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CONTRIBUTION AGREEMENT

LLC Subscription Agreement

CONTRIBUTION AGREEMENT | Document Parties: JTL PROPERTIES, LLC | Paladin Realty Income Properties, Inc | PARK HILL PARTNERS I, LLC | PRIP 6700, LLC You are currently viewing:
This LLC Subscription Agreement involves

JTL PROPERTIES, LLC | Paladin Realty Income Properties, Inc | PARK HILL PARTNERS I, LLC | PRIP 6700, LLC

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Title: CONTRIBUTION AGREEMENT
Governing Law: Missouri     Date: 4/11/2008
Law Firm: King Spalding    

CONTRIBUTION AGREEMENT, Parties: jtl properties  llc , paladin realty income properties  inc , park hill partners i  llc , prip 6700  llc
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EXHIBIT 10.2

 

 

 

CONTRIBUTION AGREEMENT

BY AND AMONG

PRIP 6700, LLC,

a Delaware limited liability company,

JTL PROPERTIES, LLC,

a Missouri limited liability company.

AND

PARK HILL PARTNERS I, LLC,

a Missouri limited liability company

As of April 7, 2008

 

 

 

 


TABLE OF CONTENTS

 

ARTICLE 1 CONTRIBUTION AND ISSUANCE OF MEMBERSHIP INTEREST

   1

1.1

  

Agreement to Contribute in Exchange for Membership Interest

   1

1.2

  

Company Property

   1

1.3

  

Property Defined

   2

1.4

  

Title to the Property

   2

1.5

  

Use of Contribution

   3

1.6

  

Payment of Contribution

   3

ARTICLE 2 CLOSING

   3

2.1

  

Time and Place

   3

2.2

  

JTL’s Obligations at Closing

   3

2.3

  

Paladin’s Obligations at Closing

   4

2.4

  

Company Income and Expenses

   4

2.5

  

Closing Costs

   5

4.8

  

Certain Tax Definitions

   5

ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS

   6

3.1

  

Representations and Warranties of JTL Primarily Relating to the Membership Interest and the Company

   6

3.2

  

Representations and Warranties of JTL Primarily Relating to the Property

   10

3.3

  

Survival of JTL’s Representations and Warranties

   13

3.4

  

Representations and Warranties of Paladin

   13

3.5

  

Survival of Paladin’s Representations and Warranties

   13

3.6

  

Indemnification by JTL

   14

ARTICLE 4 COMMISSIONS

   14

4.1

  

Representation and Indemnity

   14

4.2

  

Survival

   15

ARTICLE 5 MISCELLANEOUS

   15

5.1

  

Assignment

   15

5.2

  

Notices

   15

5.3

  

Modifications

   16

5.4

  

Calculation of Time Periods

   16

5.5

  

Successors and Assigns

   16

5.6

  

Entire Agreement

   16

5.7

  

Further Assurances

   17

5.8

  

Counterparts

   17

5.9

  

Severability

   17

5.10

  

Applicable Law

   17

5.11

  

No Third Party Beneficiary

   17

5.12

  

Exhibits and Schedule

   17

5.13

  

Captions

   18

 

- i -

 


5.14

  

Construction

   18

5.15

  

Survival

   18

5.16

  

Time of Essence

   18

 

- ii -

 


CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT (this “ Agreement ”) is made as of April 7, 2008 (the “ Effective Date ”), by and among PRIP 6700, LLC , a Delaware limited liability company (“ Paladin ”), JTL PROPERTIES, LLC, a Missouri limited liability company (“ JTL ”), and PARK HILL PARTNERS I, LLC, a Missouri limited liability company (the “ Company ”).

WITNESSETH:

ARTICLE 1

CONTRIBUTION AND ISSUANCE OF MEMBERSHIP INTEREST

1.1 Agreement to Contribute in Exchange for Membership Interest . Subject to the terms and conditions hereinafter set forth, Paladin agrees to contribute to the Company in cash on the Closing Date the sum of One Million Fifty Thousand and No/100 Dollars ($1,050,000.00) (the “ Contribution ”), in exchange for a 49% membership interest in the Company as set forth in the Restated Operating Agreement (as hereinafter defined) (collectively, the “ Membership Interest ”).

