MASTER UPREIT FORMATION AGREEMENT

 

THIS MASTER UPREIT FORMATION AGREEMENT (this “Agreement”) is dated as of July
13, 2016 by and between American Housing Income Trust, Inc., a Maryland
corporation (“AHIT”), and Northern New Mexico Properties, LLC, a New Mexico
limited liability company (“Northern”). All terms not otherwise defined in this
Agreement shall have the meanings set forth in Section 2 below. The following
Schedules and Exhibits will be incorporated herein and merged with this
Agreement as of the Closing Date:

 

Schedule A Northern Affiliates

Schedule B Northern Properties

 

Exhibit A Registration Rights Agreement

Exhibit B Limited Liability Partnership Agreement

Exhibit C Limited Liability Partnership Certificate

Exhibit D Northern Property Indebtedness

 

1. PURPOSE. AHIT is structured with the intent to operate as a real estate
investment trust in tax year 2016. However, AHIT has made no representations
that it will be operating as a real estate investment trust. At the time of this
Agreement, AHIT holds itself out as a publicly reporting real estate investment
holding company that acquires, operates and maintains single family residence,
and rents such residence to tenants that meet certain criteria set by
management. AHIT and Northern have entered into this Agreement for the purpose
of setting forth the terms of the Transactions, as defined below, pursuant to
which they shall create an umbrella partnership real estate investment trust, or
commonly referred to as an “UPREIT,” which will serve as a subsidiary limited
partnership of AHIT.

 

The UPREIT shall acquire from Northern the Northern Properties in exchange for
limited liability partnership interests, defined herein as “Units,” in the
UPREIT. AHIT and the UPREIT shall thereafter operate under the name “AHIT
Northern NM Properties, LLP, a Maryland limited liability partnership” (“AHIT
Northern”) with the general partner being AHIT. AHIT Northern, shall directly or
indirectly own, in full or in part and in fee simple or leasehold interests,
single family residential properties; however, upon the occurrence of those
events set forth in the UPREIT Agreement, AHIT Northern shall deed the
contributed properties back to Northern, and this Agreement, and all related
agreements incorporated herein shall be void, except for those provisions
intended by the parties to survive termination.

 

The parties’ intent in forming AHIT Northern is to create a partnership designed
to reduce risk and increase diversification of real estate holdings, and to
seize an opportunity for estate and tax planning purposes. AHIT shall retain 1%
of the Units, but waives any rights to convert its Units under Section 721 of
the “Code” into “AHIT Common Stock,” both terms defined below, and Northern
shall retain 99% of the Units with the right to convert its Units under Section
351 and Section 721 of the into AHIT Common Stock. Upon the occurrence of the
conversion by Northern of the Units into AHIT Common Stock, AHIT shall be the
sole owner of all General Partner and Limited Partner interests in AHIT
Northern. On the terms and subject to the conditions set forth herein, the
parties agree to execute and deliver such additional agreements and undertake
such additional actions as further provided herein.

“AHIT Common Stock” shall mean the restricted common stock, $.01 par value, of
AHIT, which is currently listed on the OTCQB.

“AHIT Material Adverse Effect” shall mean an effect that would reasonably be
expected to be material and adverse to the financial condition, business, or
results of operations of AHIT, or to the number of beneficial or record
shareholders of AHIT Common Stock, or that would materially and adversely affect
the ability of AHIT or the UPREIT to consummate the Transactions.\

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  “Closing” shall mean the closing of the Transactions.

“Closing Date” shall mean the date at which all of the Transactions are
consummated.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Units” shall mean limited liability partnership interests of the UPREIT. The
Units will be exchangeable into shares of AHIT Common Stock initially on a
one-for-one basis, provided that holders of Units issued at the Closing may not
exchange their Units into shares of AHIT Common Stock prior to the first
anniversary of the Closing. The Units otherwise will have the rights,
preferences, terms and conditions set forth in the UPREIT Agreement.

“Contributed Assets” shall mean certain tangible and intangible assets,
including engineering reports, feasibility studies, contract rights, market
studies and other intangibles owned by Northern related to the Northern
Properties, all of which shall be contributed by Northern to the UPREIT at
Closing.

“Contributed Interests” shall mean Northern’s interest in a Northern Property.

“Contribution Agreement” shall mean the Contribution Agreement in a form
reasonably agreed among AHIT and Northern to be executed within thirty (30) days
after the execution of this Agreement; and each Contribution Agreement shall
relate to the particular Northern Property that is owned, directly or
indirectly, fully or in part and whether in fee simple or through a ground
lease, by the Northern Affiliate, where applicable, in which such Northern
Member owns a membership interest. AHIT shall be an intended third party
beneficiary to each Contribution Agreement.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Exchange Act Filing” shall mean any report, form, schedule or other documents
requested to be filed or filed with the SEC pursuant to the Exchange Act.

“Gross Asset Value” shall mean the value of each Northern Property set forth in
the Contribution Agreement for such Northern Property.

“Knowledge” shall mean, in the case of AHIT, the actual knowledge of Sean
Zarinegar, and, in the case of Northern, Jerry Lopez and Les Guiterrez, each of
them or their designees.

“Members Instrument” shall mean the instrument required under each Contribution
Agreement to be executed by Northern at Closing in order to convey its
Contributed Interest in the Northern Properties.

“Net Asset Value” shall mean, for each Northern Property, the amount equal to
(a) the difference between (i) the Gross Asset Value minus (ii) the amount,
including accrued and unpaid interest, of the Northern Properties Indebtedness
encumbering such Northern Property at Closing, as adjusted by (b) the net
adjustments for the Closing prorations contemplated by this Agreement and the
applicable Contribution Agreement.

“Permitted Common Dividends” shall mean regular quarterly dividends declared
(whether or not paid) with respect to AHIT Common Stock.

“Person” shall mean any individual, trust or entity of any nature.

“Northern Affiliates” shall mean, collectively, the Northern Members or those
entities, if any, identified on Schedule A. “Northern Affiliate” shall mean any
one (1) of the Northern Affiliates.

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  “Northern Material Adverse Effect” shall mean an effect that would reasonably
be expected to be material and adverse to the financial condition, business, or
results of operations of Northern, the Northern Affiliates and the Northern
Properties, taken as a whole, or that would materially and adversely affect the
ability of Northern and the Northern Affiliates, taken as a whole, to consummate
the Transactions.

“Northern Members” shall mean the members of the Northern Affiliates holding any
interest in the Northern Properties prior to Closing, as more particularly
identified, with each of their respective “Northern Membership Interests,” on
schedules delivered by Northern at closing. “Northern Member” shall mean any one
(1) of the Northern Members.

“Northern Operating Agreement” shall mean any agreement of operation for
Northern or any Northern Affiliate subject to obligations under this Agreement.

“Northern Properties” shall mean, collectively, the properties identified on
Schedule B. “Northern Property” shall mean any one (1) of the Northern
Properties. As will be addressed in more detail in the relevant Contribution
Agreement: (a) certain Northern Affiliates directly or indirectly own certain of
the Northern Properties in fee simple; (b) certain Northern Affiliates directly
or indirectly own leasehold interests in certain of the Northern Properties;
(c) certain Northern Affiliates directly or indirectly own less than one hundred
percent (100%) of certain Northern Properties, in a tenancy-in-common with an
unrelated third party; (d) certain Northern Affiliates directly or indirectly
own less than one hundred percent (100%) of certain Northern Properties in a
joint venture relationship with an unrelated third party; and (e) certain
Northern Affiliates directly or indirectly own a Northern Property through a
condominium. In the case of all of (c), (d) and (e), however, the Northern
Affiliates directly or indirectly hold day-to-day operational control over the
pertinent Northern Properties.

 

“Northern Properties Indebtedness” shall mean, for any Northern Property, the
unpaid mortgage debt secured by such Northern Property (it being understood,
however, that the collateral for such indebtedness may, depending on the
Northern Property in question, be a lien encumbering fee simple title, a
leasehold estate or an ownership interest in a condominium); provided that, in
the case of any Northern Property for which the Contributed Interests are less
than one hundred percent (100%) of the ownership interests in such Northern
Property, such amount shall reflect only that percentage of the indebtedness
equal to the percentage ownership represented by such Contributed Interests
relating to such Northern Property. For example, the Northern Properties
Indebtedness would equal $1 million if the Northern Property was encumbered with
$10 million of indebtedness and the interest of the Northern Affiliate was ten
percent (10%) of the ownership interests in such Northern Property. The Northern
Properties Indebtedness is expected to aggregate approximately $206,619 at
Closing.

“Pursuit Costs” are all out-of-pocket professional and other costs and expenses
incurred in connection with all document preparation, negotiation, due
diligence, regulatory approval and other actions or undertakings, incident to,
in preparation for or in anticipation of this Agreement, the consummation of the
Transactions, whether with respect to the Northern Properties, the UPREIT, or
otherwise, all of which are being contributed by AHIT under the UPREIT
Agreement.

“Registration Rights Agreement” shall mean the Master Registration Rights
Agreement in the form attached as Exhibit A or, if such form is not so attached,
as agreed by the parties within thirty (30) days following the date of this
Agreement, to be entered into at Closing among AHIT and Northern, pursuant to
which AHIT shall give Northern certain registration rights (commonly known as
“demand” and “piggyback” registration rights) with respect to AHIT Common Stock.

“SEC” shall mean the U.S. Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Board of Directors Approval” shall mean the approval and adoption by the Board
of Directors of AHIT of this Agreement and the Transactions, all in satisfaction
of the requirements the Articles of Incorporation and Bylaws of AHIT, as
amended, and any applicable statute under Maryland law.

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“Superior Proposal” shall mean any bona fide, written and unsolicited
acquisition proposal made by a Person that is not an Affiliate of AHIT for a
transaction which would result in AHIT ceasing to hold all or substantially all
of AHIT’s assets, taken as a whole, in either case in exchange for consideration
consisting solely of cash or securities traded on a registered national
securities exchange or a combination thereof and not subject to a financing
contingency and otherwise on terms that the Board of Directors of AHIT
determines, in its good faith judgment (and taking into account all of the terms
and conditions of such acquisition proposal, including any break-up fees,
expense reimbursement provisions, conditions to consummation, the ability of the
Person making the acquisition proposal to finance the transaction, timing of the
closing thereof, as well as any revisions to the terms of the Transactions or
this Agreement proposed by Northern after being notified pursuant to
Section 14.7) are more favorable to AHIT’s shareholders from a financial point
of view than the Transactions (after taking into account any revised terms
thereof) and is reasonably likely to be completed without undue delay.

“Title Insurance Company” shall mean the title company mutually agreed upon by
the parties prior to Closing.

“Transactions” shall mean collectively all of the transactions and corporate
actions contemplated by this Agreement, including the Exhibits hereto.

 

“UPREIT” shall mean AHIT Northern NM Properties, LLP, a Maryland limited
liability partnership to be formed, and whose sole general partner shall be AHIT
and which will be the operating partnership or “umbrella partnership” in AHIT’s
umbrella partnership real estate investment trust structure. “UPREIT” shall also
include (a) any entity or entities controlled by the UPREIT or AHIT and
designated by the UPREIT to acquire any of the Contributed Interests, and
(b) any directly or indirectly wholly owned subsidiary entities of AHIT Northern
NM Properties, LLP designated by the limited partnership to enter into
agreements relating to real estate or to own real estate for and on behalf of
the limited partnership excluding all “Taxable REIT Subsidiaries,” as defined in
Section 856(l) of the Code.

 

“UPREIT Agreement” shall mean the limited liability partnership agreement of the
UPREIT in the form attached hereto as Exhibit B or, if such form is not so
attached, as agreed by the parties within thirty (30) days following the date of
this Agreement.

 

“UPREIT Certificate” shall mean the certificate of formation of the UPREIT in
the form attached hereto as Exhibit C or, if such form is not so attached, as
agreed by the parties within thirty (30) days following the date of this
Agreement.

 

2. BOARD OF DIRECTORS’ APPROVAL. AHIT, acting through its Board of Directors,
shall, subject to, and in accordance with, applicable law, (i) promptly and duly
call, give notice of, convene and hold as soon as practicable, a meeting of the
Board of Directors (the “Board of Directors Meeting”) for the purpose of voting
to approve and adopt this Agreement and the Transactions, (ii) recommend
approval and adoption of this Agreement and the Transactions by the Board of
Directors of AHIT, and (iii) take all reasonable action to solicit and obtain
such approval.

 

3. CONTRIBUTION. 

 

3.1 Formation. AHIT shall form the UPREIT prior to Closing by filing the UPREIT
Certificate with the State of Maryland Department of Assessments and Taxation
(Corporate Charter Division) and adopting the UPREIT Agreement. AHIT shall be
the general partner of the UPREIT.

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3.2 Northern Members Contribution. Pursuant to the terms of this Agreement and
pursuant to the Contribution Agreement, the UPREIT will acquire the Contributed
Interests and Contributed Assets subject to and in accordance with the terms of
the Contribution Agreement. As a result, the UPREIT will acquire (fully or in
part) direct or indirect ownership of the Northern Properties, as more
specifically described in the respective Contribution Agreement for each
Northern Property. However, as set forth in the UPREIT Agreement, in the event
of default by AHIT under the Master UPREIT Agreement and related agreements, or
liquidation or bankruptcy of AHIT, the Contributed Interests, Contributed Assets
and Northern Properties shall be quit claimed to Northern in consideration of
mutual releases of liability.

 

3.3 Agreed Value. AHIT and Northern have agreed that the aggregate Gross Asset
Values, including the value attributable to the Contributed Assets, is
approximately $1,333,000 (prior to deducting the aggregate amount of the
Northern Properties Indebtedness), subject to the prorations and adjustments
provided in the applicable Contribution Agreement, or as otherwise provided
herein.

 

3.4 Aggregate Unit Issuance. As consideration for the contribution of the
Contributed Interests and the Contributed Assets to the UPREIT, Northern shall
receive, or direct the issuance, in the aggregate, of Units having a value equal
to One Hundred percent (100%) of an amount equal to the aggregate Net Asset
Values (which would be approximately $1,126,381 on the date hereof).

 

3.5 Allocation Among Northern Members. The Units issuable at Closing shall be
allocated as designated by Northern based upon a schedule prepared by Northern
and delivered at Closing.

 

3.6 General Partner’s Contribution. Pursuant to the terms of this Agreement, at
Closing, AHIT shall contribute to the UPREIT capital and resources to the
Partnership, including but not limited to, property management resources, and
legal, accounting and auditing costs, but not the assumption of the Northern
Property Indebtedness as of the Closing Date, as set forth in Exhibit D. Rather,
AHIT Northern shall assume the Northern Property Indebtedness upon closing of
the Transactions. In consideration for AHIT’s contributions, AHIT shall acquire
a general partner interest in the UPREIT and become the sole general partner of
the UPREIT and shall be deemed to have made a contribution to the UPREIT in an
amount equal to the book value of the consideration identified herein. AHIT
shall have the rights, duties, privileges and obligations as the holder of the
general partner interest and as the general partner of the UPREIT and be subject
to the terms and conditions of the UPREIT Certificate and the UPREIT Agreement.
In addition, AHIT shall be issued 1% of the Units, but has agreed to waive any
and all rights associated with converting Units into AHIT Common Stock.

 

3.7 Intended Tax Treatment. The parties acknowledge that, except to the extent
that any or all of Northern and the Northern Members receive any cash in
consideration for the Contributed Interests or the Contributed Assets, the
parties intend for the transfer of the Contributed Interests and the Contributed
Assets in exchange for Limited Partnership Interests to result in no current
recognition (i.e., a deferral) of gain or loss for federal income tax purposes
pursuant to Section 721 (such treatment, the “Intended Tax Treatment”). The
parties shall cooperate in all reasonable respects with Northern and the
Northern Members to facilitate such treatment. Without limiting the generality
of the foregoing sentence, the UPREIT and AHIT shall be responsible for costs
associated with any Internal Revenue Service audit made directly of either or
both of the UPREIT and AHIT relating to their respective operations.

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3.8 Termination for Tax Purposes. Because the contribution of the Contributed
Interests may cause certain Northern Affiliates to terminate for federal income
tax purposes under Section 708(b) of the Code, the parties to this Agreement
agree that the Contribution Agreement with respect to the Northern Properties
shall provide that the Northern Members shall have the right and obligation to
file any final tax returns for such Northern Affiliates. The parties intend that
the foregoing contribution section shall not terminate or liquidate the Northern
Affiliates under the laws of their jurisdiction of formation for any other
purpose and that each Northern Affiliate shall continue to exist after Closing,
with each Northern Affiliate continuing to own its interest in the Northern
Property owned by such Northern Affiliate prior to Closing.

 

4. CLOSING. Closing shall take place on the Closing Date, at or around 9:00 MST
by or before July 8, 2016, or at such other date, place or time as AHIT and
Northern shall agree in writing, but shall be deemed effective as of 12:01 a.m.
MST on the Closing Date.

 

5. REPRESENTATIONS AND WARRANTIES OF NORTHERN. Northern hereby represents and
warrants to AHIT, which representations and warranties shall be true and correct
on the date hereof and at Closing.

 

5.1 Authority. Northern is a limited liability company duly organized and in
good standing under the laws of its jurisdiction of organization. Northern has
all necessary power and authority to execute, deliver and perform this Agreement
and consummate all of the Transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement and the Transactions have
been approved and duly authorized by all necessary action of Northern. This
Agreement is the valid and binding obligation of Northern, enforceable against
Northern in accordance with its terms, except to the extent that enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles and doctrines of general
application.

 

5.2 Authority of Northern Affiliates. Each Northern Affiliate that is an entity
is duly organized or incorporated, and in good standing under the laws of its
jurisdiction of organization, and is authorized to do business in the state in
which the Northern Property directly or indirectly owned (whether fully or in
part) by such Northern Affiliate is located, except to the extent such failure
to qualify would not have a Northern Material Adverse Effect. The copy of the
Northern Operating Agreement of each Northern Affiliate delivered, or to be
delivered, to AHIT is true, correct and complete in all material respects as of
the date delivered. Each Northern Affiliate has all necessary power and
authority to perform the Transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement and the Transactions have
been approved and duly authorized by all necessary action of each Northern
Affiliate, except as set forth in any Contribution Agreement.

