Document:

EX-10.1

 Exhibit 10.1 

AMENDMENT NO. 2 TO 

FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF 

ARMADA HOFFLER, L.P. 

This Amendment No. 2 to First Amended and Restated Agreement of Limited Partnership of Armada Hoffler, L.P. (this “Second
Amendment”) is made as of July 10, 2015 (the “Effective Date”) pursuant to the First Amended and Restated Agreement of Limited Partnership of Armada Hoffler, L.P. dated as of May 13, 2013 (the “Original
Agreement”), as amended by Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership of Armada Hoffler, L.P. dated as of March 19, 2014 (the “First Amendment” and together with the
Original Agreement and, as further amended by this Second Amendment, the “Partnership Agreement”) by Armada Hoffler Properties, Inc., a Maryland corporation, as the sole general partner (the “General
Partner”) of Armada Hoffler, L.P., a Virginia limited partnership (the “Partnership”), in accordance with the authority granted to the General Partner in the Prior Partnership Agreement. Capitalized terms used and not
defined herein shall have the meanings set forth in the Partnership Agreement. 
 WHEREAS, the Partnership, the General Partner and HK-VB,
LLC, a Delaware limited liability company (the “HK-VB”), have entered into that certain Contribution Agreement dated as of June 3, 2015 (the “Contribution Agreement”) providing for, among other things,
HK-VB’s contribution of certain property, rights and assets to the Partnership and the Partnership’s issuance of Class B Units and Class C Units (as defined below) of the Partnership to HK-VB and admission of HK-VB as a limited partner of
the Partnership; and 
 WHEREAS, pursuant to the Contribution Agreement, the General Partner wishes to provide for the amendment of the
Partnership Agreement to provide, among other things, for the foregoing. 
 NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Partnership Agreement hereby is amended as follows: 

1. (a) Article I of the Partnership Agreement hereby is amended to change the phrase “Common Unit” in the definition of such term to
“Class A Units” and the terms “Common Unit” and “Common Units” wherever used in the Partnership Agreement shall hereby be replaced with “Class A Unit” and “Class A Units,” respectively. 

(b) Article I of the Partnership Agreement hereby is amended to delete the definition of “Percentage Interest” and place it with the
following: 
 “Percentage Interest” means, as to a Partner holding a class of Partnership Interests, its interest in such
class, determined by dividing the Partnership Units of such class owned by such Partner by the total number of Partnership Units of such class then outstanding. For purposes of determining the Percentage Interest of the

 
Partnership Units at any time when there are Class B Units or Class C Units outstanding, all Class B Units and Class C Units shall be treated as Class A Units except with respect to Article
V hereof. 
 (c) Article I of the Partnership Agreement hereby is amended to add the following definitions: 

“Class B Unit” means a Partnership Unit which is designated as a Class B Unit of the Partnership and has the rights and
privileges set forth in this Agreement for such Partnership Unit. 
 “Class B Unit Conversion Date” means the first to occur
of July 10, 2017 or the Early Conversion Date. 
 “Class C Unit” means a Partnership Unit which is designated as a
Class C Unit and has the rights and which has the rights and privileges set forth in this Agreement for such Partnership Unit. 

“Class C Unit Conversion Date” means the first to occur of January 10, 2018 or the Early Conversion Date. 

“Class C Unit Issuance Date” means the first to occur of January 10, 2017 or the Early Conversion Date. 

“Convertible Units” means any Partnership Interest, option, warrant, security or other right issued or to be issued by the
Partnership (other than (i) Class C Units to be issued to HK-VB and (ii) any Partnership Interest, option, warrant, security or other right entitling the recipient thereof to acquire Partnership Units for which such recipient pays the full
fair market value thereof determined without any discount in respect of lack of marketability of constituting a minority interest or like matters) entitling any Person to obtain, whether by way of purchase, conversion, exercise or otherwise, or
obligating the Partnership to issue, any Partnership Interest. 
 “Early Conversion Date” means the business day immediately
prior to the date of an Early Conversion Event. 
 “Early Conversion Event” means: 

 

	 	(a)	the occurrence of any event specified in clauses (i), (ii), (iii) or (iv) of Section 2.04(a) upon which the Partnership is dissolved; 

 

	 	(b)	the occurrence of the event specified in Section 2.04(b) hereof; 

  
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	 	(c)	(i) the merger or consolidation of the Partnership with or into any other domestic or foreign partnership, limited partnership, limited liability company or corporation, (ii) sale or substantially all of the assets
of the Partnership in a single transaction or (iii) the first transaction in a series of related transactions which result in the sale of all or substantially all assets of the Partnership, which in any of (i), (ii) or (iii) receives
the consent of a Majority in Interest; 

  

	 	(d)	the occurrence of any event that would result in a Change of Control; 

  

	 	(e)	the consummation of any recapitalization or reorganization of the Partnership in which any cash, securities or other property is to be paid to or received by any holder of Class A Units or any holder of
Class A Units has a right or election to receive cash, securities or other property; 

  

	 	(f)	any distribution of cash, securities or other property of the Partnership, other than distributions which do not as to any fiscal year exceed an amount equal to 95% of the Funds from Operations (as defined in that
certain Credit Agreement, dated as of February 20, 2015, by and among the Partnership, the General Partner and the agents and lenders party thereto, as in effect on the date hereof, without giving effect to any subsequent amendments to, and
notwithstanding any subsequent termination of, such agreement  or any waivers of compliance with such definition) of the Partnership for such year; or 

 

	 	(g)	without duplication of any Early Conversion Event described above, any Class A Unit Transaction to which the Partnership or the General Partner is a party (including without limitation a merger, consolidation, unit
exchange, self tender offer for all or substantially all Class A Units or other business combination or reorganization, or sale of all or substantially all of the Partnership’s assets, but excluding any Class A Unit Transaction which
constitutes an Adjustment Event), in each case as a result of which Class A Units shall be exchanged for or converted into the right, or the holders of Class A Units shall otherwise be entitled, to receive cash, securities or other
property or any combination thereof. 

