Exhibit 10.1

 

SECOND AMENDMENT TO

INTEREST CONTRIBUTION AGREEMENT

 

THIS SECOND AMENDMENT TO INTEREST CONTRIBUTION AGREEMENT (this “Second
Amendment”) is made and entered into as of this 31st day of March 2017 (the
“Effective Date”), by and among FIRST CAPITAL REAL ESTATE OPERATING PARTNERSHIP,
LP, a Delaware limited partnership (“FCRE OP” or the “Contributor”), FIRST
CAPITAL REAL ESTATE TRUST INCORPORATED, a Maryland corporation (“First Capital”
and together with FCRE OP, each an “FC Party” and collectively the “FC
Parties”), TOWNSHIP NINE OWNER, LLC, a Delaware limited liability company (“T9
JV”), CAPITOL STATION HOLDINGS, LLC, a California limited liability company (“T9
Holdings”), CAPITOL STATION MEMBER, LLC, a Delaware limited liability company
(“T9 Member”), CAPITOL STATION 65 LLC, a California limited liability company
(“T9 Fee” and together with T9 JV, T9 Holdings and T9 Member collectively
referred to herein as the “T9 Parties”), AVALON JUBILEE, LLC, a New Mexico
limited liability company (“Avalon Fee”), PRESIDENTIAL REALTY OPERATING
PARTNERSHIP LP, a Delaware limited partnership (“PRES OP”), and PRESIDENTIAL
REALTY CORPORATION, a Delaware corporation (the “Company” or “Presidential” and
together with PRES OP, each a “Presidential Party” and together the
“Presidential Parties”). Each of the T9 Parties and Avalon Fee is referred to
herein, individually, as a “Contributed Entity” and collectively referred to
herein as the “Contributed Entities”. Each of the FC Entities, the Contributed
Entities and the Presidential Entities are referred to herein collectively as
the “Parties” and individually as a “Party.”

 

RECITALS

 

WHEREAS, the Parties are parties to a certain Interest Contribution Agreement
dated as of December 16, 2016, as amended on January 6, 2017 (the “Agreement”);

 

WHEREAS, FCRE OP contemplates that it will deliver to PRES OP or its designee an
Assignment and Assumption of Membership Interest (“Assignment and Assumption
Agreement”) relating to sixty-six (66%) percent of its ownership interests in T9
JV promptly following the Effective Date, subject to the terms and conditions of
the Agreement, as amended by this Second Amendment;

 

WHEREAS, in connection with this Second Amendment, FCRE OP, T9 JV and T-9
DEVELOPERS, LLC, a Delaware limited liability company (“T-9 Developers”), will
enter into that certain First Amendment to the Limited Liability Company
Agreement of T9 JV (the “T9 JV Amendment”) promptly following the Effective
Date;

 

WHEREAS, in connection with the delivery of the Assignment and Assumption
Agreement, PRES OP and the Company will sign a joinder to the Limited Liability
Company Agreement of T9 JV admitting PRES OP or its designee as a member of T9
JV; and

 

WHEREAS, the Parties desire to amend the Agreement as set forth below.

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants
and obligations contained in this Second Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:

 

 

 

 

1.Section 1.5(f) of the Agreement is hereby amended and restated to read as
follows:

 

(f) (i) The FC Parties hereby acknowledge and agree that until such time as the
FC Parties shall have delivered to Presidential an updated appraisal by a
reputable “qualified” appraiser describing the fair market value of the FC/T9
Interest as being equal to or greater than the amount of the EFMV-FC/T9 Interest
(the “T9 Property Appraisal”) and the Existing T9 Loan is refinanced or extended
on terms acceptable to the Presidential Parties and the FC Parties in their
reasonable discretion (the “T9 Loan Extension/Refinancing”) then Presidential
shall hold-back one hundred percent (100%) of the PRES OP Units in an amount
equal to the POP/T9 Interest Purchase Price ($32,649,000) (the “Holdback
Units”).

