<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 24, 1998
........................
Tarragon Realty Investors, Inc.
...............................................................................
(Exact name of registrant as specified in its charter)
Nevada 0-8003 94-2432628
...............................................................................
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
3100 Monticello, Suite 200, Dallas, Texas 75205
...............................................................................
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 599-2200
...............................................................................
...............................................................................
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
At special meetings of the shareholders of National Income Realty Trust
("NIRT") and the stockholders of Tarragon Realty Investors, Inc. ("TRII" or the
"Registrant") held on October 20, 1998, the shareholders of each entity approved
a proposal to incorporate NIRT into a California corporation through the
"Incorporation Procedure" described in a Proxy Statement/Prospectus dated
September 10, 1998 and approved an Agreement and Plan of Merger dated as of June
5, 1998 (the "Merger Agreement") among TRII and such California Corporation as
the successor to NIRT by virtue of the Incorporation Procedure and the
transactions contemplated by the Merger Agreement, including the conversion of
the shares of the California Corporation (represented by the shares of
beneficial interest of NIRT) into the right to receive 1.97 shares of Common
Stock, par value $0.01 per share, of TRII (the "TRII Common Stock"). On November
23, 1998, NIRT was incorporated pursuant to Section 200.5 of the California
Corporation Code under the name National Income Realty Corporation and such
entity was merged with and into TRII on November 24, 1998 with TRII as the
surviving entity and as the ultimate successor to NIRT.
Also, on November 24, 1998, TRII and others consummated the Stock
Purchase Agreement dated June 5, 1998 among TRII and others (the "Advisor
Acquisition Agreement") pursuant to which TRII acquired from William S. and Lucy
N. Friedman all of the issued and outstanding stock of Tarragon Realty Advisors,
Inc. ("TRA"), the contractual advisor to TRII since March 1, 1994 and to NIRT
since April 1, 1994 for 100,000 shares of TRII Common Stock and options to
acquire 350,000 shares of TRII Common Stock at prices ranging between $13 and
$16 per share. On November 24, 1998, TRA became a wholly-owned subsidiary of
TRII and TRII assumed indebtedness of up to $1 million of TRA. Effective at the
time of consummation of the Advisor Acquisition Agreement, each of separate
contractual advisory agreements between TRA and each of TRII and NIRT were
terminated.
With the completion of the Merger, the Articles of Incorporation and
Bylaws of TRII remain the Articles of Incorporation and Bylaws of the surviving
corporation. The officers of TRII immediately prior to the effective time of the
Merger remain the officers of the surviving corporation. In accordance with the
terms of the Agreement and Plan of Merger dated June 5, 1998, upon the
consummation of the Merger, five out of the seven NIRT independent trustees were
added to the Board of Directors of TRII to serve with the existing members of
the Board of Directors of TRII. The persons added to the TRII Board of Directors
are Sally Hernandez-Pinero, Lance Liebman, Lawrence G. Schafran, Raymond V. J.
Schrag and Carl B. Weisbrod. The other members of the Board of Directors of TRII
are Chester Beck, Willie K. Davis, William S. Friedman and Michael E. Smith. As
contemplated by the Merger Agreement, former NIRT trustees Messrs.
1
<PAGE> 3
Irving E. Cohen and Dan L. Johnston did not join the TRII Board of
Directors.
At the time of consummation of the Advisor Acquisition Agreement, TRII
and TRA entered into an Employment Agreement with William S. Friedman for a term
of four years and TRII and Mr. Friedman entered into a Stock Option Agreement
covering an aggregate of 450,000 shares of TRII common stock at exercise prices
ranging from $12 per share to $15 per share.
On December 3, 1998, Carl B. Weisbrod was elected Chairman of the Board
of Directors.
On December 3, 1998, Erin D. Davis was appointed Executive Vice
President and Chief Financial Officer of TRII, Kathryn Mansfield was appointed
Executive Vice President, Corporate Counsel and Secretary of TRII, and Charles
Rubenstein was appointed Executive Vice President and General Counsel of TRII.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
The following are filed herewith as exhibits or incorporated by
reference as indicated below:
<TABLE>
<CAPTION>
Exhibit Designation Description
<S> <C>
3.8* Articles of Incorporation of National
Income Realty Corporation as filed with
and approved by the Secretary of State of
California on November 23, 1998.
3.9* Articles of Merger of National Income
Realty Corporation into Tarragon Realty
Investors, Inc. as filed with and approved
by the Secretary of State of Nevada on
November 24, 1998.
10.2* Stock Option Agreement dated December 17,
1998 (effective November 24, 1998) between
Tarragon Realty Investors, Inc. and
William S. Friedman.
</TABLE>
- --------
* Filed herewith.
2
<PAGE> 4
<TABLE>
<CAPTION>
Exhibit Designation Description
<S> <C>
10.3* Stock Option Agreement dated December 17,
1998 (effective November 24, 1998) between
Tarragon Realty Investors, Inc. and Lucy
N. Friedman.
10.4* Employment Agreement dated December 17,
1998 (effective November 24, 1998) between
Tarragon Realty Investors, Inc. and
William S. Friedman
10.5* Stock Option Agreement dated December 17,
1998 (effective November 24, 1998) between
Tarragon Realty Investors, Inc. and
William S. Friedman.
</TABLE>
3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 13, 1999
TARRAGON REALTY INVESTORS, INC.
By: /s/ ERIN D. DAVIS
----------------------------------
Erin D. Davis, Executive
Vice President and Chief
Financial Officer
4
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
Exhibit Designation Description
<S> <C>
3.8* Articles of Incorporation of National
Income Realty Corporation as filed with
and approved by the Secretary of State of
California on November 23, 1998.
3.9* Articles of Merger of National Income
Realty Corporation into Tarragon Realty
Investors, Inc. as filed with and approved
by the Secretary of State of Nevada on
November 24, 1998.
10.2* Stock Option Agreement dated December 17,
1998 (effective November 24, 1998) between
Tarragon Realty Investors, Inc. and
William S. Friedman.
10.3* Stock Option Agreement dated December 17,
1998 (effective November 24, 1998) between
Tarragon Realty Investors, Inc. and Lucy
N. Friedman.
10.4* Employment Agreement dated December 17,
1998 (effective November 24, 1998) between
Tarragon Realty Investors, Inc. and
William S. Friedman
10.5* Stock Option Agreement dated December 17,
1998 (effective November 24, 1998) between
Tarragon Realty Investors, Inc. and
William S. Friedman.
</TABLE>
- --------
* Filed herewith.
<PAGE> 1
EXHIBIT 3.8
[SEAL]
SECRETARY OF STATE
I, BILL JONES, Secretary of State of the State of California, hereby
certify:
That the annexed transcript has been compared with the corporate record on
file in this office, of which it purports to be a copy, and that same is full,
true and correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal of
the State of California this
Nov. 25, 1998
-------------------------
[SEAL] By: /s/ BILL JONES
-------------------------------------
Bill Jones
Secretary of State
<PAGE> 2
ENDORSED-FILED
IN THE OFFICE OF THE
SECRETARY OF STATE
OF THE STATE OF CALIFORNIA
NOVEMBER 23 1998
BILL JONES, SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
NATIONAL INCOME REALTY CORPORATION
The undersigned natural persons of full age, as incorporators and as
the appropriate officers pursuant to Section 200.5(c) of the General Corporation
Law of the State of California, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the Corporations
Code of the State of California, do hereby adopt the following Articles of
Incorporation.
ARTICLE I
National Income Realty Trust, an existing unincorporated association,
is being incorporated by the filing of these Articles of Incorporation pursuant
to Section 200.5 of the California General Corporation Law.
ARTICLE II
The name of this corporation is NATIONAL INCOME REALTY CORPORATION.
ARTICLE III
The existence of this corporation shall be perpetual.
ARTICLE IV
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE V
The name of this corporation's initial agent for service of process in
the State of California is CT Corporation System.
1
<PAGE> 3
ARTICLE VI
(a) The total number of shares of all classes which the corporation
shall have authority to issue is 30,000,000 shares, of which 20,000,000 shares,
par value $0.01 per share, shall be of a class designated "Common Stock" and
10,000,000 shares, par value $0.01 per share, shall be of a class designated
"Special Stock."
(b) The Special Stock may be divided into such number of series as the
Board of Directors may determine. The Board of Directors is authorized to
determine and alter the rights, preferences, privileges, and restrictions
granted to and imposed upon any wholly unissued series of Special Stock, and to
fix the number of shares of any series of Special Stock and the designation of
any such series of Special Stock. The Board of Directors, within the limits and
restrictions stated in any resolution or resolutions of the Board of directors
originally fixing the number of shares constituting any series, may increase or
decrease (but not below the number of shares of such series then outstanding)
the number of shares of any series subsequent to the issue of shares of that
series.
(c) Except as otherwise specifically required by law or as specifically
provided in any resolution of the Board of Directors providing for the issuance
of any particular series of Special Stock, the exclusive voting power of the
corporation shall be vested in the Common Stock of the corporation. Except as
otherwise provided in these Articles of Incorporation, each share of Common
Stock shall entitle the holder thereof to one vote at all meetings of the
shareholders of the corporation.
ARTICLE VII
(a) The business and affairs of the corporation shall be managed and
all corporate powers shall be exercised by or under the direction of the Board
of Directors. Pursuant toss.200.5(d) of the California General Corporation Law,
the incumbent trustees of National Income Realty Trust shall constitute the
initial directors of the Corporation.
(b) Whenever the holders of any one or more series of Special Stock
issued by the Corporation shall have the right, voting separately or by class or
series, to elect directors at an annual or special meeting of shareholders, the
election, term of office, filling of vacancies and other features of such
directorships shall be governed by the terms of these Articles of Incorporation
or the resolution or resolutions adopted by the Board of Directors pursuant to
Article VI applicable thereto.
2
<PAGE> 4
ARTICLE VIII
(a) The liability of directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
(b) The corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the California Corporations Code) through Bylaw
provisions, agreements with agents, vote of shareholders or disinterested
directors or, otherwise, to the fullest extent permissible under California law.
(c) Any amendment, repeal or modification of any provision of this
Article VIII shall not adversely affect any right or protection of an agent of
this corporation existing at the time of such amendment, repeal or modification.
IN WITNESS WHEREOF, the undersigned have executed these Articles of
Incorporation this 5th day of November, 1998 in accordance with the provisions
of Section 200.5(c) of the California General Corporation Law.
/s/ WILLIAM S. FRIEDMAN
---------------------------------------
William S. Friedman, President,
National Income Realty Trust
and Incorporator of National
Income Realty Corporation
/s/ KATHRYN MANSFIELD
---------------------------------------
Kathryn Mansfield, Secretary, National
Income Realty Trust and Incorporator of
National Income Realty Corporation
3
<PAGE> 5
DECLARATION
Under penalty of perjury, the undersigned officers of National Income
Realty Trust (the "Trust") hereby verify that the incorporation of the Trust has
been approved by the trustees of the Trust and has been approved by the
affirmative vote of a majority of the outstanding voting shares of beneficial
interest of the Trust, in accordance with the provisions of Section 200.5(a) of
the California General Corporation Law.
IN WITNESS WHEREOF, the undersigned have executed this Declaration as
of November 5, 1998.
/s/ WILLIAM S. FRIEDMAN
---------------------------------------
William S. Friedman, President, National
Income Realty Trust and Incorporator of
National Income Realty Corporation
/s/ KATHRYN MANSFIELD
---------------------------------------
Kathryn Mansfield, Secretary, National
Income Realty Trust and Incorporator of
National Income Realty Corporation
[SEAL]
4
<PAGE> 1
FILED EXHIBIT 3.9
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
NOV 24, 1998
DEAN HELLER SECRETARY OF STATE
/S/ DEAN HELLER
C 7096 - 97
ARTICLES OF MERGER
OF
NATIONAL INCOME REALTY CORPORATION
A CALIFORNIA CORPORATION
INTO
TARRAGON REALTY INVESTORS, INC.
