EX-2.5 6 t1701317_ex2-5.htm EXHIBIT 2.5

 

Exhibit 2.5

 

THIS CONTRIBUTION AGREEMENT (this "Agreement") is made and entered into as of January 1, 2016, by and among TERRA SECURED INCOME FUND, LLC, a Delaware limited liability company ("Terra Fund 1"), TERRA SECURED INCOME FUND 2, LLC, a Delaware limited liability company ("Terra Fund 2"), TERRA SECURED INCOME FUND 3, LLC, a Delaware limited liability company ("Terra Fund 3"), TERRA SECURED INCOME FUND 4, LLC, a Delaware limited liability company ("Terra Fund 4"), TERRA SECURED INCOME FUND 5, LLC, a Delaware limited liability company ("Terra Fund 5" and together with Terra Fund 1, Terra Fund 2, Terra Fund 3, and Terra Fund 4, the "Contributors"), and TERRA PROPERTY TRUST, INC., a Maryland corporation (the "REIT").

 

RECITALS

 

WHEREAS, the Contributors hold the assets and liabilities listed next to their names on Schedule 1 attached hereto (the "Assets");

 

WHEREAS, each of the Contributors desire to contribute all of its right, title and interest in and to the Assets to the REIT in exchange for the number of shares of the REIT's common stock, $0.01 par value per share ("Common Stock"), listed next to their names on Schedule 2 attached hereto in accordance with the terms and subject to the conditions specified in this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement agree as follows:

 

1.Contribution of Assets; Effective Date.  The Contributors agree to contribute, transfer, convey and assign to the REIT, and the REIT agrees to accept the contribution, transfer, conveyance and assignment of, the Assets, pursuant to the terms and conditions set forth in this Agreement.  On the Closing Date (as defined in Section 5(a) of this Agreement), the Contributors shall contribute, transfer, convey and assign to the REIT the Assets.

 

2.Consideration.  As of the Closing Date, in consideration of the contribution of the Assets, the REIT shall issue to the each of the Contributors the number of shares of Common Stock listed next to their names on Schedule 2 (the "Common Stock Consideration").

 

3.Tax Treatment of the Contribution.  The contribution, transfer, conveyance and assignment of the Assets by the Contributors to the REIT in exchange for the Common Stock Consideration is intended to be treated by the parties for U.S. federal income tax purposes as a contribution by Terra Fund 5 to the REIT in a tax-deferred transaction that qualifies under Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"). The Contributors and the REIT agree to make the election set forth in Section 362(e)(2)(C) of the Code in connection the contribution to apply the limitation in Section 362(e)(2)(A) of the Code to the Contributors' tax basis in the Common Stock Consideration (and not the tax basis of the Assets contributed to the REIT) (the "Section 362(e)(2)(C) Election"), and the Contributors and the REIT agree to take such additional actions and execute any additional documentation as may be required to effectuate such election. The Contributors and the REIT intend for this Agreement to be a binding agreement to elect to apply Section 362(e)(2)(C) of the Code within the meaning of Treasury Regulation Section 1.362-4(d)(1)(i). The Contributors shall file a Section 362(e)(2)(C) Statement as described in Treasury Regulation Section 1.362-4(d)(3) in accordance with the procedures set forth therein.

 

4.Transfer Taxes.  All sales, value added, use, state or local transfer and gains taxes, registration, stamp and similar taxes imposed in connection with the transactions contemplated by this Agreement shall be borne exclusively by the REIT.

 

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5.Closing Date and Closing Procedures and Requirements.

  

(a)Closing Date.  The "Closing Date" or "Closing" of this Agreement and the completion of the acquisition of the Assets by the REIT shall be on January 1, 2016.  Closing shall take place at the offices of Clifford Chance US LLP, 31 West 52nd Street, New York, New York or at such other place as the parties hereto may agree upon.

 

(b)Closing Deliveries.  On the Closing Date, the REIT shall transfer the Common Stock Consideration to the Contributors pursuant to Section 2 of this Agreement.  Simultaneously with the delivery of the Common Stock Consideration, the Contributors will contribute to the REIT the Assets held by each such Contributor.

 

6.Successors and Assigns.  The rights and obligations created by this Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, receivers, trustees, successors and permitted assigns.