 “HK-VB” means HK-VB, LLC, a Delaware limited liability company. 

“Nominee” means HK-TK, LLC, a Delaware limited liability company. 

2. In accordance with Section 4.02 of the Partnership Agreement, set forth in Exhibit F hereto are the terms and conditions
of the Class B Units hereby established and issued to HK-VB in consideration of its contribution to the Partnership of certain property, rights and assets to the Partnership. The Partnership Agreement is amended to incorporate such Exhibit F
as Exhibit F thereto and to revise the books and records of the Partnership to reflect the issuance of the Class B Units. Exhibit F is hereby attached to and made part of the Partnership Agreement. The General Partner hereby
acknowledges the receipt in full and adequacy of the capital contribution provided by the HK-VB for the issuance of such Class B Units. 

  
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 3. In accordance with Section 4.02 of the Partnership Agreement, set forth in
Exhibit G hereto are the terms and conditions of the Class C Units hereby established and issued to HK-VB in consideration of its contribution to the Partnership of certain property, rights and assets to the Partnership. The Partnership
Agreement is amended to incorporate such Exhibit G as Exhibit G thereto and to revise the books and records of the Partnership to reflect the issuance of the Class C Units as of the Class C Unit Issuance Date. Exhibit G is
hereby attached to and made part of the Partnership Agreement. The General Partner hereby acknowledges the receipt in full and adequacy of the capital contribution provided by HK-VB for the issuance of Class C Units on the Class C Unit Issuance
Date. Promptly after the Class C Unit Issuance Date the Partnership shall issue to the person or persons then entitled to receive the Class C Units a Limited Partner Acceptance substantially in the form of that being issued to HK-VB as of the date
hereof in respect of the Class B Units. 
 4. Section 4.07 of the Partnership Agreement is hereby amended and restated as follows: 

“Percentage Interests. If the number of outstanding Partnership Units increases or decreases during a taxable year, each
Partner’s Percentage Interest shall be adjusted by the General Partner effective as of the effective date of each such increase or decrease to a percentage equal to the number of Partnership Units held by such Partner divided by the aggregate
number of Partnership Units outstanding after giving effect to such increase or decrease. If the Partners’ Percentage Interests are adjusted pursuant to this Section 4.07, the Profits and Losses for the taxable year in which the adjustment
occurs shall be, except as otherwise provided in this Agreement, allocated between the part of the year ending on the day when the Partnership’s property is revalued by the General Partner and the part of the year beginning on the following day
either (i) as if the taxable year had ended on the date of the adjustment or (ii) based on the number of days in each part. The General Partner, in its sole and absolute discretion, shall determine which method shall be used to allocate
Profits and Losses for the taxable year in which the adjustment occurs. Except as otherwise provided in this Agreement, the allocation of Profits and Losses for the earlier part of the year shall be based on the Percentage Interests before
adjustment, and the allocation of Profits and Losses for the later part shall be based on the adjusted Percentage Interests.” 
 5.
Section 7.01 of the Partnership Agreement is hereby amended to add a new Section 7.01(f) as follows: 
 “(f)
Notwithstanding anything in this Agreement to the contrary, for all purposes under Section 7.01(c) and Section 7.01(d) of this Agreement, including but not limited to entitlement to receive cash, property or securities and for
determination of the amount thereof and other calculations, (x) all Class C Units, notwithstanding that they may not yet have been issued, shall be deemed to have been issued and (y) all Class B Units and all Class C Units shall be deemed
as of any time to have been converted into the number of Class A Units that they would be automatically converted into if an Early Conversion Date were to occur at such time.” 