A NEVADA CORPORATION
------------------
Tarragon Realty Investors, Inc., a Nevada corporation ("TRII Nevada")
is the surviving entity in accordance with the requirements of Section 92A.200
of the Nevada Revised Statutes, hereby certifies as follows:
1. The name of the surviving entity is Tarragon Realty Investors, Inc.
and the place of its organization is the jurisdiction of Nevada. The name and
place of organization of the entity being merged into the surviving entity is
National Income Realty Corporation (the successor-in-interest to National Income
Realty Trust), organized in the jurisdiction of California, the laws of which
permit this merger.
2. An Agreement and Plan of Merger (the "Plan") between TRII Nevada and
National Income Realty Corporation ("National Income California") has been
approved and adopted by each entity that is a party to this merger.
3. The Plan was submitted to the shareholders of National Income
California by its Board of Directors pursuant to the requirements of Chapter 92
of the Nevada Revised Statutes. The Plan was submitted to the stockholders of
TRII Nevada by its Board of Directors pursuant to Chapter 92 of the Nevada
Revised Statutes.
4. The designation, percentage of total vote or number of votes
entitled to be cast and the total number of undisputed votes or undisputed total
percentage of owners' interest cast for and against the Plan by the holders of
Common Stock of National Income California entitled to vote on the Plan is as
follows:
1
<PAGE> 2
<TABLE>
UNDISPUTED VOTES OR TOTAL VOTES OR
TOTAL NUMBER OF TOTAL PERCENTAGE OF PERCENTAGE OF OWNER
UNDISPUTED VOTES OWNER INTEREST CASE INTEREST CAST
ENTITLED TO BE CAST FOR AGAINST
<S> <C> <C>
3,737,171 2,245,673 (60.1%) 64,210 (1.7%)
</TABLE>
and 78,920 shares (2.1%) abstained from voting.
5. The designation, percentage of total vote or number of votes
entitles to be cast and the total number of undisputed votes or undisputed total
percentage of owners' interest cast for the Plan by the holders of Common Stock
of TRII Nevada entitled to vote on the Plan is as follows:
<TABLE>
UNDISPUTED VOTES OR TOTAL VOTES OR
TOTAL NUMBER OF TOTAL PERCENTAGE OF PERCENTAGE OF OWNER
UNDISPUTED VOTES OWNER INTEREST CASE INTEREST CAST
ENTITLED TO BE CAST FOR AGAINST
<S> <C> <C>
1,272,180 714,508 (56.2%) 11,084 (0.9%)
</TABLE>
and 39,458 shares (3.1%) abstained from voting.
6. The number of votes or percentage of owners' interest cast for the
Plan by the owners of each class of interest of National Income California was
sufficient for approval by the owners of that class. The number of votes or
percentage of owners' interest cast for the Plan by the owners of each class of
interest of TRII Nevada was sufficient for approval by the owners of that class.
7. The Articles of Incorporation of TRII Nevada shall be the articles
of incorporation of the surviving corporation.
8. The effective date of the merger shall be the date when the
Secretary of State of the State of Nevada shall have issued a Certificate of
Merger or other similar document relating to such merger.
9. All entities party to this Merger have complied with the laws of
their respective jurisdiction of organization concerning this Merger.
10. The complete and executed Agreement and Plan of Merger is on file
at the principal place of business of TRII Nevada, the address of which is 3100
Monticello, Suite 200, Dallas, Texas 75205.
2
<PAGE> 3
11. A copy of the Plan will be furnished by TRII Nevada on request and
without cost to any stockholder of any corporation that is a party to the
merger.
DATED as of November 24, 1998.
TARRAGON REALTY INVESTORS, INC.
By: /s/ WILLIAM S. FRIEDMAN
---------------------------------
William S. Friedman, President
TARRAGON REALTY INVESTORS, INC.
By: /s/ KATHRYN MANSFIELD
----------------------------------
Kathryn Mansfield, Secretary
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
This instrument was acknowledged before me on the 24th day of
November, 1998 by William S. Friedman, President of Tarragon Realty
Investors, Inc.
/s/ ALYSSA J. BASSETT
-----------------------------------------------
Notary Public in and for said County and State
ALYSSA J. BASSETT
NOTARY PUBLIC, STATE OF NEW YORK
NO. 4980527
QUALIIFIED IN NEW YORK COUNTY
COMMISSION EXPIRES APRIL 22, 1999
STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the 24th day of November,
1998 by Kathryn Mansfield, Secretary of Tarragon Realty Investors, Inc.
/s/ MISTY MITCHELL
-----------------------------------------------
Notary Public in and for said County and State
MISTY MITCHELL
[SEAL] NOTARY PUBLIC
STATE OF TEXAS
My Comm. Exp. 2-27-99
3
<PAGE> 1
EXHIBIT 10.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Option Agreement") is made and
entered into on and as of the 17th day of December, 1998, but effective for all
purposes at the "Effective Date" (defined below) between TARRAGON REALTY
INVESTORS, INC., a Nevada corporation ("TRII"), which has its principal
executive offices located at 3100 Monticello Avenue, Suite 200, Dallas, Texas
75205 and WILLIAM S. FRIEDMAN, an individual (herein called "WSFriedman") whose
office address is 280 Park Avenue, East Building, 20th Floor, New York, New York
10017.
W I T N E S S E T H:
WHEREAS TRII and National Income Realty Trust are parties to that
certain Agreement and Plan of Merger dated June 5, 1998 (the "Merger Agreement")
which provides, subject to shareholder approval of each entity, for the
incorporation of NIRT, as a California corporation and the merger of that
California corporation, with and into TRII with TRII as the surviving entity;
WHEREAS, TRII, Tarragon Realty Advisors, Inc., a New York corporation
("TRA"), WSFriedman and Lucy N. Friedman are parties to that certain Stock
Purchase Agreement dated June 5, 1998 (the "Advisor Acquisition Agreement")
pursuant to which, at the closing thereof, TRII is to acquire from WSFriedman
and Lucy N. Friedman all of the Common Stock of TRA to the end that TRA will
become a wholly-owned subsidiary of TRII;
WHEREAS, the Merger Agreement has been approved by the respective
shareholders of TRII and NIRT, all conditions precedent in the Merger Agreement
have been satisfied, NIRT has been incorporated in the State of California under
the name National Income Realty Corporation and the Articles of Merger to
evidence the completion of the merger of NIRT have been filed with the Secretary
of State of Nevada, all of which is a condition precedent to the consummation of
the Advisor Acquisition Agreement;
WHEREAS, pursuant to the Advisor Acquisition Agreement, part of the
consideration is the issuance by TRII to WSFriedman and Lucy N. Friedman in
proportion to their relative ownership in TRA options to purchase a total of
350,000 shares of TRII Common Stock pursuant to Stock Option Agreements dated
the Closing Date in a form mutually acceptable to TRII and WSFriedman and Lucy
N. Friedman;
WHEREAS, TRII and WSFriedman desire to enter into this Option Agreement
as part of the consideration under the Advisor Acquisition Agreement, all under
the terms and subject to the conditions hereafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt, sufficiency and adequacy of which is hereby
acknowledged, including the
1
<PAGE> 2
consummation and closing of the Advisor Acquisition Agreement, the parties
hereto do hereby agree as follows:
1. Adoption of Recitals. The parties hereto do hereby adopt and confirm
the foregoing recitals in the same manner as if fully re-copied herein for all
purposes.
2. Effective Date. The "Effective Date" of this Option Agreement is
November 24, 1998, which is the date of closing of the Advisor Acquisition
Agreement.
3. Grant of Stock Options. Subject to the terms and conditions
contained herein, TRII hereby grants to WSFriedman separate options to purchase,
a total of 175,000 shares of TRII Common Stock, par value $0.01 per share (all
collectively the "Option Shares" and each an "Option Share") at an exercise
price of (i) $13.00 per share covering 75,000 shares, (ii) $15.00 per share
covering 50,000 shares, and (iii) $16.00 per share covering 50,000 shares (each
such price per share the "Applicable Purchase Price"). There shall not be any
requirement of this Option Agreement that WSFriedman purchase any Option Share
in any order and WSFriedman shall be free to select and exercise this Option
Agreement in portions in such manner as WSFriedman deems appropriate which may
consist of the lowest Applicable Purchase Price first or last or in any
combination desired by WSFriedman.
4. Period of Option. The "Option Period" shall be and mean the period
commencing on the date hereof and ending at 3:00 o'clock p.m. local Dallas,
Texas time on December 31, 2008 (the "Termination Time") and any portion of the
Option Shares unexercised after such Termination Time shall expire.
5. Exercise and Payment of Applicable Purchase Price. WSFriedman
(together with his successors and assigns hereunder called the "Holder") may
exercise his rights hereunder to purchase Option Shares as to the whole or any
part of the Option Shares (but not as to a fractional share of TRII Common
Stock) (a) by completing the Subscription Form, a copy of which is attached
hereto and made a part hereof (which written notice and subscription shall [i]
state the election to exercise the right and option to purchase and the number
of Option Shares and Applicable Purchase Price to which it is being exercised
and [ii] be signed by the person so exercising) and delivering such Subscription
Form to the Secretary of TRII; (b) by delivery to TRII of an investment letter
satisfactory to counsel for TRII which will restate the representations set
forth in paragraph 6 hereof; and (c) upon payment to TRII of the Applicable
Purchase Price for such portion of the Option Shares so purchased in cash or by
personal check or, at the option of the Holder, in TRII Common Stock theretofore
owned by the Holder (or by a combination of any of the foregoing). For purposes
of determining the amount if any, of the Applicable Purchase Price satisfied by
payment in shares of TRII Common Stock, such TRII Common Stock theretofore owned
shall be valued at its "Fair Market Value" on the date of exercise. For purposes
of this Option Agreement, the term "Fair Market Value" of a share of TRII Common
Stock on a particular date shall be the closing
2
<PAGE> 3
price of TRII Common Stock on the business day immediately preceding such date,
which closing price all be (i) if the TRII Common Stock is listed or admitted
for trading on any United States National Securities Exchange, the last reported
sale price of TRII Common Stock on such exchange as reported in any newspaper of
general circulation, (ii) if the TRII Common Stock is quoted on the National
Association of Securities Dealers, Inc. automated quotation system ("NASDAQ") or
any similar system of automated assimilation of quotations of securities prices
and common use, the mean between the closing high bid and low asked quotations
for such day of the TRII Common Stock on such system or (iii) if neither clause
(i) nor (ii) is applicable, a value determined by any fair and reasonable means
prescribed by the Board of Directors of the Company. Any TRII Common Stock
delivered in satisfaction of all or a portion of the exercise price shall be
appropriately endorsed for transfer and assignment to TRII.
6. Securities Laws. At the time of any exercise of this Option
Agreement and purchase of any Option Shares, the Board of Directors of TRII
shall, as a condition precedent to the exercise hereof, require from the Holder
(or in the event of the Holder's death, the Holder's legal representatives,
legatees or distributees) such written representations concerning the Holder's
(or their) intentions concerning retention or disposition of the shares of TRII
Common Stock being acquired by exercise under this Option Agreement and/or such
written covenants and agreements as to the manner of disposal of such shares as,
in the opinion of the Board of Directors of TRII, shall be necessary to ensure
that any disposition by such Holder, legal representatives, legatees or
distributees will not involve a violation of the Securities Act of 1933, as
amended or any similar or superseding statute or statutes, or any other
applicable statute or regulation, as then in effect and TRII shall not be
obligated to issue any shares subject to this Option Agreement if such issuance
would be in violation of any statute, law, rule or regulation whether federal or
state. In addition, as a condition of any issuance of any stock certificate for
Option Shares upon exercise, the Board of Directors may obtain such agreements
or undertakings, if any, as it may deem reasonably necessary or advisable to
assure compliance with any provisions of this Option Agreement or any law or
regulation including, but not limited to, any of the following:
(a) a representation and warranty by the Holder to TRII at the
time of exercise, that the Holder is acquiring the Option Shares to be
issued to him for investment and not with a view to , or for sale in
connection with the distribution of any such shares;
(b) a representation, warranty or agreement to be bound by any
legends that are, in the opinion of the Board of Directors, necessary
or appropriate to comply with the provisions of any securities law
deemed by the Board of Directors to be applicable to the issuance of
Option Shares and are endorsed upon the certificates representing such
shares.