 

7.Governing Law.  This Agreement and all transactions contemplated hereby shall be governed by, construed and enforced in accordance with the laws of the State of Maryland, without regard to the principles of conflict of law.

 

8.Severability.  If any provision of this Agreement, or the application thereof, is for any reason held to any extent to be invalid or unenforceable, the remainder of this Agreement and application of such provision to other persons or circumstances will be interpreted so as reasonably to affect the intent of the parties hereto.  The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business, and other purposes of the void or unenforceable provision and to execute any amendment, consent, or agreement deemed necessary or desirable by the REIT to effect such replacement.

 

9.Reliance.  Each party to this Agreement acknowledges and agrees that it is not relying on tax advice or other advice from the other parties to this Agreement, and that it has or will consult with its own advisors.

 

10.Further Assurances.  From time to time, at any party's request, whether on or after Closing, and without further consideration, the other parties shall execute and deliver any further instruments of conveyance and take such other actions as the requesting party may reasonably require to complete more effectively the transfer of the Assets to the REIT.

 

11.Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

12.Entire Agreement and Amendments.  This Agreement, together with all exhibits attached hereto or referred to herein, contain all representations and the entire understanding between the parties hereto with respect to the subject matter hereof.  Any prior correspondence, memoranda or agreements are replaced in total by this Agreement and exhibits hereto.  This Agreement may only be modified or amended upon the written consent of each party hereto.

 

[Signature page to follow.]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first written above.

 

  CONTRIBUTOR:
   
  TERRA SECURED INCOME FUND, LLC
   
  By: Terra Capital Advisors, LLC, its Manager
     
  By: /s/ Bruce Batkin
    Name:  Bruce Batkin
    Title:  Chief Executive Officer
     
  TERRA SECURED INCOME FUND 2, LLC
   
  By: Terra Capital Advisors, LLC, its Manager
     
  By: /s/ Bruce Batkin
    Name:  Bruce Batkin
    Title:  Chief Executive Officer
     
  TERRA SECURED INCOME FUND 3, LLC
   
  By: Terra Capital Advisors, LLC, its Manager
     
  By: /s/ Bruce Batkin
    Name:  Bruce Batkin
    Title:  Chief Executive Officer
     
  TERRA SECURED INCOME FUND 4, LLC
   
  By: Terra Capital Advisors, LLC, its Manager
     
  By: /s/ Bruce Batkin  
    Name:  Bruce Batkin
    Title:  Chief Executive Officer
     
  TERRA SECURED INCOME FUND 5, LLC
   
  By: Terra Capital Advisors, LLC, its Manager
     
  By: /s/ Bruce Batkin
    Name:  Bruce Batkin
    Title:  Chief Executive Officer
     
  TERRA PROPERTY TRUST, INC.
   
  By: /s/ Bruce Batkin
    Name:  Bruce Batkin
    Title:  Chief Executive Officer

 

[Signature Page to Contribution Agreement]

 

 

 

  

SCHEDULE 1

 

Terra Fund 1       Ownership   Outstanding   Market
Value
Investment   Position   Interest   Balance   of Loans
Clemson Student Housing Portfolio   Mezzanine   100%   $3,000,000   $3,490,475
Portland Airport Hotel Portfolio   Mezzanine   100%   5,000,000   5,588,149
Museo Apartments   Mezzanine   100%   4,000,000   3,945,527
Marriott Spartanburg   Mezzanine   83%   2,500,000   2,769,371
Brass San Antonio   Preferred Equity   27%   4,260,930   4,291,401
Total           $18,760,930   $20,084,923
                 
Other Assets               $480,533
Other Liabilities               ($193,310)
Other Adjustments               $5,063

 

Terra Fund 2       Ownership   Outstanding   Market
Value
Investment   Position   Interest   Balance   of Loans
Mystic Hotel   Preferred Equity   100%   $4,325,000   $4,325,000
CSRA Credit Facility   Mezzanine   57%   6,000,000   6,000,000
Arbor Station Apartments   Preferred Equity   100%   2,100,000   2,185,883
Stratford Apartments   Preferred Equity   100%   1,600,000   1,671,010
Ramada Plaza Atlanta Downtown   Mezzanine   100%   2,275,000   2,275,000
Mayo Portfolio   Mezzanine   100%   4,000,000   4,150,839
Marriot Warner Center   Preferred Equity   38%   7,500,000   7,832,443
Total           $27,800,000   $28,440,176
                 
