Document:

ex_279217.htm

Exhibit 10.4

 

SECOND

 

AMENDED AND RESTATED

 

LIMITED PARTNERSHIP AGREEMENT

OF

NREF OP IV, L.P.

a Delaware limited partnership

 

 

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.

 

 

AMENDED AND RESTATED AS OF SEPTEMBER 8, 2021

 

 

 

 

 

TABLE OF CONTENTS

 

	 	Page
	
			ARTICLE 1. DEFINED TERMS

				1
	
			ARTICLE 2. ORGANIZATIONAL MATTERS

				13
	
			Section 2.1. Continuation

				13
	
			Section 2.2. Name

				13
	
			Section 2.3. Registered Office and Agent; Principal Office

				14
	
			Section 2.4. Power of Attorney

				14
	
			Section 2.5. Term

				15
	
			Section 2.6. Admission of Partners

				15
	
			ARTICLE 3. PURPOSE

				15
	
			Section 3.1. Purpose and Business

				15
	
			Section 3.2. Powers

				16
	
			Section 3.3. Representations and Warranties by the Parties

				16
	
			Section 3.4. Not Publicly Traded

				18
	
			ARTICLE 4. CAPITAL CONTRIBUTIONS

				18
	
			Section 4.1. Capital Contributions of the Partners

				18
	
			Section 4.2. Issuances of Additional Partnership Interests

				19
	
			Section 4.3. Additional Funds

				19
	
			Section 4.4. Preemptive Rights

				20
	
			Section 4.5. No Interest

				20
	
			ARTICLE 5. DISTRIBUTIONS

				20
	
			Section 5.1. Requirement and Characterization of Distributions

				20
	
			Section 5.2. Amounts Withheld

				20
	
			Section 5.3. Distributions Upon Liquidation

				21
	
			Section 5.4. Restricted Distributions

				21
	
			Section 5.5. Compliance with REIT Requirements

				21
	
			ARTICLE 6. ALLOCATIONS

				21
	
			Section 6.1. Allocations For Capital Account Purposes

				21
	
			ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS

				22
	
			Section 7.1. Management

				22
	
			Section 7.2. Certificate of Limited Partnership

				26
	
			Section 7.3. Restrictions on General Partner Authority

				26
	
			Section 7.4. Reimbursement of the General Partner and the Company

				26
	
			Section 7.5. Outside Activities of the General Partner

				27
	
			Section 7.6. Contracts with Affiliates

				27
	
			Section 7.7. Indemnification

				28
	
			Section 7.8. Liability of the General Partner

				29
	
			Section 7.9. Other Matters Concerning the General Partner

				30
	
			Section 7.10. Title to Partnership Assets

				31
	
			Section 7.11. Reliance by Third Parties

				31
	
			ARTICLE 8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

				32
	
			Section 8.1. Limitation of Liability

				32

 

i

 

 

TABLE OF CONTENTS

(continued)

 

	 	Page
	
			Section 8.2. Management of Business

				32
	
			Section 8.3. Outside Activities of Limited Partners

				32
	
			Section 8.4. Return of Capital

				33
	
			Section 8.5. Rights of Limited Partners Relating to the Partnership

				33
	
			Section 8.6. Redemption Right

				34
	
			ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS

				36
	
			Section 9.1. Records and Accounting

				36
	
			Section 9.2. Fiscal Year

				36
	
			Section 9.3. Reports

				36
	
			ARTICLE 10.  TAX MATTERS

				37
	
			Section 10.1. Preparation of Tax Returns

				37
	
			Section 10.2. Tax Elections

				37
	
			Section 10.3. Partnership Representative

				38
	
			Section 10.4. Withholding

				39
	
			ARTICLE 11. TRANSFERS AND WITHDRAWALS

				39
	
			Section 11.1. Transfer

				39
	
			Section 11.2. Transfer of General Partner Interest

				40
	
			Section 11.3. Limited Partners’ Rights to Transfer

				41
	
			Section 11.4. Substituted Limited Partners

				42
	
			Section 11.5. Assignees

				43
	
			Section 11.6. Drag-Along Rights

				43
	
			Section 11.7. General Provisions

				44
	
			ARTICLE 12. ADMISSION OF PARTNERS

				45
	
			Section 12.1. Admission of Successor General Partner

				45
	
			Section 12.2. Admission of Additional Limited Partners

				45
	
			Section 12.3. Amendment of Agreement and Certificate of Limited Partnership

				46
	
			ARTICLE 13. DISSOLUTION, LIQUIDATION AND TERMINATION

				46
	
			Section 13.1. Dissolution

				46
	
			Section 13.2. Winding Up

				47
	
			Section 13.3. Deficit Capital Account Restoration Obligation

				49
	
			Section 13.4. Deemed Contribution and Distribution

				49
	
			Section 13.5. Rights of Limited Partners

				49
	
			Section 13.6. Notice of Dissolution

				49
	
			Section 13.7. Termination of Partnership and Cancellation of Certificate of Limited Partnership