3
<PAGE> 4
7. Adjustment of Number of Shares. The Option Shares covered by this
Option Agreement are shares of the Common Stock of TRII, par value $0.01 per
share as presently constituted but, if, and whenever, prior to delivery by TRII
of any of the certificates representing Option Shares which are covered by this
Option Agreement, TRII shall effect a subdivision or consolidation of shares or
any other capital readjustment, the payment of a stock dividend or other
increase or reduction of the number of shares of TRII Common Stock outstanding
without receiving compensation therefore in money, services or property, the
number of shares of TRII Common Stock then remaining subject to this Option
Agreement as Option Shares hereunder shall (a) in the event of an increase of
the number of outstanding shares, be proportionately increased and the cash
consideration payable as the Applicable Purchase Price per Option Share shall be
proportionately reduced if appropriate, and (b) in the event of a reduction in
the number of outstanding shares, be proportionately reduced and the Applicable
Purchase Price consideration payable per Option Share shall be proportionately
increased, if appropriate.
8. Merger and/or Consolidation. Upon the merger of one or more entities
into TRII or upon a consolidation of TRII and one or more entities in which TRII
shall be the surviving entity, thereafter, upon any exercise under this Option
Agreement to purchase Option Shares, the Holder shall, at no additional cost, be
entitled to receive in lieu of the number of shares of TRII Common Stock as to
which this Option Agreement shall then be so exercisable, the number and class
of shares of stock or other securities to which the Holder would have been
entitled pursuant to the terms of any such agreement of merger or consolidation
if, immediately prior to such merger or consolidation, the Holder had been the
Holder of record of a number of shares of TRII Common Stock equal to the number
of Option Shares as to which this Option Agreement remains to be so exercise
provided, that anything contained herein to the contrary notwithstanding,
(i) upon the dissolution or liquidation of TRII, or
(ii) upon any merger or consolidation where TRII is not
the surviving entity, or
(iii) if a sale of all or substantially all of the assets of TRII
occurs and it is contemplated that within a reasonable
period of time thereafter TRII will either be liquidated or
converted into a nonoperating entity or an extraordinary
dividend will be declared resulting in partial liquidation
of TRII, or
(iv) a merger or consolidation (other than a merger
effecting only a reincorporation of the entity in
another state or any other merger or consolidation in
which the equity owners of the surviving entity and
their proportionate interests therein immediately
thereafter the merger or consolidation are
substantially identical to the stockholders of TRII
and their proportionate interest therein immediately
4
<PAGE> 5
prior to the merger or consolidation) in which TRII is not
the surviving entity (or survives only as a subsidiary of
another entity in a transaction in which the stockholders of
the parent of TRII and their proportionate interest therein
immediate after the transaction not substantially identical
to the stockholders of TRII and their proportionate interest
therein immediately prior to the transaction), or
(v) if a transaction occurs in which another entity becomes the
owner of 50% or more of the total combined voting power of
all classes of equity securities of TRII,
then, in any of such events, the Holder shall be entitled to receive, upon
notice of exercise, in lieu of the number of Option Shares as to which this
Option Agreement remains unexercised, the number and class of shares of stock or
other securities, or the amount of cash, property or assets of the surviving or
resulting entity to which the Holder would have been entitled pursuant to the
terms of the agreement of merger or consolidation or dissolution or liquidation
or other transaction if immediately prior to such event the Holder had been the
Holder of record of the number of Option Shares then unexercised and there shall
be no further requirement that the Holder upon exercise pay any sums of money
above the Applicable Purchase Price then in effect, if any, under this Option
Agreement.
9. No Affect on Capital Structure. The Option Shares covered by this
Option Agreement shall not affect the right of TRII or any of its subsidiaries
to reclassify, recapitalize or otherwise change their respective capital or debt
structure or to merge, consolidate, convey any or all of their respective
assets, dissolve, liquidate, windup, or otherwise reorganize.
10. Further Adjustments. Except as expressly provided in this Option
Agreement, the issuance by TRII of shares of stock of any class or any
securities convertible into shares of any class for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights,
warrants to subscribe therefore or upon conversion of shares or obligations of
TRII convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of Option
Shares subject to this Option Agreement.
11. Rights of Holder. The Holder shall not be deemed for any purpose to
be a stockholder of TRII with respect to any of the Option Shares, except to the
extent that an exercise shall have occurred under this Option Agreement with
respect to Option Shares. Except as provided in this Option Agreement, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date a stock certificate is issued to the Holder pursuant to an
exercise for Option Shares. The existence of this Option Agreement shall not
affect in any way the right or power of TRII or its stockholders to make or
authorize any or all adjustments, recapitalizations,
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<PAGE> 6
reorganizations or other changes in TRII's capital structure or its business or
any merger or consolidation of TRII or any issue of bonds, debentures, preferred
or prior preference securities ahead of or affecting the Option Shares or the
rights thereof or the dissolution or liquidation of TRII or any sale or transfer
of all or any part of its assets or business, or any other act or proceeding,
whether of a similar character or otherwise.
12. Transferability. This Option Agreement is transferable by the
Holder and all rights granted hereunder may be assigned, pledged or hypothecated
in any way (whether by operation of law or otherwise) and shall be subject to
execution, attachment or similar process. Holder agrees not to sell, transfer or
otherwise dispose of this Option Agreement in violation of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
thereunder and any applicable state securities laws, and this Option Agreement
may be transferred only upon compliance by the Holder hereof with the Securities
Act, the rules and regulations thereunder and any applicable state securities
laws. At such time as TRII shall be satisfied that all of the conditions
relating to the transfer of this Option Agreement shall have been satisfied,
TRII shall promptly recognize the transfer of this Option Agreement, issue a new
instrument to the transferee or transferees of this Option Agreement and
register such transferee or transferees on the books and records of TRII as the
Holder of the instrument issued in exchange hereof. Notwithstanding any other
provision of this Option Agreement or the occurrence of any other event,
including the death of The Holder, the Option Period shall continue until the
Termination Time and shall not be subject to earlier termination by reason of
any particular event. If the Holder dies during the Option Period, the person or
persons to whom his rights under this Option Agreement shall pass, whether by
will or by the applicable laws of descent and distribution, may have and possess
and exercise all rights under this Option Agreement to the extent the Holder was
entitled to so exercise it on the date of this death, for the balance of the
Option Period.
13. Notices. Any notice or other communication required or permitted to
be given by this Option Agreement or any other document or instrument referred
to herein or executed in connection herewith must be given in writing (which may
be by telecopy, followed by mail or personal delivery) and must be personally
delivered or mail by prepaid, certified or registered mail, to the party to whom
such notice or communication is directed, at the address of such party set forth
opposite his or its name on the signature page to this Option Agreement. Subject
to the other provisions of this Option Agreement, any party may change its
address (or redesignate the person to whom such notice shall be delivered) for
purposes of this Option Agreement by giving notice of such change to the other
party pursuant to this provision. In all instances, any notice or other
communication required or permitted to be given by this Option Agreement shall
only be effective upon actual receipt thereof by the person intended to receive
same.
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<PAGE> 7
14. Modification or Waiver. This Option Agreement may be amended,
modified or superseded and any of the terms, covenants, representations,
warranties or conditions herein may be waived, but only by a written instrument
executed by the parties hereto. No waiver of any nature, in any one or more
instances, shall be deemed to be or be construed as a further or continued
waiver of any condition or any breach of any other term, covenant,
representation or warranty in this Option Agreement. This Option Agreement and
each provision hereof may not waived, altered, amended or modified, except in
writing, duly executed by the parties hereto. Failure to exercise and no delay
in exercising any right or power hereunder shall operate as a waiver thereof.
15. Benefits. This Option Agreement shall inure to the benefit of and
be binding upon the Holder, his successors and assigns and TRII and its
successors and assigns.
16. Further Cooperation. To the extent that either TRII's or the
Holder's further approval or other action is deemed necessary or desirable by
the other party in order to effectuate the terms and conditions of this Option
Agreement and the matters set forth herein, the parties hereby agree to execute
all reasonable documents and take all action reasonably requested by the other
party to effectuate the terms and conditions of this Option Agreement.
17. Governing Law and Enforcement. This Option Agreement shall be
construed, enforced in accordance with and governed by the laws of the State of
Texas, the state in which it was negotiated, executed and delivered, without
regard to any principles of law involving conflicts of laws. Should any clause,
sentence, section or paragraph of this Option Agreement be judicially or
administratively declared to be invalid, unenforceable or void under the laws of
the State of Texas or the United States of America, or any agency or subdivision
thereof, such decision shall not have the effect of invalidating or voiding the
remainder of this Option Agreement and the parties hereto agree that the part or
parts of this Option Agreement so held to be invalid, unenforceable or void
shall be deemed to have been deleted herefrom and the remainder shall have the
same force and effect as if such part or parts had never been included herein.
In the event any party hereto shall fail or perform any of its obligations under
this Option Agreement, such party hereby agrees to pay all reasonable expenses,
including reasonable attorneys' fees, which may be incurred by any party hereto
which is successful in enforcing this Option Agreement.
18. Captions. The headings or captions of this Option Agreement have
been included for ease of reference only and are not to be considered in the
construction or interpretation of this Option Agreement or any clause contained
herein.
19. Entire Agreement; Counterparts. This Option Agreement and the
agreements and documents referred to herein constitute the entire agreement
between the parties hereto concerning the subject matter hereof, and supersedes
all prior
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<PAGE> 8
memoranda, correspondence, conversations and agreements. This Option Agreement
may be executed in several identical counterparts, and together shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Option Agreement
as of the date and year first above written.
Address for Notices
3100 Monticello Avenue TARRAGON REALTY INVESTORS,
Suite 200 INC.
Dallas, Texas 75205
(214) 599-2200
(214) 599-2220 (fax) By: /s/ Kathryn Mansfield
------------------------------
Kathryn Mansfield,
Executive Vice
President, Corporate
Counsel and Secretary
280 Park Avenue
East Building, 20th Floor
New York, New York 10017
(212) 949-5000
(212) 949-8001 (fax) /s/ William S. Friedman
------------------------------
William S. Friedman
8
<PAGE> 9
SUBSCRIPTION FORM
TO: , Secretary Dated:
----------------------------------- ----------------
Tarragon Realty Investors, Inc.
- -----------------------------------
- -----------------------------------
The undersigned hereby irrevocably elects to exercise the right to
purchase _________ shares of Common Stock, par value $0.01 per share, of
Tarragon Realty Investors, Inc., or its successors evidenced by that certain
Stock Option Agreement dated____________ ____, 1998 between Tarragon Realty
Investors, Inc. and William S. Friedman (the "Option Agreement") and hereby
makes payment of $_________________ in payment of the "Applicable Purchase
Price" for such number of "Option Shares" designated above, calculated on the
basis of
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
.
- -------------------------------------------------------------------------------
-----------------------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
------------------------------------------------
(Please typewrite or print in block letters)
Address:
- -----------------------------------
- -----------------------------------
- -----------------------------------
Signature:
-----------------------------------
9
<PAGE> 1
EXHIBIT 10.3
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Option Agreement") is made and
entered into on and as of the 17th day of December, 1998, but effective for all
purposes at the "Effective Date" (defined below) between TARRAGON REALTY
INVESTORS, INC., a Nevada corporation ("TRII"), which has its principal
executive offices located at 3100 Monticello Avenue, Suite 200, Dallas, Texas
75205 and LUCY N. FRIEDMAN, an individual (herein called "LNFriedman") whose
office address is 280 Park Avenue, East Building, 20th Floor, New York, New York
10017.
W I T N E S S E T H:
WHEREAS TRII and National Income Realty Trust are parties to that
certain Agreement and Plan of Merger dated June 5, 1998 (the "Merger Agreement")
which provides, subject to shareholder approval of each entity, for the
incorporation of NIRT, as a California corporation and the merger of that
California corporation, with and into TRII with TRII as the surviving entity;
WHEREAS, TRII, Tarragon Realty Advisors, Inc., a New York corporation
("TRA"), LNFriedman and William S. Friedman are parties to that certain Stock
Purchase Agreement dated June 5, 1998 (the "Advisor Acquisition Agreement")
pursuant to which, at the closing thereof, TRII is to acquire from William S.