1.2 Company Property . JTL represents and warrants to Paladin that the Company owns the following:

(a) that certain tract or parcel of land located in Jackson County, Missouri, and more particularly described on Schedule1.2(a) , attached hereto and by this reference made a part hereof (the property described in this clause (a) being herein referred to as the “ Land ”), together with any rights, easements and appurtenances pertaining to the Land;

(b) the structures and other improvements (if any) on the Land (the property described in this clause (b) being herein referred to as the “ Improvements ”, and the Land and the Improvements being hereinafter sometimes collectively referred to as the “ Real Property ”);

(c) all of the right, title and interest in, to and under all tangible personal property upon the Land or within the Improvements, including specifically, without limitation, appliances, equipment, furniture, carpeting, draperies and curtains, tools and supplies, and other items of tangible personal property owned by the Company and used exclusively in connection with the ownership, use, maintenance or operation of the Land and the Improvements, and including those items of tangible personal property identified on Schedule 1.2(c) , attached hereto and incorporated herein by this reference, but excluding (i) personal property owned by tenants under the Leases, (ii) any equipment installed by, or in connection with, any telecommunication or utility provider and which is owned by any party other than the Company, and (iii) any items leased to the Company (the property described in this clause (c), other than the excluded items, being herein referred to collectively as the “ Tangible Personal Property ”).

 


(d) all of the right, title and interest as landlord or lessor in, to and under all agreements listed and described on Schedule1.2(d) (the “ Rent Roll ”) attached hereto and made a part hereof, pursuant to which any portion of the Land or Improvements is used or occupied by anyone other than the Company (the property described in this clause (d) being herein referred to collectively as the “ Leases ”);

(e) all right, title and interest as the owner in, to and under (i) the contracts listed and described on Schedule 1.2(e) (the “ Service Contracts ”) attached hereto and made a part hereof, (ii) all existing warranties and guaranties issued to or inuring to the benefit of the Company in connection with the Improvements or the Tangible Personal Property, and (iii) all governmental permits, licenses and approvals, if any, belonging to or inuring to the benefit of Company and pertaining to the Real Property or the Tangible Personal Property (the property described in this clause (e) being sometimes herein referred to collectively as the “ Intangible Property ”.

1.3 Property Defined . The Land, the Improvements, the Leases and the Intangible Property are hereinafter sometimes referred to collectively as the “ Property .”

1.4 Title to the Property . At Closing, JTL covenants that the Company shall hold good, marketable and indefeasible title to the Property subject only to the following matters (the “ Permitted Exceptions ”):

(a) the lien of all ad valorem real estate taxes and assessments not yet due and payable as of the Closing Date, subject to proration and adjustment as herein provided;

(b) the rights of tenants, as tenants only, under the Leases described in the Rent Roll;

(c) the matters set forth in Schedule 1.4(a) , attached hereto and by this reference made a part hereof;

(d) the documents evidencing and securing the $4,250,000.00 mortgage loan held by the Federal Home Loan Mortgage Corporation currently encumbering the Property (the “ Existing Financing ”).

It shall be a condition to Paladin’s obligation to close this transaction that First American Title Insurance Title Company (the “ Title Company ”) shall have issued the Title Policy to the Company (or unconditionally committed to issue the Title Policy to the Company upon receipt of the title insurance premium therefor). “Title Policy” means an extended coverage American Land Title Association (ALTA) Form 1992 Owner’s Policy of Title Insurance insuring the Company’s continuing fee simple title to the Real Property, in the amount of $5,200,000.00 with the standard exceptions and the creditor’s rights exclusion deleted, and including the endorsements set forth in Schedule 1.4(b) , attached hereto and by this reference made a part hereof.

 

-2-

 


1.5 Use of Contribution . The Contribution shall be paid, used and allocated as follows: (i) Fifty Thousand Dollars ($50,000.00) shall be retained by the Company to be used for the certain capital improvements and repairs to the Property that have previously been agreed upon by JTL and Paladin; (ii) an additional Fifty Thousand Dollars ($50,000.00) be used to fund the closing costs of the Company contemplated by Section 2.5(a) and any additional closing cost for the transaction contemplated by this Agreement and agreed to in writing by Paladin, with any surplus to be retained by the Company for working capital needs, and (iii) the remaining Nine Hundred Fifty Thousand Dollars ($950,000.00) shall be distributed to JTL.

1.6 Payment of Contribution . The Contribution shall be payable in full at Closing in cash by wire transfer of immediately available federal funds to the proper bank account of the Company designated in writing to Paladin prior to the Closing.

ARTICLE 2

CLOSING

2.1 Time and Place . The consummation of the transaction contemplated hereby (“ Closing ”) shall be held on or before April 7, 2008 at such place and time as JTL and Paladin shall mutually approve in writing. The date on which the Closing is scheduled to occur hereunder (or, if earlier, the date on which Closing occurs) is sometimes referred to herein as the “Closing Date ”.