  
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 6. Article IX of the Partnership Agreement is hereby amended to add a new
Section 9.07 as follows: 
 “9.07 Special Assignment Provisions. Notwithstanding anything in this Agreement to the
contrary, HK-VB shall be entitled, without any consent, permission or approval of the Partnership or the General Partner, to transfer or assign any or all of its Partnership Interest, including but not limited to Class B Units, Class C Units and
Class A Units issued in respect of Class B Units or Class C Units and any or all of its rights under this Section 9.07, (i) to any Person (a) at least five percent (5%) of the aggregate Percentage Interest represented by
HK-VB’s Partnership Interest as of July 10, 2015 or (b) if less, all of HK-VB’s remaining Partnership Interest, (ii) to the Nominee, (iii) to any Affiliate of HK-VB or beneficial holder (including but not limited to
indirect holdings through one or more entities) of equity securities of HK-VB or the Nominee or of the manager of HK-VB or the Nominee or (iv) to any family member of any Person listed in clause (iii) above; provided, that in each
case (w) except for transfers under clause (ii), (iii) or (iv) above, the Partnership shall, if reasonably requested by the General Partner in good faith consistent (if the Partnership has had any comparable prior transfer) with past
practice of the Partnership, receive an opinion of counsel for the transferor, in a form reasonably acceptable to the General Partner, to the effect that any transfer of Partnership Interest to such transferee does not require registration under the
United States Securities Act of 1933, (x) the transferee shall make the representations and warranties specified in Section 9.01(a) hereof, (y) the transfer shall comply with clauses (c), (d) and (f) (as such clause
(f) is qualified by the provisions of clause (w) above) of Section 9.02 hereof, and (z) the transfer shall comply with the provisions of Section 9.03 hereof other than the portion of Section 9.03(a) which precedes
clause (i) thereof (it being understood that any transfer that is effected in accordance with the provisions of this Section 9.07 shall be deemed to be a permitted Transfer and the consent of the General Partner shall be deemed to have
been given and need not be obtained if the conditions of this Section 9.07 have been complied with in connection with the transfer). The General Partner agrees that notwithstanding anything in this Agreement to the contrary, all opinions of
counsel and all General Partner determinations and requests in connection with any transfer by HK-VB must be reasonable (and not in the discretion of such counsel or the General Partner).” 

7. Section 11.02 of the Partnership Agreement is hereby amended to add the following at the end of Section 11.02: 

“For the sake of clarity, it is hereby acknowledged and agreed that as to any merger, consolidation or sale of all or
substantially all of the assets of the Partnership undertaken without the consent of the Limited Partners pursuant to the preceding sentence, notwithstanding anything in this Agreement to the contrary, for all purposes under Section 7.01(c) and
Section 7.01(d) of this Agreement as relevant to this Section 11.02, including but not limited to entitlement to receive cash, property or securities and 

  
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for determination of the amount thereof and other calculations, (x) all Class C Units, notwithstanding that they may not yet have been issued, shall be deemed to have been issued and
(y) all Class B Units and all Class C Units shall be deemed as of any time to have been converted into the number of Class A Units that they would be automatically converted into if an Early Conversion Date were to occur at such
time.” 
 8. Article XI of the Partnership Agreement is hereby amended to add a new Section 11.03 as follows: 

“11.03 Special Amendment Provisions.  

(a) Notwithstanding anything in Section 11.01 to the contrary, neither the General Partner nor the Limited Partners may, without
the prior written consent of the Limited Partners holding more than fifty percent (50%) of all outstanding Class B Units, amend this Agreement in any manner that (i) adversely affects the rights or benefits of, or results in imposition of
any liability or obligation in respect of, Class B Units, except for any amendment that affects all holders of Class A Units and does not disproportionately and adversely affect holders of Class B Units or (ii) affects rights under
Section 9.07 above or this Section 11.03(a) in respect of Class B Units. 
 (b) Notwithstanding anything in
Section 11.01 to the contrary, neither the General Partner nor the Limited Partners may, without the prior written consent of the Limited Partners holding more than fifty percent (50%) of all outstanding Class C Units, or, if the
Class C Units shall not have been issued, the holder or holders of the right or rights to receive more than fifty percent (50%) of Class C Units when issued, amend this Agreement in any manner that (i) adversely affects the rights or
benefits of, or results in imposition of any liability or obligation in respect of, Class C Units or the right or rights to receive Class C Units, except for any amendment that affects all holders of Class A Units and does not
disproportionately and adversely affect holders of Class C Units or the right or rights to receive Class C Units or (ii) affects rights under Section 9.07 above or this Section 11.03(b) in respect of Class C Units or the
right or rights to receive Class C Units. 
 9. Except as modified herein, all terms and conditions of the Prior Partnership Agreement shall
remain in full force and effect, which terms and conditions the General Partner hereby ratifies and confirms. 
 10. This Second Amendment
shall be construed and enforced in accordance with and governed by the laws of the Commonwealth of Virginia. 
 11. If any provision of this
Second Amendment is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. 

  
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 12. This Second Amendment may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one and the same agreement. This Second Amendment may be executed by facsimile signatures. 

13. HK-VB is hereby designated as an intended third-party beneficiary of this Second Amendment with full right, power and authority to enforce
the provisions hereof for it own right and benefit. 
 [Signature Page Follows] 

  
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 IN WITNESS WHEREOF, the undersigned has executed and agrees to be bound by this Second Amendment
as of the Effective Date. 
  

			
	GENERAL PARTNER:
	
	ARMADA HOFFLER PROPERTIES, INC.
		
	By:		 /s/ Michael P. O’Hara

	Name:		Michael P. O’Hara
	Title:		Chief Financial Officer and Treasurer

  
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 EXHIBIT F 

DESIGNATION OF TERMS AND CONDITIONS OF CLASS B UNITS 

A. Designation and Number. A series of Partnership Units, designated as Class B Units, is hereby established. The number of Class B Units shall be
1,000,000. Except as set forth herein, and except as expressly provided in the Partnership Agreement, Class B Units shall have the same rights, privileges and preferences as Class A Units. 