 

(ii)       Upon (x) receipt of the T9 Property Appraisal showing an appraised
value equal to the EFMV-FC/T9 Interest ($85,457,000) and (y) the successful
completion of the refinancing or extension of the T9 Loan on terms acceptable to
the Presidential Parties and the FC Parties in their reasonable discretion,
Presidential shall immediately issue and deliver to the Contributor a portion of
the Holdback Units (based upon an assumed price of $1.00 per PRES OP Unit) equal
to (A) the actual T9 Property Appraisal value minus (B) the sum of (y) the
actual outstanding balance of the T9 Loan Extension/Refinancing and (z) any
actual and reasonable associated legal costs incurred by Presidential in seeking
the successful completion of the refinancing or extension of the T9 Loan on
terms acceptable to the Presidential Parties and the FC Parties multiplied by
the T9 Fraction (66/100).  In the event that the T9 Property Appraisal is less
than the EFMV-FC/T9 Interest, Presidential shall immediately issue and deliver
to the Contributor a portion of the Holdback Units (based upon an assumed price
of $1.00 per PRES OP Unit) equal to (A) the actual T9 Property Appraisal value
minus (B) the sum of (y) the actual outstanding balance of the T9 Loan
Extension/Refinancing and (z) any actual and reasonable associated legal costs
incurred by Presidential in seeking the successful completion of the refinancing
or extension of the T9 Loan on terms acceptable to the Presidential Parties and
the FC Parties multiplied by the T9 Fraction (66/100).  In the event that the T9
Property Appraisal is greater than the EFMV-FC/T9 Interest, then the foregoing
formula shall be applied and the Contributor shall receive the number of PRES OP
Units obtained by using the formula.  Notwithstanding the foregoing, the
issuance and delivery of the Holdback Units shall be conditioned upon both
(x) receipt of the T9 Property Appraisal and (y) the occurrence of the T9 Loan
Extension/Refinancing on terms acceptable to the Presidential Parties and the FC
Parties. 

 

(iii)       The T9 Property Appraisal shall be obtained within thirty (30) days
from the date of this Second Amendment.  Notwithstanding any provision to the
contrary in this Second Amendment, in the event that the T9 Property Appraisal
has been obtained but the T9 Loan Extension/Refinancing has not been
accomplished within one hundred eighty (180) days from the date of this Second
Amendment, then the FC Parties and the Presidential Parties may within ten (10)
days mutually agree in writing to extend the time period to complete the T9 Loan
Extension/Refinancing, or either the FC Parties or the Presidential Parties may
elect to cancel the transfer of the FC/T9 Interest following ten (10) days’
prior written notice to the other. In such event the parties will cooperate with
each other and take such action and execute such documents and instruments as
may be necessary to evidence the cancellation and the removal of PRES OP or its
designee as a member of the T9 JV and from the Limited Liability Company
Agreement of T9 JV.

 

(iv)       For purposes of this Agreement, a “qualified” appraiser shall mean
any one of the following appraisal firms: 1) CBRE, 2) Cushman & Wakefield, or 3)
Colliers International. The “qualified” appraiser shall be selected by the FC
Parties but shall be subject to the approval of Presidential, which shall not be
unreasonably withheld, conditioned or delayed; specifically, Presidential shall
advise the FC Parties, in writing, of its position with respect to the appraiser
within five (5) days from the date Presidential is advised of the identity and
qualifications of the appraiser selected by FC Parties.  The engagement of such
“qualified” appraiser shall be made for the benefit of the Presidential Parties
and they will have the ability to negotiate the final scope of the appraisal in
their reasonable discretion.

 

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(v)       Notwithstanding any provision contained herein to the contrary, during
the period beginning on the Effective Date and continuing for a period of thirty
(30) days from such date, the Presidential Parties shall through the exercise of
commercially reasonable efforts (such efforts to include the negotiation and
documentation of any T9 Loan Extension/Refinancing) endeavor in good faith to
obtain the T9 Loan Extension/Refinancing.  The FC Parties shall promptly
reimburse the Presidential Parties for any actual and reasonable costs incurred
by the Presidential Parties in connection with pursuing the T9 Loan
Extension/Refinancing.  In the event that the Presidential Parties are unable to
obtain the T9 Loan Extension/Refinancing within said thirty (30) day period then
the Presidential Parties shall have no further responsibility relative to
obtaining the T9 Loan Extension/Refinancing, and the FC Parties shall thereafter
endeavor, using commercially reasonable efforts (such efforts to include the
negotiation and documentation of any T9 Loan Extension/Refinancing) to obtain
the T9 Loan Extension/Refinancing.  In the event that the T9 Loan
Extension/Refinancing is not obtained within sixty (60) days from the Effective
Date, then the FC Parties and the Presidential Parties shall continue to work
together to use commercially reasonable efforts to endeavor in good faith to
obtain the T9 Loan Extension/Refinancing and direct the Board of Directors of T9
JV to take such actions as the board may determine to be in the best interests
of the members of T9 JV relative to the T9 Loan Extension/Refinancing.
Furthermore, the FC Parties shall cause the operating agreement for T9 JV to be
amended in a manner consistent with and to effectuate the provisions of this
section concurrently with the transfer of the FC/T9 Interest.

