ex_159418.htm


 


Exhibit 10.5


 


TNHC-ARANTINE GP LLC


c/o The New Home Company Inc.


85 Enterprise, Suite 450


Aliso Viejo, CA 92656


 


 


 


September 24, 2019


 


VIA OVERNIGHT DELIVERY


 


Arantine Hills Equity LP


c/o Tricon Capital Group


1067 Yonge Street


Toronto, Ontario M4W-2L2, Canada


Attention: Jeremy Scheetz


 


Re:  Arantine Hills Holdings LP – Funding of Excess Shortfall


 


Dear Sir/Madam:


 


As you know, TNHC Land Company LLC, a Delaware limited liability company (“TNHC”) and Arantine Hills Equity LP, a Delaware limited partnership (“Tricon”), are the limited partners in Arantine Hills Holdings LP, a Delaware limited partnership (“Holdings JV”), pursuant to that certain Limited Partnership Agreement by and among TNHC, Tricon, and TNHC-Arantine GP LLC, a Delaware limited liability company (the “GP”) dated as of July 31, 2014 (as amended, the “Holdings JV Agreement”).  Holdings JV was formed to acquire, own, and develop the property known as Arantine Hills in the City of Corona, California (the “Project”). Capitalized terms used but not defined herein shall have the meanings set forth in the Holdings JV Agreement.


                              


Reference is hereby made to that certain Letter Agreement dated June 28, 2017, by and among GP, Tricon and TNHC, regarding the funding of certain amounts in excess of the TNHC Contribution Cap and the Tricon Contribution Cap (the “First Letter Agreement”).  As of the date hereof, the aggregate Capital Contributions of TNHC and Tricon under the Holdings JV Agreement have exceeded the TNHC Contribution Cap and Tricon Contribution Cap, respectively, and a proposed annual budget for 2019 has not been approved by the Executive Committee.  Notwithstanding the foregoing, the development and continued operation of the Project requires additional equity and the parties hereto desire to enter into this letter agreement to set forth their agreement regarding the funding of such amounts (in addition to the Interchange Excess Shortfall Amounts agreed to be funded in excess of such caps pursuant to the First Letter Agreement). 


 


1.         TNHC and Tricon hereby agree that, notwithstanding anything to the contrary in the Holdings JV Agreement, if at any time the GP reasonably determines that the Partnership requires additional cash funds in order to pay for Partnership Costs and Expenses which are then due and payable or due and payable within the next 60 days, and the Executive Committee has approved the funding of such amounts in writing (which may be by the approval of an interim operating plan that expressly provides for the funding of such amounts), then (i) TNHC shall be obligated to fund any such amounts up to $2,750,000 (in excess of the Interchange Excess Shortfall Amounts agreed to be funded pursuant to the First Letter Agreement) and (ii) Tricon shall be obligated to fund any such amounts up to $52,250,000 (in excess of the Interchange Excess Shortfall Amounts agreed to be funded pursuant to the First Letter Agreement) (individually or collectively, as applicable, the “2019 Excess Shortfall Amounts”).  Subject


 



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to the last two sentences of Section 4.2(a)(x) of the Holdings JV Agreement, the GP shall deliver one or more Contribution Notices requesting the funding of all or any portion of the 2019 Excess Shortfall Amounts in accordance with the terms hereof and Section 4.2(e) of the Holdings JV Agreement.


 


2.         Any and all amounts funded as 2019 Excess Shortfall Amounts shall, for the purpose of distributions of Available Cash under Section 6.1 of the Holdings JV Agreement, be treated as if the 2019 Excess Shortfall Amounts funded by the Partners were amounts funded as Excess Shortfall Amounts under Section 4.2(a)(x) of the Holdings JV Agreement. 


 


3.         In the event that either TNHC or Tricon fails to fund any 2019 Excess Shortfall Amounts, the provisions of Section 4.3 of the Holdings JV Agreement shall apply as if such 2019 Excess Shortfall Amounts were Mandatory Additional Capital Contributions, including without limitation, to the extent applicable, the treatment of any such failure to fund as a Monetary Default for purposes of determining whether a Material Monetary Default has occurred with respect to any Partner; it being acknowledged and agreed that, as provided in Section 4.3(f) of the Holdings JV Agreement, the remedies available to a Non-Defaulting Partner pursuant to Section 4.3, Article XI, and Article XII of the Holdings JV Agreement are the sole and exclusive remedies available to a Partner that does not fund any portion of the 2019 Excess Shortfall Amounts such Partner is obligated to fund pursuant to this letter agreement.


 


The parties hereto acknowledge and agree that PSPIB U.S. Realty Inc., a Delaware corporation, and the holder of an indirect interest in Tricon, is an intended beneficiary of this letter agreement and shall have the right to enforce the terms hereof.


 


Except as set forth in this letter agreement, the Holdings JV Agreement shall not be modified and is hereby ratified and confirmed in all respects.


 


This letter agreement shall be governed by the laws of the State of Delaware. The parties hereto do not intend to confer any benefit hereunder on any person, firm or corporation other than the parties hereto and lawful assigns.  This letter agreement may be executed in one or more counterparts and transmitted electronically, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.  To the maximum extent permitted by applicable law, a “pdf” or other electronic transmittal of a signature page hereto (or the entire letter agreement) shall have the same force and effect as a duly executed original of this letter agreement.


 


 


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IN WITNESS WHEREOF, the parties have executed this letter agreement as of the date set forth above.


 


	GP:	TNHC-ARANTINE GP LLC,
	 	a Delaware limited liability company
	 	 
	 	By:       /s/ A.J. Jarvis                                     
	 	Name:       A.J. Jarvis                                     
	 	Title:          President                                      
	 	 
	 	By:        /s/ Miek Harbur                               
	 	Name:      Miek Harbur                                 
	 	Title:   SVP, General Counsel & Secretary   
	 	 
	TRICON:	ARANTINE HILLS EQUITY LP,
	 	a Delaware limited liability partnership
	 	 	 
	 	By:      	Arantine Hills Equity GP LLC, a Delaware limited liability company, its General Partner
	 	 	 
	 	 	By:       /s/ Julie Burdick                           
	 	 	Name:       Julie Burdick                           
	 	 	Title:        Vice President                          
	 	 	 
	TNHC:	TNHC LAND COMPANY LLC, a Delaware limited liability company
	 	 
	 	By:       /s/ A.J. Jarvis                                    
	 	Name:       A.J. Jarvis                                    
	 	Title:          President                                      
	 	 
	 	By:        /s/ Miek Harbur                                
	 	Name:      Miek Harbur                                  
	 	Title:   SVP, General Counsel & Secretary    



 


     


 


 


 


 


	cc:	Goulston & Storrs PC
	 	400 Atlantic Avenue
	 	Boston, MA  02110-3333
	 	Attn:  Zev D. Gewurz
	 	 
	 	Dzida, Carey & Steinman
	 	3 Park Plaza, Suite 750
	 	Irvine, California 92614
	 	Attn:  Steven J. Dzida



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


[Signature Page to Arantine Hills Holdings LP Letter Agreement - 2019]