B. Rank. Class B Units shall, with respect to rights upon liquidation, dissolution or winding up, rank (a) on a parity with the Class A Units
and Class C Units and any other Partnership Units now or hereafter issued and outstanding other than Partnership Units referred to in clauses (b) and (c), (b) junior to all series of preferred units issued by the Partnership, the terms of
which specifically provide that such preferred units rank senior to the Class A Units, Class B Units and Class C Units with respect to rights upon liquidation, dissolution or winding up of the Partnership, and (c) junior to all existing
and future indebtedness of the Partnership. 
 C. Voting. Holders of Class B Units shall not have any voting rights, except with respect to those
matters required by law, in which case holders of Class B Units shall, subject to Section 11.03(a) of the Partnership Agreement vote with Class A Units as a class, or as provided in Section 11.03(a) of the Partnership Agreement, in
which case holders of Class B Units only shall vote as a single class. 
 D. Distributions. No distributions other than in connection with a
liquidation, dissolution or winding up shall accrue or be payable on any Class B Units except as to transactions under Section 7.01 of the Partnership Agreement. For the sake of clarity, (i) if a liquidation, dissolution or winding up
constitutes an Early Conversion Event, then no distributions shall be payable in respect of the Class B Units as a result thereof and (ii) upon conversion of Class B Units into Class A Units, distribution shall accrue and be payable as to
such Class A Units in the same manner as Class A Units generally. 
 E. Class B Adjustment Event. If a Class B Adjustment Event (as defined
below) occurs, then the General Partner shall make a corresponding adjustment to the Class B Units to maintain a one-for-one conversion ratio between Class A Units and Class B Units. The following shall be “Class B Adjustment
Events”: (A) the Partnership makes a distribution on all outstanding Class A Units in the form of Partnership Units, (B) the Partnership subdivides the outstanding Class A Units into a greater number of units or combines
the outstanding Class A Units into a smaller number of units, or (C) the Partnership issues any Partnership Units in exchange for its outstanding Class A Units by way of a reclassification or recapitalization of its Class A
Units. If more than one Class B Adjustment Event occurs, the adjustment to the Class B Units need be made only once using a single formula that takes into account each and every Class B Adjustment Event as if all Class B Adjustment Events occurred
simultaneously. For the avoidance of doubt, the following shall not be Class B Adjustment Events unless in connection therewith cash, securities or other property are or may become issuable in respect of other Partnership Units or any such event is
an adjustment event in respect of any other Partnership Units: (x) the issuance of Partnership Units in a financing for which each recipient pays the full amount of adequate consideration therefor as reasonably determined by the Board of
Directors of 

 
the General Partner in good faith, (y) the issuance of Partnership Units pursuant to any employee benefit or compensation plan or distribution reinvestment plan or (z) the issuance of
any Partnership Units to the General Partner in respect of a capital contribution to the Partnership of proceeds from the sale of Additional Securities by the General Partner but only if the proceeds so contributed equal the full amount of adequate
consideration for such Partnership Units as reasonably determined by the Board of Directors of the General Partner in good faith. If the Partnership takes an action affecting the Class B Units other than actions specifically described above as
“Class B Adjustment Events” and in the reasonable opinion of the General Partner such action would require an adjustment to the Class B Units to maintain the one-to-one correspondence described above, the General Partner shall have the
right to make such adjustment to the Class B Units, to the extent permitted by law, in such manner and at such time as the General Partner, in its reasonable discretion, may determine to be appropriate under the circumstances. If an adjustment is
made to the Class B Units, as herein provided, the Partnership shall promptly file in the books and records of the Partnership an officer’s certificate setting forth such adjustment and a brief statement of the facts requiring such adjustment.
Promptly after filing of such certificate, the Partnership shall deliver a notice to each holder of Class B Units setting forth the adjustment to his, her or its Class B Units, the effective date of such adjustment and a brief statement of the facts
requiring such adjustment; provided, however, the failure in good faith to deliver such notice shall not invalidate the adjustment made or the authority granted in accordance with the provisions hereof. 

F. Automatic Conversion. On the Class B Unit Conversion Date, each Class B Unit shall (without action by or approval of the General Partner, the
Partnership, the holders of Class B Units or any other Person and without satisfaction of any event or condition other than the occurrence of the Class B Unit Conversion Date) automatically convert into one fully paid Class A Unit or, if
Class A Units shall have been converted into or exchanged (other than pursuant to Section 8.04 of the Partnership Agreement) for other Partnership Units, cash, securities or other property (or the right to receive other Partnership Units,
cash, securities or other property), such other Partnership Units, cash, securities or other property or such right to receive such other Partnership Units, cash, securities or other property. The Class A Units received upon the automatic
conversion of the Class B Units in accordance herewith shall have the same rights, privileges and preferences as the Class A Units, including, without limitation, the right to require the Partnership to redeem on a Specified Redemption Date all
or a portion of the Class A Units held by such Limited Partner in accordance with Section 8.04 of the Partnership Agreement. Notwithstanding the foregoing to the contrary, all rights and remedies of the holders of Class B Units in respect
of any matter, event or circumstance prior to the Class B Unit Conversion Date shall survive the conversion of Class B Units into Class A Units. 
 G.
Allocations of Profit and Loss. No Profit or Loss shall be allocated to the Class B Units, whether prior to, on or after the Class B Conversion Date, except as a result of a liquidation, dissolution or winding up prior to the Class B
Conversion Date; provided, however, that the Class A Units issued in respect of Class B Units on the Class B Conversion Date shall be allocated Profit and Loss in the same manner and to the same proportionate extent as
Class A Units as of the earliest date of the event or events that triggered the Class B Conversion Date. This Section G shall not in any way alter the Partnership’s allocations of Profit and Loss to the existing holders of Class A
Units. 

