FIRST AMENDED AND RESTATED Limited Liability Partnership Agreement

 

of

 

AHIT Valfre, LLP

 

This First Amended and Restated Limited Partnership Agreement of AHIT Valfre,
LLP, a Maryland limited liability partnership (this “Agreement”) is effective as
of March ___, 2016 between AHIT Valfre GP, LLC, a Maryland limited liability
company (the “General Partner” unless otherwise noted) and wholly-owned
subsidiary of American Housing Income Trust, Inc., a Maryland corporation and
reporting company under the rules promulgated by the United States Securities
and Exchange Commission located at 34225 North 27th Drive, Building 5, Suite 238
in Phoenix, Arizona 85085, and the limited partner identified below in this
introductory section (the “Limited Partner” or the “REIT Partner”). The General
Partner and Limited Partner are sometimes collectively referred to as the
“Partners” and individually as a “Partner.” AHIT Valfre, LLP is referred to
herein as the “Partnership”.

 

WHEREAS, the Partners formed the Partnership pursuant to the Maryland Revised
Uniform Partnership Act, on the terms and conditions set forth in the original
Limited Partnership Agreement dated August 1, 2015 (the “Partnership
Agreement”), and consistent with the Master UPREIT Formation Agreement (the
“Master UPREIT Agreement”). This Agreement amends, restates, replaces and
supersedes the Partnership Agreement; however, this Agreement is to be read
consistent with the Master UPREIT Agreement since the intent of the Partners is
to restructure the Partnership to accommodate the underwriting requirements of
FirstKey Mortgage, LLC, and, at the same time, continue to honor the conversion
rights of the original limited partners, but now as members of the Limited
Partner.

 

WHEREAS, the Partners entered into the Master UPREIT Agreement to create an
umbrella partnership real estate investment trust, or commonly referred to as an
“UPREIT,” which since execution, has served as a subsidiary limited partnership
of American Housing Income Trust, Inc. (“AHIT”). The Partnership acquired from
the original limited partners – i.e., Valfre Holdings, LLC, an Arizona limited
liability company, and James and Pamela Valfre (collectively referred to herein
as the “Valfres”), those parcels of real property defined in the Master UPREIT
Agreement as the “Valfre Properties” in exchange for Common Units in the
Partnership. The Partnership directly owns, in full and in fee simple the Valfre
Properties. The parties’ intent in forming the Partnership was 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.
Under the Partnership Agreement, the general partner thereunder, i.e. AHIT,
issued the Valfres put options to be exercised pursuant to the terms of the
Partnership Agreement. The partners under the Partnership Agreement had agreed
that the Valfres would be issued the following limited partnership interests
under the Partnership Agreement, which now equate to the number of membership
units held by the Valfres in the special purpose entity Operating Agreement for
the Limited Partner:

 

Valfre Holdings, LLC 69,555

James A. Valfre 192,050

Pamela J. Valfre 38,421

 

WHEREAS, in order to meet the underwriting requirements of Lender, for purposes
of identification of equity interests in the Partnership, the Partners agree
that the General Partner retains a 1% equity ownership in the Partnership and
the Limited Partner retains 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.”

 

WHEREAS, AHIT and the Valfres, and the General Partner and Limited Partner
herein, have agreed to restructure the Partnership Agreement to accommodate the
underwriting requirements of FirstKey Mortgage, LLC, but preserving the
conversion rights of the Partnership Interests. In order to do so, the members
of the Limited Partner, i.e. the Valfres, have been granted the conversion
option into shares of restricted common stock of AHIT, subject to the
Registration Rights Agreement, as amended, through their membership interest in
the Limited Partner.

 

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WHEREAS, the Partners have agreed to the definitions set forth below.
Capitalized terms not otherwise set forth below shall have the meanings set
forth in the Loan Documents identified below:

 

(a) “Creditors Rights Laws” means any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship, arrangement, adjustment, winding-up,
liquidator, dissolution, composition of other relief with respect to its debts
or debtors.

 

(b) “Debt” means the outstanding principal amount of the Loan together with all
interest unpaid thereon and all other sums due to Lender at any time under the
Loan Documents.

 

(c) “Debt Service” means, with respect to any particular period of time,
scheduled principal and interest payments under the Loan.

 

(d) “Governmental Authority” means any court, board, agency, commission, office
or other authority of any nature whatsoever for any governmental unit (foreign,
federal, state, county, district, municipal, city or otherwise) whether now or
hereafter in existence.