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5.3 Title and Physical Condition. Northern and/or one or more Northern Affiliate
(on a direct or an indirect basis) holds (fully or in part) fee simple or
leasehold title to each Northern Property, as described in further detail in the
Contribution Agreement. To the Knowledge of Northern, and except as otherwise
provided in the Contribution Agreement, there is no existing patent or latent
structural or other physical defect or deficiency in the condition of any
Northern Property, or any component or portion thereof, that would have a
Northern Material Adverse Effect. Northern acknowledges that since the
Contribution Agreements and the corresponding title policies will reflect that
the conveyance of the Northern Properties is “subject to” all liens and other
encumbrances, its current lenders on the Northern Property Indebtedness may
pursue causes of action against Northern (depending on which property and
lender) for breaches of any applicable note, mortgage, deed of trust, or other
existing obligations associated with the Northern Property Indebtedness.

 

5.4 Compliance with Existing Laws. To the Knowledge of Northern (i) no Northern
Property is in violation of any material building, zoning, environmental or
other ordinances, statutes or regulations of any governmental agency, in respect
to the ownership, use, maintenance, condition and operation of the Northern
Property or any part thereof, and (ii) the fee simple owner or ground lessee of
each Northern Property possesses all material licenses, certificates, permits
and authorizations necessary for the use and operation of the Northern Property
owned or ground leased, as the case may be, by it in the manner in which it is
currently being operated, except, in each case where such violation or failure
would not have a Northern Material Adverse Effect.

 

5.5 Litigation. No litigation is pending or, to Northern’s Knowledge,
threatened, including administrative actions or orders relating to governmental
regulations, against the fee simple owner or ground lessee of any Northern
Property or affecting the use, operation or ownership of any Northern Property
or any part thereof as contemplated herein, except, in any case, such as would
not have a Northern Material Adverse Effect.

 

5.6 Environmental Matters. Northern has no Knowledge of any release, discharge,
spillage, uncontrolled loss, seepage or filtration of oil, petroleum or chemical
liquids or solids, liquid or gaseous products or any hazardous waste or
hazardous substance (as those terms are used in the Comprehensive Environmental
Response, Compensation and Liability Act of 1986, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, or in any other applicable
federal, state or local laws, ordinances, rules or regulations relating to
protection of public health, safety or the environment, as such laws may be
amended from time to time) at, upon, under or within any Northern Property that
would have a Northern Material Adverse Effect. To Northern’s Knowledge, there is
no proceeding or action pending or threatened by any person or governmental
agency regarding the environmental condition of any Northern Property that would
have a Northern Material Adverse Effect.

 

5.7 Northern Affiliate Liabilities. Except for (i) the Northern Property
Indebtedness, (ii) any tenancy-in-common or joint venture agreement to which a
Northern Property may be subject, and (iii) any accrued liabilities and
obligations of the Northern Affiliate which are subject to Closing prorations
pursuant to this Agreement, to the Knowledge of Northern, no Northern Affiliate
shall have any material liabilities or obligations, either accrued, absolute or
contingent or otherwise, which will not be paid or discharged on or before the
Closing Date. In addition, except for the claims and liabilities described in
the preceding sentence or otherwise described or disclosed in this Agreement
(including the Schedules and Exhibits hereto), no Northern Affiliate has, to the
Knowledge of Northern, received notice of, as of the date of execution of this
Agreement, nor has any Knowledge of any basis for any, claim against (or
liability of) the Northern Affiliate arising from the business done,
transactions entered into or other events occurring prior to the Closing Date,
which will not be discharged by the Northern Affiliate before the Closing Date.

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5.8 Classified as Partnership or Disregarded Entity for Tax Purposes. Each
Northern Affiliate that is an entity is, and at all times has been, properly
administered and dealt with as a partnership or has been a disregarded entity
for federal income tax purposes, and not as a “corporation”, “association” or
“publicly traded partnership” taxable as a corporation.

 

5.9 Taxes. To the Knowledge of Northern, each Northern Affiliate has timely
filed with the appropriate taxing authorities all returns (including without
limitation informational returns and other material information) in respect of
Federal, State and local taxes (collectively “Taxes”) required to be filed
through the date hereof (and for which an extension has not been obtained) and
will timely file any such returns required to be filed (i) on or prior to the
Closing Date and (ii) with respect to all periods ending on or before the
Closing Date. The returns and other information filed (or to be filed) are
complete and accurate in all material respects. All material Taxes of each
Northern Affiliate in respect of periods beginning before the Closing Date have
been timely paid, or will be timely paid prior to the Closing Date, or will be
subject to Closing proration pursuant to this Agreement and, to the Knowledge of
Northern, each Northern Affiliate has no material liability for Taxes in excess
of the amounts so paid. All material Taxes that each Northern Affiliate has been
required to collect or withhold have been duly collected or withheld and, to the
extent required when due, have been or will be (prior to Closing Date) duly paid
to the proper taxing authority and no material deficiencies for Taxes of any
Northern Affiliate have been claimed, proposed or assessed by any taxing or
other governmental authority. There are no pending or threatened audits,
investigations or claims for or relating to any material additional liability to
any Northern Affiliate in respect of Taxes, and there are no matters under
discussion with any governmental authorities with respect to Taxes that in
reasonable judgment of Northern, is likely to result in a material additional
liability for Taxes. To the Knowledge of Northern, there are no liens for Taxes
(other than for current Taxes not yet due and payable) on any of the assets of
any Northern Affiliate. No Northern Member is a person other than a United
States person within the meaning of Section 7701 of the Code.

 

5.10 Disclosure. To the Knowledge of Northern, none of this Agreement, or any of
the schedules, exhibits, agreement, documents, certificates or other items
prepared or supplied to AHIT by, or on behalf of, Northern with respect to the
Northern Properties or the Transactions contain any untrue statements of a
material fact or omit a material fact necessary to make each statement contained
herein or therein not misleading. To the Knowledge of Northern, there is no fact
that Northern has not disclosed to AHIT in writing and of which it has Knowledge
that has had or would reasonably be anticipated to have a Northern Material
Adverse Effect. Copies of all documents referred to herein or in the schedules
hereto have been delivered or made available to AHIT, are true, correct and
complete copies thereof, and include all amendments, supplements or
modifications thereto or waivers thereunder.

 

5.11 No Other Representation or Warranty. Except as expressly set forth in this
Section 11, Northern makes no express or implied warranty of any kind
whatsoever. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED AND EXCEPT TO THE LIMITED AND SPECIFIC
EXTENT PROVIDED HEREIN OR IN ANY CONTRIBUTION AGREEMENT TO THE CONTRARY,
CONTRIBUTION OF THE NORTHERN PROPERTIES IS ON A STRICT “AS-IS” BASIS.

 

6. CONDITIONS PRECEDENT OF NORTHERN PENDING CLOSING. From and after the date of
this Agreement through the Closing Date, Northern covenants and agrees as
follows:

 

6.1 Preparation of Exhibits. Northern shall use commercially reasonable efforts
to agree to the forms of agreement contemplated to be attached as exhibits to
this Agreement, such agreements to contain customary and other commercially
reasonable terms and conditions.

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6.2 Changes in Representations. Northern shall notify AHIT promptly if it
becomes aware of any occurrence prior to the Closing Date that would make any of
its representations, warranties or covenants contained herein not true in any
material respect.

 

6.3 Review and Acceptance of Public Filings of AHIT. Northern shall not proceed
to closing unless it has reviewed and deemed acceptable for purposes of its due
diligence review, any and all filings by AHIT with the SEC.

 

7. REPRESENTATION AND WARRANTIES OF AHIT. AHIT hereby represents and warrants to
Northern, which representations and warranties are true and correct on the date
hereof, and at Closing, as follows:

 

7.1 Authority of AHIT. AHIT is a corporation duly organized, validly existing
and in good standing under the laws of the State of Maryland and is duly
authorized to do business and own properties in all jurisdictions in which it
does business and owns properties. AHIT has all necessary power and authority to
execute, deliver and perform this Agreement and consummate all of the
Transactions contemplated by this Agreement. Except for the AHIT Board of
Director Approval, the execution, delivery and performance of this Agreement and
the Transactions have been approved and duly authorized by all necessary action
of AHIT. This Agreement is the valid and binding obligation of AHIT, enforceable
against AHIT in accordance with its terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles and doctrines
of general application.

 

7.2 Exchange Act Reporting. AHIT has made all Exchange Act Filings required to
be made under the Exchange Act. All such Exchange Act Filings made by AHIT are
in all material respects true, correct and complete and complied, and all
documents required to be filed by AHIT with the SEC after the date hereof and
prior to the Closing will comply, in all material respects with the requirements
of the Exchange Act and the applicable rules and regulations promulgated
thereunder. None of AHIT’s Exchange Act Filings contained, and shall not
contain, any untrue statement of a material fact or omitted, or shall omit, to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, or
shall be made, not misleading. The financial statements of AHIT included in
AHIT’s Exchange Act Filings fairly present, and will fairly present, the
financial position of AHIT, as at the respective dates thereof and the results
of operations and cash flows for the respective periods then ended (subject, in
the case of the unaudited statements, to normal year-end audit adjustments and
to any other adjustments described therein) in conformity with generally
accepted accounting principles applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto).

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7.3 AHIT Common Stock. All shares of AHIT Common Stock exchangeable for Units
issued in connection with the Transactions will be duly authorized, validly
issued, fully paid, non-assessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. All issued and
outstanding shares of AHIT Common Stock were issued in compliance with, or in
transactions exempt from, the registration requirements of applicable federal
and state securities laws. The authorized capital stock of AHIT consists of
100,000,000 shares of AHIT Common Stock with a par value of $.01, and 10,000,000
shares of preferred stock with par value of $.00001. All issued and outstanding
shares are fully paid and non-assessable. Other than those shares of AHIT Common
Stock subject to the Stock Exchange and Restructuring Agreement, and/or
Parent-Subsidiary and Operations Agreement with Performance Realty Management,
LLC, and/or Employment Agreement with Sean Zarinegar, and certain issuances
under director advisory agreements, there are no outstanding options, warrants,
rights, calls, commitments, conversion rights, rights of exchange, plans or
other agreements of any character providing for the purchase, issuance or sale
of any shares of the capital stock of AHIT. All dividends on the capital stock
of AHIT that have been authorized or declared prior to the date hereof have been
paid in full. By executing this Agreement, Northern has represented that it has
reviewed all prior filings of AHIT at www.sec.gov/edgar.

 

7.4 Litigation. AHIT is not a party to any, and there are no pending or, to
AHIT’s Knowledge, threatened legal, administrative, or arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against AHIT or any of its assets that, individually or in the aggregate
(i) would delay or prevent AHIT from performing its obligations hereunder, or
(ii) would adversely affect the ability of AHIT to consummate the Transactions
contemplated hereby.

 

7.5 Corporate Documents. The copies of the articles of incorporation of AHIT and
Bylaws of AHIT, and the copies of all other books and records of AHIT delivered,
or to be delivered to Northern, are true, correct and complete copies thereof as
of the date delivered, and are true, correct and complete as reported with the
SEC.

 

7.6 Compliance with Existing Laws. To AHIT’s Knowledge, AHIT is in compliance in
all material respects in the conduct of its business, with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
permits, licenses, franchises, certificates of authority, rules, judgments,
orders or decrees applicable thereto or to the employees conducting such
businesses including the Sarbanes-Oxley Act of 2002. To AHIT’s Knowledge, AHIT
possesses all material licenses, certificates, permits and authorizations
necessary for the use and operation of its business in the manner in which it is
currently being operated by AHIT.

 

7.7 No Defaults. Neither the execution of this Agreement nor the consummation of
the Transactions will: (i) conflict with, or result in a breach of, the terms,
conditions or provisions of, or constitute a default under, any agreement or
instrument to which AHIT is a party or by which AHIT or any of its assets are
bound, (ii) violate any restriction, requirement, covenant or condition to which
AHIT is subject or by which AHIT or any of its assets are bound,
(iii) constitute a violation of any applicable code, resolution, law, statute,
regulation, ordinance, rule, judgment, decree or order applicable to AHIT, or
(iv) result in the cancellation of any contract or lease pertaining to any of
AHIT’s assets. As of the date of this Agreement, AHIT is not a party to any
confidentiality or standstill agreement with a Person that has made, or has
indicated that it intends to make, an Acquisition Proposal.

-10- 

 

 

7.8 Environmental Matters. AHIT has no Knowledge of any discharge, spillage,
uncontrolled loss, seepage or filtration of oil, petroleum or chemical liquids
or solids, liquid or gaseous products or any hazardous waste or hazardous
substance (as those terms are used in the Comprehensive Environmental Response,
Compensation and Liability Act of 1986, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, or in any other applicable federal, state
or local laws, ordinances, rules or regulations relating to protection of public
health, safety or the environment, as such laws may be amended from time to
time) at, upon, under or within any Northern Property or any contiguous real
estate. To AHIT’s Knowledge, there is no proceeding or action pending or
threatened by any person or governmental agency regarding the environmental
condition of the property of AHIT.

 

7.9 Taxes. AHIT currently does not qualify as a “real estate investment trust”
within the meaning of Section 856(a) of the Code. Until such time it does, AHIT
may incur liability for Taxes under Sections 857(b), 860(c) or 4981 of the Code,
including (but not limited to) any Tax arising from a prohibited transaction
described in Section 857(b)(6) of the Code or any Tax arising from “redetermined
rents,” “redetermined deductions” and “excess interest” described in
Section 857(b)(7) of the Code. AHIT discloses that there presents a material
risk that any Tax described in the preceding sentence will be imposed upon AHIT,
or AHIT may not qualify as a real estate investment trust within the meaning of
Section 856(a) of the Code. AHIT has not yet taken the requisite steps to
qualify as a real estate investment trust by the Internal Revenue Service. AHIT
and each predecessor of AHIT have timely filed with the appropriate taxing
authorities all returns (including without limitation information returns and
other material information) in respect of Taxes required to be filed through the
date hereof and will timely file any such returns required to be filed on or
prior to the Closing Date. The returns and other information filed (or to be
filed) are complete and accurate in all material respects. All Taxes of AHIT in
respect of periods ending on or before the Closing Date have been timely paid,
or will be timely paid prior to the Closing Date, and AHIT has no material
liability for Taxes in excess of the amounts so paid. All Taxes that AHIT has
been required to collect or withhold have been duly collected or withheld and,
to the extent required when due, have been or will be (prior to Closing Date)
duly paid to the proper taxing authority. No audits of any of AHIT’s federal,
state or local returns for Taxes by the relevant taxing authorities have
occurred, and no material deficiencies for Taxes of AHIT have been claimed,
proposed or assessed by any taxing or other governmental authority against AHIT.
There are no pending or, to the Knowledge of AHIT, threatened audits,
investigations or claims for or relating to any material additional liability to
the AHIT in respect of Taxes, and there are no matters under discussion with any
governmental authorities with respect to Taxes that in reasonable judgment of
AHIT or its counsel, is likely to result in a material additional liability for
Taxes. To the Knowledge of AHIT, there are no liens for Taxes (other than for
current taxes not yet due and payable) on any of the assets of AHIT.

 

7.10 Disclosure Controls and Procedures. None of AHIT’s records, systems,
controls, data or information are recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held by any means (including any
electronic, mechanical or photographic process, whether computerized or not)
which (including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of AHIT. AHIT has systems of internal
accounting controls effective in providing reasonable assurances regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles.

-11- 

 

 

 

7.11 Absence of Undisclosed Liabilities. Except for items for which reserves
have been established in AHIT’s audited consolidated balance sheets contained in
AHIT’s SEC reporting and which do not reflect any overstated assets, AHIT has
not incurred, and is not legally obligated with respect to, any material
indebtedness, liability (including, without limitation, a liability arising out
of an indemnification, guarantee, hold harmless or similar arrangement) or
obligation (accrued or contingent, whether due or to become due, and whether or
not subordinated to the claims of its general creditors) on AHIT. AHIT has not
knowingly made nor shall make any representation or covenant in any agreement
pursuant to which any loans or other assets have been or will be sold by AHIT
that contained or shall contain any untrue statement of a material fact or
omitted or shall omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which such
representations and/or covenants were made or shall be made, not misleading.

 

7.12 Absence of Certain Changes or Events. Except as disclosed in AHIT’s
Exchange Act Filings, AHIT has conducted its business only in the ordinary
course and there has not been any change that has a AHIT Material Adverse
Effect.

 

7.13 AHIT Affiliated Transactions. Except for the agreements and arrangements
referred to herein, no officer, director, employee, shareholder or Affiliate of
AHIT or any Person related by blood or marriage to any such Person, is a party
to any contract, agreement, arrangement, commitment or transaction with AHIT or
has any interest in any property, right or asset owned or used by AHIT. All of
such contracts, agreements, arrangements, commitments and transactions are on
terms that are no less favorable to AHIT than the terms that could be obtained
from an unrelated third party.

 

7.14 Disclosure. To the Knowledge of AHIT, none of this Agreement, or any of the
schedules, exhibits, agreement, documents, certificates or other items prepared
or supplied to Northern by, or on behalf of, AHIT with respect to AHIT or the
Transactions contain any untrue statements of a material fact or omit a material
fact necessary to make each statement contained herein or therein no misleading.
To the Knowledge of AHIT, there is no fact that AHIT has not disclosed to
Northern in writing and of which it has Knowledge that has had or would
reasonably be anticipated to have an AHIT Material Adverse Effect. Copies of all
documents referred to herein or in the schedules hereto have been delivered or
made available to Northern, are true, correct and complete copies thereof, and
include all amendments, supplements or modifications thereto or waivers
thereunder.

 

8. CONDITIONS PRECEDENT OF AHIT PENDING CLOSING. From and after the date of this
Agreement through the Closing Date, AHIT covenants and agrees as follows:

 

8.1 Preparation of Exhibits. AHIT shall use commercially reasonable efforts to
agree to the forms of agreement contemplated to be attached as exhibits to this
Agreement, such agreements to contain customary and other commercially
reasonable terms and conditions.