  
 F-2 

 H. Class B Unit Redemption Right. Notwithstanding anything in the Partnership Agreement to the contrary,
holders of Class B Units shall not be permitted to tender their Class B Units for redemption by the Partnership in accordance with Section 8.04 the Partnership Agreement; provided, however, that any Class A Units received as
a result of a conversion of Class B Units into Class A Units pursuant to Section F hereof shall thereafter be entitled and subject to Section 8.04 of the Partnership Agreement to the same extent as any other Class A Unit of the
Partnership then outstanding; provided further, that for the avoidance of doubt, any Class A Units received as a result of a conversion of Class B Units into Class A Units pursuant to Section F hereof shall be eligible to be tendered for
redemption by the holders thereof on or after the Class B Unit Conversion Date. 
 I. Notices. The General Partner shall give written notice to the
holders of Class B Units (a) promptly after any adjustment to the Conversion Factor and (b) no later than ten (10) business days prior to the occurrence of any Early Conversion Date. 

  
 F-3 

 EXHIBIT G 

DESIGNATION OF TERMS AND CONDITIONS OF CLASS C UNITS 

A. Designation, Number and Issuance. A series of Partnership Units, designated as Class C Units, is hereby established. The number of Class C
Units shall be 275,000. Except as set forth herein, and except as expressly provided in the Partnership Agreement, Class C Units shall have the same rights, privileges and preferences as Class A Units. All Class C Units shall on the Class
C Unit Issuance Date automatically be issued to the holders of Class B Units proportionately without any further action or approval of the General Partner, the Partnership or any other Person and without satisfaction of any event or condition other
than the occurrence of the Class C Unit Issuance Date. The General Partner hereby acknowledges the receipt in full, and the adequacy of, all consideration and contribution to the Partnership in respect of all Class C Units. No additional
consideration or contribution shall be due or required in respect of the issuance of the Class C Units on the Class C Unit Issuance Date. 
 B. Rank.
Class C Units shall, with respect to rights upon liquidation, dissolution or winding up, rank (a) on a parity with the Class A Units and Class B Units and any other Partnership Units now or hereafter issued and outstanding other than
Partnership Units referred to in clauses (b) and (c), (b) junior to all series of preferred units issued by the Partnership, the terms of which specifically provide that such preferred units rank senior to the Class A Units, Class B
Units and Class C Units with respect to rights upon liquidation, dissolution or winding up of the Partnership, and (c) junior to all existing and future indebtedness of the Partnership. 

C. Voting. Holders of Class C Units or of rights to receive Class C Units shall not have any voting rights in respect of such Class C Units or rights
to receive Class C Units, except with respect to those matters required by law, in which case holders of Class C Units or rights to receive Class C Units, as applicable, shall, subject to Section 11.03(b) of the Partnership Agreement vote with
Class A Units as a class, or as provided in Section 11.03(b) of the Partnership Agreement, in which case holders of Class C Units or rights to receive Class C Units, as applicable, only shall vote as a single class. 

D. Distributions. No distributions other than in connection with a liquidation, dissolution or winding up shall accrue or be payable on any Class C
Units except as to transactions under Section 7.01 of the Partnership Agreement. For the sake of clarity, (i) if a liquidation, dissolution or winding up constitutes an Early Conversion Event, then no distributions shall be payable in
respect of the Class C Units as a result thereof and (ii) upon conversion of Class C Units into Class A Units, distribution shall accrue and be payable as to such Class A Units in the same manner as Class A Units generally. 

E. Class C Adjustment Event. If a Class C Adjustment Event (as defined below) occurs, then the General Partner shall make a corresponding adjustment to
the Class C Units that shall have been or are to be issued to maintain a one-for-one conversion ratio between Class A Units and Class C Units. The following shall be “Class C Adjustment Events”: (A) the Partnership makes a
distribution on all outstanding Class A Units in the form of Partnership Units, (B) the Partnership subdivides the outstanding Class A Units into a greater number of units or combines the outstanding Class A Units into a smaller
number of units, or (C) the Partnership issues any 