 

(e) “Indebtedness” means, for any Person, any indebtedness or other similar
obligation for which that Person is directly or indirectly obligated (by
contract, operation of law or otherwise), including, without limitation: (i) all
indebtedness of that Person for borrowed money, for amounts drawn under a letter
of credit or for the deferred purchase price of property for which that Person,
or its assets is liable; (ii) all unfunded amounts under a loan agreement,
letter of credit or other credit facility for which that Person would be liable
if those amounts were advanced thereunder; (iii) all amounts required to be paid
by that Person by contract and/or as guaranteed payment (including, without
limitation, any such amounts required to be paid to partners or Members and/or
as a preferred or special dividend, including any mandatory redemption of shares
or interests); (iv) all indebtedness directly or indirectly incurred and/or
guaranteed by that Person (including, without limitation, contractual
obligations of that Person); (v) all obligations under leases that constitute
capital leases for which that Person is liable; and (vi) all obligations of that
Person under interest rate swaps, caps, floors, collars and other interest hedge
agreements, in each case whether that Person is liable contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations that Person otherwise assures a creditor against loss.

 

(f) “Legal Requirements” means all applicable federal, state, county, municipal
and other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions of any Governmental Authority affecting the
Partnership or the Property or any part thereof, or the construction, use,
alteration or operation thereof, or any part thereof, whether now or hereafter
enacted and in force, including, without limitation, the Americans with
Disabilities Act of 1990, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to the
Partnership, at any time in force affecting the Partnership or the Property or
any part thereof, including, without limitation, any which may (i) require
repairs, modifications or alterations in or to the Property or any part thereof,
or (ii) in any way limit the use and enjoyment thereof.

 

(g) “Lender” means FIRSTKEY MORTGAGE, LLC, a Florida limited liability company,
and its successors and/or assigns with respect to the Loan.

 

(h) “Loan” means, collectively, the loan made by Lender to the Partnership
pursuant to the Loan Documents together with all amendments, restatements,
advancements and other modifications thereof.

 

(i) “Loan Cooperation Agreement” means that Loan Cooperation Agreement executed
by Lender and the Partnership with respect to the Loan.

 

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(j) “Loan Documents” mean, collectively, the Loan Cooperation Agreement and the
Note, the Security Instrument, the Assignment of Management Agreement, the
Guaranty, the Pledge Agreement, the Pledge Guaranty and all other documents
executed and/or delivered in connection with the Loan.

 

(k) “Person” means any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.

 

(l) “Personal Property” means, individually and/or collectively (as the context
requires), the “Personal Property” as defined in each applicable Security
Instrument.

 

(m) “Pledge Agreement” means that Pledge and Security Agreement, dates as of the
date hereof, by Pledgor in Lender’s favor, as it may be amended, restated,
replaced, supplemented or otherwise modified from time to time, and pursuant to
which 100% of the Equity interests in Borrower have been pledged to Lender as
additional Security for the Debt.

 

(n) “Pledge Guaranty” means that Guaranty of the Debt, dated as of the date
hereof, by Pledgor in Lender’s favor, as it may be amended, restated, replaced,
supplemented or otherwise modified from time to time, and which is secured by
the Pledge Agreement.

 

(o) “Pledgor” means collectively AHIT Valfre GP, LLC and AHIT Valfre Limiteds,
LLC, i.e. the Partners.

 

(p) “Property” and/or “Properties” shall mean the real properties described on
Exhibit C to this Agreement. Exhibit C hereto replaces Schedule B of the Master
Agreement.

 

(q) “Security Instrument” and “Security Instruments” mean, individually and/or
collectively (as the context requires), each first priority mortgage, deed of
trust, deed to secure debt (or similar instrument), dated the date hereof,
executed and delivered by the Partnership in Lender’s favor (or for Lender’s
benefit, as applicable) as security for the Loan and encumbering the Property
(or any portion thereof), as any such instrument may be amended, restated,
replaced, supplemented or otherwise modified from time to time in accordance
with the terms of the Loan Documents.