				50
	
			Section 13.8. Reasonable Time for Winding Up

				50
	
			Section 13.9. Waiver of Partition

				50
	
			ARTICLE 14. AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

				50
	
			Section 14.1. Amendment of Partnership Agreement

				50
	
			Section 14.2. Meetings of the Partners

				51

 

ii

 

 

TABLE OF CONTENTS

(continued)

 

	 	Page
	
			ARTICLE 15. GENERAL PROVISIONS

				52
	
			Section 15.1. Addresses and Notice

				52
	
			Section 15.2. Titles and Captions

				52
	
			Section 15.3. Pronouns and Plurals

				52
	
			Section 15.4. Further Action

				52
	
			Section 15.5. Binding Effect

				52
	
			Section 15.6. Creditors

				52
	
			Section 15.7. Waiver

				53
	
			Section 15.8. Counterparts

				53
	
			Section 15.9. Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial

				53
	
			Section 15.10. Invalidity of Provisions

				53
	
			Section 15.11. Entire Agreement

				54
	
			Section 15.12. Legal Counsel Relationships

				54

 

 

 

	Exhibit A – Capital Account Maintenance	A-1
	Exhibit B – Special Allocation Rules	B-1
	Exhibit C – Notice of Redemption	C-1
	Exhibit D – Constructive Ownership Definition	D-1
	Exhibit E – Schedule of Partner’s Ownership with Respect to Tenants	E-1

 

iii

 

 

 

 

SECOND AMENDED AND RESTATED

LIMITED PARTNERSHIP AGREEMENT

OF

NREF OP IV, L.P.

 

THIS SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT (as now or hereafter amended, restated, modified, supplemented, or replaced, this “Agreement”) of NREF OP IV, L.P., a Delaware limited partnership (the “Partnership”), dated as of September 8, 2021, is entered into by and among NexPoint Real Estate Finance Operating Partnership, L.P., a Delaware limited partnership (the “General Partner”) and the Persons who are admitted from time to time as limited partners in accordance with this Agreement and who have not subsequently withdrawn (the “Limited Partners”), such persons being identified on the books and records of the Partnership.

 

WHEREAS, the Partnership was formed on and the original agreement of limited partnership of the Partnership was entered into effective as of October 8, 2019 (the “Original Agreement”);

 

WHEREAS, the Original Agreement was amended and restated effective as of February 11, 2020 (the “First A&R Agreement”) and the First A&R Agreement was subsequently amended by the First Amendment thereto, dated August 4, 2020 and the Second Amendment thereto, dated September 30, 2020; and

 

WHEREAS, the General Partner and the Limited Partners desire to amend and restate the First A&R Agreement, as amended, in its entirety as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE 1.

DEFINED TERMS

 

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

 

“704(c) Value” of any Contributed Property means the fair market value of such property or other consideration at the time of contribution, as determined by the General Partner, following the direction and approval of the Board of Directors, using such reasonable method of valuation as it may adopt. Subject to Exhibit A hereof, the General Partner shall, following the direction and approval of the Board of Directors, use such method as it deems reasonable and appropriate to allocate the aggregate of the 704(c) Values of Contributed Properties in a single or integrated transaction among the separate properties on a basis proportional to their respective fair market values.

 

1

 

 

“Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §17-101, et seq., as it may be amended from time to time, and any successor to such statute.

 

“Additional Funds” has the meaning set forth in Section 4.3(A).

 

“Additional Limited Partner” means a Person admitted to the Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is shown as such on the books and records of the Partnership.

 

“Adjusted Capital Account” means the Capital Account maintained for each Partner as of the end of each Partnership taxable year (i) increased by any amounts which such Partner is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704‐2(i)(5) and (ii) decreased by the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

“Adjusted Capital Account Deficit” means, with respect to any Partner, the deficit balance, if any, in such Partner’s Adjusted Capital Account as of the end of the relevant Partnership taxable year.