 

8.2 Maintenance and Operation of AHIT Properties and AHIT Business. AHIT shall
continue to own the properties owned by it and continue to pursue its intent to
operate its business as a real estate investment trust. Without limiting the
generality of the foregoing, AHIT shall (i) comply with all requirements
applicable to real estate investment trusts under Section 856 of the Code;
(ii) not take any action, or fail to take any action, if such action or failure
could reasonably be expected to result in the disqualification of AHIT’s pursuit
as a real estate investment trust within the meaning of Section 856(a) of the
Code; and (iii) diligently deploy its assets and earn income consistent with all
of the asset and income tests applicable to real estate investment trusts set
forth in Section 856 of the Code.

-12- 

 

 

8.3 Government Requirements. AHIT shall use its commercially reasonable efforts
to comply with governmental requirements applicable to AHIT.

 

8.4 Changes in Representations. AHIT shall notify Northern promptly if it
becomes aware of any occurrence prior to the Closing Date that would make any of
its representations or warranties contained herein not true in any material
respect.

 

8.5 Exchange Act Filings. AHIT shall make all Exchange Act Filings on a timely
basis. All such Exchange Act Filings shall be true, correct and complete and
shall comply in all material respects with the requirements of the Exchange Act
and the applicable rules and regulations promulgated thereunder.

 

9. NORTHERN PROPERTIES.

 

9.1 Marketable Title. At Closing, the Northern Properties shall be free and
clear of all material liens, covenants, restrictions, easements, encumbrances,
and other title exceptions or objections excepting, however, the Permitted
Exceptions (hereinafter defined). Title to the Northern Properties at Closing
shall be good and marketable and as such will be insured by the Title Insurance
Company at regular rates for regular risks, with such endorsements as the
Northern Members shall reasonably require.

9.2 Permitted Exceptions. As to each Northern Property, the “Permitted
Exceptions” are:

(i) mortgages held by those lenders identified on all title insurance policies
(i.e. conveyance being done on a “subject to” basis, see Section 5.3);

(ii) real estate taxes and assessments not yet due and payable;

(ii) covenants, restrictions, easements and other similar agreements, provided
that the same are not violated by existing improvements or the current use and
operation of the Northern Property, or if so violated that the same do not
materially impair the value of the Northern Property and that the violation of
the same will not result in a forfeiture or reversion of title;

(iv) zoning laws, ordinances and regulations, building codes and other
governmental laws, regulations, rules and orders affecting such Northern
Property, provided that the same are not violated by existing improvements or
the current use and operation of the Northern Property, or if so violated that
the same do not materially impair the value of the Northern Property or that
such violation will not result in a forfeiture or reversion of title;

(v) any minor imperfection of title which (1) does not affect the current use,
operation or enjoyment of a Northern Property, (2) does not render title to such
Northern Property unmarketable or uninsurable, and (3) does not materially
impair the value of the Northern Property;

(vi) the Northern Properties Indebtedness encumbering such Northern Property;

(vii) any leases with respect to such Northern Property; and

(viii) as noted in any applicable Contribution Agreement.

9.3 No Subsequent Exception. From and after the date of this Agreement, Northern
shall not take any action, or fail to take any action, outside of the ordinary
course of its business that would cause title to the Northern Properties to be
subject to any material title exceptions or objections, other than the Permitted
Exceptions.

 

-13- 

 

10. RISK OF LOSS. If prior to Closing (i) condemnation proceedings are commenced
against all or any material portion of the Northern Properties (other than a
condemnation which does not materially and adversely affect the value of the
Northern Properties), or (ii) if any Northern Property is damaged by an
uninsured casualty to the extent that the cost of repairing such damage shall be
Two Hundred Thousand Dollars ($200,000) or more based on the good faith estimate
of an independent contractor selected by Northern, then Northern and AHIT shall
have the right, upon notice in writing to the other party delivered within forty
five (45) days after actual notice of such condemnation or fire or other
casualty, to delete such Northern Property from this Agreement, and thereupon
the parties shall be released and discharged from any further obligations to
each other with respect to such Northern Property. If such Northern Property is
not deleted in the event of fire or other casualty or condemnation not giving
rise to a right to terminate this Agreement, all of the proceeds of fire or
other casualty insurance proceeds and the rent insurance proceeds payable with
respect to the period prior to Closing or, of the condemnation award, as the
case may be, shall be a part of the Closing.

 

11. MUTUAL CONDITIONS PRECEDENT. Neither Northern nor AHIT will be obligated to
complete or cause to be completed the transactions contemplated by this
Agreement unless the following conditions have been satisfied prior to or at the
Closing, unless waived by Northern and AHIT:

 

11.1 No Restraint. No order to restrain, enjoin or otherwise prevent the
consummation of this Agreement or the Transactions shall have been entered by
any court or administrative body and shall remain in full force and effect
(other than order sought by any of the parties to this Agreement).

 

11.2 No Termination. The obligations to consummate the Transactions shall not
have been terminated pursuant to the terms of this Agreement.

 

11.3 Board of Director Approval. This Agreement and the Transactions shall have
received Board of Director Approval.

 

11.4 Private Placement. The Contribution contemplated herein shall be exempt
from registration under the Securities Act and all applicable blue sky laws
except for any required ministerial filings.

 

12. CONDITIONS PRECEDENT TO OBLIGATIONS OF NORTHERN. The obligations of Northern
to consummate the Transactions by this Agreement are subject to the fulfillment,
prior to or upon the Closing Date, of the following conditions precedent, unless
waived by AHIT:

 

  (i) AHIT shall have complied with and performed in all material respects all
of the covenants contained in this Agreement to be performed by AHIT at or prior
to the Closing Date.

 

  (ii) From and after the date hereof, there shall have been no AHIT Material
Adverse Effect.

 

  (iii) The AHIT Common Stock shall not have been delisted from the OTC and
shall not have notified AHIT that it has failed to satisfy any criteria which
must be met in order to continue the listing of the AHIT Common Stock on the
OTC.

 

  (iv) The representations and warranties set forth in Section 13 shall be true
and accurate on and as of the Closing Date, except as otherwise required by this
Agreement, with the same force and effect as if they had been made at the
Closing Date.

 

-14- 

 

  (v) The UPREIT will be a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Maryland and the UPREIT
Agreement shall have been duly adopted and in full force and effect.

  

  (vi) The Northern Members shall have delivered all documents required to be
delivered by the Northern Members under this Agreement and otherwise to
consummate the Transactions.

 

  (vii) AHIT shall have executed and delivered, or caused to be executed and
delivered, all documents contemplated by this Agreement to be executed by AHIT
or caused to be executed by AHIT or as necessary or desirable to consummate the
Transactions.

 

13. CONDITIONS PRECEDENT TO OBLIGATIONS OF AHIT. The obligations of AHIT to
consummate the Transactions contemplated by this Agreement are subject to the
fulfillment, prior to or upon the Closing Date, of the following conditions
precedent, unless waived by Northern.

 

  (i) Northern shall have complied with and performed in all material respects
all of the covenants contained in this Agreement to be performed by Northern at
or prior to the Closing Date.

 

  (ii) From and after the date hereof, there shall have been no Northern
Material Adverse Effect.

 

  (iii) Each Northern Property shall be in the same order and condition as at
the date of this Agreement, normal wear and tear and damage by fire or other
casualty excepted (subject to Section 10), and shall have been operated between
the date of this Agreement and the Closing Date in substantially the same manner
as agreed prior to the date of this Agreement of the normal, including the
purchase and replacement of fixtures and equipment, and maintenance and repairs
so that such Northern Property shall be, except for normal wear and tear and
damage by fire or other casualty (subject to Section 10), in substantially the
same condition on the Closing Date as on the date hereof.

 

  (iv) All payments required to be made under the Northern Properties
Indebtedness shall have been made when due between the date hereof and the
Closing Date; and none of the Northern Properties Indebtedness shall be in
default as of the Closing Date.

 

  (v) No Northern Affiliate shall have any indebtedness, other than the Northern
Properties Indebtedness, current accounts payable in the day-to-day operation of
the Northern Properties and other obligations subject to Closing proration
pursuant to this Agreement.

 

  (vi) The representations and warranties set forth by Northern shall be true
and accurate on and as of the Closing Date with the same force and effect as if
they had been made at the Closing Date.

 

  (vii) Northern, the Northern Affiliates and Northern Members shall have
executed and delivered, or caused to be executed and delivered, all documents
contemplated by this Agreement to be executed by the Northern Members or caused
to be executed by Northern, the Northern Affiliates, and Northern Members or as
necessary or desirable to consummate the Transactions.

 

 14. DELIVERIES BY NORTHERN. At Closing, Northern shall deliver, or cause the
delivery of, the following documents:

 

-15- 

 

 

  (i)

Northern resolutions sined by Northern Members authorizing the Transactions.

 

  (ii) A release from each Northern Member releasing the Northern Affiliates and
the UPREIT (and its designee(s)) from any obligations and liabilities with
respect to the original formation of the Northern Affiliates, and any other
matter arising from business done, transactions entered into or events occurring
prior to the Closing Date.

 

  (iii) A certification of non-foreign status as required by the Code executed
by each Northern Member.

 

  (iv) The Registration Rights Agreement executed by each Northern Member or its
designated recipients of Units.

 

  (v) An option granted by Northern and any affiliated entities designated by
Northern exercisable by the UPREIT to cause Northern or such affiliated entities
to contribute to the UPREIT at values equal to their cost in consideration for
Units of the UPREIT (or, at the option of the UPREIT to sell to the UPREIT for
cash in the same amount), those parcels of real property identified as of the
Closing, as being the subject matter of (a) an outstanding and unaccepted offer
by Northern (or such designated affiliated entities); or (b) an accepted offer
from Northern (or such designated affiliated entities) as to which the subject
purchase transaction has not yet closed; or (iii) an acquisition by Northern (or
such designated affiliated entities) after the date of this Agreement and prior
to or within an agreed time after the Closing.

 

  (vi) An original letter executed by the Northern Affiliates advising the
tenants of the Northern Properties of the change in control and management of
the Northern Properties and directing that rents and other payments thereafter
be sent to the UPREIT or as UPREIT may direct.

 

  (vii) Possession of the Northern Properties from the Northern Affiliates in
the condition required by this Agreement and the keys therefor.

 

 

(viii)

 

 

(ix)

A Power of Attorney in a form acceptable to AHIT in order for AHIT to have
direct communications with any lender associated with the Northern Property
Indebtedness.

 

All such documents and instruments (including, without limitation, an accredited
investor’s questionnaire from each of the Northern Members for the purposes of
confirming accredited investor status) as may be reasonably required to allow
the UPREIT to comply with federal and state securities law requirements with
respect to the issuance of the Limited Partnership Interests.

 

  (x) Such other documents and items (customarily delivered in transactions
similar to the Transactions) as may be reasonably required under the terms of
this Agreement or relating to the Transactions to reasonably effect the purposes
of this Agreement or consummate the Transactions (including any of the foregoing
required by the Title Insurance Company).  

 

15.

 

AHIT PERFORMANCE AND DELIVERIES BY AHIT.

       

At the Closing, AHIT shall deliver, or cause the delivery of the following
documents:

 

-16- 

 

 

  (i) A certificate from the UPREIT attesting to the Units in the names of the
Northern Members on the books and records of the UPREIT.

 

  (ii) The Registration Rights Agreement executed by AHIT.

 

 

  (iii) The joinders to the UPREIT Agreement executed by the Northern Members,
each counter-executed by the UPREIT.

 

  (iv) Instruments and agreements of assumption by the UPREIT of the Northern
Properties Indebtedness reasonably requested by any holder of Northern
Properties Indebtedness.

 

  (v) Instruments and agreements of assumption or indemnification by the UPREIT
of any environmental or “carve-out” obligations of any Northern Affiliate under
the Northern Properties Indebtedness.

 

  (vi)

Such other documents and items (customarily in delivered in transactions similar
to the Transactions) as may be reasonably required under the terms of this
Agreement or relating to the Transactions to reasonably effect the purposes of
this Agreement or to consummate the Transactions.

 

  16. CLOSING CHARGES; PRORATIONS AND ADJUSTMENTS.        

16.1 All title examination charges, title insurance premium, survey costs,
environmental assessment charges, notary fees and other such third party charges
relating to the Transactions shall be paid by AHIT, but if such amounts are
customarily paid by a seller in a substantial commercial transaction in the
jurisdiction in which the applicable Northern Property is located, the value of
the contribution deemed made by the Northern Members with respect to such
Northern Property shall be reduced in the corresponding amount and the number of
Units issuable to the Northern Members shall be correspondingly reduced.

 

16.2 Although Northern and AHIT intend that no real estate transfer or recording
fees or taxes will be due in connection with the contribution of the Northern
Membership Interests, if it is finally determined that such taxes are due and
payable in connection herewith, such real estate transfer or recording fees or
taxes shall be paid by the party who customarily pays such costs in a
substantial commercial transaction in such jurisdiction.

 

16.3 The Northern Members and AHIT shall each pay their own due diligence costs
and legal, brokerage, lenders, investment banking and accounting costs and fees
related to the Transaction and preparation of this Agreement and all documents
required to settle the transaction contemplated hereby.

-17- 

 

 

16.4 With respect to each of the Northern Properties, as of the 12:01 a.m. on
the Closing Date, there shall be apportioned between the Northern Affiliate
formerly owning (whether fully or in part) an interest in such Northern Property
and the UPREIT (1) rent under all leases of Northern Properties, including, but
not limited to, ground leases (2) interest under all of the Northern Properties
Indebtedness, (3) taxes, insurance and operating expenses of such Northern
Property to the extent borne by the owning Northern Affiliate, (4) payments with
respect to the items listed in the preceding clause that are received from
tenants to the extent prepaid (including all security deposits) or paid in
arrears to the owning Northern Affiliate, (5) deposits, and (6) other matters
customarily prorated in single family residential real estate transactions in
the respective jurisdictions in which the Northern Properties are located. All
management agreements between the Northern Affiliates and Northern (or any
affiliate) shall be terminated as of the Closing Date, and all fees due under
such agreements through Closing shall be paid by the Northern Affiliate. Any
amounts due pursuant to this Section 17.4 shall be paid in cash at the Closing.
To the extent that the amount of the items to be adjusted are not reasonably
ascertainable as of the Closing Date, such as tenant chargebacks or collections
for tenant reimbursements, they shall be adjusted promptly after the
determination of the amount thereof.

 

16.5 The Northern Affiliates shall be reimbursed for any escrows maintained
under any of the Northern Properties Indebtedness and assigned to the UPREIT,
which reimbursement shall increase the value of the contribution deemed made by
the NORTHERN Members and the number of Units issuable to the Northern Members
shall be correspondingly increased.

 

16.6 It is acknowledged and agreed that, on or prior to the Closing, the
Northern Affiliates may distribute to the Northern Members all cash and assets
of each such Northern Affiliate other than the Northern Properties.

 

 17. PARTNERSHIP LIABILITTIES AND SALES OF NORTHERN PROPERTIES.

 

17.1 For a period of one (1) year following the Closing, Northern shall not, and
shall cause the UPREIT to not:

 

  (i) sell the Northern Properties (or membership interests or other equity
interests in the Northern Affiliates or successors thereto) other than pursuant
to a tax-deferred exchange effectuated in compliance with Section 1031 of the
Internal Revenue Code, and shall refrain from selling any acquired replacement
properties (or membership interests therein) other than pursuant to
Section 1031;

 

  (ii) defease or prepay any of the Northern Properties Indebtedness other than
for purposes of concurrent refinancing of those assets with non-recourse
mortgage debt of equal or greater amount;

 

  (iii) subject any of the Northern Properties to cross-default or
cross-collateralization with other assets of the UPREIT; and

 

  (iv) provide any guaranty or additional collateral for any of the assumed debt
encumbering the Northern Properties.

17.2 For a period of one (1) year following the Closing, Northern shall and
shall cause the UPREIT to:

 

-18- 

 

 

  (i) promptly replace any Northern Properties that are condemned or lost to
casualty;

 

  (ii) provide, in the event of an unavoidable loss of mortgage indebtedness
allocable as basis to any Northern Properties, whether through transfer of
ownership of an Northern Property to a taxable subsidiary of the AHIT or
otherwise, an opportunity for the Northern Members in question to replace such
indebtedness for tax basis purposes with a surrogate for lost basis in the form
of a liquidation-based guaranty of a sufficient quantity of UPREIT payables and
obligations outstanding at any time; and

 

  (iii) provide, in the event of an inability of the UPREIT to comply with the
above parameters, a make-whole cash payment by the UPREIT to the Northern
Members in the full amount of all state and federal tax obligations incurred by
them pursuant to special allocations of built-in gain made to them as a result
of the sale, defeasance or failure of replacement of a contributed Northern
Property (or membership interests or other equity interests in the Northern
Affiliates or successors thereto), in the full amount of the resulting state and
federal tax obligations of the Northern Members (at the maximum personal rate),
plus a gross-up payment sufficient to defray the state and federal taxes
applicable to such make-whole payment.

17.3 Without limitation of the above, at such time as any sale or defeasance of
a Northern Property (or membership interests or other equity interests in the
Northern Affiliates or successors thereto) is foreseeable, or a condemnation or
casualty has occurred or is in process (in the case of a condemnation), the
UPREIT shall promptly notify the relevant Northern Members of such known facts,
and shall provide them with full disclosure of the operative circumstances, and
an opportunity to provide input with respect to the determination of the
strategy for perpetuating tax deferral.

 

-19- 

 

 

18. NOTICES. All notices and other communications under this Agreement shall be
addressed as follows, shall be sent by a reputable national overnight delivery
service, given in person or sent by facsimile and shall be deemed given one
(1) business day after delivery and acceptance by such reputable national
overnight delivery service and be deemed given upon receipt if (b) given in
person; or (c) sent by facsimile for which the transmitting facsimile machine
generates evidence of complete transmission in each case addressed as follows:

If to AHIT:

American Housing Income Trust, Inc.

c/o American Realty Partners, LLC

Attention: Mr. Jeff Howard

Chief Executive Officer and President

34225 N. 27th Drive, Building 5 

Phoenix, AZ 85058

with a copy to:

 

Paesano Akkashian Apkarian, P.C.