 

2.Section 2.2 of the Agreement is hereby amended and restated to read as
follows:

 

Issuance of Securities. The applicable PRES OP Units will be issued and
delivered by PRES OP (a) upon the Closing of the Avalon Property and (b) as
provided in Section 1.5(f) with respect to the T9 Property, in the amounts
specified in Article I. The parties acknowledge and agree that the contribution
by the Contributor of sixty-six (66%) percent of its ownership interests in T9
JV shall occur on the Effective Date.

 

3.Section 1.5(e) (as amended on January 6, 2017), Section 5.1(c)(iii), Section
5.2(d), Section 5.2(e) and Section 5.2(g) of the Agreement are hereby deleted in
their entirety. Schedule 1.9 of the Agreement is hereby amended to delete clause
(vi) thereof.

 

4.Conditions Precedent to the Obligations of the Parties. The Parties agree that
upon the Effective Date, any conditions under Sections 5.2 and 5.3 of the
Agreement shall be deemed satisfied or waived, as applicable. Section 5.3(d) of
the Agreement is hereby deleted in its entirety.

 

5.Registration Rights. Article VI of the Agreement is hereby deleted, and each
of the FC Parties and the holders of any PRES OP Unit originally issued to the
Contributor shall have the registration rights described in Annex A to this
Second Amendment.

 

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6.Revision to January 6, 2017 Acknowledgement and Certificate by The BBJ Family
Irrevocable Trust. In connection with the first amendment to the Agreement on
January 6, 2017, The BBJ Family Irrevocable Trust (the “Trust”) entered into an
Acknowledgement and Certificate (the “Certificate”) for the benefit of the FC
Parties and the Presidential Parties. In Section 1.4, clause (v), of the
Certificate, the Trust agreed “to vote in favor of the election or appointment
of two (2) new board members selected by the FC Parties.” As a condition to the
effectiveness of this Second Amendment, the Certificate shall be amended to
revise Section 1.4, clause (v) as follows: “vote in favor of the election or
appointment to the board of each of Serge Kasarda and Richard Shea.”

 

7.Board Members. Presidential agrees that subject to the recommendation of
Presidential’s Nominating Committee, and the approval of Presidential’s board of
directors (the “Presidential Board”) in the exercise of their fiduciary duties,
the two vacancies currently existing on the Presidential Board shall be filled
by Serge Kasarda and Richard Shea on the Effective Date or promptly thereafter.

 

8.New Presidential Management. Presidential agrees that subject to the approval
of the Presidential Board in the exercise of its fiduciary duties, Presidential
shall on the Effective Date or promptly thereafter take all such actions as may
reasonably be required to cause the appointment or election of a new management
team lead by Serge Kasarda and other persons reasonably acceptable to him who
can assist him in implementing the Business Plan.

 

9.Business Plan. The Business Plan (consisting of a 23-page presentation by
Serge Kasarda and his associates proposing a health care business strategy dated
March 2017) has been approved by the Presidential Board.

 

10.Incorporation by Reference; Defined Terms. This Second Amendment is hereby
incorporated into and shall be deemed a part of the Agreement. Any capitalized
terms used but not defined in this Second Amendment shall have the meanings
ascribed to such terms as provided in the Agreement.

 

11.Construction. Each of the Parties acknowledges that they, and their
respective counsel, all substantially participated in the negotiation, drafting
and editing of this Second Amendment. Accordingly, the Parties agree that the
provisions of this Second Amendment shall not be construed or interpreted for or
against any Party hereto based on authorship.

 

12.Authority. Each Party represents and warrants that it has the power and
authority to execute this Second Amendment, and that there are no third-party
approvals required to execute this Second Amendment or to comply with the terms
or provisions contained herein.

 

13.Ratified and Confirmed. The Agreement, except as amended by this Second
Amendment, is hereby ratified and confirmed and shall remain in full force and
effect in accordance with its original terms and provisions. If there is any
conflict between the terms and provisions of this Second Amendment and the terms
and provisions of the Agreement, the terms and provisions of this Second
Amendment shall govern. From and after the Effective Date, any reference to the
Agreement shall mean the Agreement as modified by this Second Amendment.

 

14.Governing Law; Waiver of Jury Trial. Sections 8.6 and 8.7 of the Agreement
shall govern this Second Amendment.

 

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15.Headings. The paragraph headings contained herein are included solely for the
convenience of reference and shall not be considered in the interpretation of
this Second Amendment nor shall the same be deemed to alter or modify the terms
of this Second Amendment.