 

“Adjusted Property” means any property, the Carrying Value of which has been adjusted pursuant to Exhibit A hereof.

 

“Adjustment Event” has the meaning set forth in Section 4.6(A)(1) hereof.

 

“Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes of this definition, “control” when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Agreed Value” means (i) in the case of any Contributed Property as of the time of its contribution to the Partnership, the 704(c) Value of such property, reduced by any liabilities either assumed by the Partnership upon such contribution or to which such property is subject when contributed, and (ii) in the case of any property distributed to a Partner by the Partnership, the Partnership’s Carrying Value of such property at the time such property is distributed, reduced by any indebtedness either assumed by such Partner upon such distribution or to which such property is subject at the time of distribution as determined under Section 752 of the Code and the Regulations thereunder.

 

“Agreement” has the meaning set forth in the recitals hereto.

 

2

 

 

“Aggregate Consideration” has the meaning set forth in Section 11.6(C).

 

“Approved Sale” means a Sale of the Partnership which is approved by the Partners holding, collectively, more than 50% of the issued and outstanding Partnership Interests, subject to the direction and approval of the Board of Directors.

 

“Approving Partners” has the meaning set forth in Section 11.6(A).

 

“Assignee” means a Person to whom all or a portion of a Partnership Interest has been transferred in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5.

 

“Available Cash” means, with respect to any period for which such calculation is being made, all cash balances of the Partnership net of the Partnership’s working capital needs, anticipated capital expenditures, operating expenses, debt service requirements and other necessary reserves including with respect to contingencies or commitments, each as determined by the General Partner, following the direction and approval of the Board of Directors.

 

“Bankruptcy Event” shall mean, with respect to any Person, such Person (a) is insolvent, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors or (b) becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar person charged with the reorganization or liquidation of its business appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment.

 

“Board of Directors” means the Board of Directors of the Company.

 

“Book-Tax Disparities” means, with respect to any item of Contributed Property or Adjusted Property, as of the date of any determination, the difference between the Carrying Value of such Contributed Property or Adjusted Property and the adjusted basis thereof for federal income tax purposes as of such date. A Partner’s share of the Partnership’s Book-Tax Disparities in all of its Contributed Property and Adjusted Property will be reflected by the difference between such Partner’s Capital Account balance as maintained pursuant to Exhibit A and the hypothetical balance of such Partner’s Capital Account computed as if it had been maintained strictly in accordance with federal income tax accounting principles.

 

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

 

“Capital Account” means the Capital Account maintained for a Partner pursuant to Exhibit A hereof.

 

3

 

 

“Capital Contribution” means, with respect to any Partner, any cash, cash equivalents or the Agreed Value of Contributed Property which such Partner contributes or is deemed to contribute to the Partnership.

 

“Carrying Value” means (i) with respect to a Contributed Property or Adjusted Property, the 704(c) Value of such property, reduced (but not below zero) by all Depreciation with respect to such property charged to the Partners’ Capital Accounts following the contribution of or adjustment with respect to such property; and (ii) with respect to any other Partnership property, the adjusted basis of such property for federal income tax purposes, all as of the time of determination. The Carrying Value of any property shall be adjusted from time to time in accordance with Exhibit A hereof, and to reflect changes, additions or other adjustments to the Carrying Value for dispositions and acquisitions of Partnership properties, as deemed appropriate by the General Partner, following the direction and approval of the Board of Directors.

 

“Cash Amount” means an amount of cash equal to the Value on the Valuation Date of the OP Unit Amount.

 

“Certificate” means the Certificate of Limited Partnership of the Partnership as filed in the office of the Delaware Secretary of State on October 8, 2019, as amended, restated and/or supplemented from time to time in accordance with the terms hereof and the Act.

 

“Charter” means the Articles of Amendment and Restatement of the Company filed with the State Department of Assessments and Taxation of the State of Maryland on February 3, 2020, as amended, restated and/or supplemented from time to time.

 

“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time, as interpreted by the applicable regulations thereunder. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.

 

“Common Units” means the Partnership Units, other than any other series of units of Limited Partner Interest issued in the future and designated as preferred or otherwise different from the Common Units, such difference including, but not limited to, with respect to the payment of distributions, including distributions upon liquidation.

 

“Company” means NexPoint Real Estate Finance, Inc., a Maryland corporation.