Friedman and LNFriedman all of the Common Stock of TRA to the end that TRA will
become a wholly-owned subsidiary of TRII;
WHEREAS, the Merger Agreement has been approved by the respective
shareholders of TRII and NIRT, all conditions precedent in the Merger Agreement
have been satisfied, NIRT has been incorporated in the State of California under
the name National Income Realty Corporation and the Articles of Merger to
evidence the completion of the merger of NIRT have been filed with the Secretary
of State of Nevada, all of which is a condition precedent to the consummation of
the Advisor Acquisition Agreement;
WHEREAS, pursuant to the Advisor Acquisition Agreement, part of the
consideration is the issuance by TRII to William S. Friedman and LNFriedman in
proportion to their relative ownership in TRA options to purchase a total of
350,000 shares of TRII Common Stock pursuant to Stock Option Agreements dated
the Closing Date in a form mutually acceptable to TRII and William S. Friedman
and LNFriedman;
WHEREAS, TRII and LNFriedman desire to enter into this Option Agreement
as part of the consideration under the Advisor Acquisition Agreement, all under
the terms and subject to the conditions hereafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt, sufficiency and adequacy of which is hereby
acknowledged, including the
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<PAGE> 2
consummation and closing of the Advisor Acquisition Agreement, the parties
hereto do hereby agree as follows:
1. Adoption of Recitals. The parties hereto do hereby adopt and confirm
the foregoing recitals in the same manner as if fully re-copied herein for all
purposes.
2. Effective Date. The "Effective Date" of this Option Agreement is
November 24, 1998, which is the date of closing of the Advisor Acquisition
Agreement.
3. Grant of Stock Options. Subject to the terms and conditions
contained herein, TRII hereby grants to LNFriedman separate options to purchase,
a total of 175,000 shares of TRII Common Stock, par value $0.01 per share (all
collectively the "Option Shares" and each an "Option Share") at an exercise
price of (i) $13.00 per share covering 75,000 shares, (ii) $15.00 per share
covering 50,000 shares, and (iii) $16.00 per share covering 50,000 shares (each
such price per share the "Applicable Purchase Price"). There shall not be any
requirement of this Option Agreement that LNFriedman purchase any Option Share
in any order and LNFriedman shall be free to select and exercise this Option
Agreement in portions in such manner as LNFriedman deems appropriate which may
consist of the lowest Applicable Purchase Price first or last or in any
combination desired by LNFriedman.
4. Period of Option. The "Option Period" shall be and mean the period
commencing on the date hereof and ending at 3:00 o'clock p.m. local Dallas,
Texas time on December 31, 2008 (the "Termination Time") and any portion of the
Option Shares unexercised after such Termination Time shall expire.
5. Exercise and Payment of Applicable Purchase Price. LNFriedman
(together with her successors and assigns hereunder called the "Holder") may
exercise her rights hereunder to purchase Option Shares as to the whole or any
part of the Option Shares (but not as to a fractional share of TRII Common
Stock) (a) by completing the Subscription Form, a copy of which is attached
hereto and made a part hereof (which written notice and subscription shall [i]
state the election to exercise the right and option to purchase and the number
of Option Shares and Applicable Purchase Price to which it is being exercised
and [ii] be signed by the person so exercising) and delivering such Subscription
Form to the Secretary of TRII; (b) by delivery to TRII of an investment letter
satisfactory to counsel for TRII which will restate the representations set
forth in paragraph 6 hereof; and (c) upon payment to TRII of the Applicable
Purchase Price for such portion of the Option Shares so purchased in cash or by
personal check or, at the option of the Holder, in TRII Common Stock theretofore
owned by the Holder (or by a combination of any of the foregoing). For purposes
of determining the amount if any, of the Applicable Purchase Price satisfied by
payment in shares of TRII Common Stock, such TRII Common Stock theretofore owned
shall be valued at its "Fair Market Value" on the date of exercise. For purposes
of this Option Agreement, the term "Fair Market Value" of a share of TRII Common
Stock on a particular date shall be the closing
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<PAGE> 3
price of TRII Common Stock on the business day immediately preceding such date,
which closing price all be (i) if the TRII Common Stock is listed or admitted
for trading on any United States National Securities Exchange, the last reported
sale price of TRII Common Stock on such exchange as reported in any newspaper of
general circulation, (ii) if the TRII Common Stock is quoted on the National
Association of Securities Dealers, Inc. automated quotation system ("NASDAQ") or
any similar system of automated assimilation of quotations of securities prices
and common use, the mean between the closing high bid and low asked quotations
for such day of the TRII Common Stock on such system or (iii) if neither clause
(i) nor (ii) is applicable, a value determined by any fair and reasonable means
prescribed by the Board of Directors of the Company. Any TRII Common Stock
delivered in satisfaction of all or a portion of the exercise price shall be
appropriately endorsed for transfer and assignment to TRII.
6. Securities Laws. At the time of any exercise of this Option
Agreement and purchase of any Option Shares, the Board of Directors of TRII
shall, as a condition precedent to the exercise hereof, require from the Holder
(or in the event of the Holder's death, the Holder's legal representatives,
legatees or distributees) such written representations concerning the Holder's
(or their) intentions concerning retention or disposition of the shares of TRII
Common Stock being acquired by exercise under this Option Agreement and/or such
written covenants and agreements as to the manner of disposal of such shares as,
in the opinion of the Board of Directors of TRII, shall be necessary to ensure
that any disposition by such Holder, legal representatives, legatees or
distributees will not involve a violation of the Securities Act of 1933, as
amended or any similar or superseding statute of statutes, or any other
applicable statute or regulation, as then in effect and TRII shall not be
obligated to issue any shares subject to this Option Agreement if such issuance
would be in violation of any statute, law, rule or regulation whether federal or
state. In addition, as a condition of any issuance of any stock certificate for
Option Shares upon exercise, the Board of Directors may obtain such agreements
or undertakings, if any, as it may deem reasonably necessary or advisable to
assure compliance with any provisions of this Option Agreement or any law or
regulation including, but not limited to, any of the following:
(a) a representation and warranty by the Holder to TRII at the
time of exercise, that the Holder is acquiring the Option Shares to be
issued to him for investment and not with a view to , or for sale in
connection with the distribution of any such shares;
(b) a representation, warranty or agreement to be bound by any
legends that are, in the opinion of the Board of Directors, necessary
or appropriate to comply with the provisions of any securities law
deemed by the Board of Directors to be applicable to the issuance of
Option Shares and are endorsed upon the certificates representing such
shares.
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<PAGE> 4
7. Adjustment of Number of Shares. The Option Shares covered by this
Option Agreement are shares of the Common Stock of TRII, par value $0.01 per
share as presently constituted but, if, and whenever, prior to delivery by TRII
of any of the certificates representing Option Shares which are covered by this
Option Agreement, TRII shall effect a subdivision of consolidation of shares or
any other capital readjustment, the payment of a stock dividend or other
increase or reduction of the number of shares of TRII Common Stock outstanding
without receiving compensation therefore in money, services or property, the
number of shares of TRII Common Stock then remaining subject to this Option
Agreement as Option Shares hereunder shall (a) in the event of an increase of
the number of outstanding shares, be proportionately increased and the cash
consideration payable as the Applicable Purchase Price per Option Share shall be
proportionately reduced if appropriate, and (b) in the event of a reduction in
the number of outstanding shares, be proportionately reduced and the Applicable
Purchase Price consideration payable per Option Share shall be proportionately
increased, if appropriate.
8. Merger and/or Consolidation. Upon the merger of one or more entities
into TRII or upon a consolidation of TRII and one or more entities in which TRII
shall be the surviving entity, thereafter, upon any exercise under this Option
Agreement to purchase Option Shares, the Holder shall, at no additional cost, be
entitled to receive in lieu of the number of shares of TRII Common Stock as to
which this Option Agreement shall then be so exercisable, the number and class
of shares of stock or other securities to which the Holder would have been
entitled pursuant to the terms of any such agreement of merger or consolidation
if, immediately prior to such merger or consolidation, the Holder had been the
Holder of record of a number of shares of TRII Common Stock equal to the number
of Option Shares as to which this Option Agreement remains to be so exercise
provided, that anything contained herein to the contrary notwithstanding,
(i) upon the dissolution or liquidation of TRII, or
(ii) upon any merger or consolidation where TRII is not
the surviving entity, or
(iii) if a sale of all or substantially all of the assets of TRII
occurs and it is contemplated that within a reasonable
period of time thereafter TRII will either be liquidated or
converted into a nonoperating entity or an extraordinary
dividend will be declared resulting in partial liquidation
of TRII, or
(iv) a merger or consolidation (other than a merger
effecting only a reincorporation of the entity in
another state or any other merger or consolidation in
which the equity owners of the surviving entity and
their proportionate interests therein immediately
thereafter the merger or consolidation are
substantially identical to the stockholders of TRII
and their proportionate interest therein immediately
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<PAGE> 5
prior to the merger or consolidation) in which TRII is not
the surviving entity (or survives only as a subsidiary of
another entity in a transaction in which the stockholders of
the parent of TRII and their proportionate interest therein
immediate after the transaction not substantially identical
to the stockholders of TRII and their proportionate interest
therein immediately prior to the transaction), or
(v) if a transaction occurs in which another entity becomes the
owner of 50% or more of the total combined voting power of
all classes of equity securities of TRII,
then, in any of such events, the Holder shall be entitled to receive, upon
notice of exercise, in lieu of the number of Option Shares as to which this
Option Agreement remains unexercised, the number and class of shares of stock or
other securities, or the amount of cash, property or assets of the surviving or
resulting entity to which the Holder would have been entitled pursuant to the
terms of the agreement of merger or consolidation or dissolution or liquidation
or other transaction if immediately prior to such event the Holder had been the
Holder of record of the number of Option Shares then unexercised and there shall
be no further requirement that the Holder upon exercise pay any sums of money
above the Applicable Purchase Price then in effect, if any, under this Option
Agreement.
9. No Affect on Capital Structure. The Option Shares covered by this
Option Agreement shall not affect the right of TRII or any of its subsidiaries
to reclassify, recapitalize or otherwise change their respective capital or debt
structure or to merge, consolidate, convey any or all of their respective
assets, dissolve, liquidate, windup, or otherwise reorganize.
10. Further Adjustments. Except as expressly provided in this Option
Agreement, the issuance by TRII of shares of stock of any class or any
securities convertible into shares of any class for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights,
warrants to subscribe therefore or upon conversion of shares or obligations of
TRII convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of Option
Shares subject to this Option Agreement.
11. Rights of Holder. The Holder shall not be deemed for any purpose to
be a stockholder of TRII with respect to any of the Option Shares, except to the
extent that an exercise shall have occurred under this Option Agreement with
respect to Option Shares. Except as provided in this Option Agreement, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date a stock certificate is issued to the Holder pursuant to an
exercise for Option Shares. The existence of this Option Agreement shall not
affect in any way the right or power of TRII or its stockholders to make or
authorize any or all adjustments, recapitalizations,
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<PAGE> 6
reorganizations or other changes in TRII's capital structure or its business or
any merger or consolidation of TRII or any issue of bonds, debentures, preferred
or prior preference securities ahead of or affecting the Option Shares or the
rights thereof or the dissolution or liquidation of TRII or any sale or transfer
of all or any part of its assets or business, or any other act or proceeding,
whether of a similar character or otherwise.