 

16.Execution/Counterparts. This Second Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. Each of the Parties hereto shall be
entitled to rely upon a counterpart of this Second Amendment executed by the
other Party and sent by facsimile transmission.

 

[Signatures appear on the following page]

 

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IN WITNESS WHEREOF the Parties have executed this Second Amendment as of the
date set forth above.

 

ON BEHALF OF THE FC PARTIES & THE CONTRIBUTED ENTITIES:

 

By: First Capital Real Estate Operating Partnership, LP     a Delaware limited
partnership               By: First Capital Real Estate Trust Incorporated,    
  a Maryland corporation       its General Partner                 By: /s/
Suneet Singal       Name: Suneet Singal       Title: CEO & Chairman of the Board
 

 

ON BEHALF OF THE PRESIDENTIAL PARTIES:

 

By: Presidential Realty Operating Partnership LP     a Delaware limited
partnership               By: Presidential Realty Corporation,       a Delaware
Corporation       its General Partner                 By: /s/ Nickolas Jekogian
        Name:  Nickolas Jekogian         Title:  CEO    

 

[Signature page to Second Amendment to Interest Contribution]

 

 

ANNEX A

 

REGISTRATION RIGHTS

 

The Parties desire to facilitate the FC Parties’ ultimate goal of providing
liquidity in the form of registered or otherwise freely tradable shares of the
Company’s common stock to the FC Parties and the limited partners of the
Contributor and the stockholders of First Capital. Notwithstanding any provision
of the Agreement or the PRES OP Agreement, each of the FC Parties, the limited
partners of Contributor and the stockholders of First Capital, in their
capacities as holders of PRES OP Units originally issued to the Contributor
shall have the registration rights described in this Annex A to this Second
Amendment.

 

1.       Registration Rights of the Contributor.

 

(a)       Registration of PRES OP Units Issued to the Contributor.

 

(i)       Subject to the provisions of applicable securities laws and the
interpretations of the SEC, at the request of the Contributor or, at the option
of the Company prior to such request, PRES OP (and/or the Company, as
applicable) agrees to file with the SEC a shelf registration statement on Form
S-3 under Rule 415 of the Securities Act, or any similar rule that may be
adopted by the SEC (the “Contributor Shelf Registration”), with respect to all
of the PRES OP Units issued to the Contributor (the “Contributor PRES OP Units”)
so that such Contributor PRES OP Units can be distributed to the limited
partners of the Contributor. PRES OP (and/or the Company, as applicable) will
use its best efforts to have the Contributor Shelf Registration declared
effective under the Securities Act and to keep the Contributor Shelf
Registration continuously effective until a date agreed upon by PRES OP (and/or
the Company, as applicable) and the Contributor or until such time as all of the
securities registered pursuant to such Shelf Registration (1) have been
distributed to the limited partners of the Contributor pursuant to such
Contributor Shelf Registration, (2) have otherwise been distributed pursuant to
Rule 144 promulgated under the Securities Act (“Rule 144”), or (3) have been
otherwise transferred in a transaction resulting in the transferee receiving
Contributor PRES OP Units not deemed to be “restricted securities” under Rule
144. PRES OP (and/or the Company, as applicable) further agrees to supplement or
make amendments to the Contributor Shelf Registration, if required by the rules,
regulations or instructions applicable to the registration form utilized by the
Company or by the Securities Act or rules and regulations thereunder for the
Contributor Shelf Registration.

 

(ii)       PRES OP (and/or the Company, as applicable) further agrees that if a
shelf registration under Rule 415 of the Securities Act, or any similar rule
that may be adopted by the SEC, is not available for the registration
contemplated hereunder, and/or if Form S-3 is not then available for such
registration, PRES OP (and/or the Company, as applicable) shall effect a
non-shelf registration on the registration form that is then available for such
registration, and the Contributor agrees to promptly distribute the Contributor
PRES OP Units to its limited partners upon the effectiveness of the
registration.

 

(iii)       The Company, in the exercise of its reasonable judgment, shall have
the right to delay the filing of the Contributor Shelf Registration for up to
120 days.

 

(iv)       Notwithstanding the foregoing provisions of this Section 1(a), PRES
OP and/or the Company shall be so obligated to file a registration statement
with the SEC under this Section 1(a) only if the Contributor has concluded,
based on the advice of its securities counsel, that there is no registration
exemption available for the distribution of the Contributor PRES OP Units to the
limited partners of the Contributor.