Article I

Organization

 

1.1 Formation. The parties form 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 AHIT, at all times to be classified as a REIT and
avoid the imposition of federal income and excise taxes on the General Partner
or AHIT, unless AHIT 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 AHIT from terminating its
status as a REIT under the Code at any time (following which the proviso
contained in clause (i) above shall no longer be applicable). Notwithstanding
anything to the contrary herein, at all times prior to repayment of the Loan in
full and the release or discharge of the Security Instrument, the sole purpose
to be conducted or promoted by the Partnership is to engage in the following
activities:

 

(a) the ownership, operation and maintenance of the Property, and activities
incidental thereto;

 

(b) to enter into and perform its obligations under the Loan Documents;

 

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(c) to sell, transfer, service, convey, dispose of, pledge, assign, borrow money
against, finance, refinance or otherwise deal with the Property to the extent
permitted under the Loan Documents; and

 

(d) to engage in any lawful act or activity and to exercise any powers permitted
to limited liability partnerships under the laws of the State of Maryland that
are related or incidental to and necessary, convenient or advisable for the
accomplishment of the above mentioned purposes.

 

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
AHIT 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;
(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, or (v)
could violate the terms of the Loan Documents or any operational limitations of
the Partnership by virtue of its relationship with the Lender, as set forth
herein.

 

1.3 Partnership Only for Partnership Purposes, and Single Purpose Entity. This
Agreement shall not be deemed to create a joint 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.
Furthermore, at all times prior to repayment of the Loan in full and the release
or discharge of the Security Instrument, the Partnership shall not:

 

(a) engage in any business or activity other than the ownership, operation and
maintenance of the Property, and activities incidental thereto;

 

(b) acquire or own any assets other than (i) the Property, and (ii) such
incidental Personal Property as may be necessary for the ownership, leasing,
maintenance and operation of the Property;

 

(c) fail to observe all organizational formalities, or fail to preserve its
existence as an entity duly organized, validly existing and in good standing (if
applicable) under applicable Legal Requirements of the jurisdiction of its
organization or formation, or amend, modify, terminate or fail to comply with
the provisions of its organizational documents;

 

(d) own any subsidiary, or make any investment in, any Person;

 

(e) commingle its assets with the assets of any other Person;

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(f) incur any indebtedness, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (1) the Debt and/or (2)
trade and operational indebtedness incurred in the ordinary course of business
with trade creditors, provided that indebtedness is (i) unsecured, (ii) not
evidenced by a note, (iii) on commercially reasonable terms and conditions, and
(iv) due not more than 60 days past the date incurred and paid on or prior to
that date, and/or (3) Permitted Equipment Leases; provided, however, the
aggregate amount of the indebtedness described in (2) and (3) shall not exceed
at any time 3% of the outstanding principal amount of the Debt. No Indebtedness
other than the Debt may be secured (subordinate or pari passu) by the Property;

 

(g) fail to maintain all of its books, records, financial statements and bank
accounts separate from those of its affiliates and any constituent party. The
Partnership’s assets will not be listed as assets on the financial statement of
any other Person; provided, however, the Partnership’s assets may be included in
a consolidated financial statement of its affiliates (including Pledgor)
provided (i) appropriate notation shall be made on those consolidated financial
statements to indicate the separateness of the Partnership and those Person and
to indicate that the Partnership’s assets and credit are not available to
satisfy the debts and other obligations of those Persons or any other Person and
(ii) those assets shall be listed on the Partnership’s and Pledgor’s own
separate balance sheet. The Partnership will maintain its books, records,
resolutions and agreements of official records;

 

(h) enter into any contract or agreement with any general partner, member,
shareholder, principal or Affiliate, expect upon terms and conditions that are
intrinsically fair and substantially similar to those that would be available on
an arm’s-length basis with unaffiliated third parties;

 

(i) maintain its assets in such a manner that it will be costly or difficult to
segregate, ascertain or identify its individual assets from those of any other
Person;

 

(j) assume or guaranty the debts or any other Person, hold itself out to be
responsible for the debts of any other Person, otherwise pledge its assets for
the benefit of any other Person or hold out its credit as being available to
satisfy the obligations of any other Person;

 

(k) make any loans or advances to any Person;

 

(l) fail to file its own tax returns (unless prohibited by Legal Requirements
from doing so);

 

(m) fail either to hold itself out to the public as legal entity separate and
distinct from any other Person or to conduct its business solely its own name or
fail to correct any known misunderstanding regarding its separate identity;

 

(n) fail to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations (to the extent there exists sufficient cash
flow from the Property to do so after the payment of all operating expenses and
Debt Service, but this covenant shall not require any equity owner to make
additional capital contributions to the Partnership);

 

(o) without the unanimous written consent of all of its Partners (a) file or
consent to the filing of any petition, either voluntary or involuntary, to take
advantage of any Creditors Rights Laws, (b) seek or consent to the appointment
of a receiver, liquidator or any similar official, (c) take any action that
might cause that entity to become insolvent, or (d) make an assignment for the
benefit of creditors.