 
Partnership Units in exchange for its outstanding Class A Units by way of a reclassification or recapitalization of its Class A Units. If more than one Class C Adjustment Event occurs,
the adjustment to the Class C Units need be made only once using a single formula that takes into account each and every Class C Adjustment Event as if all Class C Adjustment Events occurred simultaneously. For the avoidance of doubt, the following
shall not be Class C Adjustment Events unless in connection therewith cash, securities or other property are or may become issuable in respect of other Partnership Units or any such event is an adjustment event in respect of any other Partnership
Units: (x) the issuance of Partnership Units in a financing for which each recipient pays the full amount of adequate consideration therefor as reasonably determined by the Board of Directors of the General Partner, (y) the issuance of
Partnership Units pursuant to any employee benefit or compensation plan or distribution reinvestment plan or (z) the issuance of any Partnership Units to the General Partner in respect of a capital contribution to the Partnership of proceeds
from the sale of Additional Securities by the General Partner but only if the proceeds so contributed equal the full amount of adequate consideration for such Partnership Units as reasonably determined by the Board of Directors of the General
Partner in good faith. If the Partnership takes an action affecting the Class C Units or right to receive Class C Units other than actions specifically described above as “Class C Adjustment Events” and in the reasonable opinion of the
General Partner such action would require an adjustment to the Class C Units issued or to be issued to maintain the one-to-one correspondence described above, the General Partner shall have the right to make such adjustment to the Class C Units, to
the extent permitted by law, in such manner and at such time as the General Partner, in its reasonable discretion, may determine to be appropriate under the circumstances. If an adjustment is made to the issued or to be issued Class C Units, as
herein provided, the Partnership shall promptly file in the books and records of the Partnership an officer’s certificate setting forth such adjustment and a brief statement of the facts requiring such adjustment, which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after filing of such certificate, the Partnership shall deliver a notice to each Person holding or entitled to receive Class C Units setting forth the
adjustment to his, her or its Class C Units, the effective date of such adjustment and a brief statement of the facts requiring such adjustment; provided, however, the failure in good faith to deliver such notice shall not invalidate
the adjustment made or the authority granted in accordance with the provisions hereof. 
 F. Automatic Conversion. On the Class C Unit Conversion
Date, each Class C Unit (including, for the sake of clarity, all Class C Units being issued as of the Class C Unit Conversion Date) shall (without action by or approval of the General Partner, the Partnership, the holders of Class C Units or any
other Person and without satisfaction of any event or condition other than the occurrence of the Class C Unit Conversion Date) automatically convert into one fully paid Class A Unit or, if Class A Units shall have been converted into or
exchanged (other than pursuant to Section 8.04 of the Partnership Agreement) for other Partnership Units, cash, securities or other property (or the right to receive other Partnership Units, cash, securities or other property), such other
Partnership Units, cash, securities or other property or such right to receive such other Partnership Units, cash, securities or other property. The Class A Units received upon the automatic conversion of the Class C Units in accordance
herewith shall have the same rights, privileges and preferences as the Class A Units, including, without limitation, the right to require the Partnership to redeem on a Specified Redemption Date all or a portion of the Class A Units held
by such Limited Partner in accordance with Section 8.04 of the Partnership Agreement. Notwithstanding the foregoing to the contrary, all rights and remedies 

  
 G-2 

 
of the holders of, or Persons entitled to receive, Class C Units in respect of any matter, event or circumstance prior to the Class C Unit Conversion Date shall survive the conversion of Class C
Units into Class A Units. 
 G. Allocations of Profit and Loss. No Profit or Loss shall be allocated to the Class C Units, whether prior to, on
or after the Class C Conversion Date, except as a result of a liquidation, dissolution or winding up prior to the Class C Conversion Date; provided, however, that the Class A Units issued in respect of Class C Units on the Class C
Conversion Date shall be allocated Profit and Loss in the same manner and to the same proportionate extent as Class A Units as of the earliest date of the event or events that triggered the Class C Conversion Date. This Section G shall not in
any way alter the Partnership’s allocations of Profit and Loss to the existing holders of Class A Units. 
 H. Class C Unit Redemption
Right. Notwithstanding anything in the Partnership Agreement to the contrary, holders of Class C Units shall not be permitted to tender their Class C Units for redemption by the Partnership in accordance with Section 8.04 the Partnership
Agreement; provided, however, that any Class A Units received as a result of a conversion of Class C Units into Class A Units pursuant to Section F hereof shall thereafter be entitled and subject to Section 8.04 of the
Partnership Agreement to the same extent as any other Class A Unit of the Partnership then outstanding; provided further, that for the avoidance of doubt, any Class A Units received as a result of a conversion of Class C Units into
Class A Units pursuant to Section F hereof shall be eligible to be tendered for redemption by the holders thereof on or after the Class C Unit Conversion Date. 

I. Notices. The General Partner shall give written notice to the holders of and all Persons entitle to receive Class C Units (a) promptly after
any adjustment to the Conversion Factor and (b) no later than ten (10) business days prior to the occurrence of any Early Conversion Date. 

  
 G-3Exhibit

Exhibit 10.1

GENERAL CANNABIS CORP

EMPLOYEE NONSTATUTORY STOCK OPTION AGREEMENT

	
	 

	 

THIS EMPLOYEE NONSTATUTORY STOCK OPTION AGREEMENT (“Agreement”) is made and entered into as of the date set forth below, by and between General Cannabis Corp, a Colorado corporation (the “Company”), and the following member of the Company’s Board of Directors (“Optionee”):

In consideration of the covenants herein set forth, the parties hereto agree as follows:

1.  Option Information.

				
	 
	(a)

	Date of Option:

	June 26, 2015

	 
	(b)

	Optionee:

	Peter Boockvar

	 
	(c)

	Number of Shares:

	150,000

	 
	(d)

	Exercise Price:

	$2.15

2.  Acknowledgements.

(a) Optionee is a member of the Company’s Board of Directors (the “Board” which term shall include an authorized committee of the Board of Directors, as applicable).

(b) The Board and shareholders of the Company have heretofore adopted a 2014 Equity Incentive Plan (the “Plan”), pursuant to which this Option is being granted; and

(c) The Board has authorized the granting to Optionee of a nonstatutory stock option (“Option”) to purchase shares of common stock of the Company (“Stock”) upon the terms and conditions hereinafter stated and pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”) provided by Rule 701 thereunder.