 

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(v)       Under no circumstances shall the Company or PRES OP have any
obligation to file a registration statement pursuant to this Section 1(a) unless
and until PRES OP has issued the PRES OP Units representing the purchase price
for the FC/T9 Interest.

 

(b)       Registration of PRES OP Units Distributed by the Contributor to First
Capital.

 

(i)       After the distribution of PRES OP Units to First Capital as a limited
partner of the Contributor, whether such distribution is registered or exempt
from registration, and subject to the provisions of applicable securities laws
and the interpretations of the SEC, at the request of First Capital or, at the
option of the Company prior to such request, PRES OP (and/or the Company, as
applicable) agrees to file with the SEC a shelf registration statement on Form
S-3 under Rule 415 of the Securities Act, or any similar rule that may be
adopted by the SEC (the “First Capital Shelf Registration”), with respect to all
of the PRES OP Units distributed to First Capital (the “First Capital PRES OP
Units”) so that such PRES OP Units can be distributed to the stockholders of
First Capital. PRES OP (and/or the Company, as applicable) will use its best
efforts to have the First Capital Shelf Registration declared effective under
the Securities Act and to keep the First Capital Shelf Registration continuously
effective until a date agreed upon by PRES OP (and/or the Company, as
applicable) and First Capital or until such time as all of the securities
registered pursuant to such First Capital Shelf Registration (1) have been
distributed to the stockholders of First Capital pursuant to such First Capital
Shelf Registration, (2) have otherwise been distributed pursuant to Rule 144, or
(3) have been otherwise transferred in a transaction resulting in the transferee
receiving First Capital PRES OP Units not deemed to be “restricted securities”
under Rule 144. PRES OP (and/or the Company, as applicable) further agrees to
supplement or make amendments to the First Capital Shelf Registration, if
required by the rules, regulations or instructions applicable to the
registration form utilized by the Company or by the Securities Act or rules and
regulations thereunder for the First Capital Shelf Registration.

 

(ii)       PRES OP (and/or the Company, as applicable) further agrees that if a
shelf registration under Rule 415 of the Securities Act, or any similar rule
that may be adopted by the SEC, is not available for the registration
contemplated hereunder, and/or if Form S-3 is not then available for such
registration, PRES OP (and/or the Company, as applicable) shall effect a
non-shelf registration on the registration form that is then available for such
registration, and First Capital agrees to promptly distribute the First Capital
PRES OP Units to its stockholders upon the effectiveness of the registration.

 

(iii)       The Company, in the exercise of its reasonable judgment, shall have
the right to delay the filing of the First Capital Shelf Registration for up to
120 days.

 

(iv)       Notwithstanding the foregoing provisions of this Section 1(b), PRES
OP and/or the Company shall be so obligated to file a registration statement
with the SEC under this Section 1(b) only if First Capital has concluded, based
on the advice of its securities counsel, that there is no registration exemption
available for the distribution of the First Capital PRES OP Units to the
stockholders of First Capital.

 

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(v)       Under no circumstances shall the Company or PRES OP have any
obligation to file a registration statement pursuant to this Section 1(b) unless
and until PRES OP has issued the PRES OP Units representing the purchase price
for the FC/T9 Interest.

 

(vi)       If the registration under Section 1(a) and the registration under
Section 1(b) are intended to occur simultaneously or in close proximity in time,
the FC Parties and the Presidential Parties shall work in good faith to combine
or coordinate such registrations.

 

(c)       Registration of “REIT Shares” so that PRES OP Units can be Redeemed
under the PRES OP Agreement.

 

(i)       Concurrently with the registration of the PRES OP Units to enable them
to be distributed to the stockholders of First Capital as contemplated in
Section 1(b), and subject to the provisions of applicable securities laws and
the interpretations of the SEC, and the provisions of the Company’s Certificate
of Incorporation, the Company agrees to file with the SEC a shelf registration
statement on Form S-3 under Rule 415 of the Securities Act, or any similar rule
that may be adopted by the SEC (the “Shelf Registration”), with respect to all
of the “REIT Shares” (as defined in the PRES OP Agreement) that such
stockholders of First Capital and the limited partners of the Contributor, in
their capacity as limited partners in PRES OP, are entitled to receive pursuant
to Section 8.05(b) of the PRES OP Agreement (the “Redemption Shares”). The
Company will use its best efforts to have the Shelf Registration declared
effective under the Securities Act and to keep the Shelf Registration
continuously effective until a date agreed upon by the Company and such
stockholders of First Capital and the limited partners of the Contributor, in
their capacity as limited partners in PRES OP, or until such time as all of the
securities registered pursuant to such Shelf Registration (1) have been disposed
of pursuant to such Shelf Registration, (2) have otherwise been distributed
pursuant to Rule 144, or (3) have been otherwise transferred in a transaction
resulting in the transferee receiving REIT Shares not deemed to be “restricted
securities” under Rule 144. The Company further agrees to supplement or make
amendments to the Shelf Registration, if required by the rules, regulations or
instructions applicable to the registration form utilized by the Company or by
the Securities Act or rules and regulations thereunder for the Shelf
Registration.