 

(p) fail to allocate shared expenses (including, without limitation, shared
office space) of fail to use separate stationery, invoices and checks;

 

(q) fail to pay its own liabilities (including, without limitation, salaries of
its own employees) from its own funds or fail to maintain a sufficient number of
employees in light of its contemplated business operations (in each case to the
extent there exists sufficient cash flow from the Property to do so);

 

(r) acquire obligations or securities of the Partners, members, shareholders or
other Affiliates, as applicable, or

 

(s) identify the Partners, members, shareholders or other Affiliates, as
applicable, as a division or part of it.

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1.4 Name. The Partnership shall not change (or permit to be changed) its (a)
name, (b) identity (including its trade name or names), (c) principal place of
business or (d) the Partnership’s structure, without notifying Lender of that
change in writing at least 30 days prior to the effective date of the change
and, in the case of a change in the Partnership’s structure, without first
obtaining Lender’s prior written consent.

 

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. At all times prior to repayment of the Loan in full,
the Partnership shall continue to engage in the businesses now conducted by it
as and to the extent necessary for the ownership, maintenance, management and
operation of the Property. The Partnership shall qualify to do business and
shall remain in good standing under the laws of each jurisdiction as and to the
extent required for the ownership, maintenance, management and operation of each
Property.

 

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 Waiver of Right to Dissolve or Terminate. Notwithstanding anything to the
contrary contained herein (including, without limitation, Section 1.6 above), at
all times prior to repayment of the Loan is full and the release or discharge of
the Security Instrument, the Partnership and its Partners hereby waive their
right to dissolve or terminate (and waive their right to consent to the
dissolution or termination of) the Partnership or this Agreement, and shall not
take any action towards that end, except upon the express prior written consent
of Lender. Further, the death, retirement, incapacity, insanity, expulsion or
resignation, bankruptcy, insolvency, dissolution or other similar proceeding of,
or pertaining to, any Partner, or any other event or act causing dissolution of
the Partnership pursuant to the Act or this Agreement, shall not constitute an
event of liquidation, dissolution or termination of the Partnership or this
Agreement, except upon the express prior written consent of Lender.

 

1.8 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.

 

1.9 Power of Attorney. The 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:

 

(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 Valfre Property Indebtedness as defined in the Master Agreement;
and

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(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 Valfre 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.

 

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 with the Limited Partner
retaining rights associated with the conversion option defined in Section 3.3,
below.

 

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
each 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
Master UPREIT Agreement, each membership unit of 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 AHIT
on a 1:1 basis. The Partnership may require a member of the Limited Partner to
convert his, her or its membership interest in the Limited Partner into the
number of fully paid and nonassessable shares of common stock in AHIT after the
first anniversary of the Master UPREIT Agreement. In order for a member of the
Limited Partner to exercise his, her or its conversion right, it shall deliver
to AHIT’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
membership interest in the Limited Partner.

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Article IV

Rights and Obligations of the General Partner

 

4.1 Management of Partnership. The management of the Partnership shall in all
respects be the full and complete responsibility of the General Partner alone.
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 operation of the Partnership. 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, but
subject to Section 1.3, 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.

 

(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.

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(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, subject to the restrictions in Section
1.7, above).

 

(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.

 

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’ exercise of its conversion
rights herein.

 

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 AHIT’s status as a REIT.

 

5.3 Restrictions Upon Transfers of Interests. Notwithstanding anything to the
contrary herein, at all times prior to repayment of the Loan in full and the
release of discharge of the Security Instrument, the Partnership shall not allow
transfers of direct or indirect ownership interests in or control rights over
the Partnership that would violate the provisions of the Loan Documents, other
than the Limited Partner’s member’s exercise of their respective conversion
rights (as permitted by the Loan Documents).

 

Article VI

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

 

6.1 Withdrawal of Limited Partner. The Limited Partner may not withdraw from the
Partnership unless otherwise allowed for under this Agreement. If the Limited
Partner is adjudicated bankrupt, the Partnership shall not terminate, and the
administrator or trustee, as the case may be, 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.

 

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Article VII

Termination of Partnership

 

7.1 Termination. Subject to the limitations in Section 1.7, above, 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.

 

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 Subordination of Indemnification Obligations. Notwithstanding anything to
the contrary contained herein, at all times prior to repayment of the Loan in
full and the release or discharge of the Security Instrument, the Partnership’s
obligation hereunder, if any, to indemnify its Partners is hereby fully
subordinated to the Loan and the Loan Documents, and no indemnity payment from
funds of the Partnership (as distinct from funds from other sources, such as
insurance) of any indemnity hereunder, if any, shall be payable from amounts
allocable to any other Person pursuant to the Loan Documents.