Other Assets               $9,060,926
                 
Other Liabilities               ($8,880,855)
Other Adjustments               $53,038

  

Terra Fund 3       Ownership   Outstanding   Market
Value
Investment   Position   Interest   Balance   of Loans
Ramada Resort Fort Walton Beach   Mezzanine   100%   $4,500,000   $4,606,412
AHF Portfolio   Mezzanine   100%   3,869,381   4,239,452
Z Hotel NYC   Mezzanine   78%   3,500,000   3,838,928
Brass San Antonio   Preferred Equity   55%   8,733,343   8,801,171

 

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Kingsport Multifamily Portfolio   Mezzanine   100%   3,000,000   3,332,046
Park Central and Park East   Equity   35%   5,915,000   5,915,000
Holiday Inn Austin   Mezzanine   100%   3,500,000   3,500,000
Total           $33,017,724   $34,233,009
                 
Other Assets               $3,525,558
Other Liabilities               ($2,128,084)
Other Adjustments               $78,139

 

Terra Fund 4       Ownership   Outstanding   Market
Value
Investment   Position   Interest   Balance   of Loans
Z Hotel NYC   Mezzanine   22%   $1,000,000   $1,096,836
Encino Courtyard   Mezzanine   100%   2,500,000   2,664,533
DoubleTree by Hilton Greensboro   Mezzanine   100%   3,500,000   3,586,169
Sheraton Hotel and Spa   Mezzanine   100%   8,700,000   8,700,000
Matrix MHC Portfolio   Mezzanine   100%   15,000,000   16,073,639
Ball State Student Housing Portfolio   Mezzanine   100%   2,700,000   2,691,781
Hilton Garden Inn Fort Washington   Preferred Equity   100%   3,742,000   3,742,000
Peachtree Pointe   Mezzanine   100%   7,500,000   7,500,000
Georgia Multifamily Portfolio   Mezzanine   100%   5,000,000   5,570,643
Park Central and Park East   Equity   65%   10,985,000   10,985,000
Millennium IV   First Mortgage   100%   13,980,000   13,980,000
Total           $74,607,000   76,590,603
                 
Other Assets               $4,562,015
Other Liabilities               ($3,125,564)

 

Terra Fund 5       Ownership   Outstanding   Market
Value
Investment   Position   Interest   Balance   of Loans
Marriott Spartanburg   Mezzanine   17%   $500,000   $553,874
CSRA Credit Facility   Mezzanine   43%   4,500,000   4,500,000
Brass San Antonio   Preferred Equity   19%   3,018,418   3,036,080
UBS Tower   Mezzanine   100%   6,530,638   6,665,798
1733 Ocean Ave   Preferred Equity   70%   8,584,100   8,584,100
98 14th Street   Mezzanine   70%   3,948,803   4,015,012
Marriot Warner Center   Preferred Equity   44%   8,750,000   9,137,850
55 Miracle Mile   Mezzanine   70%   2,433,960   2,504,882
Crestavilla   First Mortgage   70%   7,896,000   7,896,000
144 South Harrison St   First Mortgage   100%   15,621,355   15,621,355
DoubleTree by Hilton San Diego   Preferred Equity   87%   5,200,000   5,200,000

 

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1100 Biscayne Blvd   Mezzanine   82%   12,059,001   12,189,801
Pine Tree Drive   Mezzanine   100%   5,010,017   5,044,997
Uptown Newport   First Mortgage   100%   11,200,000   11,200,000
BPG Office Portfolio   Mezzanine   100%   10,000,000   10,000,000
BPG Hotel Portfolio   Mezzanine   31%   1,800,000   1,800,000
42-50 24th Street   Mezzanine   79%   11,880,000   11,880,000
East 96th Street   Mezzanine   100%   3,322,262   3,322,262
Total           $122,254,554   $123,152,012
                 
Other Assets               $23,484,064
                 
Other Liabilities               ($22,373,304)
Other Adjustments               $708,125

 

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SCHEDULE 2

 

CONTRIBUTOR   REIT SHARES
     
Terra Fund 1   1,017,266
     
Terra Fund 2   1,433,654
     
Terra Fund 3   1,785,423
     
Terra Fund 4   3,901,394
     
Terra Fund 5   6,248,652

 

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