7457 Franklin Road

Suite 200

Bloomfield Hills, Michigan 48301

Attention: Mr. Anthony R. Paesano

Facsimile: (248) 792-6885

 

If to Northern:

 

Northern New Mexico Properties, LLC

835 Fairview Lane

Espanola, NM 87532

-20- 

 

 

19. ACCESS TO INFORMATION AND DUE DILIGENCE. Upon reasonable notice and subject
to applicable laws relating to the exchange of information, AHIT shall afford to
the officers, employees, accountants, counsel and other representatives of
Northern, access, during normal business hours during the period commencing on
the date hereof and prior to the Closing, to all of AHIT’s properties, books,
contracts, commitments, records, officers, employees, accountants, counsel and
other representatives, and, during such period, AHIT shall make available to
Northern all information concerning AHIT’s businesses and properties as Northern
may reasonably request and shall provide NORTHERN with such assistance as
Northern may reasonably request in planning and implementing the Transactions.

 

20. PUBLIC DISCLOSURE. Consistent with federal and state securities law
disclosure requirements, AHIT and the Northern agree that AHIT may issue a press
release or other public disclosures regarding the Transactions.

 

21. TERMINATION; DEFAULT.

 

21.1 At any time prior to the Closing Date, this Agreement may be terminated
(1) by mutual written consent of AHIT and Northern; (2) by AHIT or Northern if
(i) there shall be any order in effect preventing consummation of the
transactions contemplated by this Agreement (other than an order sought by any
of the parties), or (ii) there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated, issued or deemed applicable to the
transactions contemplated by this Agreement by any governmental entity that
makes consummation of the transactions contemplated by this Agreement illegal,
or the economic effect of which would be materially and adversely burdensome to
any party to this Agreement or, in the case of any Northern Affiliate, or its
Northern Members (and the party so burdened may elect to terminate); (3) by
Northern if the Closing Date is not on or prior to June 1, 2016; (4) by AHIT, if
(i) AHIT’s Board of Directors shall have determined, in its good faith judgment
and after consultation with its counsel and advisors, that AHIT has received a
Superior Proposal and that it would be in the best interests of AHIT’s Board of
Directors, and company as a whole, to pursue such Superior Proposal.

 

21.2 If this Agreement shall be terminated as provided in Section 21.1, this
Agreement shall forthwith become void, and there shall be no liability on the
part of any party hereto to any other party, except that nothing set forth
herein shall relieve a party hereto from liability for its willful breach of
this Agreement or its own costs incurred with respect to costs agreed upon by
each party prior to such termination. If this Agreement is terminated, each
party hereto agrees to return or destroy all documents and other information
received from any other party hereto as soon as practicable after the
termination of this Agreement.

 

21.3 Notwithstanding anything contained in this Section 21 or elsewhere in this
Agreement to the contrary, if Northern defaults in the performance of any of the
obligations of Northern under the Agreement, AHIT shall, as its sole and
exclusive remedy, have the right to be paid its Pursuit Costs as liquidated
damages and the sole and exclusive remedy of AHIT, with no action for damages
other than for its Pursuit Costs.

 

22. MISCELLANEOUS.

 

22.1 Entire Agreement. This Agreement (together with its Exhibits and Schedules)
constitutes the entire understanding between the parties with respect to the
Transactions, and all prior or contemporaneous oral agreements, understandings,
representations and statements, and all prior written agreements,
understandings, letters of intent and proposals, in each case with respect to
the Transactions, are hereby superseded and rendered null and void and of no
further force and effect. Neither this Agreement nor any provisions hereof may
be waived, modified, amended, discharged or terminated except by an instrument
in writing signed by the party against which the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.

-21- 

 

 

22.2 Time of the Essence. Time is of the essence of this Agreement. If any date
herein set forth for the performance of any obligations by Northern or AHIT or
for the delivery of any instrument or notice as herein provided should be on a
Saturday, Sunday or legal holiday, the compliance with such obligations or
delivery shall be deemed acceptable on the next business day following such
Saturday, Sunday or legal holiday. As used herein, the term “legal holiday”
means any state or federal holiday for which financial institutions or post
offices are generally closed in the State of Illinois for observance thereof.

 

22.3 Conditions Precedent. The waiver of any particular condition precedent to
either party’s obligations hereunder shall not constitute the waiver of any
other. Northern and AHIT shall each have the right, in its sole and absolute
discretion, to waive any Condition Precedent for its benefit contained in this
Agreement.

 

22.4 Construction. This Agreement shall not be construed more strictly against
one party than against the other merely by virtue of the fact that it may have
been prepared by counsel for one of the parties, it being recognized that both
Northern and AHIT have contributed substantially and materially to the
preparation of this Agreement. The headings of various Sections in this
Agreement are for convenience only, and are not to be utilized in construing the
content or meaning of the substantive provisions hereof.

 

22.5 Governing Law Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland. The parties:
(i) agree that any suit, action or legal proceeding relating to this Agreement
may be brought in any federal court located in the Baltimore, Maryland’s
metropolitan area, if federal jurisdiction is available, and, otherwise, in any
state court located in such metropolitan area; (ii) consent to the jurisdiction
of each such court in any such suit, action or proceeding; and (iii) waive any
objection which they may have to the laying of venue in any such suit, action or
proceeding in either such court. Further, the parties hereby consent and submit
to the personal jurisdiction of the Maryland courts, both state and federal, and
hereby waive any and all objections now or hereafter existing to personal
jurisdiction of said courts over them. The parties waive, to the extent
permitted under applicable law, any right they may have to assert the doctrine
of forum non conveniens or to object to venue to the extent any proceeding is
brought in accordance with this section.

 

22.6 Partial Invalidity. The provisions hereof shall be deemed independent and
severable, and the invalidity or partial invalidity or enforceability of any one
provision shall not affect the validity of enforceability of any other provision
hereof.

 

22.7 Certain Securities Matters. No sale of units in the UPREIT is intended by
the parties by virtue of their execution of this Agreement. Any sale of units in
the UPREIT referred to in this Agreement will occur, if at all, upon Closing.

 

22.8 Counterparts. This Agreement may be executed in any number of identical
counterparts, any of which may contain the signatures of less than all parties,
and all of which together shall constitute a single agreement.

 

22.9 Calculation of Time Periods. Notwithstanding anything to the contrary
contained in this Agreement, any period of time provided for in this Agreement
that is intended to expire on or prior to the Closing Date, but that would
extend beyond the Closing Date if permitted to run its full term, shall be
deemed to expire upon Closing.

-22- 

 

 

22.10 Benefit. This Agreement is for the benefit only of the parties hereto, the
Northern Affiliates, the Northern Members, the UPREIT and their respective
nominees, successors, beneficiaries and permitted assignees and no other person
or entity shall be entitled to rely hereon, receive any benefit herefrom or
enforce against any party hereto any provision hereof.

 

22.11 No Survival. Except as otherwise explicitly set forth in this Agreement,
all representations, warranties, covenants and agreements of the parties in this
Agreement or in any instrument delivered by the parties pursuant to this
Agreement (other than the agreements, covenants and obligations set forth herein
which are contemplated to be performed after the Closing) shall not survive the
Closing.

 

22.12 Fax Signatures. Any signature page hereto delivered by a fax machine or
telecopy machine shall be binding to the same extent as an original signature
page, with regard to any agreement subject to the terms hereof or any amendment
thereto. Any party who delivers such a signature page agrees to later deliver an
original counterpart to any party that requests it.

 

22.13 Construction. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of
strict construction will be applied against any party. Any reference to any
federal, state, local or foreign statute or law, statute, rule or regulation
will be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The use of the word
“including” and similar expressions means “including without limitation” and
unless the context otherwise requires, “neither,” “nor,” “any,” “either” and
“or” shall not be exclusive. Unless otherwise noted, all references to sections,
exhibits and schedules are to sections, exhibits and schedules to this
Agreement. All words used in this Agreement shall be construed to be of such
gender or number as the circumstances require. The parties hereto intend that
each representation, warranty and covenant contained herein shall have
independent significance. If any party has breached any representation, warranty
or covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which such party has not
breached shall not detract from or mitigate the fact that such party is in
breach of the first representation, warranty or covenant. All references to
agreements hereunder include all exhibits and schedules to such agreements and
shall mean such agreements as they may be amended, restated, supplemented or
otherwise modified from time to time.

 

22.14 CONFLICT OF INTEREST DISCLOSURE AND WAIVER. NORTHERN ACKNOWELDGES THAT
COUNSEL FOR AHIT IS ALSO COUNSEL FOR THE PARTNERSHIP. COUNSEL FOR THE
PARTNERSHIP HAS ADVISED NORTHERN THAT IT IS NOT RENDERING LEGAL ADVICE FOR THE
BENEFIT OF NORTHERN. NORTHERN ACKNOWLEDGES BY SIGNING THIS AGREEMENT AND ALL
RELATED DOCUMENTS THAT COUNSEL FOR AHIT AND THE PARTNERSHIP HAS NOT RENDERED ANY
LEGAL ADVICE TO NORTHERN OR NORTHERN MEMBERS. NORTHERN HAS AGREED TO WAIVE ANY
AND ALL CONFLICTS OF INTEREST IN COUNSEL REPRESENTING AHIT AND THE PARTNERSHIP.
NORTHERN HAS HAD THE OPPORTUNITY TO SEEK INDEPENDENT LEGAL ADVICE REGARDING THE
CONFLICT DISCLOSURE AND THE WAIVER, AND HAS ELECTED TO PROCEED BASED ON LEGAL
ADVICE RENDERED.

 

[SIGNATURES ON NEXT PAGE]

-23- 

 

 

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

 

AMERICAN HOUSING INCOME TRUST, INC.,

a Maryland corporation.

 

/s/ Jeff Howard__________________________

By: Jeff Howard

Its: Chief Executive Officer and President

 

Northern NEW MEXICO Properties, LLC, a New Mexico limited liability company

 

/s/ Jerry Lopez____________________________

By: Jerry Lopez

Its: Member

 Date: July 13, 2016

 

/s/ Les Gutierrez___________________________

By: Les Gutierrez

Its: Member

Date: July 13, 2016

 /s/ Camilla S. Lopez________________________

By: Camilla S. Lopez

Its: Member

 Date: July 13, 2016

 

 

-24- 

 

 

Schedule A

Northern Affiliates

 

Jerry Lopez

Les Guiterrez

Camilla S. Lopez

-25- 

 

 

Schedule B

Northern Properties

 

1012 Calle Vianson

Santa Fe, New Mexico 87507

Parcel #: 1-051-096-223-354-000-000

Lot 18 Block 17A Las Resolana Subdivision, Santa Fe County

 

2376 Camino Capitan

Santa Fe, New Mexico 87505

 

2933 Plaza Azul

Santa Fe, New Mexico 87505

Account No. 16009383

Lot 138 Park Plazas, Phase 2 T16N R 9E s9, Santa Fe County

 

2141 44th Street

Los Alamos, New Mexico 87544

Account No. R002476

Parcel ID: 10321133823580001

 

1540 Tulip Road

Rio Rancho, New Mexico 87124

Parcel #: 1011070088033

Subd. Rio Rancho Estates, Block 141-A, Lot: 30, Unit 11, Sandoval County

 

4114 Las Casas Court

Rio Rancho, New Mexico 87124

Parcel #: 1014068095477

Subd. Corrales Heights, Block 1, Lot 47

 

Crestview Apartments and MH Park

906 Lucky Street

Truth or Consequences, New Mexico

Parcel #: 3021078249121

-26- 

 

 

Exhibit A

 

MASTER REGISTRATION RIGHTS AGREEMENT

This Master Registration Rights Agreement (this/the “Agreement”) is dated as of
July 13, 2016 by and between American Housing Income Trust, Inc., a Maryland
corporation (the “Company”), and Northern New Mexico Properties, LLC, a New
Mexico limited liability company (“Northern”).

WHEREAS, the Company is the sole general partner of AHIT Northern NM Properties,
LLP (the “Partnership”), which is engaged in the business of owning, managing,
acquiring and developing single family residences directly and through limited
partnerships and other entities (“Properties”);

WHEREAS, the Partnership anticipates acquiring from time to time additional
Properties or contract rights to acquire Properties or other properties in
transactions (the “Contributions”) in which all or a portion of the
consideration to be paid by the Partnership will consist of Units (as
hereinafter defined);

WHEREAS, pursuant to the Partnership Agreement (as hereinafter defined) Units
are, under certain circumstances, redeemable for common stock of the Company;

WHEREAS, the Company desires to provide certain registration rights with respect
to Shares (as hereinafter defined) for the benefit of Persons receiving Units in
connection with Contributions and the successors and assigns of such Persons
(collectively, the “Holders”);

NOW, THEREFORE, the Company for the benefit of the Holders agrees as follows:

 

  1. DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth
in this Section 1:

“Limited Partnership Interests” shall mean common partnership units of the
Partnership.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from
time to time.

“Majority Holders” shall mean, at any time, Holders of Registrable Securities
and Units then redeemable for Registrable Securities who, if all such Units were
so redeemed, would then hold a majority of the Registrable Securities.

“Partnership Agreement” shall mean the Limited Liability Partnership Agreement
of the Partnership, dated as of August 1, 2015, as may be amended or restated
from time to time.

“Person” shall mean any individual, partnership, corporation, trust or entity of
any nature.

“Prospectus” shall mean a prospectus included in a Registration Statement,
including any preliminary prospectus, and any such prospectus as amended or
supplemented by any Prospectus Supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by such
Registration Statement, and including post-effective amendments, in each case
including all material incorporated by reference therein.

“Prospectus Supplement” shall mean a prospectus supplement to a Prospectus
contained in a Shelf Registration Statement that has already been declared
effective.

-27- 

 

 

“Registrable Securities” shall mean the Shares, excluding (i) Shares for which a
Registration Statement shall have become effective under the Securities Act and
which have been disposed of under such Registration Statement, (ii) Shares sold
or otherwise distributed pursuant to Rule 144 under the Securities Act, and
(iii) Shares that may be sold without restriction pursuant to Rule 144(k) under
the Securities Act.

“Registration Expense” shall mean any and all expenses incident to performance
of or compliance with this Agreement by the Company, including, without
limitation:

 

  (a) all SEC, stock exchange, FINRA and other registration, listing and filing
fees;

 

  (b) all fees and expenses incurred in connection with compliance with state
securities or “blue sky” laws and compliance with the rules of any stock
exchange (including fees and disbursements of counsel in connection with such
compliance and the preparation of a “blue sky” memorandum and legal investment
survey);

 

  (c) all expenses of any persons or entities in preparing or assisting in
preparing, word processing, printing, distributing, mailing and delivering any
Registration Statement, any Prospectus, any underwriting agreements, transmittal
letters, securities sales agreements, securities certificates and other
documents relating to the performance of or compliance with this Agreement;

 

  (d) the fees and disbursements of legal counsel for the Company;

 

  (e) the reasonable fees and disbursements of a single firm of legal counsel
for all Holders;

 

  (f) the fees and disbursements of the independent registered public
accountants including the expenses of any audit and/or comfort letters and the
fees and expenses of other persons or entities, including experts, retained by
the Company;

 

  (g) the expenses incurred in connection with making road show presentations
and holding meetings with potential investors to facilitate the distribution and
sale of securities in the registration;

 

  (h) premiums and other costs of policies of insurance against liabilities
arising out of the public offering of the securities being registered; and

 

  (i) all internal expenses of the Company (including all salaries and expenses
of officers and employees performing legal or accounting duties);

provided, however, Registration Expenses shall not include discounts and
commissions payable to underwriters, selling brokers, dealer managers or other
similar persons or entities engaged in the distribution of any of the securities
in the registration; and provided, further, that if the Company shall not
register any securities with respect to which it had given written notice of its
intention to register to Holders, notwithstanding anything to the contrary in
the foregoing, all of the costs and expenses incurred by the Holders and their
permitted transferees in connection with such registration shall be deemed to be
Registration Expenses.

-28- 

 

 

“Registration Statement” shall mean a registration statement of the Company and
any other entity required to be a registrant with respect to such registration
statement pursuant to the requirements of the Securities Act, and all amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.

“SEC” shall mean the Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended from time to
time.

“Shares” shall mean the shares of common stock of the Company issued to Holders
of Units upon redemption or exchange of their Units pursuant to the terms of the
Partnership Agreement.

“Shelf Registration” shall mean a registration required to be effected pursuant
to Section 2.1 hereof.

“Shelf Registration Statement” shall mean a registration statement on Form S-3,
or any successor form thereto, covering the sale of Registrable Securities on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, or
any similar rule that may be adopted by the SEC.

“Units” shall mean the Limited Partnership Interests issued to the Holders in
connection with the Contributions.

“WKSI” shall mean a well-known seasoned issuer as defined under Rule 405 of the
Securities Act.

 

  2. REGISTRATION UNDER THE SECURITIES ACT

2.1      Filing of Shelf Registration Statement.    Provided that such Holder
has not delivered an Exclusion Notice (as defined herein) to the Company and has
timely provided the information requested by the Company pursuant to
Section 2.3, the Company shall, not later than the Required Filing Date (as
defined herein) cause to be filed a Shelf Registration Statement or a Prospectus
Supplement providing for the resale by such Holder of the Registrable Securities
for which such Holder’s Units are redeemable in accordance with the terms
hereof. If the Company is eligible as a WKSI, the Shelf Registration Statement
shall use the automatic shelf registration process under Rule 415 and Rule 462
promulgated under the Securities Act. If the Company is not eligible as a WKSI
or is otherwise ineligible to utilize the automatic shelf registration process,
then the Company shall utilize Form S-3 (or any similar short-form registration
statement), if it is then available, and use its commercially reasonable efforts
to have the Shelf Registration Statement declared effective as expeditiously as
possible. The Company agrees to use its commercially reasonable efforts to keep
a Shelf Registration Statement covering the sale of each Holder’s Registrable
Securities continuously effective under the Securities Act until such time as
the aggregate market value of all outstanding Registrable Securities (assuming
for this purpose that all Units then held by Holders were redeemed or exchanged
for Shares) is less than $5,000,000 and, subject to Section 3(g), further agrees
to supplement or amend each Shelf Registration Statement, if and as required by
the rules, regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration Statement or by the Securities Act or
by any other rules and regulations thereunder for Shelf Registrations. 