 

(ii)       The Company further agrees that if a shelf registration under Rule
415 of the Securities Act, or any similar rule that may be adopted by the SEC,
is not available for the registration contemplated hereunder, and/or if Form S-3
is not then available for such registration, the Company shall effect and
maintain a shelf registration on the registration form that is then available
for such registration.

 

(iii)       The Company, in the exercise of its reasonable judgment, shall have
the right to delay the filing of the Shelf Registration for up to 120 days.

 

(iv)       First Capital and the Presidential Parties shall work in good faith
to combine or coordinate the First Capital Shelf Registration with the Shelf
Registration.

 

(v)       Under no circumstances shall the Company or PRES OP have any
obligation to file a registration statement pursuant to this Section 1(c) unless
and until PRES OP has issued the PRES OP Units representing the purchase price
for the FC/T9 Interest.

 

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2.       Registration and Qualification Procedures. The Company and/or PRES OP
is obligated to use its or their best efforts to have the registration
statements described above declared effective under the Securities Act.
Accordingly, Company and/or PRES OP, as applicable, will:

 

(i)       prepare and file with the SEC a registration statement, including
amendments thereof and supplements relating thereto, with respect to the
securities referenced above, as applicable;

 

(ii)       use its or their best efforts to cause the applicable registration to
be declared effective by the SEC;

 

(iii)       keep the registration effective and the related prospectus current
as described in Section 1 above, except as provided in Section 1(a)(ii) and
Section 1(b)(ii);

 

(iv)       furnish to each holder of such securities such numbers of copies of
prospectuses, and supplements or amendments thereto, and such other documents as
such holder reasonably requests;

 

(v)       register or qualify such securities covered by the applicable
registration statement under the securities or blue sky laws of such
jurisdictions within the United States as any holder of such securities shall
reasonably request, and do such other reasonable acts and things as may be
required of it to enable such holders to consummate the sale or other
disposition in such jurisdictions of such securities; provided, however, that
neither the Company nor PRES OP shall be required (1) to qualify as a foreign
corporation or other foreign entity or consent to a general and unlimited
service of process in any jurisdictions in which it would not otherwise be
required to be qualified or so consent or (2) to qualify as a dealer in
securities; and

 

(vi)       keep the holders of such securities advised as to the initiation and
progress of the applicable registration.

 

3.       Allocation of Expenses.

 

(a)       The Company or PRES OP shall pay all expenses in connection with the
registrations described in Section 1, including without limitation (i) all
expenses incident to filing with the Financial Industry Regulatory Authority,
(ii) registration fees, (iii) printing expenses, (iv) accounting and legal fees
and expenses, except to the extent holders of such securities elect to engage
accountants or attorneys in addition to the accountants and attorneys engaged by
the Company or PRES OP, (v) accounting expenses incident to or required by any
such registration or qualification and (vi) expenses of complying with the
securities or blue sky laws of any jurisdictions in connection with such
registration or qualification; provided, however, neither the Company nor PRES
OP shall be liable for (A) any discounts or commissions to any broker
attributable to the sale of such securities, or (B) any fees or expenses
incurred by holders of such securities in connection with such registration
which, according to the written instructions of any regulatory authority,
neither the Company nor PRES OP is permitted to pay.

 

(b)       At the time of any proposed registration pursuant to Section 1,
neither the Company nor PRES OP may not have sufficient available funds to
prepare and file a registration statement. If at such time the Company has not
completed a private placement of its shares, to the extent that the registration
requirements of Section 1 impose costs and expenses (including, without
limitation, legal, accounting, filing fees, blue sky fees, FINRA fees) on the
Company and/or PRES OP in excess of those to be incurred by the Company and/or
PRES OP without such registration statement, then the First Capital Parties or
any holder whose securities are being included in the registration statement may
advance such expenses on behalf of the Company and PRES OP, and in such event
the Company and/or PRES OP will perform its obligations under Sections 1 and 2
and the Company and PRES OP shall be jointly and severally liable to reimburse
such holder or holders as soon as their financial circumstances permit such
payment without having a material adverse effect on the Company. Neither the
Company nor PRES OP will be required to incur expenses in connection with the
performance of this Agreement without the determination of the Board of
Directors of the Company that doing so would not have a material adverse effect
on either or both of the Company and PRES OP.