12. Transferability. This Option Agreement is transferable by the
Holder and all rights granted hereunder may be assigned, pledged or hypothecated
in any way (whether by operation of law or otherwise) and shall be subject to
execution, attachment or similar process. Holder agrees not to sell, transfer or
otherwise dispose of this Option Agreement in violation of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
thereunder and any applicable state securities laws, and this Option Agreement
may be transferred only upon compliance by the Holder hereof with the Securities
Act, the rules and regulations thereunder and any applicable state securities
laws. At such time as TRII shall be satisfied that all of the conditions
relating to the transfer of this Option Agreement shall have been satisfied,
TRII shall promptly recognize the transfer of this Option Agreement, issue a new
instrument to the transferee or transferees of this Option Agreement and
register such transferee or transferees on the books and records of TRII as the
Holder of the instrument issued in exchange hereof. Notwithstanding any other
provision of this Option Agreement or the occurrence of any other event,
including the death of The Holder, the Option Period shall continue until the
Termination Time and shall not be subject to earlier termination by reason of
any particular event. If the Holder dies during the Option Period, the person or
persons to whom his rights under this Option Agreement shall pass, whether by
will or by the applicable laws of descent and distribution, may have and possess
and exercise all rights under this Option Agreement to the extent the Holder was
entitled to so exercise it on the date of this death, for the balance of the
Option Period.
13. Notices. Any notice or other communication required or permitted to
be given by this Option Agreement or any other document or instrument referred
to herein or executed in connection herewith must be given in writing (which may
be by telecopy, followed by mail or personal delivery) and must be personally
delivered or mail by prepaid, certified or registered mail, to the party to whom
such notice or communication is directed, at the address of such party set forth
opposite her or its name on the signature page to this Option Agreement. Subject
to the other provisions of this Option Agreement, any party may change its
address (or redesignate the person to whom such notice shall be delivered) for
purposes of this Option Agreement by giving notice of such change to the other
party pursuant to this provision. In all instances, any notice or other
communication required or permitted to be given by this Option Agreement shall
only be effective upon actual receipt thereof by the person intended to receive
same.
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<PAGE> 7
14. Modification or Waiver. This Option Agreement may be amended,
modified or superseded and any of the terms, covenants, representations,
warranties or conditions herein may be waived, but only by a written instrument
executed by the parties hereto. No waiver of any nature, in any one or more
instances, shall be deemed to be or be construed as a further or continued
waiver of any condition or any breach of any other term, covenant,
representation or warranty in this Option Agreement. This Option Agreement and
each provision hereof may not waived, altered, amended or modified, except in
writing, duly executed by the parties hereto. Failure to exercise and no delay
in exercising any right or power hereunder shall operate as a waiver thereof.
15. Benefits. This Option Agreement shall inure to the benefit of and
be binding upon the Holder, her successors and assigns and TRII and its
successors and assigns.
16. Further Cooperation. To the extent that either TRII's or the
Holder's further approval or other action is deemed necessary or desirable by
the other party in order to effectuate the terms and conditions of this Option
Agreement and the matters set forth herein, the parties hereby agree to execute
all reasonable documents and take all action reasonably requested by the other
party to effectuate the terms and conditions of this Option Agreement.
17. Governing Law and Enforcement. This Option Agreement shall be
construed, enforced in accordance with and governed by the laws of the State of
Texas, the state in which it was negotiated, executed and delivered, without
regard to any principles of law involving conflicts of laws. Should any clause,
sentence, section or paragraph of this Option Agreement be judicially or
administratively declared to be invalid, unenforceable or void under the laws of
the State of Texas or the United States of America, or any agency or subdivision
thereof, such decision shall not have the effect of invalidating or voiding the
remainder of this Option Agreement and the parties hereto agree that the part or
parts of this Option Agreement so held to be invalid, unenforceable or void
shall be deemed to have been deleted herefrom and the remainder shall have the
same force and effect as if such part or parts had never been included herein.
In the event any party hereto shall fail or perform any of its obligations under
this Option Agreement, such party hereby agrees to pay all reasonable expenses,
including reasonable attorneys' fees, which may be incurred by any party hereto
which is successful in enforcing this Option Agreement.
18. Captions. The headings or captions of this Option Agreement have
been included for ease of reference only and are not to be considered in the
construction or interpretation of this Option Agreement or any clause contained
herein.
19. Entire Agreement; Counterparts. This Option Agreement and the
agreements and documents referred to herein constitute the entire agreement
between the parties hereto concerning the subject matter hereof, and supersedes
all prior
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<PAGE> 8
memoranda, correspondence, conversations and agreements. This Option Agreement
may be executed in several identical counterparts, and together shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Option Agreement
as of the date and year first above written.
Address for Notices
3100 Monticello Avenue TARRAGON REALTY INVESTORS,
Suite 200 INC.
Dallas, Texas 75205
(214) 599-2200
(214) 599-2220 (fax) By: /s/KATHRYN MANSFIELD
--------------------
Name: Kathryn Mansfield
-------------------
Title: Executive Vice President
280 Park Avenue
East Building, 20th Floor
New York, New York 10017
(212) 949-5000
(212) 949-8001 (fax) /s/LUCY N. FRIEDMAN
-------------------
Lucy N. Friedman
8
<PAGE> 9
SUBSCRIPTION FORM
TO: , Secretary Dated:
----------------------------- -----------
Tarragon Realty Investors, Inc.
- --------------------------------------
- --------------------------------------
The undersigned hereby irrevocably elects to exercise the right to
purchase __________ shares of Common Stock, par value $0.01 per share, of
Tarragon Realty Investors, Inc., or its successors evidenced by that certain
Stock Option Agreement dated__________ _____, 1998 between Tarragon Realty
Investors, Inc. and Lucy N. Friedman (the "Option Agreement") and hereby makes
payment of $______________ in payment of the "Applicable Purchase Price" for
such number of "Option Shares" designated above, calculated on the basis of
-----
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
---------------------------------------
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
------------------------------------------------
(Please typewrite or print in block letters)
Address:
- -----------------------------
- -----------------------------
- -----------------------------
Signature:
------------------------
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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into on
and as of the 17th day of December, 1998, but effective for all purposes at the
"Effective Date" (defined below) between TARRAGON REALTY INVESTORS, INC., a
Nevada corporation ("TRII") which has its principal executive offices located at
3100 Monticello Avenue, Suite 200, Dallas, Texas 75205 and WILLIAM S. FRIEDMAN,
an individual (herein called "Employee") whose office address is 280 Park
Avenue, East Building, 20th Floor, New York, New York 10017.
W I T N E S S E T H:
WHEREAS, TRII is engaged in the business of investing in equity
interests in real estate and financing real estate and real estate related
activities through mortgage loans including first, wrap-around and junior
mortgage loans and has elected to be treated as a real estate investment trust
("REIT") but has from time to time in the past and may again in the future
engage in any and all aspects of the real estate business including acquisition,
development and construction (all collectively the "Real Estate Business");
WHEREAS, Employee has been the President and a director of
TRII since its inception;
WHEREAS, TRII is the ultimate successor-in-interest to Vinland Property
Trust ("Vinland") originally established July 18, 1973, which was incorporated
as a California corporation and merged into TRII on July 25, 1997;
WHEREAS, TRII and National Income Realty Trust are parties to that
certain Agreement and Plan of Merger dated June 5, 1998 (the "Merger Agreement")
which provides, subject to shareholder approval of each entity, for the
incorporation of NIRT as a California corporation and the merger of that
California corporation with and into TRII with TRII as the surviving entity;
WHEREAS, TRII, Tarragon Realty Advisors, Inc., a New York corporation
("TRA"), Employee and Lucy Friedman are all parties to that certain Stock
Purchase Agreement dated June 5, 1998 (the "Advisor Acquisition Agreement");
WHEREAS, the Merger Agreement has been approved by the respective
shareholders of TRII and NIRT, all conditions precedent in the Merger Agreement
have been satisfied, NIRT has been incorporated in the State of California under
the name National Income Realty Corporation and the Articles of Merger to
evidence the completion of the merger of NIRT or have been filed with the
Secretary of State of Nevada, all of which is a condition precedent to the
consummation of the Advisor Acquisition Agreement;
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WHEREAS, the entry into this Agreement between TRII and Employee on
terms mutually agreeable to TRII and Employee for a term of four years at a
salary of $300,000 per year is part of the consideration under the Advisor
Acquisition Agreement;
WHEREAS, TRII desires to employ Employee as a senior executive officer
and Employee is willing to accept such employment, all under the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt, sufficiency and adequacy of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
1. Adoption of Recitals. The parties hereto do hereby adopt and confirm
the foregoing recitals in the same manner as if fully recopied herein for all
purposes.
2. Employment. TRII hereby employs Employee for the entire term of this
Agreement as set forth in Section 3 below to serve TRII in the capacity of Chief
Executive Officer and President of TRII, filling such other positions of
responsibility and description as the Board of Directors of TRII may from time
to time determine, and Employee hereby agrees to accept such employment and to
perform the services specified herein, upon the terms and conditions herein set
forth.
3. Term. The employment of Employee hereunder shall commence to be
effective on and as of November 24, 1998 (the "Effective Date") and shall
continue for an initial period of time of at least four (4) full calendar years
after the Effective Date expiring December 31, 2002 (the "Initial Period") and
thereafter this Agreement shall automatically renew and continue on a
year-to-year basis unless terminated by written notice from either party to this
Agreement to the other party hereto of non-renewal at least thirty (30) calendar
days prior to the expiration of the Initial Period or thirty (30) calendar days
prior to the termination of any subsequent annual extension of such period of
employment, unless otherwise previously terminated as set forth herein.
4. Compensation. In consideration of services to be
rendered by Employee during the term of this Agreement, TRII shall
compensate Employee as follows:
a. Base Compensation. While Employee is in the employ of TRII
under the provisions of this Agreement, TRII shall pay to Employee a
base compensation at the rate of $300,000 per annum during each year of
the Initial Period, payable no less frequently than 1/12th per month;
during each annual period after the Initial Period, TRII shall pay to
Employee a base
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compensation at the rate of $300,000 per annum, payable no less
frequently than 1/12th per month, or at such higher rate of base
compensation as may be set from time to time by the Board of Directors.
b. Bonus. Employee may receive, in addition to his
base compensation, such bonuses as may be deemed appropriate
by the Board of Directors of the Company, in their sole
discretion.
c. Other Benefits. During the term of this Agreement, TRII
will provide for Employee the following:
i. Health Insurance; Benefit Plans. TRII will allow
Employee to participate in any benefit plan of TRII or any of
its subsidiaries covering health/major medical insurance and
any self-funded retirement or "401-k" plan on the same basis
as any other senior executive officer of the Company.
ii. Other Insurance. TRII will provide life insurance
and disability insurance for Employee on the same basis or
pursuant to the same arrangements now or hereafter existing
for the benefit of senior executive officers of TRII and its
subsidiaries and Employee generally at any time during the
term of this Agreement.
iii. Vacation and Other Benefits. Employee shall be
entitled to participate in benefits generally extended from
time to time to senior executive officers of TRII and its
subsidiaries and reasonable vacations consistent with TRII and
its subsidiaries' policies.
5. Duties; Extent of Services. Employee shall devote substantially all
of his business time, attention and energy to TRII and its subsidiaries and
shall not, during the term of employment, be actively engaged in any competitive
managerial or employment capacity in any other business activity for gain,
profit or other pecuniary advantage; provided, however, that the foregoing does
not prohibit Employee from making investments that do not materially interfere
with the performance of his duties for TRII and its subsidiaries and, provided,
further, that TRII recognizes that Employee has certain other business interests
in real estate which may require some devotion of time by Employee. Within such
parameters, Employee shall serve TRII and its subsidiaries in such responsible
capacities as the Board of Directors or other senior executive officers of TRII
may, from time to time, determine and in such capacities shall serve TRII and
its subsidiaries faithfully and to the best of his ability discharge the duties
undertaken by him hereunder under the direction of the Board of Directors and
other senior executive officers of TRII, subject at all times to the discretion
and control of the Board of Directors of TRII.