-29- 

 

 2.2      Alternate Registration Procedures.    If the Company does not file a
Shelf Registration pursuant to Section 2.1 by the applicable Required Filing
Date for any Holder Group (such Holders, the “Affected Holders”, and the
Registrable Securities, which were to be included in such Shelf Registration
Statement or Prospectus Supplement, the “Affected Securities”), thereafter, the
Affected Holders holding (or who would hold, after redemption of Units) a
majority of the Affected Securities (and which shall have an aggregate market
value of greater than $5,000,000) shall have the right exercisable by written
notice to the Company (“Demand Notice”), to cause the Company to use its
commercially reasonable efforts to prepare and file with the SEC a Registration
Statement and such other documents, including a Prospectus, as may be necessary
in the judgment of both counsel for the Company and the one special counsel
selected by the Affected Holders participating in the registration so as to
permit a public offering and sale of their respective Affected Securities.
Company agrees to prepare and file with the SEC, within one hundred twenty
(120) days after it receives a Demand Notice from the Affected Holders, a
Registration Statement on any available form covering the sale by the Affected
Holders of Affected Securities in accordance with the terms hereof, and, if
eligible as a WKSI, shall use the automatic shelf registration process under
Rule 415 and Rule 462 promulgated under the Securities Act, and if not eligible
as a WKSI or not otherwise eligible to use the automatic shelf registration
process, will use its commercially reasonable efforts to cause such Registration
Statement to be declared effective by the SEC as soon as reasonably practicable
and use its commercially reasonable efforts to keep such Registration Statement
continuously effective under the Securities Act for a period of ninety (90) days
following its effective date (“Effective Period”); provided, however, that if
the Company is eligible to effect the registration on Form S-3, the Effective
Period shall be one (1) year. The Company may terminate any such Registration
Statement (or, if applicable, be relieved of its obligation to file any such
Registration Statement) at such time as any new Shelf Registration Statement
shall be available for the purposes set forth in Section 2.1. If the Affected
Holders intend to distribute the Affected Securities covered by their request by
means of an underwritten offering, they shall so advise the Company in the
Demand Notice. In such event, the right of any Affected Holder to include such
Affected Holder’s Affected Securities in such registration shall be conditioned
upon such Affected Holder’s participation in such underwriting and the inclusion
of such Holder’s Affected Securities in the underwriting to the extent provided
herein. All Affected Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by the
Company (which underwriter or underwriters shall be reasonably acceptable to a
majority in interest of the Affected Holders). 

-30- 

 

2.3      Inclusion of Holder in Registration Statement.    If at any time
commencing after the date hereof the Company proposes to register any of its
common stock (or securities convertible into or exchangeable for its common
stock) under the Securities Act whether or not pursuant to registration rights
granted to other holders of its securities and whether or not for sale for its
own account (and which shall not include, for these purposes, any registration
made on Forms S-1, S-4, S-8, S-11 or any successor forms to such forms), the
Company shall promptly deliver to all Holders of Registrable Securities a
written notice (which notice shall be given at least thirty (30) days prior to
such proposed registration); (1) indicating its intent to make such a filing and
describing in reasonable detail the proposed registration and distribution
(including the anticipated range of the proposed offering price, the class and
number of securities proposed to be registered and the distribution
arrangements), (2) requesting such information from the Holder as the Company
reasonably believes is required in connection with such filing (including the
proposed method of distribution by such Holder), and (3) indicating that the
Holder may elect, by notice (each, an “Exclusion Notice”) to the Company, not to
be named in the Registration Statement or Prospectus Supplement, as applicable,
to be filed. If a Holder does not provide the requested information within
twenty (20) days after request therefor given in accordance with Section 8.3 or
delivers an Exclusion Notice, such Holder shall not be entitled to use any
Prospectus prepared by the Company in connection with the sale of any
Registrable Securities until the later of (i) ten (10) business days after
receipt by the Company from the Holder of the information requested in such
notice from the Company, and (ii) the effective date of the applicable
Registration Statement under the Securities Act, in each case subject to the
other requirements of and limitations set forth in this Agreement. If any Holder
notifies the Company in writing within twenty (20) days after receipt of any
Company notice of the Holder’s desire to include any Registrable Securities in
such proposed Registration Statement, the Company shall afford such Holder
holding the Registrable Securities the opportunity to have any such Registrable
Securities registered under such Registration Statement. If the Registration
Statement under which the Company gives notice under this Section 2.3 is for an
underwritten offering, the Company shall so advise the Holders of Registrable
Securities. In such event, the right of any such Holder to be included in a
registration pursuant to this Section 2.3 shall be conditioned upon such
Holder’s participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
The Company shall have the right to terminate or withdraw any registration
initiated by it under this Section 2.3 prior to the effectiveness of such
registration whether or not any Holder has elected to include Registrable
Securities in such registration. The Registration Expenses of such withdrawn
registration shall be borne by the Company. If a registration pursuant to this
Section 2.3 involves an underwritten offering and the managing underwriter
advises the Company in good faith that in its opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without having an adverse effect on such offering,
including the price at which such securities can be sold, then the Company will
be required to include in such registration the maximum number of shares that
such underwriter advises can be sold, allocated (x) first, to the securities the
Company proposes to sell, (y) second, among the Registrable Securities requested
to be included in such registration by the Holders (other than Registrable
Securities previously registered pursuant to a Shelf Registration Statement
filed in accordance with Section 2.1 hereof under which such Holder could then
dispose of such Registrable Securities), considered in the aggregate (if such
registration was initiated by the Company), and any other shareholder of the
Company with Common Shares eligible for registration, pro rata, on the basis of
the number of Common Shares such holder requests be included in such
registration, and (z) third, among other securities, if any, requested and
otherwise eligible to be included in such registration.

 

-31- 

 

  2.4 Registration of Redemption.

 

  (a) In lieu of complying with Sections 2.1 and 2.2 hereof, the Company may, in
its sole discretion, elect to file a Registration Statement registering the
issuance of Common Shares to one or more Holders. If the Company so elects, it
will use its commercially reasonable efforts to cause such Registration
Statement to be declared effective by the SEC as soon as reasonably practicable
after filing and to keep such Registration Statement continuously effective
under the Securities Act until such time as the aggregate market value of all
Shares for which such registrations have been effected and which remain unissued
is less than $5,000,000 and the Company shall supplement or amend each such
Registration Statement if and as required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder. If the Company makes an election under this Section 2.4,
it shall be relieved of its obligations under Section 3, other than those
contained in Sections 3(a)(ii), 3(d), 3(e), 3(f), 3(g), 3(i), 3(j), 3(l) and
3.2, which continuing obligations shall be deemed modified as appropriate to
apply to the issuance of Shares to Holders.

 

  (b) Notwithstanding anything to the contrary herein, in order for any
Registrable Securities that are issuable upon the exercise of conversion rights,
redemption rights, options or warrants to be included in any registration
pursuant to Section 2 hereof (including any Units), the exercise of such
conversion rights, redemption rights, options or warrants must be effected no
later than immediately prior to the closing of any sales under the Registration
Statement pursuant to which such Registrable Securities are to be sold such that
the Holder is the record holder of the Shares that are the subject to such
conversion rights, redemption rights, option or warrants.

2.5      Selection of Underwriters.    If any offering pursuant to a
Registration Statement is to be an underwritten offering, the Company will
select a managing underwriter or underwriters to administer the offering,
provided that in the case of a registration statement pursuant to Section 2.2
hereof, Affected Holders holding more than 50% of the shares of Affected
Securities held by the Affected Holders to be included in such underwriters
offering shall have the right to consent to the managing underwriter or
underwriters selected by the Company, which consent shall not be unreasonably
withheld or delayed.

 

  3. REGISTRATION PROCEDURES.

In connection with the Company’s obligations under Section 2 hereof, the Company
shall:

 

  (a) for each Holder Group, prepare and file with the SEC, within the time
period referenced in Section 2 hereof, a Registration Statement or Prospectus
Supplement, as appropriate, which Registration Statement or Prospectus
Supplement and related Prospectus (i) shall be available for the sale by such
Holders of the Registrable Securities attributable to the New Units (as defined
in the applicable Supplement) in accordance with the intended method or methods
of distribution thereof permitted under applicable law and in accordance with
the Partnership Agreement as communicated to the Company by such Holders, and
(ii) shall comply as to form in all material respects with the requirements of
the applicable form required by the SEC to be filed therewith.

-32- 

 

 

  (b) for each Holder Group, (i) prepare and file with the SEC such amendments,
post-effective amendments and supplements to the applicable Registration
Statement, and any Prospectus contained therein, as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Registration Statement in accordance with
the intended method or methods of distribution thereof as communicated to the
Company by such Holders, (ii) respond promptly to any comments received from the
SEC with respect to the applicable Registration Statement, or any amendment,
post-effective amendment or supplement relating thereto, and (iii) otherwise
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by the applicable Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution thereof as communicated to the Company by the applicable
Holders. The Company shall have seven (7) business days to prepare and file any
such amendment or supplement after receipt of a notice from a Holder containing
information giving rise to the need to file any such amendment or supplement.
Notwithstanding anything to the contrary contained herein, the Company shall not
be required to take any of the actions described in clauses (i) and (ii) above
with respect to a Holder unless such Holder shall have provided all information
and documents reasonably requested by the Company in connection with such
actions.

 

  (c) furnish to each Holder, without charge, as many copies of each applicable
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder may reasonably
request, in order to facilitate the public sale or other disposition of such
Holder’s Registrable Securities; the Company consents to the use of such
Prospectus, including such preliminary Prospectus, by each such Holder in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus or the preliminary Prospectus.

 

  (d) use its commercially reasonable efforts to register or qualify each
Holder’s Registrable Securities not later than the First Sale Date specified in
the Supplement to which the Holder is a party, under all applicable state
securities or “blue sky” laws of such jurisdictions as such Holder shall
reasonably request in writing, keep each such registration or qualification
effective during the period the applicable Registration Statement is required to
be kept effective or during the period offers or sales are being made by such
Holder, whichever is shorter, and do any and all other acts and things that may
be reasonably necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Holder’s Registrable Securities;
provided, however, that the Company shall not be required (i) to qualify
generally to do business in any jurisdiction or to register as a broker or
dealer in such jurisdiction where it would not be required so to qualify or
register but for this Section 3(c), (ii) to subject itself to taxation in any
such jurisdiction, or (iii) to submit to the general service of process in any
such jurisdiction.

 

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  (e) notify each Holder when the applicable Registration Statement has become
effective and notify each Holder of Registrable Securities promptly and, if
requested by such Holder, confirm such advice in writing (i) when any
post-effective amendments and supplements to the applicable Registration
Statement become effective, (ii) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of the
applicable Registration Statement or the initiation of any proceedings for that
purpose, (iii) if the Company receives any notification with respect to the
suspension of the qualification of the Holder’s Registrable Securities for sale
in any jurisdiction or the initiation of any proceeding for such purpose, and
(iv) of the happening of any event during the period the applicable Registration
Statement is effective as a result of which the applicable Prospectus contains
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

 

  (f) for each Holder Group, make every commercially reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of the applicable
Registration Statement at the earliest possible moment.

 

  (g) cooperate with the selling Holders of Registrable Securities to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any Securities Act legend.

 

  (h) for each Holder, provided that such Holder has provided all information
and documents reasonably requested by the Company, upon the occurrence of any
event contemplated by Section 3(e)(iv) hereof, use its commercially reasonable
efforts promptly to prepare and file a supplement or prepare, file and obtain
effectiveness of a post-effective amendment to the applicable Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

 

  (i) make available for inspection by the Holders of Registrable Securities and
any counsel or accountant retained by such Holders, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the respective officers, directors and employees of the Company to supply all
information reasonably requested by any such Holders, counsel or accountant in
connection with the applicable Registration Statement; provided, however, that
such records, documents or information shall not be disclosed by the
representatives, counsel or accountants or used for any purpose other than in
connection with this Agreement unless (i) the disclosure of such records,
documents or information is necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii) the release of
such records, documents or information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, or (iii) such records,
documents or information have been generally made available to the public by the
Company.

 

  (j) use its commercially reasonable efforts to cause all Shares to be listed
on the principal securities exchange or automated quotation system on which
similar securities issued by the Company are then listed (provided that the
Company shall not be obligated to obtain any listings that it does not then
maintain).

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  (k) otherwise use its commercially reasonable efforts to comply with all
applicable rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering at
least 12 months which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.

 

  (l) use its commercially reasonable efforts to cause the Registrable
Securities covered by each Registration Statement to be registered with or
approved y such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company to enable the applicable
Holders to consummate the disposition of such Registrable Securities.

 

  (m) pay all Registration Expenses in connection with the filing of any
Registration Statement; provided, however, that each Holder shall pay all
underwriting discounts and commissions, brokerage or dealer fees, fees and
disbursements of counsel, accountants or other representatives of such Holder
and transfer taxes, if any, relating to the sale or disposition of such Holder’s
Registrable Securities, be it pursuant to any Registration Statement, Rule 144
under the Securities Act or otherwise.

 

  (n) if such Registration Statement covers an underwritten offering, use
commercially reasonable efforts to obtain a comfort letter from the Company’s
independent registered public accountants who have certified the Company’s
financial statements included or incorporated by reference in such Registration
Statement, in each case addressed to the Company and such underwriters dated the
effective date of such Registration Statement, in customary form and covering
such matters as are customarily covered by such comfort letters delivered to
underwriters in underwritten public offerings, which letter shall be reasonably
satisfactory to the sole or lead managing underwriter, if any, and to the
Holders to be included in such registration, and furnish to each Holder
participating in the offering and to each underwriter, if any, a copy of such
letter addressed to such underwriter.

  

  (o) use commercially reasonable efforts to take all other reasonable actions
necessary to expedite and facilitate the registration of the Registrable
Securities pursuant to the Registration Statement.

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3.2        Limitation on Company’s Obligations.    Notwithstanding anything to
the contrary contained in this Agreement or in any Supplement, in the event that
(1) the Company’s costs of compliance with the requirements of this Agreement
and any Supplement do, or an event occurs that, as soon as it takes effect, will
cause the Company’s costs of compliance with the requirements of this Agreement
and any Supplement to, increase substantially for reasons beyond the Company’s
control and having nothing to do with (w) the failure of the Company to meet the
applicable eligibility requirements under the Securities Act in effect as of the
date of this Agreement with respect to any Registration Statement required to be
filed pursuant to this Agreement, (x) the cost of legal services or other
third-party services necessary to enable the Company to satisfy its obligations
under the Agreement, (y) general economic conditions (including, without
limitation, inflation), or (z) the general financial condition of the Company,
and (2) the circumstance described in clause (1) above occurs or is ongoing at
any time on or after the fifth anniversary of the date of this Agreement, the
Company shall be relieved of its obligations under Sections 2 and 3(a) through
3(p) of the Agreement (and any provision of any Supplement concerning any of
such sections), subject to the remaining terms of this Section. If the Company
reasonably and in good faith determines that the preceding sentence is
applicable, then the Company shall give written notice thereof to the Holders
that hold Units or Registrable Securities at that time (the “Curtailment
Notice”), which notice shall explain, in reasonable detail, the circumstances
that are causing, or that will cause, the Company to experience a substantial
increase in the cost of compliance. If any of such Holders notify the Company in
writing during the 60-day period following the date of the Curtailment Notice
(the “Notice Period”) that it wishes to sell its Registrable Securities pursuant
to the terms of this Agreement, the Company shall honor such request, even if it
requires an undertaking by the Company beyond the expiration of the Notice
Period, unless any cost to the Company that is not contemplated by the Agreement
(i.e., any cost that is contemplated by clause (1) above) would be incurred in
doing so. If the Company’s delivery of the Curtailment Notice is due to the
occurrence of an event that, as soon as it takes effect, will cause a
substantial increase in the Company’s cost of compliance pursuant to
clause (1) above, then if the date of the Curtailment Notice is more than
90 days prior to such an event’s effective date, the Notice Period shall be
extended to a date 30 days prior to such an event’s effective date. Except as
set forth in the succeeding sentence, the Company shall have no obligations
under Sections 2 or 3(a) through 3(n) of this Agreement following the expiration
of the Notice Period to any Holder that has not notified the Company during the
Notice Period of its desire to sell its Registrable Securities. In addition, the
Company hereby agrees to reasonably cooperate with those Holders that continue
to hold Units or Registrable Securities following the expiration of the Notice
Period so as to enable those Holders to explore alternative methods by which to
effect the objectives of the Agreement for their benefit. Notwithstanding
anything to the contrary contained in this Section 3.2, the Company shall have
no right to terminate any of its obligations under Sections 2 or 3(a) through
3(n) of the Agreement pursuant to this Section 3.2 in the event that any or all
of the Holders, prior to the expiration of the Notice Period, enter into an
agreement with the Company, reasonably satisfactory to the Company, pursuant to
which such Holders shall be obligated to reimburse the Company for the entirety
of the increased costs of compliance referenced in clause (1) above.

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  4. EXPENSES OF REGISTRATION.

The Company shall pay all Registration Expenses in connection with any
registration pursuant to Section 2 whether or not such registration shall become
effective and whether or not all securities originally requested to be included
in such registration are withdrawn or otherwise ultimately not included in such
registration.