 

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4.       Listing on Securities Exchange. If the Company shall list or maintain
the listing of any REIT Shares on any securities exchange, it will at its
expense (subject to Section 3(b)) and as necessary to permit the registration
and sale of the REIT Shares hereunder, list thereon, maintain and, when
necessary, increase such listing to include such REIT Shares.

 

5.       Indemnification.

 

(a)       Indemnification by the Company and PRES OP. Each of the Company and
PRES OP agrees to indemnify and hold harmless, to the full extent permitted by
law, each of the Contributor, First Capital and the limited partners of PRES OP
described above who redeem the PRES OP Units for REIT Shares, and each of their
respective direct or indirect partners, members or stockholders and each of such
partner’s, member’s or stockholder’s partners, members or stockholders and, with
respect to all of the foregoing Persons, each of their respective Affiliates,
employees, directors, officers, trustees or agents and each Person who controls
(within the meaning of the Securities Act or the Exchange Act) such Persons and
each of their respective representatives from and against any and all losses,
penalties, judgments, suits, costs, claims, damages, liabilities and expenses,
joint or several (including reasonable costs of investigation and legal
expenses) (each, a “Loss” and collectively, “Losses”) arising out of or based
upon (i) any untrue or alleged untrue statement of a material fact contained in
any registration statement under which the securities referenced in Section 1
above (“Registrable Securities”) were registered under the Securities Act
(including any final, preliminary or summary prospectus contained therein or any
amendment or supplement thereto or any documents incorporated by reference
therein), any issuer free writing prospectus or amendment or supplement thereto,
or any other disclosure document produced by or on behalf of the Company or PRES
OP including reports and other documents filed under the Exchange Act, (ii) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, preliminary prospectus or issuer free writing prospectus, in light
of the circumstances under which they were made) not misleading, (iii) any
violation or alleged violation by the Company or PRES OP of any federal, state
or common law rule or regulation applicable to the Company or PRES OP in
connection with any such registration, qualification, compliance or sale of
Registrable Securities, (iv) any failure to register or qualify Registrable
Securities in any state where the Company or PRES OP or its or their agents have
affirmatively undertaken or agreed in writing that the Company or PRES OP (the
undertaking of any underwriter being attributed to the Company or PRES OP) will
undertake such registration or qualification on behalf of the holders of such
Registrable Securities (provided, that, in such instance the Company PRES OP
shall not be so liable if it has undertaken its reasonable best efforts to so
register or qualify such Registrable Securities) or (v) any actions or inactions
or proceedings in respect of the foregoing whether or not such indemnified party
is a party thereto, and the Company or PRES OP will reimburse, as incurred, each
such holder and each of their respective direct or indirect partners, members or
stockholders and each of such partner’s, member’s or stockholder’s partners
members or stockholders and, with respect to all of the foregoing Persons, each
of their respective Affiliates, employees, directors, officers, trustees or
agents and controlling Persons and each of their respective Representatives, for
any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, that, the Company or PRES OP shall not be liable to any particular
indemnified party to the extent that any such Loss arises out of or is based
upon (A) an untrue statement or alleged untrue statement or omission or alleged
omission made in any such registration statement or other document in reliance
upon and in conformity with written information furnished to the Company or PRES
OP by such indemnified party expressly for use in the preparation thereof or (B)
an untrue statement or omission in a preliminary prospectus relating to
Registrable Securities, if a prospectus (as then amended or supplemented) that
would have cured the defect was furnished to the indemnified party from whom the
Person asserting the claim giving rise to such Loss purchased Registrable
Securities at least five (5) days prior to the written confirmation of the sale
of the Registrable Securities to such Person and a copy of such prospectus (as
amended and supplemented) if such prospectus was not sent or given by or on
behalf of such indemnified party to such Person at or prior to the written
confirmation of the sale of the Registrable Securities to such Person. This
indemnity shall be in addition to any liability the Company or PRES OP may
otherwise have. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such holder or any indemnified
party and shall survive the transfer of such securities by such holder.