 

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 Maryland 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.

 

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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.

 

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 UCC Article 8 Opt-In. It is expressly agreed that: (i) each Partnership
Interest in the Partnership is a “security” governed by Article 8 of the Uniform
Commercial Code of the State of Maryland and any other applicable jurisdictions;
(ii) this Agreement establishes the terms of such Partnership Interests; and
(iii) such Partnership Interests shall be certificated in accordance with the
form attached as Exhibit A.

 

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 Valfre
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.

 

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. 

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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.

 

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.

 

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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

 

AHIT Valfre GP, LLC, a Maryland limited liability company, by its member,
American Housing Income Trust, Inc., a Maryland corporation.

 

/s/ Jeff Howard______________________

By: Jeff Howard

Its: Chief Executive Officer and President

 

LIMITED PARTNER

 

AHIT Valfre Limiteds, LLC, a Maryland limited liability company.

 

/s/ James A. Valfre___________________

By: James A. Valfre

Its: Authorized Member

 

     

 

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Exhibit A

Certificate of Partnership Interest

LIMITED PARTNERSHIP Certificate

of

AHIT VALFRE, LLP

a Maryland limited liability partnership

 

Certificate No. _

 

__ % Partnership Interest

 

The undersigned, being the authorized member of the General Partner of AHIT
Valfre, LLP, a Maryland limited liability partnership (the “Partnership”),
hereby certifies that ______________________, a Maryland limited liability
company, is a [Limited][General] 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 First Amended and
Restated Limited Liability Partnership Agreement, dated as of March _____, 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: March _11_ , 2016            

By: /s/ Jeff Howard /s

Name: Jeff Howard

Title: Director, Chief Executive Officer and

President of American Housing Income Trust,

Inc., a Maryland corporation and sole member

of AHIT Valfre GP, LLC

 

This certificate evidences a LIMITED PARTNERSHIP INTEREST in AHIT VALFRE, 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.

 

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.

-14- 

 

(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

Conversion Notice

To: American Housing Income Trust, Inc. or

Transfer Agent for American Housing Income Trust, Inc.

 

As a Member of AHIT Valfre Limiteds, LLC, a Maryland limited liability company
(“AHIT Valfre Limiteds”), being the Limited Partner of AHIT Valfre, LLP, a
Maryland limited liability partnership (“AHIT Valfre”), I hereby exercise my
right under the AHIT Master UPREIT Agreement, as amended (“Master Agreement”)
and the AHIT First Amended and Restated Limited Liability Partnership Agreement
to convert _________ membership units in AHIT Valfre Limiteds 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
membership unit in AHIT Valfre Limiteds, 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 membership units in AHIT Valfre Limiteds 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 Member of AHIT Valfre Limiteds, LLC

 

________________________________

Street Address

 

__________________, _________ __________

City State Zip Code

 

____________________________

Social Security Number or EIN

 

APPROVED BY AHIT VALFRE LIMITEDS, LLC

 

By:_______________________

 

Its: _______________________

 

Dated: ____________________ 

 

APPROVED BY AMERICAN HOUSING INCOME TRUST

 

 

By:_/s/ Jeff Howard__________

 

Its: _CEO__________________

 

Dated: _March 11, 2016______

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Exhibit C

 

Properties

 

  Title Holder Parcel 1

AHIT Valfre, LLP

7818 E. Apple Tree Dr.

Tucson, AZ 85730

Parcel 2

AHIT Valfre, LLP

10565 S. Sage Hills Ct.

Vail, AZ 85641

Parcel 3

AHIT Valfre, LLP

10372 E. Capercaillie St.

Tucson, AZ 85747

Parcel 4

AHIT Valfre, LLP

7818 E. Apple Tree Dr.

Tucson, AZ 85730

Parcel 5

AHIT Valfre, LLP

9651 E. Stonehaven

Tucson, AZ 85747

Parcel 6

AHIT Valfre, LLP

10565 S. Sage Hills Ct.

Vail, AZ85641

Parcel 7

AHIT Valfre, LLP

10565 S. Sage Hills Ct.

Vail, AZ85641

Parcel 8

AHIT Valfre, LLP

10565 S. Sage Hills Ct.

Vail, AZ 85641

Parcel 9

AHIT Valfre, LLP

10372 E. Capercaillie St.

Tucson, AZ 85747

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