 

  5. RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES.

Each Holder agrees with the Company that:

 

  (a) If the Company determines, after consultation with counsel, that the
filing of a Registration Statement under Section 2 hereof or the use of any
Prospectus would require the disclosure of important information, which the
Company has a bona fide business purpose for preserving as nonpublic or the
disclosure of which would impede the Company’s ability to consummate a
significant transaction, upon written notice of such determination by the
Company, the rights of the Holders to offer, sell or distribute any Registrable
Securities pursuant to a Registration Statement or Prospectus or to require the
Company to take action with respect to the registration or sale of any
Registrable Securities pursuant to a Registration Statement (including any
action contemplated by Section 3 hereof) will be suspended until the date upon
which the Company notifies the Holders in writing that suspension of such rights
for the grounds set forth in this Section 5(a) is no longer necessary; provided,
however, that the Company may not suspend such rights for an aggregate period of
more than 90 days in any 12-month period.

 

  (b) In the case of the registration of any underwritten equity offering
proposed by the Company (other than any registration by the Company on Form S-8,
or a successor or substantially similar form, of (i) an employee stock option,
stock purchase or compensation plan or of securities issued or issuable pursuant
to any such plan or (ii) a dividend reinvestment plan), each Holder agrees, if
requested in writing by the managing underwriter or underwriters administering
such offering, not to effect any offer, sale or distribution of Units or
Registrable Securities (or any option or right to acquire Registrable
Securities) (each, a “Transfer”) during the period commencing on a date day
prior to the expected effective date of the Registration Statement covering such
underwritten primary equity offering or, if such offering shall be a “take-down”
from an effective Shelf Registration Statement, a date prior to the expected
commencement date of such offering, and ending on a date, in each case specified
by such managing underwriter in such written request to such Holder. Nothing in
this Section 5(b) shall be read to limit the ability of any Holder to redeem its
Units for Shares in accordance with the Partnership Agreement.

  

  (c) In the event that any Holder uses a Prospectus in connection with the
offering and sale of Registrable Securities covered by such Prospectus, such
Holder will use only the latest version of such Prospectus provided to it by the
Company.

 

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  (d) In connection with and as a condition to the Company’s obligations under
Sections 2 and 3 hereof, (i) such Holder will not offer or sell its Registrable
Securities under the applicable Registration Statement unless it has received
copies of the applicable Prospectus or any supplemented or amended Prospectus
contemplated by Section 3(a) hereof and receives notice that any post-effective
amendment has become effective, (ii) upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(d)(iv) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the applicable Registration Statement until such Holder receives
copies of the supplemented or amended Prospectus contemplated by Section 3(g)
hereof and receives notice that any post-effective amendment has become
effective, and, if so directed by the Company, such Holder will deliver to the
Company (at the expense of the Company) all copies in its possession, other than
permanent file copies then in such Holder’s possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice and (iii) such Holder will only sell its Registrable Securities in
accordance with the provisions of the Exchange Act and the Securities Act, and
the rules and regulations thereunder.

 

  6. INDEMNIFICATION AND CONTRIBUTION.

6.1      Indemnification by the Company.    The Company will indemnify each
Holder of Registrable Securities and each of its officers, directors, members,
shareholders, employees, affiliates, agents, managers and partners
(collectively, “Representatives”), and each person controlling such Holder and
its Representatives, with respect to which such registration, qualification or
compliance has been effected pursuant to Section 2, and each underwriter, if
any, and each person who controls any underwriter of the Registrable Securities
held by or issuable to such Holder from and against all claims, losses,
expenses, damages and liabilities (or actions in respect thereto), joint or
several, actions or proceedings (whether commenced or threatened) in respect
thereof, and expenses (as incurred or suffered and including, but not limited
to, any and all expenses incurred in investigating, preparing or defending any
litigation or proceeding, whether commenced or threatened, and the reasonable
fees, disbursements and other charges of legal counsel) in respect thereof
(collectively “Damages”) arising out of or based on (1) any untrue statement (or
alleged untrue statement) of a material fact contained in any Registration
Statement or Prospectus (including any preliminary, final or summary prospectus
and any amendment or supplement thereto), offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, (2) any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (3) any
violation by the Company of any rule or regulation promulgated under the
Securities Act or any state securities law applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, qualification or compliance. Notwithstanding the foregoing,
the indemnity agreement contained in this Section shall not apply to amounts
paid in settlement of any such claim, loss, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld). Further notwithstanding the foregoing, the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon (x) the
Company’s reliance on an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information furnished by
any such Holder, any such underwriter or any such controlling person in writing
specifically for use in such Registration Statement or Prospectus, (y) such
Holder’s or underwriter’s failure to deliver a copy of the prospectus or any
amendments or supplements thereto after the Company has furnished such holder
the number of copies of the same reasonably requested by such holder or
underwriter, or (z) any violation or alleged violation by such Holder or such
underwriter of the Securities Act, the Securities Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Securities Exchange Act or any state securities law.

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6.2      Indemnification by each Holder.    Each Holder will, severally and not
jointly, if Registrable Securities held by or issuable to such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its
Representatives, each underwriter, if any, of the Company’s securities covered
by such a Registration Statement, each person who controls the Company within
the meaning of the Securities Act, and each other such Holder, each of its
Representatives and each person controlling such Holder, against damages arising
out of or based on (1) any untrue statement (or alleged untrue statement) of a
material fact contained in any such Registration Statement, Prospectus, offering
circular or other document, (2) any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (3) any violation by such Holder of the
Securities Act, the Securities Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Securities Exchange
Act, or any state securities law in connection with the offering covered by such
Application, in each case of (1) and (2) to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such Registration Statement, Prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder
specifically for use therein; provided, however, the total amount for which any
Holder shall be liable under this Section shall not in any event exceed the
aggregate net proceeds received by such Holder from the sale of Registrable
Securities held by such Holder in such registration. Notwithstanding the
foregoing, the indemnity agreement contained in this Section shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability, or action
if such settlement is effected without the consent of such Holder (which consent
shall not be unreasonably withheld).

6.3      Notice of Claims.     Each party entitled to indemnification under this
Section 6.3 (the “Indemnified Party”) shall give notice to the party required to
provide indemnification (the “Indemnifying Party”) promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party’s expense, and provided, further, that the failure of any
Indemnified Party to give notice as provided herein, shall not relieve the
Indemnifying Party of its obligations hereunder, unless such failure resulted in
actual material detriment to the Indemnifying Party. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation or which contains any admission
of wrongdoing by such Indemnified Party.

-39- 

 

 6.4      Contribution.    In order to provide for just and equitable
contribution in any case in which either: (i) any Person makes a claim for
indemnification pursuant to this Section 6.4 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 6.4 provides for indemnification in such case, or
(ii) contribution under the Securities Act may be required on the part of any
such Person in circumstances for which indemnification is provided under this
Section 6; then, and in each such case, the Indemnifying Party and Indemnified
Party will contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others) in such proportion so
that the Indemnifying Party and the Indemnified Party are responsible for the
portion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party, respectively, in connection with the statements,
omissions or violations which resulted in such Damages, as well as any other
relevant equitable considerations. The relative fault of the Indemnifying Party
and Indemnified Party on the one hand and the Indemnifying Party on the other
shall be determined by reference to, among other things, whether any action
taken, including 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 such party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
If, however, the foregoing allocation is not permitted by applicable law, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party in such proportion as is appropriate to reflect not only such
relative faults but also the relative benefits of the Indemnifying Party and the
Indemnified Party as well as any other relevant equitable considerations. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6.4 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to in this Section 6.4. The amount paid or payable by a
party as a result of any claim referred to in this Section 6.4 shall be deemed
to include, subject to the limitations set forth in Section 6.3, any legal or
other fees, costs or expenses reasonably incurred by such party in connection
with any investigation or proceeding. Notwithstanding anything in this
Section 6.4 to the contrary, no Indemnifying Party (other than the Company)
shall be required pursuant to this Section 6.4 to contribute any amount in
excess of the net proceeds received by such Indemnifying Party from the sale of
the Registrable Securities sold by such Indemnifying Party pursuant to the
Registration Statement giving rise to such claims, less all amounts previously
paid by such Indemnifying Party with respect to such claims. 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.

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  7. PARTICIPATION IN REGISTRATIONS.

7.1      Cooperation.    No Holder may participate in any registration hereunder
unless such Holder: (i) cooperates with the Company as reasonably requested by
the Company in connection with the preparation of the Registration Statement,
and for so long as the Company is obligated to file and keep effective the
Registration Statement, provides to the Company, in writing, for use in the
Registration Statement, all such information regarding such Holder and its plan
of distribution of the Registrable Securities as may be reasonably necessary to
enable the Company to prepare the Registration Statement and Prospectus covering
the Registrable Securities, to maintain the currency of and effectiveness
thereof and otherwise to comply with all applicable requirements of law in
connection therewith, (ii) agrees to sell such Holder’s securities on the basis
provided in any underwriting arrangements with any underwriter for such
registration selected by the Company (including, without limitation, pursuant to
the terms of any over-allotment or “green shoe” option requested by the managing
underwriter(s)), except that no Holder will be required to sell more than the
number of Registrable Securities that such Holder has requested the Company to
include in any registration, and (iii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents reasonably required under the terms of such underwriting
arrangements; provided that no Holder of Registrable Securities included in any
underwritten registration shall be required to make any representations or
warranties to, or agreements with, the Company or the underwriters other than
such representations and warranties or agreements as are customary in the
industry.

7.2      Immediate Discontinuance.    Each Holder that is participating in any
registration hereunder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(c)(ii) –
(iv) above, such Person will immediately discontinue the disposition of its
Registrable Securities pursuant to the registration statement until such
Holder’s receipt of the copies of a supplemented or amended prospectus as
contemplated by such Section 3(e)(ii) – (iv).

7.3      Prompt Notice.    Each Holder participating in any registration
hereunder agrees to notify the Company promptly, but in any event within
forty-eight (48) hours, after the date on which any Registrable Securities owned
by such Holder have been sold by such Holder pursuant to such registration, if
such date is prior to the termination of the effectiveness of such registration
statement.

7.4      Regulation M Restrictions.    Each Holder agrees not to effect any
public sale or distribution of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
unless such sale or distribution complies with Regulation M under the Securities
Exchange Act.

7.5      Prospectus Delivery.    Each Holder participating in any registration
hereunder shall comply, and shall use its commercially reasonable efforts to
cause its representatives and agents to comply, in all material respects with
the applicable Prospectus delivery requirements of the Securities Act in
connection with any sale pursuant to such registration.

 

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  8. MISCELLANEOUS.

8.1      Rule 144 Sales.    The Company covenants that it will file the reports
required to be filed by the Company under the Securities Act and the Exchange
Act, so as to enable any Holder to sell Registrable Securities pursuant to
Rule 144 under the Securities Act. In connection with any sale by any Holder of
any Registrable Securities pursuant to and in compliance with Rule 144 under the
Securities Act, the Company shall cooperate with such Holder to facilitate the
timely preparation and delivery after such sale of stock certificates not
bearing any Securities Act legend.

8.2      Amendments and Waivers.    The provisions of this Agreement, including
the provisions of this sentence may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the written consent of the Company and Holders constituting
Majority Holders; provided, however, that no amendment, modification or
supplement or waiver or consent to the departure with respect to the provisions
of Sections 2, 3, 4, 5, 6, 7, or 8.1 hereof or the definition of Registrable
Securities that would materially impair the rights of any Holder under such
provisions, shall be effective as against any Holder unless consented to in
writing by such Holder. Notice of any amendment, modification or supplement to
this Agreement adopted in accordance with this Section 8.1 shall be provided by
Company to each holder of Registrable Securities or Units redeemable for
Registrable Securities at least ten (10) days prior to the effective date of
such amendment, modification or supplement.

8.3      Notices.    All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
telecopier or any courier guaranteeing overnight delivery, (i) if to a Holder,
at the most current address given by such Holder to the Company by means of a
notice given in accordance with the provisions of this Section 8.3, which
address initially is, with respect to each Holder, the address set forth in the
Partnership Agreement, or (ii) if to the Company, at 34225 North 27th Drive,
Building 5, Suite 238 in Phoenix, Arizona 85085, Attention: Corporate Secretary.

All such notices and communications shall be deemed to have been duly given: at
the time delivered, by hand, if personally delivered; three (3) business days
after being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged, if telecopied; or at the time delivered if delivered, by an air
courier guaranteeing overnight delivery.

8.4      Successors and Assigns.    This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
Company and the Holders, including without limitation and without the need for
an express assignment, subsequent Holders. If any successor, assignee or
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be entitled to receive the
benefits hereof and shall be conclusively deemed to have agreed to be bound by
all of the terms and provisions hereof.

8.5      Headings.    The headings in this Agreement are for the convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

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8.6      Governing Law; Jurisdiction.    This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland without reference
to principles of conflicts of law. The parties: (x) agree that any suit, action
or legal proceeding relating to this Agreement shall be brought exclusively in
any federal court located in Maryland, if federal jurisdiction is available,
and, otherwise, in any state court located in such state; (y) consent to the
jurisdiction of each such court in any such suit, action or proceeding; and
(z) waive any objection which they may have to the laying of venue in any such
suit, action or proceeding in either such court. Further, the parties hereby
consent and submit to the personal jurisdiction of the Maryland courts, both
state and federal, and hereby waive any and all objections now or hereafter
existing to personal jurisdiction of said courts over them. The parties waive,
to the extent permitted under applicable law, any right they may have to assert
the doctrine of forum non conveniens or to object to venue to the extent any
proceeding is brought in accordance with this section.

 

8.7      Specific Performance.    The Company and the Holders acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that the Company and each
Holder, in addition to any other remedy to which it may be entitled at law or in
equity, shall be entitled to compel specific performance of the obligations of
another under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.

 

8.8      Binding Effect.    This Agreement and each and every term, covenant and
condition thereof, including all restrictions herein contained upon the sale,
transfer, assignment or other disposition or encumbrance of stock, shall be
binding upon and inure to the benefit of the transferees, legatees, donees,
heirs, executors, administrators, personal representatives, successors and
permitted assigns of each of the parties.

 

8.9      Severability.    The invalidity or unenforceability of any provision
hereof shall not in any way affect the validity or enforceability of any other
provision.

 

8.10    Adjustments Affecting Registrable Securities.    The Company agrees that
it shall not effect or permit to occur any combination or subdivision of shares
which would adversely affect the ability of the Holder of any Registrable
Securities to include such Registrable Securities in any registration
contemplated by this Agreement or the marketability of such Registrable
Securities in any such registration.

 

8.11    No Inconsistent Agreements.    The Company will not hereafter enter into
any agreement which is inconsistent with the rights granted to the Holders in
this Agreement.

 

8.12    Further Assurances.    Each party hereto shall do and perform or cause
to be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

8.13      Counterparts.    This Agreement may be executed in any number of
identical counterparts, any of which may contain the signatures of less than all
parties, and all of which together shall constitute a single agreement.

 

8.14      Fax or Electronic Signatures.    Any signature page hereto delivered
electronically or by facsimile shall be binding to the same extent as an
original signature page, with regard to any agreement subject to the terms
hereof or any amendment thereto. Any party who delivers such a signature page
agrees to later deliver an original counterpart to any party that requests it.

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8.16      Construction.    The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party. Any reference to
any federal, state, local or foreign statute or law, statute, rule or regulation
will be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise, and any amendment or
successor thereto. The use of the word “including” and similar expressions means
“including without limitation” and unless the context otherwise requires,
“neither,” “nor,” “any,” “either” and “or” shall not be exclusive. Unless
otherwise noted, all references to sections, exhibits and schedules are to
sections, exhibits and schedules to this Agreement. All references to this
Agreement shall include the Supplements. All words used in this Agreement shall
be construed to be of such gender or number as the circumstances require. The
parties hereto intend that each representation, warranty and covenant contained
herein shall have independent significance. If any party has breached any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which
such party has not breached shall not detract from or mitigate the fact that
such party is in breach of the first representation, warranty or covenant. All
references to agreements hereunder include all exhibits and schedules to such
agreements and shall mean such agreements as they may be amended, restated,
supplemented or otherwise modified from time to time.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

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

 

AMERICAN HOUSING INCOME TRUST, INC.,

a Maryland corporation.

 

/s/ Jeff Howard__________________________

By: Jeff Howard

Its: Chief Executive Officer and President

 

Northern NEW MEXICO Properties, LLC, a New Mexico limited liability company

 

/s/ Jerry Lopez____________________________

By: Jerry Lopez

Its: Member

 Date: July 13, 2016

 

/s/ Les Gutierrez___________________________

By: Les Gutierrez

Its: Member

Date: July 13, 2016

 /s/ Camilla S. Lopez________________________

By: Camilla S. Lopez

Its: Member

 Date: July 13, 2016

 

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Exhibit B

UPREIT Agreement

Limited Liability Partnership Agreement

 

of

 

AHIT Northern NM PROPERTIES, LLP

 

This Limited Partnership Agreement of AHIT Northern NM Properties, LLP, a
Maryland limited liability partnership (this “Agreement”) is effective as of
July 13, 2016 between American Housing Income Trust, Inc., a Maryland
corporation (“General Partner”) doing business at 34225 North 27th Drive,
Building 5, Suite 238 in Phoenix, Arizona 85085, and those limited partners
identified below in this introductory section (each a “Limited Partner” or “REIT
Partner” or collectively the “Limited Partners” or “REIT Partners”). The General
Partner and Limited Partners are sometimes collectively referred to as the
“Partners” and individually as a “Partner.”

 

WHEREAS, the Partners desire to form a limited liability partnership pursuant to
the Maryland Revised Uniform Partnership Act, on the terms and conditions set
forth in this Agreement.