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Employee, who presently is an elected member of the Board of Directors, shall
also perform the duties of a director and/or member of any committee of
directors of TRII to which Employee is elected of selected. Employ agrees that
he shall not, during the term of this Agreement, whether as an employee,
director, officer, shareholder, owner, partner or otherwise, directly or
indirectly, engage in any business or businesses competitive to that conducted
by TRII or any of its subsidiaries or affiliates. Nothing herein contained shall
prevent Employee from owning or dealing in stocks or interests of any entity
actively traded on a recognized exchange which may be so competitive (without
participating in the management or control of such entity), provided that
Employee's holdings shall not at any time exceed five percent (5%) of the
outstanding equity voting securities of such entity. Employee may from time to
time request permission of the Board of Directors of TRII to engage in other
business activities (which may include service as a director of other entities)
which do not interfere with or prevent his faithful performance of the
responsibilities assigned to him by the Board of Directors or other senior
executive officers of TRII. Any such permission granted must be in writing to
become effective and be pursuant to and approved at a duly constituted meeting
of the Board of Directors. Notwithstanding the foregoing or anything else to the
contrary contained herein, it is recognized that Employee is an equity owner of
and/or directly involved with businesses and entities listed and described on
Exhibit "1" annexed hereto (all of which are collectively sometimes referred to
herein as the "Friedman Entities"). The continuation of Employee's ownership
and/or involvement with the Friedman Entities, including Employee's active
participation in the respective operations of the Friedman Entities, shall not
be deemed to be a conflict with, or breach or violation of this Agreement or to
create, by itself, any right of termination or cancellation of this Agreement.
6. Termination. Employee's employment hereunder may be terminated at
any time during the term of this Agreement, but only on the terms and conditions
set forth below, provided, however, that notwithstanding such termination or any
other provision of this Agreement, the provisions of Sections 8, 9, 10 and 11
shall survive the term and termination of this Agreement and Employee and TRII
shall continue to be bound thereby:
a. Mutual Agreement. Employee's employment hereunder
may be terminated at any time by mutual agreement on terms to
be negotiated and reduced to writing at the time of such
termination.
b. Death. Employee's employment hereunder and this
Agreement shall terminate automatically upon the death of
Employee.
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c. Disability. Employee's employment hereunder shall terminate
and this Agreement shall terminate automatically upon the total
disability of Employee. For purposes of this Agreement "total
disability" shall be deemed to have occurred if in the sole judgment of
TRII, acting in good faith by a vote of at least 80% in number of the
members of the Board of Directors, Employee shall have been unable to
perform the duties of employment due to mental or physical incapacity
for a period of 90 consecutive calendar days.
d. Cause. TRII may terminate Employee for "Cause." For
purposes of this Agreement, the term "Cause" shall be deemed to be
conduct by Employee constituting " mismanagement" (defined below),
willful misconduct or fraud during the term of this Agreement directly
involving TRII and the determination made in good faith by a vote of at
least 50% in number of the members of the Board of Directors of TRII or
the occurrence of events which, in the determination made in good faith
by a vote of at least 50% in number of the members of the Board of
Directors of TRII render Employee unable to devote full time and
undivided attention to his duties under this Agreement (other than
death, disability or illness). The term "gross mis-management" shall be
and mean (i) that Employee shall be convicted of, or shall admit in
writing or publicly, to a crime involving the business or property of
TRII or any of its subsidiaries, (ii) the absence other than by reason
of illness, injury or vacation from his duties without the consent of
TRII for more than thirty (30) consecutive days, (iii) the negligence
by Employee in the performance of his duties under this Agreement or
otherwise wilfully failing to comply with the terms and conditions of
this Agreement, or (iv) the engagement by Employee in any activity that
would, in the reasonable opinion of at least 50% of the members of the
Board of Directors of TRII, constitute a direct conflict of interest
with TRII and/or its business, except for matters involving the
Friedman Entities. In the event of any such termination for Cause of
Employee's employment hereunder, such termination shall not affect any
of TRII's or Employee's other rights and/or remedies and any such
termination for Cause may be made by TRII upon notification to the
Employee in writing of the occurrence of any of the events specified in
this paragraph within fifteen (15) calendar days prior to such
termination.
e. Requested Resignation. The employment of Employee
will be terminated in the event of Employee's termination
without Cause by 80% in number of the members of the Board of
Directors of TRII.
f. Employee's Voluntary Resignation. The employment of
Employee will be terminated in the event of Employee's
voluntary written resignation from employment.
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7. Effects of Termination. Upon severance or termination of employment
of Employee for any reason and without regard to any attribution of fault to any
person, Employee shall, upon such severance or termination:
a. return to TRII and its subsidiaries all items of property
owned or leased by TRII and its subsidiaries in Employee's possession
including, without limitation, all credit cards, cash advances, work
papers, computer programs or tapes, computers, customer lists, keys to
facilities, vehicles or other items of transportation; and
b. have such other rights to which Employee may be entitled
under the provisions of this Agreement.
Notwithstanding any subpart of this Section 7, upon severance or termination of
employment, Employee will make himself available, when reasonably requested, for
testimony in any lawsuit or administrative proceeding that may be brought
against TRII and/or its subsidiaries after severance or termination of his
employment. In the event Employee is called upon to render such services, TRII
agrees to reasonably compensate Employee for such services.
8. Compensation upon Termination. If the employment of Employee under
this Agreement is terminated pursuant to the provisions of paragraph (a) under
Section 6 above, the terms of the negotiated mutual settlement shall encompass
and provide for compensation to be paid to Employee and no further compensation
will be payable to Employee except as specifically provided therein. In the
event of the termination of this Agreement by reason of paragraph (b) of Section
6 above, this Agreement shall terminate and no further compensation shall be
paid to Employee other than the base compensation accrued through the date of
termination, provided, however, that Employee's estate, heirs and beneficiaries,
as applicable, shall be entitled to receive the greater of (i) on a monthly
basis from TRII a payment equivalent to the greater of $25,000 per month for the
balance of the term of this Agreement through the Initial Period or, if an
annual renewal thereof, through the end of the then current calendar year, which
is the compensation which would have been payable to Employee (except for his
death) or one-twelfth of the monthly payment most recently approved by the
Board, and (ii) such other benefits specifically provided to them or Employee
under any benefit plan then in effect involving the Employee. In the event of
termination of this Agreement by reason of paragraphs (c), (d), (e) or (f) under
Section 6 above, Employee shall receive on a monthly basis from TRII a payment
of $25,000 per month or the greater of (x) the remaining number of months in the
Initial Period or, if such Initial Period has passed, then the then annual
renewal of this Agreement ending on December 31 of the calendar year of such
year, or (y) an equivalent number of months covered by Section 10 below which
are observed by Employee, not to exceed 36 calendar months.
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9. Disclosure of Information. The Employee hereby acknowledges that he
has had and will continue to have access to certain trade secrets and
confidential information of TRII and its subsidiaries and affiliates (all
collectively the "Entities") and that such information constitutes the valuable,
special and unique property of the Entities. Employee will not, during or after
the term of employment hereunder, disclose any such trade secrets or
confidential information to any person or entity for any reason or purpose
whatsoever, except as may be required by law.
10. Restrictive Covenant; Agreement Not to Compete. Employee and TRII
agree that the covenants, agreements and restrictions contained herein are
necessary to protect the business good will, business interests and proprietary
rights of TRII and that the parties to this Agreement have independently
discussed, reviewed and had the opportunity of legal counsel to consider this
Agreement and have stipulated that the covenant contained in this Section 10 is
an integral part of an enforceable agreement, specifically the Agreement, and
the covenants contained herein were made at the same time that the Agreement was
consummated by the parties hereto, that the covenants contained herein are fair
and reasonable in (i) geographical area, (ii) length of time, and (iii) scope of
activity being restrained. Employee expressly agrees that while this Agreement
is in effect, and following the termination of employment with TRII pursuant to
Section 6 above, Employee agrees that for a period of three calendar years
following the date of termination, Employee shall not, except as provided below,
"engage," directly or indirectly, in a "Competing Business." For purposes of the
foregoing sentence, the term "engage" shall mean and include activities that
directly further the business of any business enterprise (regardless of whether
it is a corporation, partnership, sole proprietorship, limited liability or
other business association entity) which constitutes a "Competing Business"
whether Employee serves as a principal, owner, director, consultant, stockholder
or employee of any such business enterprise. "Competing Business" shall mean a
business enterprise regardless of how constituted as a sole proprietorship,
corporation, limited liability company, general or limited partnership or
otherwise which is engaged in the business of investing in equity interests in
real estate and financing real estate and real estate related activities through
mortgage loans including first, wrap-around and junior mortgage loans in the
geographical areas or states where TRII is actively engaged in such business
during the period covered by this Agreement or at the termination hereof, as
applicable. For the purposes of this Agreement, the term "Person" means any
individual, corporation, partnership, unincorporated association, firm, trust,
joint stock company, joint venture or other entity of whatever nature. For the
purposes of this Agreement, the term "affiliate" means, with respect to any
Person, any Person that directly or indirectly controls, or is controlled by or
is under common control with, such designated Person and, without limiting the
generality of the
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foregoing, shall include any Person who, directly or indirectly, is the legal or
beneficial owner of or controls 10% or more of any class of equity securities of
the designated Person. For the purpose of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise. Notwithstanding the foregoing, Employee shall not be
deemed to be engaged in a Competing Business solely by reason of:
a. ownership of an economic interest in a Competing Business
on the Effective Date of this Agreement or continuing to hold such
interest after the date of this Agreement or receipt of any payments in
respect of such economic interest; or
b. continuing or becoming, after termination of this
Agreement, an officer, director, consultant or employee of any of the
Friedman Entities or performing services or duties after termination of
this Agreement requested by any of the Friedman Entities (other than,
in each instance specified in this paragraph, those which require
Employee to render assistance to a Competing Business that furthers its
competitive position in the areas specified in the definition of
"Competing Business"); or
c. beneficial ownership as an investment, acquired after the
date of this Agreement, of not more than 5% of the equity securities of
any entity that constitutes a "Competing Business" if such entity is
subject to the reporting requirements imposed by Sections 13 or 15 of
the Securities Exchange Act of 1934, as amended.
It is intended that the restrictions set forth in this section shall not be held
invalid or unenforceable because of the scope of the territory or actions
subject thereto or restricted thereby for the period of time within which such
restriction is operative, but any judgment of any court of competent
jurisdiction may redefine or further limit the territory included in the
definition of "Competing Business," increase the exceptions set forth in the
immediately preceding paragraph and/or reduce the period of time during which
such restriction is enforceable.
11. Agreement Not to Solicit Employees. Following termination of
employment with TRII hereunder, Employee agrees that for a period of one (1)
calendar year, Employee will not, either alone or on behalf of any business
engaged in a "Competing Business" solicit or induce, or in any manner attempt to
solicit or induce, any person employed by, or an agent of, TRII or its
affiliates to terminate his or her contract of employment or agency (including
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those employees at will), as the case may be, with TRII or one of its affiliates
(other than Employee's secretary or direct assistant).
12. Injunctive Relief; Independent Covenants. The covenants contained
in Sections 8, 9, 10 and 11 are independent and separate and, in the event any
provision contained in this Agreement is declared invalid or illegal, the other
provisions shall not be affected or impaired thereby and shall remain valid and
enforceable. In the event of a breach or threatened breach by Employee of any of
Sections 9, 10 or 11 of this Agreement, TRII shall be entitled to an injunction
to prevent irreparable injury to TRII or any of its affiliates. In the event of
a breach by TRII of Section 8 of this Agreement, the Employee shall be entitled
to an injunction to prevent irreparable injury to the Employee. Nothing herein
contained shall be construed as prohibiting any of TRII or any affiliate or the
Employee from pursuing any other remedies available to them for such breach or
threatened breach, including recovery of damages.