3.  Shares; Price.  Company hereby grants to Optionee the right to purchase, upon and subject to the terms and conditions herein stated, the number of shares of Stock set forth in Section 1(c) above (the “Shares”) for cash (or other consideration as is authorized under the Plan and acceptable to the Board of Directors of the Company, in their sole and absolute discretion) at the price per Share set forth in Section 1(d) above (the “Exercise Price”), such price being not less than 100% of the fair market value per share of the Shares covered by this Option as of the date hereof.

4.  Term of Option; Continuation of Service.  This Option shall expire, and all rights hereunder to purchase the Shares shall terminate, ten (10) years from the date hereof. This Option shall earlier terminate subject to Sections 7 and 8 hereof upon, and as of the date of, the termination of Optionee’s employment if such termination occurs prior to the end of such ten (10) year period. Nothing contained herein shall confer upon Optionee the right to the continuation of his or her employment by the Company or to interfere with the right of the Company to terminate such employment or to increase or decrease the compensation of Optionee from the rate in existence at the date hereof.

5.  Vesting of Option.  Subject to the provisions of Sections 7 and 8 hereof, this Option shall become exercisable during the term of Optionee’s employment in 3 installments, as follows:

			
	Vesting Date

	 
	Number of Shares Vesting

	June 26, 2015

	 
	50,000

	June 26, 2016

	 
	50,000

	June 26, 2017

	 
	50,000

The installments shall be cumulative (i.e., this option may be exercised, as to any or all Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration or termination of this option).

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6.  Exercise.  This Option shall be exercised by delivery to the Company to the attention of the Chief Executive Officer of (a) written notice of exercise stating the number of Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Appendix A, (b) a certified check or cash in the amount of the Exercise Price of the Shares covered by the notice (or such other consideration as has been approved by the Board of Directors consistent with the Plan) and (c) a written investment representation as provided for in Section 13 hereof. This Option shall not be assignable or transferable, except by will or by the laws of descent and distribution, and shall be exercisable only by Optionee during his or her lifetime, except as provided in Section 8 hereof.

7.  Termination of Employment.  If Optionee shall cease to be employed by the Company for any reason, whether voluntarily or involuntarily, other than by his or her death, Optionee (or if the Optionee shall die after such termination, but prior to such exercise date, Optionee’s personal representative or the person entitled to succeed to the Option) shall have the right at any time within ten (10) days following such termination of employment or the remaining term of this Option, whichever is the lesser, to exercise in whole or in part this Option to the extent, but only to the extent, that this Option was exercisable as of the date of termination of employment and had not previously been exercised; provided, however: (i) if Optionee is permanently disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code (the “Code”)) at the time of termination, the foregoing ten (10) day period shall be extended to six (6) months; or (ii) if Optionee is terminated “for cause” as that term is defined under Colorado Labor Code and case law related thereto, or by the terms of the Plan or this Option Agreement or by any employment agreement between the Optionee and the Company, this Option shall automatically terminate as to all Shares covered by this Option not exercised prior to termination. Unless earlier terminated, all rights under this Option shall terminate in any event on the expiration date of this Option as defined in Section 4 hereof.

8.  Death of Optionee.  If the Optionee shall die while in the employ of the Company, Optionee’s personal representative or the person entitled to Optionee’s rights hereunder may at any time within six (6) months after the date of Optionee’s death, or during the remaining term of this Option, whichever is the lesser, exercise this Option and purchase Shares to the extent, but only to the extent, that Optionee could have exercised this Option as of the date of Optionee’s death; provided, in any case, that this Option may be so exercised only to the extent that this Option has not previously been exercised by Optionee.

9.  No Rights as Shareholder.  Optionee shall have no rights as a shareholder with respect to the Shares covered by any installment of this Option until the effective date of issuance of the Shares following exercise of this Option, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued except as provided in Section 10 hereof.

10.  Recapitalization.  Subject to any required action by the shareholders of the Company, the number of Shares covered by this Option, and the Exercise Price thereof, shall be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company; provided however that the conversion of any convertible securities of the Company shall not be deemed having been “effected without receipt of consideration by the Company.”

In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a “Reorganization”), except as provided in the following paragraph, any Option granted hereunder shall terminate, but, provided that the Optionee shall have the right ten (10) days prior to any such Reorganization to exercise his Option in whole or in part whether or not the vesting requirements set forth in the stock option agreement have been satisfied.  

If the stockholders of the Company receive capital stock of another corporation (“Exchange Stock”) in exchange for their Common Shares in any Reorganization, all options granted hereunder shall terminate in accordance with the provision of the preceeding paragraph unless the Directors and the corporation issuing the Exchange Stock in their sole and arbitrary discretion and subject to any required action by the stockholders of the Company and such corporation, agree that all such Options granted hereunder are converted into options to purchase shares of Exchange Stock.  The amount and price of such options shall be determined by adjusting the amount and price of the Options granted hereunder in the same proportion as used for determining the number of shares of Exchange Stock the holders of the Common Shares receive in such merger, consolidation, acquisition of property or stock, separation or reorganization. The vesting schedule set forth in the stock option agreement shall continue to apply to the options granted for the Exchange Stock.

Subject to any required action by the shareholders of the Company, if the Company shall be the surviving entity in any merger or consolidation, this Option thereafter shall pertain to and apply to the securities to which a holder of Shares equal to the Shares subject to this Option would have been entitled by reason of such merger or consolidation, and the installment provisions of Section 5 shall continue to apply.