 

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(b)       Indemnification by Certain Holders of Registrable Securities. Each FC
Party (a “Holder”) agrees (severally and not jointly) to indemnify and hold
harmless, to the fullest extent permitted by law, the Company, PRES OP, their
directors, managers and officers and each Person who controls the Company or
PRES OP, and each of their respective representatives from and against any
Losses resulting from (i) any untrue statement of a material fact in any
registration statement under which such Registrable Securities were registered
under the Securities Act (including any final, preliminary or summary prospectus
contained therein or any amendment or supplement thereto or any documents
incorporated by reference therein) or any issuer free writing prospectus or
amendment or supplement thereto, or (ii) any omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, preliminary prospectus or issuer free
writing prospectus, in light of the circumstances under which they were made)
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or omission is contained in any information furnished in
writing by such Holder to the Company or PRES OP specifically for inclusion in
such registration statement and has not been corrected in a subsequent writing
prior to or concurrently with the sale of the Registrable Securities to the
Person asserting the claim, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) was made in such registration statement, prospectus, offering
circular, issuer free writing prospectus or other document, in reliance upon and
in conformity with written information furnished to the Company by such Holder
expressly for use therein.

 

(c)       Conduct of Indemnification Proceedings. Any Person entitled to
indemnification under this Section 5 shall (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided, that, any delay or failure to so notify the indemnifying party shall
relieve the indemnifying party of its obligations hereunder only to the extent,
if at all, that it is actually and materially prejudiced by reason of such delay
or failure) and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, that, any Person entitled to indemnification hereunder shall have the
right to select and employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the expense of
such Person unless (A) the indemnifying party has agreed in writing to pay such
fees or expenses, (B) the indemnifying party shall have failed to assume the
defense of such claim within a reasonable time after delivery of notice of such
claim from the Person entitled to indemnification hereunder and employ counsel
reasonably satisfactory to such Person, (C) the indemnified party has reasonably
concluded (based upon advice of its counsel) that there may be legal defenses
available to it or other indemnified parties that are different from or in
addition to those available to the indemnifying party, or (D) in the reasonable
judgment of any such Person (based upon advice of its counsel) a conflict of
interest may exist between such Person and the indemnifying party with respect
to such claims (in which case, if the Person notifies the indemnifying party in
writing that such Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such Person). If the indemnifying party
assumes the defense, the indemnifying party shall not have the right to settle
such action, consent to entry of any judgment or enter into any settlement, in
each case without the prior written consent of the indemnified party, unless the
entry of such judgment or settlement (i) includes as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of an
unconditional release from all liability in respect to such claim or litigation
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of such indemnified party, and
provided, that, any sums payable in connection with such settlement are paid in
full by the indemnifying party. If such defense is not assumed by the
indemnifying party, the indemnifying party will not be subject to any liability
for any settlement made without its prior written consent, but such consent may
not be unreasonably withheld. It is understood that the indemnifying party or
parties shall not, except as specifically set forth in this Section 5(c), in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements or other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time
unless (x) the employment of more than one counsel has been authorized in
writing by the indemnifying party or parties, (y) an indemnified party has
reasonably concluded (based on the advice of counsel) that there may be legal
defenses available to it that are different from or in addition to those
available to the other indemnified parties, or (z) a conflict or potential
conflict exists or may exist (based upon advice of counsel to an indemnified
party) between such indemnified party and the other indemnified parties, in each
of which cases the indemnifying party shall be obligated to pay the reasonable
fees and expenses of such additional counsel or counsels.

 

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(d)       Contribution. If for any reason the indemnification provided for in
paragraphs (a) and (b) of this Section 5 is unavailable to an indemnified party
or insufficient in respect of any Losses referred to therein, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such Loss in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and the
indemnified party or parties on the other hand in connection with the acts,
statements or omissions that resulted in such losses, as well as any other
relevant equitable considerations. In connection with any registration statement
filed with the SEC by the Company or PRES OP, the relative fault of the
indemnifying party on the one hand and the indemnified party on the other hand
shall be determined by reference to, among other things, whether any untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in this Section 5(d). No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The amount paid or payable by an
indemnified party as a result of the Losses referred to in Section 5(a) and
Section 5(b) shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim. If
indemnification is available under this Section 5, the indemnifying parties
shall indemnify each indemnified party to the full extent provided in Section
5(a) and Section 5(b) hereof without regard to the provisions of this
Section 5(d).

 

(e)       No Exclusivity. The remedies provided for in this Section 5 are not
exclusive and shall not limit any rights or remedies which may be available to
any indemnified party at law or in equity or pursuant to any other agreement.

 

(f)       Survival. The indemnities provided in this Section 5 shall survive the
transfer of any Registrable Securities by the holder thereof.

 

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