13. Right of First Refusal. While Employee is in the employ of TRII
under the provisions of this Agreement, regardless of whether any such duty or
obligation might exist absent this Agreement, Employee shall provide to TRII the
right to first acquire or engage in (and Employee shall refrain from acting with
respect to, until the expiration of ten calendar days following the date of
written notice to TRII by Employee of such opportunity) any opportunity relating
to any aspect of the real estate business received by Employee in any manner
from any source, in a manner which might directly or indirectly confer a benefit
of any kind upon Employee or the Friedman Entities in all instances where such
knowledge, information or opportunity is received in the first instance by
Employee (i) from his activities on behalf of TRII or its Subsidiaries, or (ii)
while Employee is directly and exclusively engaged in performing his duties as a
director or officer of TRII in TRII's business and is received as a direct
result of such activities, or (iii) in a written communication the express terms
of which evidence that it is intended to be received, and it was in fact
intended to be received, only by an officer or director of TRII in that
capacity, unless otherwise approved by a majority of the disinterested members
of the Board of Directors of TRII. The Employee also hereby agrees to apprise
TRII in writing of such opportunities in the real estate business and to impart
to TRII such knowledge, information, advice, and expertise relating to possible
opportunities in the real estate business as he may receive after the date of
this Agreement. In the event TRII fails to notify Employee of its election to
exercise any such right of first refusal within ten (10) calendar days following
receipt of such notice, TRII shall be deemed to have elected not to exercise
such right of first refusal. The right of first refusal contained herein shall
remain in full force and effect throughout the term of this Agreement except
with respect to those real estate
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opportunities for which TRII has elected not to exercise such right of first
refusal. In the event that TRII ever elects not to exercise its right of first
refusal and the real estate opportunity is then available to Employee, Employee
may take up such opportunity on such basis as he deems appropriate without
further obligation to TRII, so long as such real estate opportunity does not
interfere with the covenant of Employee in Section 5 above to devote
substantially all of his business time, attention and energy to TRII and its
subsidiaries.
14. Management of Real Estate Assets. During the term of this
Agreement, Employee will utilize his best lawful efforts to transfer to TRII
and/or its subsidiaries the right and opportunity to manage any real estate
assets now or hereafter controlled by Employee or his family which are of a type
and in a location where TRII is then managing one or more similar properties on
terms mutually acceptable to Employee and TRII.
15. Notices. Any notice or other communication required or permitted to
be given by this Agreement or any other document or instrument referred to
herein or executed in connection herewith must be given in writing (which may be
by telecopy, followed by mail or personal delivery) and must be personally
delivered or mailed by prepaid, certified or registered mail, to the party to
whom such notice or communication is directed, at the address of such party set
forth opposite his or its name on the signature page to this Agreement. Subject
to the other provisions of this Agreement, any party may change its address (or
re-designate the person to whom such notice shall be delivered) for purposes of
this Agreement by giving notice of such change to the other party pursuant to
this section. In all instances, any notice or other communication required or
permitted to be given by this Agreement shall only be effective upon actual
receipt thereof by the person intended to receive same.
16. Modification or Waiver. This Agreement may be amended, modified or
superseded and any of the terms, covenants, representations, warranties or
conditions herein may be waived, but only by a written instrument executed by
the parties hereto. No waiver of any nature, in any one or more instance, shall
be deemed to be or be construed as a further or continued waiver of any
condition or any breach of any other term, covenant, representation or warranty
in this Agreement. This Agreement and each provision hereof may not be waived,
altered, amended or modified, except in writing, duly executed by the parties
hereto. No failure to exercise and no delay in exercising, any right or power
hereunder shall operate as a waiver thereof.
17. Benefit. This Agreement shall inure to the benefit of and be
binding upon Employee, his heirs and personal repre sentatives and TRII, its
successors and assigns. Neither this Agreement nor the rights and obligations
created hereunder may be
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assigned by either party without the prior written consent of the
other party.
18. Further Cooperation. To the extent that either TRII's or Employee's
further approval or other action is deemed necessary or desirable by the other
party in order to effectuate the terms and conditions of this Agreement and the
matters set forth herein, the parties hereby agree to execute all reasonable
documents and take all actions reasonably requested by the other party to
effectuate the terms and conditions of this Agreement.
19. Governing Law and Enforcement. This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of Texas,
the state in which it was negotiated, executed and delivered, without regard to
any principals of law involving conflicts of laws. Should any clause, sentence,
section or paragraph of this Agreement be judicially or administratively
declared to be invalid, unenforceable or void under the laws of the State of
Texas or the United States of America, or any agency or subdivision thereof,
such decision shall not have the effect of invalidating or voiding the remainder
of this Agreement and the parties hereto agree that the part or parts of this
Agreement so held to be invalid, unenforceable or void shall be deemed to have
been deleted here from and the remainder shall have the same force and effect as
if such part or parts had never been included herein. In the event any party
hereto shall fail to perform any of its obligations under this Agreement, such
party hereby agrees to pay all reasonable expenses, including reasonable
attorneys' fees, which may be incurred by any party hereto which is successful
in enforcing this Agreement.
20. Entire Agreement; Counterparts. This Agreement and the agreements
referred to herein constitute the entire agreement between the parties hereto
concerning the subject matter hereof, and supersedes all prior memoranda,
correspondence, conversations, and agreements. This Agreement may be executed
in several identical counterparts that together shall constitute but one and the
same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
Address for Notices: TARRAGON REALTY INVESTORS, INC.
3100 Monticello Avenue
Suite 200
Dallas, Texas 75205
(214) 599-2200 By: /s/ Kathryn Mansfield
(214) 599-2220 (FAX) ---------------------------------
Kathryn Mansfield,
Executive Vice President,
Corporate Counsel and
Secretary
280 Park Avenue, EMPLOYEE
East Building, 20th Floor
New York, New York 10017
(212) 949-5000
(212) 949-8001 (FAX) /s/ William S. Friedman
--------------------------------------
William S. Friedman
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EXHIBIT "1"
List and Description of Friedman Entities
Beachwold Partners, L.P., a Texas limited partnership.
FEI 75-25682952
Tarragon Capital Corporation, a Texas corporation.
FEI 75-2340089
Tarragon Partners, Ltd., a Texas limited partnership.
FEI 75-2340088
Tarragon Investment partners, L.P., a Texas limited
partnership. FEI
---------------
CAI Plaza Associates, L.P., a Florida limited partnership.
FEI
---------------
Crossroads LLC, a New Mexico limited liability company. FEI
---------------
Galaxy Associates, a Texas partnership. FEI
---------------
Linbar Associates, a Tennessee limited partnership. FEI
---------------
Gaslight Associates, L.P., an Alabama limited partnership FEI
---------------
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EXHIBIT 10.5
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Option Agreement") is made and
entered into on and as of the 17th day of December, 1998, but effective for all
purposes at the "Effective Date" (defined below) between TARRAGON REALTY
INVESTORS, INC., a Nevada corporation ("TRII"), which has its principal
executive offices located at 3100 Monticello Avenue, Suite 200, Dallas, Texas
75205 and WILLIAM S. FRIEDMAN, an individual (herein called "Grantee") whose
office address is 280 Park Avenue, East Building, 20th Floor, New York, New York
10017.
W I T N E S S E T H:
WHEREAS TRII and National Income Realty Trust are parties to that
certain Agreement and Plan of Merger dated June 5, 1998 (the "Merger Agreement")
which provides, subject to shareholder approval of each entity, for the
incorporation of NIRT, as a California corporation and the merger of that
California corporation, with and into TRII with TRII as the surviving entity;
WHEREAS, TRII, Tarragon Realty Advisors, Inc., a New York corporation
("TRA"), Grantee and Lucy Friedman are parties to that certain Stock Purchase
Agreement dated June 5, 1998 (the "Advisor Acquisition Agreement");
WHEREAS, the Merger Agreement has been approved by the respective
shareholders of TRII and NIRT, all conditions precedent in the Merger Agreement
have been satisfied, NIRT has been incorporated in the State of California under
the name National Income Realty Corporation and the Articles of Merger to
evidence the completion of the merger of NIRT have been filed with the Secretary
of State of Nevada, all of which is a condition precedent to the consummation of
the Advisor Acquisition Agreement;
WHEREAS, entry into an Employment Agreement between TRII and Grantee on
terms mutually agreeable to TRII and the Grantee (the "Employment Agreement") is
part of the consideration under, and a condition of, the Advisor Acquisition
Agreement;
WHEREAS, pursuant to such Employment Agreement, the entry into this
Option Agreement between TRII and Grantee in a form mutually acceptable is a
part of the consideration under the Advisor Acquisition Agreement;
WHEREAS, TRII and the Grantee desire to enter into this Option
Agreement in consideration of the Employment Agreement and the Advisor
Acquisition Agreement, all under the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants contained herein, and other good and valuable
consideration, the receipt, sufficiency and adequacy of which is hereby
acknowledged, including the consummation and closing of the Advisor Acquisition
Agreement, the parties hereto do hereby agree as follows:
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1. Adoption of Recitals. The parties hereto do hereby adopt and confirm
the foregoing recitals in the same manner as if fully re-copied herein for all
purposes.
2. Effective Date. The "Effective Date" of this Option Agreement is
November 24, 1998, which is the date of closing of the Advisor Acquisition
Agreement and the Effective Date of execution of the Employment Agreement.
3. Grant of Stock Options. Subject to the terms and conditions
contained herein, TRII hereby grants to Grantee separate options to purchase, a
total of 450,000 shares of TRII Common Stock, par value $0.01 per share (all
collectively the "Option Shares" and each an "Option Share") at an exercise
price of (i) $12.00 per share covering 250,000 shares, and (ii) $15.00 per share
covering 200,000 shares (each such price per share the "Applicable Purchase
Price"). There shall not be any requirement of this Option Agreement that
Grantee purchase any Option Share in any order and Grantee shall be free to
select and exercise this Option Agreement in portions in such manner as Grantee
deems appropriate which may consist of the lowest Applicable Purchase Price
first or last or in any combination desired by Grantee.
4. Period of Option. The "Option Period" shall be and mean the period
commencing on the date hereof and ending at 3:00 o'clock p.m. local Dallas,
Texas time on December 31, 2008 (the "Termination Time") and any portion of the
Option Shares unexercised after such Termination Time shall expire.
5. Exercise and Payment of Applicable Purchase Price. Grantee may
exercise his rights hereunder to purchase Option Shares as to the whole or any
part of the Option Shares (but not as to a fractional share of TRII Common
Stock) (a) by completing the Subscription Form, a copy of which is attached
hereto and made a part hereof (which written notice and subscription shall [i]
state the election to exercise the right and option to purchase and the number
of Option Shares and Applicable Purchase Price to which it is being exercised
and [ii] be signed by the person so exercising) and delivering such Subscription
Form to the Secretary of TRII; (b) by delivery to TRII of an investment letter
satisfactory to counsel for TRII which will restate the representations set
forth in paragraph 6 hereof; and (c) upon payment to TRII of the Applicable
Purchase Price for such portion of the Option Shares so purchased in cash or by
personal check or, at the option of Grantee, in TRII Common Stock theretofore
owned by Grantee (or by a combination of any of the foregoing). For purposes of
determining the amount if any, of the Applicable Purchase Price satisfied by
payment in shares of TRII Common Stock, such TRII Common Stock theretofore owned
shall be valued at its "Fair Market Value" on the date of exercise. For purposes
of this Option Agreement, the term "Fair Market Value" of a share of TRII Common
Stock on a particular date shall be the closing price of TRII Common Stock on
the business day immediately preceding such date, which closing price all be (i)
if the TRII Common Stock is listed or admitted for trading on any United States
National Securities Exchange, the last reported sale price of TRII Common Stock
on such
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exchange as reported in any newspaper of general circulation, (ii) if the TRII
Common Stock is quoted on the National Association of Securities Dealers, Inc.
automated quotation system ("NASDAQ") or any similar system of automated
assimilation of quotations of securities prices and common use, the mean between
the closing high bid and low asked quotations for such day of the TRII Common
Stock on such system or (iii) if neither clause (i) nor (ii) is applicable, a
value determined by any fair and reasonable means prescribed by the Board of
Directors of the Company. Any TRII Common Stock delivered in satisfaction of all
or a portion of the exercise price shall be appropriately endorsed for transfer
and assignment to TRII.