2.2 JTL’s Obligations at Closing . At Closing, JTL shall:

(a) deliver to Paladin such duly executed instruments of redemption as Paladin shall reasonably request to evidence the redemption by the Company of membership interests of JTL and the Dino Agnos Trust (the “ Existing Members ”) in the Company equal to the Membership Interest;

(b) execute and deliver to Paladin an Amended and Restated Operating Agreement of Park Hill Partners I, LLC (the “ Restated Operating Agreement ”) in the form attached hereto as Schedule 2.2(b) ;

(c) deliver to Paladin written resignation from any manager or officer of the Company other than JTL as the manager of the Company;

(d) execute and deliver to Paladin a closing statement, prepared by JTL and approved by Paladin, consistent with the terms of this Agreement;

(e) execute and deliver to Paladin such evidence as Paladin’s counsel and/or the Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of the Existing Members ;

 

-3-

 


(f) cause its counsel to issue an opinion in form and substance satisfactory to Paladin and its counsel that the execution, delivery and consummation of the transaction contemplated by this Agreement and the issuance to Paladin of the Membership Interest by the Company will not result in a breach or violation of the provisions of the Existing Financing.

(g) execute and deliver or cause to be executed and delivered to the Title Company a title insurance affidavit, in form and content reasonably satisfactory to Paladin and the Title Company and sufficient for the Title Company to issue the Title Policy, which title insurance affidavit shall include, without limitation, all matters necessary to cause the Title Company to issue a non-imputation endorsement and a Fairway endorsement in form and substance satisfactory to Paladin in its sole discretion.

2.3 Paladin’s Obligations at Closing . At Closing, Paladin shall:

(a) deliver to the Company the full amount of the Contribution in immediately available federal funds wire transferred to an account designated in writing as set forth in Section 1.6;

(b) execute and deliver to JTL such evidence as JTL’s counsel and/or the Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of Paladin;

(c) execute and deliver to JTL a closing statement, prepared by JTL and approved by Paladin, consistent with the terms of this Agreement; and

(d) execute and deliver the Restated Operating Agreement.

2.4 Company Income and Expenses . Except as otherwise expressly provided in this Agreement, it is the intent of JTL and Paladin that all items of income and expense attributable to the Company prior to April 1, 2008 (the “ Cut-Off Date ”) inure to the Existing Members and that all items of income and expense attributable to the Company on and after the Closing Date inure to the members under the Restated Operating Agreement. JTL and Paladin agree to make any financial adjustments between themselves after the Closing so as to give effect to such intent. In furtherance of such intent the following provisions shall apply:

(a) JTL shall cause the Company to pay in full prior to the Closing all leasing commissions and locators’ and finders’ fees, if any, due to leasing or other agents (pursuant to a contractual arrangement with the Company) for each Lease entered into by the Company prior to the Closing Date promptly when due. Trade payables in the nature of open accounts payable to trade vendors or suppliers and all other accounts payable which have accrued prior to the Closing Date shall be the obligation of the Existing Members.

 

-4-

 


(b) Unpaid and delinquent rent collected by the Company after the date of Closing shall be delivered as follows: (a) if the Company collects any unpaid or delinquent rent for the Property relating to the Cut-Off Date and any period thereafter, the Company shall distribute any such rent pursuant to the provisions of the Restated Operating Agreement, and (b) if the Company collects any unpaid or delinquent rent from the Property relating to the period prior to the date of Closing, the Company shall, within fifteen (15) days after the receipt thereof, deliver to JTL any such rent which the Existing Members are entitled to hereunder. JTL and Paladin agree that all rent received by the Company after the Closing shall be applied first to current rentals and then to delinquent rentals, if any, in inverse order of maturity. The Company will make a good faith effort after Closing to collect all rents in the usual course of the Company’s operation of the Property, but the Company will not be obligated to institute any lawsuit or other collection procedures to collect delinquent rents.

(c) The provisions of this Section 2.4 shall survive Closing.

2.5 Closing Costs .

(a) The Company shall pay the fees of counsel representing JTL and the fees of counsel representing Paladin in connection with this transaction and the premium for the Title Policy.

(b) Except as otherwise provided herein, all other costs and expenses incident to this transaction and the closing thereof shall be paid by the party incurring same.

2.6 Certain Tax Definitions .

(a) For purposes of this Agreement, the following terms have the following meanings:

(1) “ Tax ” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, natural resources, customs, duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not, and including any express or implied obligation of the Company to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

(2) “ Tax Return ” means any return, declaration, report, claim for refund, information return, or other document, including any related or supporting schedule, statement, information or attachment, and including any amendment thereof filed or required to be filed in connection with the determination, assessment or collection of Taxes of any party or the administration of any laws, regulations or administrative requirements relating to any Taxes.

(b) The provisions of this Section 2.6 shall survive Closing

 

-5-

 


ARTICLE 3

REPRESENTATIONS, WARRANTIES AND COVENANTS

3.1 Representations and Warranties of JTL Primarily Relating to the Membership Interest and the Company . JTL hereby represents and warrants to, and covenants with, Paladin as of the Effective Date and as of the Closing Date, that:

(a) Authority of JTL . Neither the execution and delivery of this Agreement nor any other documents executed and delivered, or to be executed and delivered, by JTL in connection with the transactions described herein, will violate any material agreements, regulations, or laws to or by which the Company or JTL is bound.