 

WHEREAS, AHIT and Northern have entered into a Master UPREIT Formation Agreement
(the “Master Agreement”), which contemplates, amongst other things, the
negotiation and execution of this Agreement for the purpose of creating an
umbrella partnership real estate investment trust, or commonly referred to as an
“UPREIT,” which will serve as a subsidiary limited partnership of the General
Partner. The UPREIT shall acquire from the Limited Partners those parcels of
real property defined in the Master Agreement as the “Northern Properties” in
exchange for Limited Partnership Interests in AHIT Northern NM Properties, LLP
(the “Partnership”). The Partnership shall directly or indirectly own, in full
or in part and in fee simple or leasehold interests the Northern Properties. The
parties’ intent in forming the Partnership is to create a partnership designed
to reduce risk and increase diversification of real estate holdings, and to
seize an opportunity for estate and tax planning purposes. On the terms and
subject to the conditions set forth herein, the parties agree to execute and
deliver such additional agreements and undertake such additional actions as
further provided herein, including forming a Maryland limited partnership to as
the UPREIT under the direction of the general partner, AHIT, and issuing
Northern put options to be exercised pursuant to the terms hereof, and obtaining
all necessary approvals of the Board of Directors of AHIT.

 

The parties agree to the following limited partnership interests:

 

Northern Holdings, LLC 500,614 Units

American Housing Income Trust, Inc. 5,006 Units (Non-Convertible by Consent)

 

 

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Although identified as a Limited Partner above, for purposes of the balance of
this Agreement, unless otherwise noted, Northern Holdings, LLC is defined as the
“Limited Partner.” The Partners agree that the General Partner retains a 1%
equity ownership in the Partnership and the Limited Partners retain a 99% equity
ownership in the Partnership, subject to the balance of the provisions of this
Agreement. The respective interests of the General Partner and the Limited
Partner are defined herein as the “Partnership Interests” or individually as a
“Partnership Interest.” These limited partnership interests are collectively
referred to as “Partnership Interests” or individually as a “Partnership
Interest.” The General Partner retains only 1% of the Partnership Interests
until the conversion set forth herein, but retains the right to income or
profits of the Partnership as set forth herein Pursuant to Article III, the
General Partner shall retain all rights to income and distributions of the
Partnership. The Partnership Interests are evidenced by the certificate in the
same form as the one attached as Exhibit B.

 

Article I

Organization

 

1.1 Formation. The parties form a limited liability partnership (the
“Partnership”) pursuant to the Act. The purpose and nature of the Partnership is
(i) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act; provided, however, that such business
shall be limited to and conducted in such a manner as to permit the General
Partner at all times to be classified as a REIT and avoid the imposition of
federal income and excise taxes on the General Partner, unless the General
Partner ceases to qualify, or is not qualified, as a REIT for any reason or
reasons; (ii) to enter into any partnership, joint venture, limited liability
company or other similar arrangement to engage in any of the foregoing or the
ownership of interests in any entity engaged, directly or indirectly, in any of
the foregoing; and (iii) to do anything necessary or incidental to the
foregoing. Nothing in this Section 1.1 shall prevent the General Partner from
terminating its status as a REIT under the Code at any time (following which the
proviso contained in clause of (i) above shall no longer be applicable).

 

1.2 Powers. The Partnership shall have full power and authority to do any and
all acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership,
including, directly or through its ownership interest in other Persons, the
power to (i) enter into, perform and carry out contracts of any kind,
(ii) borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, (iii) acquire, own, manage,
improve and develop real property, and (iv) lease, sell, transfer and dispose of
real property; provided, however, that the Partnership shall not take, or
refrain from taking, any action which, in the judgment of the General Partner,
in its sole and absolute discretion, (i) could adversely affect the ability of
the General Partner to continue to qualify as a REIT, (ii) could subject the
General Partner to any additional taxes under Section 857 or Section 4981 of the
Code, ( iii) could violate any law or regulation of any governmental body or
agency having jurisdiction over the General Partner, its securities or the
Partnership; or (iv) could violate in any material respects any of the
covenants, conditions or restrictions now or hereafter placed upon or adopted by
the General Partner pursuant to any of its agreements or applicable laws and
regulations.

 

-47- 

 

 

1.3 Partnership Only for Partnership Purposes. This Agreement shall not be
deemed to create a Partnership, venture or partnership between or among the
Partners with respect to any activities whatsoever other than the activities
within the purposes of the Partnership. Except as otherwise provided in this
Agreement, no Partner shall have any authority to act for, bind, commit or
assume any obligation or responsibility on behalf of the Partnership, its
properties or any other Partner. No Partner, in its capacity as a Partner under
this Agreement, shall be responsible or liable for any indebtedness or
obligation of another Partner, and the Partnership shall not be responsible or
liable for any indebtedness or obligation of any Partner, incurred either before
or after the execution and delivery of this Agreement by such Partner, except as
to those responsibilities, liabilities, indebtedness or obligations incurred
pursuant to and as limited by the provisions of this Agreement and the Act.

 

1.4 Name. The business of the Partnership shall be conducted under the name
“AHIT Northern NM Properties, LLP”. The Partnership’s business may be conducted
under any other name or names deemed advisable by the General Partner, including
the name of the General Partner or any Affiliate thereof. The General Partner in
its sole and absolute discretion may change the name of the Partnership at any
time and from time to time and shall notify the Partners of such change in the
next regular communication to the Partners.

 

1.5 Principal Place of Business. The address of the registered office of the
Partnership in the State of Maryland is located at 7 Saint Paul Street Suite 820
in Baltimore, Maryland 21202. The principal office of the Partnership is located
at 34225 North 27th Drive, Building 5, Suite 238 in Phoenix, Arizona 85085, or
such other place as the General Partner may from time to time designate by
notice to the Limited Partners. The Partnership may maintain offices at such
other place or places within or outside the State of Maryland as the General
Partner deems advisable.

 

1.6 Effective Date and Term. The Partnership formed pursuant to this Agreement
shall be effective as of the date of this Agreement and shall continue for a
term ending upon the Limited Partners execution of its conversion rights
hereunder, unless earlier dissolved and terminated pursuant to the Act or any
provision of this Agreement.

 

1.7 Names and Addresses of General Partner and Limited Partner. The names and
addresses of the General Partner and Limited Partner are set forth at the
beginning of this Agreement.

 

1.8 Power of Attorney. Each Limited Partner hereby constitutes and appoints the
General Partner, and authorized officers and attorneys-in-fact of each, and each
of those acting singly, in each case with full power of substitution, as its
true and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:

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  (a)   execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (i) all certificates, documents and other instruments
(including this Agreement and the Certificate and all amendments, supplements or
restatements thereof) that the General Partner deems appropriate or necessary to
form, qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the Limited Partners have limited
liability) in the State of Maryland and in all other jurisdictions in which the
Partnership may or plans to conduct business or own property; (ii) all
instruments that the General Partner deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (iii) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of this
Agreement, including a certificate of cancellation; (iv) all instruments
relating to the admission, withdrawal, removal or substitution of any Partner
pursuant to the terms herein, (v) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges relating to Partnership Interests, and (vi) communicate with any and
all holders of Northern Property Indebtedness as defined in the Master UPREIT
Agreement; and           (b)   execute, swear to, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of the General
Partner to make, evidence, give, confirm or ratify any vote, consent, approval,
agreement or other action which is made or given by the Partners hereunder or is
consistent with the terms of this Agreement or appropriate or necessary, in the
sole and absolute discretion of the General Partner to effectuate the terms or
intent of this Agreement.

 

Nothing contained herein shall be construed as authorizing the General Partner
to amend this Agreement except in accordance with the provisions herein or as
may be otherwise expressly provided for in this Agreement. The foregoing power
of attorney is hereby declared to be irrevocable and a power coupled with an
interest, in recognition of the fact that each of the Limited Partners and
assignees will be relying upon the power of the General Partner to act as
contemplated by this Agreement in any filing or other action by it on behalf of
the Partnership.

 

Article II

Capital Contribution

 

2.1 General Partner. The General Partner shall contribute the consideration set
forth in the Master UPREIT Agreement to the capital of the Partnership.

 

2.2 Limited Partner. The Limited Partner shall contribute the Northern
Properties to the capital of the Partnership.

 

2.3 Additional Limited Partners. The General Partner may admit additional
Limited Partners to the Partnership on the payment of a capital contribution.

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Article III

Allocation of Profits, Losses, and Distributions

 

3.1 Allocation of Profits and Losses. Net profits or losses of the Partnership
(and their various items of income, expense, and credit for federal income tax
purposes) shall be allocated to the General Partner. This allocation is in
consideration of the General Partner, amongst other things, waiving its rights
to conversion, as set forth below, and waiving any rights to withdraw from the
Partnership.

 

3.2 Distribution of Cash. All cash remaining after paying the obligations
incurred for the acquisition, operation, and development of Partnership
properties, administrative costs, and capital expenditures and establishing a
cash reserve considered suitable by the General Partner shall be distributed to
the General Partner in accordance with that General Partner’s percentage
interest in the Partnership at the time of distribution.

 

3.3 Conversion Option. Commencing on the day after the first anniversary of the
closing of the Master UPREIT Agreement, each Partnership Interest held by the
Limited Partner shall be convertible, at the option of the holder thereof, at
any time and from time to time, and without the payment of additional
consideration by the holder thereof, into the number of fully paid and
nonassessable shares of common stock in the General Partner on a 1:1 basis. In
order for a Limited Partner to exercise its, his or her conversion rights, such
holder shall deliver to the General Partner’s Transfer Agent written notice in
the same or similar form as Exhibit B hereto that such holder elects to convert
all or any number of its, his or her Partnership Interests. Notwithstanding, the
General Partner, acting on behalf of the Partnership, may require any Limited
Partner to convert each of his, her or its Partnership Interests into the number
of fully paid and nonassessable shares of common stock in the General Partner
any time after the first anniversary of the closing of the Master UPREIT
Agreement by directing the General Partner’s Transfer Agent of the conversion,
and in the event of such an occurrence, the Limited Partner whose Partnership
Interest is being converted authorizes the General Partner’s Transfer Agent to
process the conversion. AHIT has agreed to waive any and all conversion rights
under this Section 3.3 until such time that the Limited Partner exercises its
conversion right and exchanges interests for shares in the General Partner under
Section 721 of the Internal Revenue Code.

 

Article IV

Rights and Obligations of the General Partner

 

4.1 Management of Partnership and Designation of Property Management Services by
Limited Partner. The management of the Partnership shall in all respects be the
full and complete responsibility of the General Partner alone. Between the
effective date of the closing of the Master UPREIT Agreement and the exercise of
the conversion option in Section 3.3, above, the General Partner agrees to
retain the designee of the Limited Partner to serve as “property manager” of the
Northern Properties, which shall not be confused with providing General Partner
duties in this Article IV.

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During the time period in which the Limited Partner’s designee serves as
“property manager,” the Limited Partner or the designee directly shall receive a
property management fee equal to a mutually agreeable yearly fee based on a good
faith analysis of net profits from the operation of the Partnership for the
year, but under no circumstances in excess of $120,000. This property management
fee shall be terminated upon the General Partner exercising its sole discretion
in the following paragraph,, by providing written notice to the Limited Partner.
Upon receipt of this notice, the Limited Partner, and any party that has relied
upon the designee’s representation that it serves as “property manager” of the
Northern Properties shall defer to the direction and management of the General
Partner. The termination of the designee of the Limited Partner under this
paragraph constitutes a waiver by the Limited Partner, or its designee, of the
property management fee set forth above. Thereafter, the General Partner, as
General Partner, shall devote to the management of the Partnership as much time
as it, in its sole discretion, determines is reasonably necessary for the
efficient property management of the Northern Properties, in addition to its
other duties and obligations as General Partner for the Partnership, including
but not limited to those in Section 4.3, below..

 

All decisions made for and on behalf of the Partnership by the General Partner
shall be binding on the Partnership. Except as expressly provided otherwise in
this Agreement, the General Partner (acting for and on behalf of the
Partnership), in extension and not in limitation of the rights and powers given
by law or by the other provisions of this Agreement, shall, in its sole
discretion, have the full and entire right, power, and authority to manage the
Partnership’s business, doing anything necessary, proper, or advisable to
effectuate or further the purposes of the Partnership.

 

4.2 Limitation on General Partner’s Authority. Notwithstanding anything to the
contrary contained in this Agreement, the General Partner shall not, without the
consent of all of the other Partners,

 

(a) take any action in contravention of this Agreement or its amendments;

 

(b) take any action that would make it impossible to carry on the purposes of
the Partnership, except the sale or other disposition of Partnership interests
or properties;

 

(c) confess a judgment against the Partnership; or

 

(d) amend this Agreement.

 

4.3 Certain Rights and Obligations of the General Partner. In addition to the
provisions of section 4.1, to carry out the purposes of the Partnership, the
General Partner

 

(a) May purchase or sell any real estate interests for the Partnership and may
execute on behalf of the Partnership all documents or instruments of any kind
that the General Partner may deem appropriate in carrying out the purposes of
the Partnership, including but not limited to construction contracts, mortgages,
deeds, assignments, leases, subleases, management agreements, or other contracts
of any kind or character or amendments to them, which relate to the affairs of
the Partnership.

 

(b) Shall maintain complete and accurate books of account for the term of the
Partnership, keeping the books at the General Partner’s offices and open to
inspection after reasonable notice and request by any Limited Partner or
authorized representative, at their expense, at any time during ordinary
business hours, and retaining the final books and records of the Partnership for
four years after the term of the Partnership ends.

-51- 

 

 

(c) Shall provide each Limited Partner with (i) an annual financial statement
within 90 days after December 31 of each calendar year, subject to any change in
the fiscal year of the Partnership, indicating the financial position of the
Partnership and (ii) a report containing information the General Partner deems
necessary to prepare federal income tax returns and that shall be furnished by
March 15 of each year.

 

(d) May purchase, at the Partnership’s expense, liability and other insurance to
protect the Partnership properties and business.

 

(e) May enter into any loan agreement to borrow money necessary or desirable to
conduct the Partnership’s business, including but not limited to loans to be
used, in whole or in part, to acquire, construct, or operate the project. The
General Partner is authorized to assign any portion or all of the Partnership
properties and revenues derived from it to secure the borrowed money or loan
agreements. Limited Partners shall have no personal liability for these borrowed
amounts. In no event will any lender have the election to convert its position
as a creditor into an equity interest in the Partnership or in the General
Partner. The General Partner may make unsecured loans and advances to the
Partnership. The interest on loans and advances made by the General Partner
shall not exceed amounts that would be charged by unrelated banks (without
regard to the General Partner’s financial abilities or guaranties) on comparable
loans for the same purpose, and no fees, points, or other financing charges will
be charged to the Partnership by the General Partner.

 

(f) Shall determine the extent that the property will be marketed, leased, sold,
or otherwise disposed of.

 

(g) May lease equipment necessary to manage and operate the property on the
terms and conditions it deems necessary and appropriate.

 

(h) Shall file a Certificate of Limited Partnership and any other necessary
instruments required to qualify the Partnership to do business in the states
where the Partnership conducts any activities or cause the limited partnership
status of the entity to be recognized.

 

(i) May admit additional limited partners.

 

(j) May invest Partnership funds in its discretion until the funds are committed
to Partnership activities, including retaining balances in interest-bearing or
non–interest-bearing bank accounts.

 

(k) May sell, exchange, distribute, or otherwise dispose of some or all of the
property or the project (even though doing so may cause a dissolution, winding
up, and termination of the Partnership).

 

(l) Shall do any and all things necessary or appropriate to accomplish the
purposes of the Partnership subject to the provisions of this Agreement. Any act
considered by the General Partner to be within the scope of authority conferred
by this Agreement and the Act shall be conclusively deemed to be so as long as
any Limited Partner who has notice of the act does not object in writing within
30 days.

 

(m) Notwithstanding any paragraphs to the contrary herein, or in any unrelated
agreement, shall not pay obligations associated with the Property Indebtedness
until conversion by the Limited Partner, as set forth above.

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4.4 Reliance on Acts of General Partner. No financial institution or any other
person, firm, or corporation dealing with the General Partner shall be required
to ascertain whether it is acting in accordance with this Agreement, but shall
be protected in relying solely on the assurance of and the execution of all
instruments by the General Partner.

 

Article V

Transfer of Partnership Interests

 

5.1 General Partner. The General Partner shall not sell, assign, pledge, or
otherwise encumber or dispose of its general partnership interest in the
Partnership or any part of it, and any attempt to do so shall be null and void,
unless doing so occurs after the Limited Partners’ conversion set forth in
Section 3.3.

 

5.2 Limited Partners. The interest of the Limited Partner shall not be
assignable unless the General Partner consents in writing that such assignment
does not interfere with the General Partner’s status as a REIT.

 

Article VI

Death, Insanity, Bankruptcy, Incompetency, or Removal of a Partner

 

6.1 Withdrawal of Limited Partner. Prior to the expiration of the Conversion
Period, as defined above, the Limited Partner may withdraw from the Partnership
only upon default by the General Partner of its duties and obligations under the
Master UPREIT Agreement or related agreements, or upon the dissolution,
liquidation, or bankruptcy of the General Partner. In the event of withdrawal
during this time period for the reasons stated above, the Limited Partner’s
designee serving as management of the Partnership under Article IV, above, or
the General Partner in the event it exercised its discretion as set forth under
Article IV, shall quit claim the Northern Properties to the Limited Partner or
its designee. If the Limited Partner is adjudicated bankrupt, the Partnership
shall not terminate, and the administrator of the bankrupt Limited Partner shall
become an assignee of the interest of that Limited Partner.

 

6.2 Withdrawal of General Partner. The General Partner may not withdraw from the
Partnership without the express written consent of the Limited Partner.

 

6.3 Removal of General Partner. The Limited Partner shall have no right, power,
or authority to remove the General Partner.

 

Article VII

Termination of Partnership

 

7.1 Termination. The Partnership shall dissolve on the expiration of the term
specified in section 1.6, by agreement of the Partners or on the sale of
substantially all of the Partnership’s assets. On any such termination, the
General Partner shall wind up the Partnership and apply and distribute its
assets as provided in section 3.2.

-53- 

 

 

Article VIII

Indemnification

 

8.1 Indemnification of Limited Partner by General Partner. The General Partner
agrees to indemnify and hold the Limited Partner harmless against any losses or
claims arising as a result of any false statements appearing in any Certificate
of Limited Partnership filed by the General Partner on behalf of the
Partnership.