6. Securities Laws. At the time of any exercise of this Option
Agreement and purchase of any Option Shares, the Board of Directors of TRII
shall, as a condition precedent to the exercise hereof, require from the Grantee
(or in the event of Grantee's death, Grantee's legal representatives, legatees
or distributees) such written representations concerning Grantee's (or their)
intentions concerning retention or disposition of the shares of TRII Common
Stock being acquired by exercise under this Option Agreement and/or such written
covenants and agreements as to the manner of disposal of such shares as, in the
opinion of the Board of Directors of TRII, shall be necessary to ensure that any
disposition by such holder, legal representatives, legatees or distributees will
not involve a violation of the Securities Act of 1933, as amended or any similar
or superseding statute or statutes, or any other applicable statute or
regulation, as then in effect and TRII shall not be obligated to issue any
shares subject to this Option Agreement if such issuance would be in violation
of any statute, law, rule or regulation whether federal or state. In addition,
as a condition of any issuance of any stock certificate for Option Shares upon
exercise, the Board of Directors may obtain such agreements or undertakings, if
any, as it may deem reasonably necessary or advisable to assure compliance with
any provisions of this Option Agreement or any law or regulation including, but
not limited to, any of the following:
(a) a representation and warranty by the Grantee to TRII at
the time of exercise, that Grantee is acquiring the Option Shares to be
issued to him for investment and not with a view to , or for sale in
connection with the distribution of any such shares;
(b) a representation, warranty or agreement to be bound by any
legends that are, in the opinion of the Board of Directors, necessary
or appropriate to comply with the provisions of any securities law
deemed by the Board of Directors to be applicable to the issuance of
Option Shares and are endorsed upon the certificates representing such
shares.
7. Adjustment of Number of Shares. The Option Shares covered by this
Option Agreement are shares of the Common Stock of TRII, par value $0.01 per
share as presently constituted but, if, and whenever, prior to delivery by TRII
of any of the
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certificates representing Option Shares which are covered by this Option
Agreement, TRII shall effect a subdivision or consolidation of shares or any
other capital readjustment, the payment of a stock dividend or other increase or
reduction of the number of shares of TRII Common Stock outstanding without
receiving compensation therefore in money, services or property, the number of
shares of TRII Common Stock then remaining subject to this Option Agreement as
Option Shares hereunder shall (a) in the event of an increase of the number of
outstanding shares, be proportionately increased and the cash consideration
payable as the Applicable Purchase Price per Option Share shall be
proportionately reduced if appropriate, and (b) in the event of a reduction in
the number of outstanding shares, be proportionately reduced and the Applicable
Purchase Price consideration payable per Option Share shall be proportionately
increased, if appropriate.
8. Merger and/or Consolidation. Upon the merger of one or more entities
into TRII or upon a consolidation of TRII and one or more entities in which TRII
shall be the surviving entity, thereafter, upon any exercise under this Option
Agreement to purchase Option Shares, the Grantee shall, at no additional cost,
be entitled to receive in lieu of the number of shares of TRII Common Stock as
to which this Option Agreement shall then be so exercisable, the number and
class of shares of stock or other securities to which the Grantee would have
been entitled pursuant to the terms of any such agreement of merger or
consolidation if, immediately prior to such merger or consolidation, the Grantee
had been the holder of record of a number of shares of TRII Common Stock equal
to the number of Option Shares as to which this Option Agreement remains to be
so exercise provided, that anything contained herein to the contrary
notwithstanding,
(i) upon the dissolution or liquidation of TRII, or
(ii) upon any merger or consolidation where TRII is not
the surviving entity, or
(iii) if a sale of all or substantially all of the assets of TRII
occurs and it is contemplated that within a reasonable
period of time thereafter TRII will either be liquidated or
converted into a nonoperating entity or an extraordinary
dividend will be declared resulting in partial liquidation
of TRII, or
(iv) a merger or consolidation (other than a merger
effecting only a reincorporation of the entity in
another state or any other merger or consolidation in
which the equity owners of the surviving entity and
their proportionate interests therein immediately
thereafter the merger or consolidation are
substantially identical to the stockholders of TRII
and their proportionate interest therein immediately
prior to the merger or consolidation) in which TRII
is not the surviving entity (or survives only as a
subsidiary of another entity in a transaction in
which the stockholders of the parent of TRII and
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their proportionate interest therein immediate after the
transaction not substantially identical to the stock holders
of TRII and their proportionate interest therein immediately
prior to the transaction), or
(v) if a transaction occurs in which another entity becomes the
owner of 50% or more of the total combined voting power of
all classes of equity securities of TRII,
then, in any of such events, the Grantee shall be entitled to receive, upon
notice of exercise, in lieu of the number of Option Shares as to which this
Option Agreement remains unexercised, the number and class of shares of stock or
other securities, or the amount of cash, property or assets of the surviving or
resulting entity to which Grantee would have been entitled pursuant to the terms
of the agreement of merger or consolidation or dissolution or liquidation or
other transaction if immediately prior to such event the Grantee had been the
holder of record of the number of Option Shares then unexercised and there shall
be no further requirement that the Grantee upon exercise pay any sums of money
above the Applicable Purchase Price then in effect, if any, under this Option
Agreement.
9. No Affect on Capital Structure. The Option Shares covered by this
Option Agreement shall not affect the right of TRII or any of its subsidiaries
to reclassify, recapitalize or otherwise change their respective capital or debt
structure or to merge, consolidate, convey any or all of their respective
assets, dissolve, liquidate, windup, or otherwise reorganize.
10. Further Adjustments. Except as expressly provided in this Option
Agreement, the issuance by TRII of shares of stock of any class or any
securities convertible into shares of any class for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights,
warrants to subscribe therefore or upon conversion of shares or obligations of
TRII convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of Option
Shares subject to this Option Agreement.
11. Rights of Grantee. The Grantee shall not be deemed for any purpose
to be a stockholder of TRII with respect to any of the Option Shares, except to
the extent that an exercise shall have occurred under this Option Agreement with
respect to Option Shares. Except as provided in this Option Agreement, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date a stock certificate is issued to Grantee pursuant to an
exercise for Option Shares. The existence of this Option Agreement shall not
affect in any way the right or power of TRII or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in TRII's capital structure or its business or any merger or
consolidation of TRII or any issue of bonds, debentures, preferred or prior
preference securities ahead of or affecting the Option Shares or the rights
thereof or
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the dissolution or liquidation of TRII or any sale or transfer of all or any
part of its assets or business, or any other act or proceeding, whether of a
similar character or otherwise.
12. Limitation on Transferability. This Option Agreement is not
transferable by Grantee other than to a trust for the benefit of the immediate
family members of Grantee or a charitable organization, by will or the laws of
descent and distribution, and this Option Agreement may be exercised during the
lifetime of Grantee only by Grantee or, if Grantee is legally incapacitated, by
his guardian or legal representative, regardless of any community property
interest therein of Grantee's spouse or such spouse's successors-in-interest. In
the event of Grantee's death, the Option Shares shall be exercisable by
Grantee's executor, heirs or other legal representative under the same terms and
conditions of this Option Agreement. Except as stated above, this Option
Agreement and all rights granted hereunder shall not be transferred, assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment or similar process. Any
attempt to transfer, assign, pledge or hypothecate, or otherwise dispose of this
Option Agreement or such rights contrary to the provisions of this Option
Agreement, or upon levy or any attachment or similar process upon such Option
Agreement or such rights, such purported transfer shall become null, void and of
no force or effect. Notwithstanding any other provision of this Option Agreement
or the occurrence of any other event, including the death of Grantee, the Option
Period shall continue until the Termination Time and shall not be subject to
earlier termination by reason of any particular event. If Grantee dies during
the Option Period, the person or persons to whom his rights under this Option
Agreement shall pass, whether by will or by the applicable laws of descent and
distribution, may have and possess and exercise all rights under this Option
Agreement to the extent the Grantee was entitled to so exercise it on the date
of this death, for the balance of the Option Period.
13. Notices. Any notice or other communication required or permitted to
be given by this Option Agreement or any other document or instrument referred
to herein or executed in connection herewith must be given in writing (which may
be by telecopy, followed by mail or personal delivery) and must be personally
delivered or mail by prepaid, certified or registered mail, to the party to whom
such notice or communication is directed, at the address of such party set forth
opposite his or its name on the signature page to this Option Agreement. Subject
to the other provisions of this Option Agreement, any party may change its
address (or redesignate the person to whom such notice shall be delivered) for
purposes of this Option Agreement by giving notice of such change to the other
party pursuant to this provision. In all instances, any notice or other
communication required or permitted to be given by this Option Agreement shall
only be effective upon actual receipt thereof by the person intended to receive
same.
14. Modification or Waiver. This Option Agreement may be
amended, modified or superseded and any of the terms, covenants,
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representations, warranties or conditions herein may be waived, but only by a
written instrument executed by the parties hereto. No waiver of any nature, in
any one or more instances, shall be deemed to be or be construed as a further or
continued waiver of any condition or any breach of any other term, covenant,
representation or warranty in this Option Agreement. This Option Agreement and
each provision hereof may not waived, altered, amended or modified, except in
writing, duly executed by the parties hereto. Failure to exercise and no delay
in exercising any right or power hereunder shall operate as a waiver thereof.
15. Benefits. This Option Agreement shall inure to the benefit of and
be binding upon the Grantee, his heirs and personal representatives and TRII and
its successors and assigns. Subject to the limitations on transferability
contained in Section 12 hereof, no assignment or transfer of this Option
Agreement, whether voluntary or involuntary, by operation of law (including of
descent or distribution) shall vest in the assignee or transferee any interest
or right whatsoever in this Option Agreement.
16. Further Cooperation. To the extent that either TRII's or Grantee's
further approval or other action is deemed necessary or desirable by the other
party in order to effectuate the terms and conditions of this Option Agreement
and the matters set forth herein, the parties hereby agree to execute all
reasonable documents and take all action reasonably requested by the other party
to effectuate the terms and conditions of this Option Agreement.
17. Governing Law and Enforcement. This Option Agreement shall be
construed, enforced in accordance with and governed by the laws of the State of
Texas, the state in which it was negotiated, executed and delivered, without
regard to any principles of law involving conflicts of laws. Should any clause,
sentence, section or paragraph of this Option Agreement be judicially or
administratively declared to be invalid, unenforceable or void under the laws of
the State of Texas or the United States of America, or any agency or subdivision
thereof, such decision shall not have the effect of invalidating or voiding the
remainder of this Option Agreement and the parties hereto agree that the part or
parts of this Option Agreement so held to be invalid, unenforceable or void
shall be deemed to have been deleted herefrom and the remainder shall have the
same force and effect as if such part or parts had never been included herein.
In the event any party hereto shall fail or perform any of its obligations under
this Option Agreement, such party hereby agrees to pay all reasonable expenses,
including reasonable attorneys' fees, which may be incurred by any party hereto
which is successful in enforcing this Option Agreement.
18. Captions. The headings or captions of this Option Agreement have
been included for ease of reference only and are not to be considered in the
construction or interpretation of this Option Agreement or any clause contained
herein.
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19. Entire Agreement; Counterparts. This Option Agreement and the
agreements and documents referred to herein constitute the entire agreement
between the parties hereto concerning the subject matter hereof, and supersedes
all prior memoranda, correspondence, conversations and agreements. This Option
Agreement may be executed in several identical counterparts, and together shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Option Agreement
as of the date and year first above written.
Address for Notices
3100 Monticello Avenue TARRAGON REALTY INVESTORS,
Suite 200 INC.
Dallas, Texas 75205
(214) 599-2200
(214) 599-2220 (fax) By: /s/ Kathryn Mansfield
-----------------------------------
Kathryn Mansfield,
Executive Vice
President, Corporate
Counsel and Secretary
280 Park Avenue GRANTEE:
East Building, 20th Floor
New York, New York 10017
(212) 949-5000
(212) 949-8001 (fax) /s/ William S. Friedman
---------------------------------------
William S. Friedman
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SUBSCRIPTION FORM
TO: , Secretary Dated:
----------------------------------- ----------------
Tarragon Realty Investors, Inc.
- -----------------------------------
- -----------------------------------
The undersigned hereby irrevocably elects to exercise the right to
purchase _________ shares of Common Stock, par value $0.01 per share, of
Tarragon Realty Investors, Inc., or its successors evidenced by that certain
Stock Option Agreement dated ________ ___, 1998 between Tarragon Realty
Investors, Inc. and William S. Friedman (the "Option Agreement") and hereby
makes payment of $_________________ in payment of the "Applicable Purchase
Price" for such number of "Option Shares" designated above, calculated on the
basis of
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- --------------------------------------------------------------------------------
.
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INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
------------------------------------------------
(Please typewrite or print in block letters)
Address:
- -----------------------------------
- -----------------------------------
- -----------------------------------
Signature:
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