EXHIBIT 10.5
QUALIFIED EXCHANGE ACCOMMODATION AGREEMENT
(REPLACEMENT PROPERTY HOLD)
EXCHANGE NO. 380271R-A
THIS QUALIFIED EXCHANGE ACCOMMODATION AGREEMENT ("QEAA") IS MADE AND
ENTERED INTO AS OF MAY 5, 2006 BY AND BETWEEN NORTHERN TECHNOLOGIES
INTERNATIONAL CORPORATION, A MINNESOTA CORPORATION ("EXCHANGOR") AND NORTHERN
TECHNOLOGIES HOLDING COMPANY, LLC, A MINNESOTA LIMITED LIABILITY COMPANY
("EAT").
RECITALS
A.
Exchangor presently owns for investment purposes or for use in its trade or
business certain property ("Currently Held Property") which Exchangor intends to
identify as relinquished property, and/or Exchangor has disposed of as
relinquished property certain property that Exchangor owned for investment
purposes or used in Exchangor's trade or business ("Formerly Held Property").
B.
Exchangor has transferred or intends to transfer some or all of the identified
Currently Held Property and/or Formerly Held Property (the "Relinquished
Property") to one or more third party buyers (the "Transferees") pursuant to one
or more purchase and sale agreements to be entered into between Exchangor and
the Transferee or Transferees (each such agreement being referred to herein as a
"Relinquished Property Transfer Agreement").
Exchangor has advised EAT that it
intends to dispose of the Relinquished Property through a qualified intermediary
(the "QI") within the meaning of Treasury Regulation ("Treas. Reg.") Section
1.1031(k)-1(g)(4) for the purpose of effectuating a like-kind exchange (the
"Exchange") within the meaning of Section 1031 of the Internal Revenue Code of
1986, as amended (the "Code").
Pursuant to the Exchange, Exchangor and QI will
enter into an Exchange Agreement (the "Exchange Agreement").
First American
Exchange Company, LLC will act as the QI in connection with the Exchange.
C.
EAT is willing to cooperate with and assist Exchangor and the QI in completing
the Exchange upon the terms and conditions provided herein.
To that end, EAT
will act as an "Exchange Accommodation Titleholder" as that term is defined in
Internal Revenue Service Revenue Procedure 2000-37, 2000-40 I.R.B. 1 (September
15, 2000)("Rev. Proc. 2000-37"). Exchangor has entered into a purchase and sale
agreement ("Replacement Property Purchase Agreement") to acquire replacement
property commonly known as 22 Village Parkway, Circle Pines and located in the
County of Anoka, State of Minnesota
("Replacement Property") more particularly
described in Exhibit "A," attached hereto and made a part hereof, from the
seller of such property ("Seller"). Exchangor is contemporaneously herewith
assigning Exchangor's rights under the Replacement Property Purchase Agreement
to EAT pursuant to which assignment EAT will acquire from Seller the Replacement
Property.
D.
EAT is also willing to lease the Replacement Property to Exchangor or an
affiliate thereof pursuant to a lease in form and substance acceptable to EAT
("Lease").
If improvements are to be constructed on the Replacement Property,
EAT is willing to enter into a Construction Management Agreement in form and
substance acceptable to EAT (the "Construction Management Agreement").
The
Lease and/or Construction Management Agreement are to be executed concurrently
with the execution of this QEAA.
The improvements to be constructed on the
Replacement Property shall be referred to herein as the "Replacement Property
Improvements."
As used in this Agreement, the Replacement