 

“Company Common Unit Economic Balance” means (i) the Economic Capital Account Balance of the Company but only to the extent attributable to the Company’s ownership of Common Units and computed on a hypothetical basis after taking into account all allocations through the date on which any allocation is made under Section 1(H) of Exhibit B divided by (ii) the number of the Company’s Common Units.

 

“Constructive Ownership” or “Constructively Own” means ownership under the constructive ownership rules described in Exhibit D.

 

4

 

 

“Contributed Property” means each property or other asset, in such form as may be permitted by the Act (but excluding cash), contributed or deemed contributed to the Partnership. Once the Carrying Value of a Contributed Property is adjusted pursuant to Exhibit A hereof, such property shall no longer constitute a Contributed Property for purposes of Exhibit A hereof, but shall be deemed an Adjusted Property for such purposes.

 

“Conversion Factor” means 1.0, subject to adjustment as follows: (i) in case the Company shall (A) make a distribution on the outstanding REIT Shares in REIT Shares, (B) subdivide or reclassify the outstanding REIT Shares into a greater number of REIT Shares, or (C) combine or reclassify the outstanding REIT Shares into a smaller number of REIT Shares, the Conversion Factor in effect at the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such distribution or subject to such subdivision, combination or reclassification shall be proportionately adjusted so that a holder of OP Units shall be entitled to receive, upon exchange thereof, the number of REIT Shares which the holder would have owned at the opening of business on the day following the date fixed for such determination had such OP Units been exchanged in accordance with the limited partnership agreement of the Operating Partnership immediately prior to such determination; (ii) in case the Operating Partnership shall subdivide or reclassify its outstanding OP Units into a greater number of OP Units, the Conversion Factor in effect at the opening of business on the day following the date fixed for the determination of holders of OP Units subject to such subdivision or reclassification shall be proportionately adjusted so that a holder of OP Units shall be entitled to receive, upon exchange thereof, the number of REIT Shares which the holder would have owned at the opening of business on the day following the date fixed for such determination had such OP Units been exchanged in accordance with the limited partnership agreement of the Operating Partnership immediately prior to such determination; (iii) in case the Company (A) shall issue rights or warrants to all holders of REIT Shares entitling them to subscribe for or purchase REIT Shares at a price per share less than the daily market price per REIT Share on the date fixed for the determination of shareholders entitled to receive such rights or warrants, (B) shall not issue similar rights or warrants to all holders of OP Units of the Operating Partnership entitling them to subscribe for or purchase REIT Shares or OP Units at a comparable price (determined, in the case of OP Units, by reference to the Conversion Factor), and (C) cannot issue such rights or warrants to a Redeeming Partner, then the Conversion Factor in effect at the opening of business on the day following the date fixed for such determination shall be increased by multiplying such Conversion Factor by a fraction of which the numerator shall be the number of REIT Shares outstanding at the close of business on the date fixed for such determination plus the number of REIT Shares so offered for subscription or purchase, and of which the denominator shall be the number of REIT Shares outstanding at the close of business on the date fixed for such determination plus the number of REIT Shares which the aggregate offering price of the total number of REIT Shares so offered for subscription would purchase at such daily market price per share, such increase to the Conversion Factor to become effective immediately after the opening of business on the day following the date fixed for such determination; and (iv) in case the Company shall, by distribution or otherwise, distribute to all holders of its REIT Shares, (A) capital shares of any class other than its REIT Shares, (B) evidence of its indebtedness or (C) assets (excluding any rights or warrants referred to in clause (iii) above, any cash distribution lawfully paid under the laws of the state of organization of the Company, and any distribution referred to in clause (i) above) and shall not cause a corresponding distribution to be made to all holders of OP Units, the Conversion Factor shall be adjusted so that the same shall equal the ratio determined by multiplying the Conversion Factor in effect immediately prior to the close of business on the date fixed for the determination of shareholders entitled to receive such distribution by a fraction of which the numerator shall be the daily market price per REIT Share on the date fixed for such determination, and of which the denominator shall be such daily market price per REIT Share less the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors certified by the Secretary of the Company and delivered to the holders of OP Units) of the portion of the capital shares or evidences of indebtedness or assets so distributed applicable to one REIT Share, such adjustment to become effective immediately prior to the opening of business on the day following the date fixed for the determination of shareholders entitled to receive such distribution.

 

5

 

 

“Conversion Notice” has the meaning set forth in Section 4.7(B) hereof.