 

8.2 Indemnification and Hold Harmless of General Partner by Limited Partner. The
Limited Partner has been advised by its own counsel and advisors of the
potential tax ramifications and liabilities associated with certain transfers of
real property to the Limited Partner under Section 351 of the Code, and the
conversion of units to shares under Section 721 of the Code. The Limited Partner
represents and warrants that it has relied on its own advisors recommendations
and advice associated with these provisions of the Code, amongst others. The
Limited Partner agrees to indemnify and hold the General Partner harmless
against any claims, audits, losses or other damages arising out of any
interpretations or applications of law associated with these specific Code
provisions.

 

8.3 Limited Indemnification of the Limited Partner and General Partner by the
Partnership. The Limited Partner and the General Partner have made certain
representations in the Master Agreement and this Agreement regarding the
intended tax treatment of the contribution of properties to the Partnership and
the intended tax treatment of the exchange of LP Units for shares of common
stock in the General Partner. Notwithstanding this expressed intended tax
treatment, the parties are cognizant of the fact that certain unforeseen
circumstances might arise throughout their relationship, and performance of
their respective duties and obligations under this Agreement, resulting in tax
liability to the General Partner and/or the Limited Partner contrary to the
intended tax treatment set forth in this Agreement.

 

The parties have agreed that the Partnership shall indemnify the General Partner
and the Limited Partner, to the extent funds are available, associated with any
resulting tax liability as a result of the conversion event set forth in Section
3.3, above, and any other related provision in the Master Agreement or this
Agreement regarding the conversion event. The parties agree that this indemnity
obligation under Section 8.3 shall not be borne, in any respect, by the General
Partner or the Limited Partner in any manner.

 

To the extent both parties seek indemnity under this Section 8.3 associated with
a taxable event associated with the conversion, the indemnity shall be split
between the parties based on their respective LP Unit holdings. The payment of
indemnity hereunder is limited to (a) the amount of the tax liability or
obligation of the General Partner and/or Limited Partner, depending on the
circumstances, minus any tax liability or obligation resulting from actions or
decisions by the General Partner and/or Limited Partner, depending on who is
making the claim for indemnity, on matters not associated with the Partnership
(i.e. the Partnership shall not be responsible for any actions of the General
Partner or Limited Partner outside the ordinary course of the Partnership’s
business or the Master Agreement or this Agreement, and (b) reasonable attorney
fees and costs, and auditor and accounting fees. This indemnity obligation is
limited by the amount of funds available to the Partnership so as to not
interfere with the ordinary course of the Partnership’s business and its ability
to pay expenses of the Partnership in the ordinary course.

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Article X

Miscellaneous

 

9.1 Governing Law. The Partnership and this Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland.

 

9.2 Agreement for Further Execution. At any time, on the General Partner’s
request, the Partners agree to sign, swear to, or acknowledge the certificate of
limited partnership required by the Act; to sign, swear to, or acknowledge any
amendment to or cancellation of the certificate whenever that amendment or
cancellation is required by law; to sign, swear to, or acknowledge similar
certificates or affidavits or certificates of a fictitious firm name, trade
name, or the like (and any amendments or cancellations of them) required by the
laws of Michigan or any other jurisdiction in which the Partnership does, or
proposes to do, business and file these documents for record when the filing is
required by law. This section shall not prejudice or affect the rights of
Limited Partners to approve certain amendments to this Agreement as provided in
Section 10.2.

 

9.3 Entire Agreement. This Agreement is to be read consistent with the Master
UPREIT Agreement and Contribution Agreements by and between the parties to
effectuate the intent of creating an UPREIT structure. This Agreement, and the
related agreements identified in the preceding sentence, contain the entire
understanding among the parties and supersedes any previous understanding and
agreements between them respecting the subject matter of this Agreement. There
are no representations, agreements, arrangements, or understandings, oral or
written, between or among the parties to this Agreement, relating to the subject
matter of this Agreement, that are not fully expressed in this Agreement.

 

9.4 Severability. This Agreement is intended to be performed in accordance with,
and only to the extent permitted by, all applicable laws, ordinances, rules, and
regulations of the jurisdictions in which the Partnership does business. If any
provision of this Agreement or its application to any person or circumstance
shall, for any reason and to any extent, be invalid or unenforceable, the
remainder of this Agreement and the application of that provision to other
persons or circumstances shall not be affected by it, but rather shall be
enforced to the greatest extent permitted by law.

 

9.5 Notices. Notices to Partners or to the Partnership shall be deemed to have
been given when mailed by prepaid registered or certified mail and addressed as
set forth in this Agreement or as set forth in any notice or change of address
previously given in writing by the addressee to the addresser.

 

9.6 Further Action. The Partners shall execute and deliver all documents,
provide all information and take or refrain from taking action as may be
necessary or appropriate to achieve the purposes of this Agreement.

 

9.7 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.

 

9.8 Counterparts. This Agreement may be executed in any number of identical
counterparts, any of which may contain the signatures of less than all parties,
and all of which together shall constitute a single agreement.

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9.9 Fax Signatures. Any signature page hereto delivered by a fax machine or
telecopy machine shall be binding to the same extent as an original signature
page, with regard to any agreement subject to the terms hereof or any amendment
thereto. Any party who delivers such a signature page agrees to later deliver an
original counterpart to any party that requests it.

 

9.10 Partial Invalidity. The provisions hereof shall be deemed independent and
severable, and the invalidity or partial invalidity or enforceability of any one
provision shall not affect the validity of enforceability of any other provision
hereof.

 

9.11 Waiver. No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition. The
restrictions, conditions and other limitations on the rights and benefits of the
Limited Partners contained in this Agreement, and the duties, covenants and
other requirements of performance or notice by the Limited Partners, are for the
benefit of the Partnership and, except for an obligation to convey the Northern
Properties to the Partnership pursuant to the Master UPREIT Agreement, may be
waived or relinquished by the General Partner, in its sole and absolute
discretion, on behalf of the Partnership in one or more instances from time to
time and at any time; provided, however, that any such waiver or relinquishment
may not be made if it would have the effect of (i) creating liability for any
Limited Partner, (ii) causing the Partnership to cease to qualify as a limited
partnership, (iii) reducing the amount of cash otherwise distributable to the
Limited Partners, (iv) resulting in the classification of the Partnership as an
association or publicly traded partnership taxable as a corporation or
(v) violating the Securities Act, the Exchange Act or any state “blue sky” or
other securities laws; provided, further, that any waiver relating to compliance
with the ownership limit or other restrictions in the Articles of Incorporation
shall be made and shall be effective only as provided in the Articles of
Incorporation.

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9.12 Limitation to Preserve REIT Status. Notwithstanding anything else in this
Agreement, to the extent that the amount paid, credited, distributed or
reimbursed by the Partnership to any REIT Partner or its officers, directors,
employees or agents, whether as a reimbursement, fee, expense or indemnity (a
“REIT Payment”), would constitute gross income to the REIT Partner for purposes
of Code Section 856(c)(2) or Code Section 856(c)(3), then, notwithstanding any
other provision of this Agreement, the amount of such REIT Payments, as selected
by the General Partner in its discretion from among items of potential
distribution, reimbursement, fees, expenses and indemnities, shall be reduced
for any fiscal year so that the REIT Payments, as so reduced, for or with
respect to such REIT Partner shall not exceed the lesser of: (i) an amount equal
to the excess, if any, of (a) four and nine-tenths percent (4.9%) of the REIT
Partner’s total gross income (but excluding the amount of any REIT Payments) for
the Fiscal Year that is described in subsections (A) through (H) of Code
Section 856(c)(2) over (b) the amount of gross income (within the meaning of
Code Section 856(c)(2)) derived by the REIT Partner from sources other than
those described in subsections (A) through (H) of Code Section 856(c)(2) (but
not including the amount of any REIT Payments); or (ii) an amount equal to the
excess, if any, of (a) twenty-four percent (24%) of the REIT Partner’s total
gross income (but excluding the amount of any REIT Payments) for the Fiscal Year
that is described in subsections (A) through (I) of Code Section 856(c)(3) over
(b) the amount of gross income (within the meaning of Code Section 856(c)(3))
derived by the REIT Partner from sources other than those described in
subsections (A) through (I) of Code Section 856(c)(3) (but not including the
amount of any REIT Payments); provided, however, that REIT Payments in excess of
the amounts set forth in clauses (i) and (ii) above may be made if the General
Partner, reasonably determines, on the advice of counsel, that the receipt of
such excess amounts shall not adversely affect the REIT Partner’s ability to
qualify as a REIT. To the extent that REIT Payments may not be made in a fiscal
year as a consequence of the limitations set forth herein, such REIT Payments
shall carry over and shall be treated as arising in the following fiscal
year(s). The purpose of the limitations contained herein is to prevent any REIT
Partner from failing to qualify as a REIT under the Code by reason of such REIT
Partner’s share of items, including distributions, reimbursements, fees,
expenses or indemnities, receivable directly or indirectly from the Partnership,
and this Section shall be interpreted and applied to effectuate such purpose. 

 

9.13 No Partition. No Partner nor any successor-in-interest to a Partner shall
have the right while this Agreement remains in effect to have any property of
the Partnership partitioned, or to file a complaint or institute any proceeding
at law or in equity to have such property of the Partnership partitioned, and
each Partner, on behalf of itself and its successors and assigns hereby waives
any such right. It is the intention of the Partners that the rights of the
parties hereto and their successors-in-interest to Partnership property, as
among themselves, shall be governed by the terms of this Agreement, and that the
rights of the Partners and their successors-in-interest shall be subject to the
limitations and restrictions as set forth in this Agreement.

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9.14 No Third-Party Rights Created Hereby. The provisions of this Agreement are
solely for the purpose of defining the interests of the Partners, inter se; and
no other person, firm or entity (i.e., a party who is not a signatory hereto or
a permitted successor to such signatory hereto) shall have any right, power,
title or interest by way of subrogation or otherwise, in and to the rights,
powers, title and provisions of this Agreement. No creditor or other third party
having dealings with the Partnership (other than as expressly set forth herein
with respect to Indemnitees) shall have the right to enforce the right or
obligation of any Partner to make capital contributions or loans to the
Partnership or to pursue any other right or remedy hereunder or at law or in
equity. None of the rights or obligations of the Partners herein set forth to
make Capital Contributions or loans to the Partnership shall be deemed an asset
of the Partnership for any purpose by any creditor or other third party, nor may
any such rights or obligations be sold, transferred or assigned by the
Partnership or pledged or encumbered by the Partnership to secure any debt or
other obligation of the Partnership or any of the Partners.

 

9.15 No Rights as Stockholders. Nothing contained in this Agreement shall be
construed as conferring upon the Limited Partners any rights whatsoever as
vested stockholders of the General Partner, including without limitation any
right to receive dividends or other distributions made to stockholders of the
General Partner or to vote or to consent or receive notice as stockholders in
respect of any meeting of stockholders for the election of directors of the
General Partner or any other matter.

 

9.16 Construction. Whenever used in this Agreement, the singular shall include
the plural and vice versa (where applicable), the use of the masculine, feminine
or neuter gender shall include the other genders (unless the context otherwise
requires), the words “hereof,” “herein,” “hereto,” “hereby,” “hereunder” and
other words of similar import refer to this Agreement as a whole (including all
schedules and exhibits), the words “include,” “includes” and “including” shall
mean “include, without limitation,” “includes, without limitation” and
“including, without limitation,” respectively. Each party has been represented
by its own counsel in connection with the negotiation and preparation of this
Agreement and, consequently, each party hereby waives the application of any
rule of law that would otherwise be applicable in connection with the
interpretation of this Agreement, including any rule of law to the effect that
any provision of this Agreement shall be interpreted or construed against the
party whose counsel drafted that provision. The Limited Partner agrees that the
General Partner is represented by separate legal counsel and that it has not
relied on the General Partner’s legal advice, nor has it sought of the General
Partner’s legal counsel or its accountants, for any legal or accounting advice,
respectively.

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Each of the parties to this Agreement has executed and sworn to this Agreement
or has caused this Agreement to be duly executed on its behalf by its duly
authorized officer listed on the first page of this Agreement.

 

GENERAL PARTNER

 

AMERICAN HOUSING INCOME TRUST, INC.,

a Maryland corporation.

 

   /s/ Jeff Howard

By: Jeff Howard

  Its: Chief Executive Officer and President

 

  LIMITED PARTNERS

 

  Northern New Mexico Properties, LLC,

  a New Mexico limited liability company

 

  /s/ Jerry Lopez

By: Jerry Lopez

Its: Member

Date:

 

 /s/ Les Gutierrez

By: Les Gutierrez

Its: Member

 Date:

 

  /s/ Camilla S. Lopez________________________

By: Camilla S. Lopez

Its: Member

 Date:

 

AMERICAN HOUSING INCOME TRUST, INC.,

a Maryland corporation.

 

/s/ Jeff Howard____________________________

By: Jeff Howard

Its: Chief Executive Officer and President

 

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Exhibit A to Partnership Agreement

Certificate of Partnership Interest

AHIT NORTHERN NM PROPERTIES, LLP

a Maryland limited liability partnership

 

Certificate No. 1

 

___ % Partnership Interest

 

The undersigned, being the authorized member of the General Partner of AHIT
Northern NM Properties, LLP, a Maryland limited liability partnership (the
“Partnership”), hereby certifies that _______________, is a Limited Partner of
the Partnership and owner of record of ___% of the limited partnership interests
in the Partnership, with the rights, preferences, and limitations of which as
set forth in the Limited Liability Partnership Agreement, dated as of July 8,
2016, as amended from time to time (the “Agreement”), and the Master UPREIT
Agreement, as defined in the Agreement, and as amended from time to time (the
“Master Agreement”). Copies of the Agreement and Master Agreement are on file at
the Partnership’s principal office and available for inspection and/or may be
obtained without cost upon request from the Partnership. This Certificate is
transferable only on the books of the Partnership by the holder hereof or by a
duly authorized attorney upon surrender of this certificate properly endorsed
and the transfer of this limited partnership interest is subject to restrictions
as set forth in the Agreement and the Master Agreement, and the transfer of the
related partnership rights may be effected only upon compliance with the terms,
provisions and procedures as set forth in the Agreement.

 

Dated: July 13 , 2016            

By: /s/ Jeff Howard______________________

Name: Jeff Howard

           Title: Director, Chief Executive Officer and President of American
Housing Income Trust, Inc., a Maryland corporation

 

This certificate evidences a LIMITED PARTNERSHIP INTEREST in AHIT NORTHERN NM
PROPERTIES, lLp and shall be a security for purposes of Article 8 of the Uniform
Commercial Code of the State of MARYLAND. The securities represented by this
certificate have been acquired for investment and haVE not been registered under
the Securities Act of 1933, as amended, or any applicable state securities laws.
Without such registration, such securities may not be sold or otherwise
transferred at any time whatsoever unless, in the opinion of counsel
satisfactory to the PARTNERSHIP, (1) registration is not required for such
transfer and (2) such transfer will not be in violation of the Act or applicable
state securities laws, or any rule or regulation promulgated thereunder.

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ANY SALE OR TRANSFER OF THESE LIMITED PARTNERSHIP INTERESTS OR ANY PART THEREOF,
OR RECEIPT OF ANY CONSIDERATION THEREFOR, SHALL OCCUR IN COMPLIANCE WITH THE
PROVISIONS OF THE AGREEMENT. ANY UNAUTHORIZED ASSIGNMENT OR TRANSFER SHALL BE
VOID AB INITIO. BY ACCEPTANCE OF THIS CERTIFICATE AND, AS A CONDITION TO BEING
ENTITLED TO ANY RIGHTS IN OR BENEFITS WITH RESPECT TO THE LIMITED PARTNERSHIP
INTERESTS EVIDENCED HEREBY, A HOLDER HEREOF (INCLUDING ANY TRANSFEREE HEREOF) IS
DEEMED TO HAVE AGREED, WHETHER OR NOT SUCH HOLDER IS ADMITTED TO THE PARTNERSHIP
AS A SUBSTITUTED LIMITED PARTNER, TO COMPLY WITH AND BE BOUND BY ALL TERMS AND
CONDITIONS OF THE AGREEMENT.

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(REVERSE SIDE OF SHARE CERTIFICATE)

 

FOR VALUE RECEIVED, _____________________________________________________ hereby
sells, assigns and transfers unto ___________________________________ a limited
partnership interest represented by the within Limited Partnership Certificate,
and does hereby irrevocably constitute and appoint_______________________
attorneys to transfer the said limited partnership interest on the books of the
within-named Limited Partnership with full power of substitution in the
premises.

Dated: ______________________

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Exhibit B to Partnership Agreement

Conversion Notice

To: American Housing Income Trust, Inc., or Transfer Agent for American Housing
Income Trust, Inc.

 

As a Limited Partner of AHIT Northern NM Properties, LLP, a Maryland limited
liability partnership (“AHIT Northern”), I hereby exercise my right under the
Master UPREIT Agreement (“Master Agreement”) and the Limited Liability
Partnership Agreement to convert _________ Limited Liability Partnership
Interests in AHIT Northern into _________ shares of common stock in American
Housing Income Trust, Inc. (“AHIT”) – a 1:1 exchange ratio. I represent,
warrant, certify and agree that I am a Qualifying Party, as defined under the
Master Agreement, and that I am, and at the closing of the conversion, will have
good, marketable and unencumbered title to the Partnership Interests, free and
clear of the rights or interests of any other person or entity. I have the full
right, power and authority to tender and surrender my Partnership Interests to
AHIT Northern in consideration of the issuance of shares of common stock in
AHIT. To the extent necessary, I have obtained the consent or approval of all
persons and entities having the right to consent to or approve such tender and
surrender.

Dated: __________________________

________________________________

Name of Limited Partner

 

________________________________

Street Address

 

__________________, _________ __________

City State Zip Code

 

____________________________

Social Security Number or EIN

 

APPROVED BY AMERICAN HOUSING INCOME TRUST

 

 

By:_______________________

 

Its: _______________________

 

Dated: ____________________

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Exhibit C

 

Certification of Limited Liability Partnership

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Exhibit D

Northern Property Indebtedness

 

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