(b) Organization and Authority of the Company . The Company has been duly organized and is validly existing and in good standing as a limited liability company under the laws of the State of Missouri. The person signing this Agreement on behalf of the Company is authorized to do so. Neither the execution and delivery of this Agreement nor any other documents executed and delivered, or to be executed and delivered, by the Company in connection with the transactions described herein, will violate (i) any provision of the Company’s organizational documents; or (ii) any material agreements, regulations, or laws to or by which the Company is bound. This Agreement has been duly authorized, executed and delivered by the Company.

(c) Ownership of Membership Interest . The Existing Members are the only member in the Company and collectively own one hundred percent (100%) of the outstanding membership interests in the Company free and clear of any and all liens, encumbrances, pledges and other similar interests. There are no managers or members in the Company other than the Existing Members. Upon the issuance of the Membership Interest to Paladin, Paladin shall own the Membership Interest in the Company free and clear of any and all liens, encumbrances, pledges or other interests.

(d) Authority to Transfer Membership Interest . JTL has full right and authority to enter into this Agreement and to cause the Company to issue the Membership Interest to the Paladin. No documents relating to the Company or the Membership Interest prohibit or restrict the Company’s right to issue the Membership Interest to Paladin.

(e) Membership Interest Documents and Files . JTL has made and shall make available to the Paladin for inspection a true, correct and complete copies of all material documents and reports relating to the Membership Interest, the Company and the Property. JTL has delivered to Paladin true correct and complete copies of all documents and other items set forth on Schedule 3.1(e) .

(f) Assets and Liabilities . At the time of the Closing, the only material assets of the Company will be the Property. To JTL’s knowledge, the Company has no liabilities (contingent or otherwise), other than as set forth on Schedule 3.1(f) , attached hereto and by this reference made a part hereof.

 

-6-

 


(g) Taxes and Tax Returns . All Tax Returns required to be filed by, on behalf of or with respect to the income, assets or operations of, JTL and the Company have been timely filed with the appropriate taxing authorities in all jurisdictions in which such Tax Returns are required to be filed, and all such Tax Returns were accurate and complete in all material respects. As of the date hereof, (i) all Taxes payable by, on behalf of or with respect to the income, assets or operations of, JTL and the Company have been fully and timely paid, and (ii) adequate reserves or accruals for Taxes have been provided with respect to any period for which Tax Returns are not yet due and have not yet been filed. Neither JTL nor the Company has executed or filed with the Internal Revenue Service or any other taxing authority any agreement, waiver or other document or arrangement extending or having the effect of extending the period for assessment or collection of Taxes (including, but not limited to, any applicable statute of limitation), and no power of attorney with respect to any Tax matter is currently in force with respect to JTL or the Company.

(h) No Defaults . JTL has performed all obligations required to be performed by it under the Operating Agreement for Park Hill Partners I, LLC, dated June 23, 2006 (the “ LLC Agreement ”) and is not in breach or default of any provisions of the LLC Agreement. No action or legal proceeding is pending or threatened against the Company or any of the Existing Members relating to the Membership Interest or the Company.

(i) Employment Matters . The Company has no employees and has never had any employees.

(j) Insurance . Schedule 4.1(j), attached hereto and by this reference made a part hereof, lists each insurance policy maintained by the Company with respect to its properties, assets and business. All of such insurance policies are in full force and effect, and the Company is not in default with respect to its obligations under any of such insurance policies and has not received any notification of cancellation of any of such insurance policies. Furthermore, neither JTL nor the Company has received any written notice from any insurance company or board of fire underwriters of any defect or inadequacies in or on the Real Property or any part or component thereof that would materially and adversely affect the insurability of the Real Property or cause any material increase in the premiums for insurance on the Real Property, and that have not been cured or repaired.

(k) No Option or Right of First Refusal . There exists no option, right of first refusal, letter of intent, agreement to sell, or other similar right with respect to the issuance of the Membership Interest.

(l) Compliance with Laws . To JTL’s knowledge, (i) the Company is in compliance in all material respects, and has received no written notice that it is not in compliance in any material respect, with any statute, law, ordinance, rule, regulation,

 

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judgment, order, decree, governmental permit or other governmental authorization or approval applicable to it or to the business of the Company, and (ii) all governmental authorizations or approvals material for the ownership and operation of the Property have been duly and lawfully obtained and are in full force and effect. There are no proceedings pending or, to the knowledge of JTL, overtly threatened which may result in the revocation, cancellation or suspension, or any materially adverse modification, of any thereof. Neither the Company nor JTL has received notice of any alleged violation of any applicable statute, law, ordinance, rule, regulation, judgment, order, decree, governmental permit or other governmental authorization or approval necessary for the conduct of the business of the Company or for


 
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