 

“Conversion Right” has the meaning set forth in Section 4.7(A) hereof.

 

“Covered Person” has the meaning set forth in Section 7.8(A).

 

“Debt” means, as to any Person, as of any date of determination, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person, (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof, and (iv) obligations of such Person incurred in connection with entering into a lease which, in accordance with GAAP, should be capitalized.

 

“Delaware Courts” has the meaning set forth in Section 15.10(B) hereof.

 

“Depreciation” means, for each taxable year, an amount equal to the federal income tax depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year, except that if the Carrying Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Carrying Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Carrying Value using any reasonable method selected by the General Partner.

 

6

 

 

“Economic Capital Account Balance”, with respect to a Partner, means an amount equal to such Partner’s Capital Account balance, plus the amount of its share of any Partner Minimum Gain and Partnership Minimum Gain.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended and in effect from time to time, as interpreted by the applicable regulations thereunder. Any reference herein to a specific section or Title of ERISA shall be deemed to include a reference to any corresponding provision of future law.

 

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

 

“flow through entity” has the meaning set forth in Section 3.3(D)(3) hereof.

 

“GAAP” means U.S. generally accepted accounting principles, applied on a consistent basis.

 

“General Partner” has the meaning set forth in the recitals hereto.

 

“General Partner Interest” means a Partnership Interest held by the General Partner, in its capacity as general partner of the Partnership. A General Partner Interest may be (but is not required to be) expressed as a number of Partnership Units.

 

“Incapacity” or “Incapacitated” means, (i) as to any individual Partner, death, total physical disability or entry by a court of competent jurisdiction adjudicating him incompetent to manage his Person or his estate; (ii) as to any corporation which is a Partner, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any partnership or limited liability company which is a Partner, the dissolution and commencement of winding up of the partnership or limited liability company; (iv) as to any estate which is a Partner, the distribution by the fiduciary of the estate’s entire interest in the Partnership; (v) as to any trustee of a trust which is a Partner, the termination of the trust (but not the substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences a voluntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect; (b) the Partner is adjudged as bankrupt or insolvent, or a final and non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner; (c) the Partner executes and delivers a general assignment for the benefit of the Partner’s creditors; (d) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (b) above; (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for the Partner or for all or any substantial part of the Partner’s properties; (f) any proceeding seeking liquidation, reorganization or other relief of or against such Partner under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within 120 days after the commencement thereof; (g) the appointment without the Partner’s consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within 90 days of such appointment; or (h) an appointment referred to in clause (g) which has been stayed is not vacated within 90 days after the expiration of any such stay.

 

7

 

 

“Indemnitee” means (i) any Person made a party to a proceeding by reason of (A) his or its status as the General Partner, or as a trustee, director, officer, shareholder, partner, member, employee, representative or agent of the General Partner or as an officer, employee, representative or agent of the Partnership or as the Partnership Representative, or (B) his, her or its liabilities, pursuant to a loan guarantee or otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken assets subject to); and (ii) such other Persons (including Affiliates of the General Partner or the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability) following the direction and approval of the Board of Directors.

 

“Initial Limited Partner” has the meaning set forth in the recitals hereto.

 

“Initial General Partner” has the meaning set forth in the recitals hereto.

 

“Limited Partner” has the meaning set forth in the recitals hereto, including any Substituted Limited Partner or Additional Limited Partner, in such Person’s capacity as a limited partner of the Partnership. For purposes of this Agreement and the Act, the Limited Partners shall constitute a single class or group of limited partners.

 

“Limited Partner Interest” means a Partnership Interest of a Limited Partner in the Partnership representing a fractional part of the Partnership Interests of all Partners and includes any and all benefits to which the holder of such a Partnership Interest may be entitled, as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Limited Partner Interest may be (but is not required to be) expressed as a number of Partnership Units.

 

“Liquidating Event” has the meaning set forth in Section 13.1.

 

“Liquidating Gains” means any net gain realized in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership (including upon the occurrence of any event of liquidation of the Partnership), including but not limited to the net gain realized in connection with an adjustment to the Carrying Value of Partnership assets under Section 1.D of Exhibit A attached hereto.

 

“Liquidating Losses” means any net loss realized in connection with the actual or hypothetical sale of all or substantially all of the assets of the Partnership (including upon the occurrence of any event of liquidation of the Partnership), including but not limited to the net loss realized in connection with an adjustment to the Carrying Value of Partnership assets under Section 1.D of Exhibit A attached hereto.