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In the event of a change in the shares of the Company as presently constituted, which is limited to a change of all of its authorized Stock without par value into the same number of shares of Stock with a par value, the shares resulting from any such change shall be deemed to be the Shares within the meaning of this Option.

To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as hereinbefore expressly provided, Optionee shall have no rights by reason of any subdivision or consolidation of shares of Stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number and price of Shares subject to this Option shall not be affected by, and no adjustments shall be made by reason of, any dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class.

The grant of this Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets.

11.  Taxation upon Exercise of Option.  Optionee understands that, upon exercise of this Option, Optionee will recognize income, for Federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Shares, determined as of the date of exercise, exceeds the Exercise Price. The acceptance of the Shares by Optionee shall constitute an agreement by Optionee to report such income in accordance with then applicable law and to cooperate with Company in establishing the amount of such income and corresponding deduction to the Company for its income tax purposes. Withholding for Federal or state income and employment tax purposes will be made, if and as required by law, from Optionee’s then current compensation, or, if such current compensation is insufficient to satisfy withholding tax liability, the Company may require Optionee to make a cash payment to cover such liability as a condition of the exercise of this Option.

12.  Modification, Extension and Renewal of Options.  The Board or Committee, as described in the Plan, may modify, extend or renew this Option or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution therefore (to the extent not theretofore exercised), subject at all times to the Plan, the Code and laws of the State of Colorado.  Notwithstanding the foregoing provisions of this Section 12, no modification shall, without the consent of the Optionee, alter to the Optionee’s detriment or impair any rights of Optionee hereunder.

13.  Investment Intent; Restrictions on Transfer.

(a)  Optionee represents and agrees that if Optionee exercises this Option in whole or in part, Optionee will in each case acquire the Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that upon such exercise of this Option in whole or in part, Optionee (or any person or persons entitled to exercise this Option under the provisions of Sections 7 and 8 hereof) shall furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. If the Shares represented by this Option are registered under the Securities Act, either before or after the exercise of this Option in whole or in part, the Optionee shall be relieved of the foregoing investment representation and agreement and shall not be required to furnish the Company with the foregoing written statement.

(b)  Optionee further represents that Optionee has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition, and to obtain additional information reasonably necessary to verify the accuracy of such information

(c)  Unless and until the Shares represented by this Option are registered under the Securities Act, all certificates representing the Shares and any certificates subsequently issued in substitution therefor and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event shall bear legends in substantially the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED JUNE 26, 2015 BETWEEN THE COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.

and/or such other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions with respect to the Shares have been placed with the Company’s transfer agent.

14.  Stand-off Agreement.  Optionee agrees that, in connection with any registration of the Company’s securities under the Securities Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company’s securities, Optionee shall not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Shares (other than Shares included in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period of at least one year following the effective date of registration of such offering.

15.  Restriction Upon Transfer.  The Shares may not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated by the Optionee, except as permitted under applicable SEC rules and regulations.

16.  Notices.  Any notice required to be given pursuant to this Option or the Plan shall be in writing and shall be deemed to be delivered upon receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed to Optionee at the address last provided by Optionee for his or her employee records.

17.  Agreement Subject to Plan; Applicable Law.  This Option is made pursuant to the Plan and shall be interpreted to comply therewith. A copy of such Plan is available to Optionee, at no charge, at the principal office of the Company. Any provision of this Option inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. This Option has been granted, executed and delivered in the State of Colorado, and the interpretation and enforcement shall be governed by the laws thereof and subject to the exclusive jurisdiction of the courts therein.

[signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Option as of the date first above written.

				
	COMPANY:

	 
	GENERAL CANNABIS CORP,

	 
	 
	a Colorado corporation

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	By:

	/s/ Robert L. Frichtel

	 
	 
	Name:

	Robert L. Frichtel

	 
	 
	Title:

	Chief Executive Officer

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	OPTIONEE:

	 
	 
	 

	 
	 
	By:

	/s/ Peter Boockvar

	 
	 
	 
	(signature)

	 
	 
	Name:

	Peter Boockvar

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Appendix A

NOTICE OF EXERCISE

General Cannabis Corp

Re: Employee Nonstatutory Stock Option

Notice is hereby given pursuant to Section 6 of my Employee Nonstatutory Stock Option Agreement that I elect to purchase the number of shares set forth below at the exercise price set forth in my option agreement:

Employee Nonstatutory Stock Option Agreement dated: ____________

Number of shares being purchased: ____________

Exercise Price: $____________

A certified check in the amount of the aggregate price of the shares being purchased is attached.

I hereby confirm that such shares are being acquired by me for my own account for investment purposes, and not with a view to, or for resale in connection with, any distribution thereof. I will not sell or dispose of my Shares in violation of the Securities Act of 1933, as amended, or any applicable federal or state securities laws. Further, I understand that the exemption from taxable income at the time of exercise is dependent upon my holding such stock for a period of at least one year from the date of exercise and two years from the date of grant of the Option.

I understand that the certificate representing the Option Shares will bear a restrictive legend within the contemplation of the Securities Act and as required by such other state or federal law or regulation applicable to the issuance or delivery of the Option Shares.

I agree to provide to the Company such additional documents or information as may be required pursuant to the Company’s 2014 Equity Incentive Plan.

				
	 
	 
	By:

	 

	 
	 
	 
	(signature)

	 
	 
	Name:

	Peter Boockvar

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