 

8

 

 

“Liquidator” has the meaning set forth in Section 13.2.

 

“Net Income” means, for any taxable period, the excess, if any, of the Partnership’s items of income and gain for such taxable period over the Partnership’s items of loss and deduction for such taxable period. The items included in the calculation of Net Income shall be determined in accordance with U.S. federal income tax accounting principles, subject to the specific adjustments provided for in Section 1.B of Exhibit A.

 

“Net Loss” means, for any taxable period, the excess, if any, of the Partnership’s items of loss and deduction for such taxable period over the Partnership’s items of income and gain for such taxable period. The items included in the calculation of Net Loss shall be determined in accordance with federal income tax accounting principles, subject to the specific adjustments provided for in Section 1.B of Exhibit A.

 

“Non-Approving Partners” has the meaning set forth in Section 11.6(A).

 

“Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership taxable year shall be determined in accordance with the rules of Regulations Section 1.704-2(c).

 

“Nonrecourse Liability” has the meaning set forth in Regulations Section 1.752-1(a)(2).

 

“Notice of Redemption” means the Notice of Redemption substantially in the form of Exhibit C to this Agreement.

 

“Operating Partnership” means NexPoint Real Estate Finance Operating Partnership, L.P.

 

“OP Units” means common partnership units of the Operating Partnership.

 

“OP Unit Amount” means a number of OP Units equal to the product of (i) the number of Partnership Units offered for redemption by a Redeeming Partner, and (ii) the Conversion Factor; provided, that in the event the Operating Partnership issues to all holders of OP Units rights, options, warrants or convertible or exchangeable securities entitling the holders of OP Units to subscribe for or purchase OP Units, or any other securities or property (collectively, the “rights”), and the Operating Partnership can issue such rights to the Redeeming Partner, then the OP Unit Amount shall also include such rights that a holder of that number of OP Units would be entitled to receive.

 

“Partner” means a General Partner or a Limited Partner, and “Partners” means the General Partner and the Limited Partners collectively.

 

“Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

 

9

 

 

“Partner Nonrecourse Debt” has the meaning set forth in Regulations Section 1.704-2(b)(4).

 

“Partner Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Partnership taxable year shall be determined in accordance with the rules of Regulations Section 1.704-2(i)(2).

 

“Partnership” has the meaning set forth in the recitals hereto.

 

“Partnership Interest” means an ownership interest in the Partnership held by a Partner and includes any and all benefits to which the holder of such a partnership interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Partnership Interest may be (but is not required to be) expressed as a number of Partnership Units.

 

“Partnership Minimum Gain” has the meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or decrease in a Partnership Minimum Gain, for a Partnership taxable year shall be determined in accordance with the rules of Regulations Section 1.704-2(d).

 

“Partnership Record Date” means the record date established by the General Partner for the distribution of Available Cash pursuant to Section 5.1 hereof, which record date shall be the same as the record date established by the Company for a distribution to its shareholders of some or all of its portion of such distribution.

 

“Partnership Representative” has the meaning set forth in Section 10.3(A).

 

“Partnership Unit” means a fractional, undivided share of the Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2 and any other classes or series of Partnership Units established after the date hereof. The number of Partnership Units outstanding and the Percentage Interest in the Partnership represented by such Partnership Units are set forth on the books and records of the Partnership.

 

“Partnership Year” means the fiscal year of the Partnership, which shall be the calendar year.

 

“Percentage Interest” means, as to a Partner, its interest in the Partnership as determined by dividing the Partnership Units owned by such Partner by the total number of Partnership Units then outstanding and as specified on the books and records of the Partnership.

 

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“Person” means an individual or a real estate investment trust, corporation, partnership, limited liability company, trust, estate, unincorporated organization, association or other entity.

 

“Prior Agreement” has the meaning set forth in the recitals hereto.

 

“Qualified REIT Subsidiary” means a qualified REIT subsidiary of the Company within the meaning of Section 856(i)(2) of the Code.

 

“Recapture Income” means any gain recognized by the Partnership upon the disposition of any property or asset of the Partnership, which gain is characterized as ordinary income because it represents the recapture of deductions previously taken with respect to such property or asset.

 

“Redeeming Partner” has the meaning set forth in Section 8.6(A).

 

“Redemption Right” shall have the meaning set forth in Section 8.6(A).

 

“Regulations” means the Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

“REIT” means a real estate investment trust under Section 856 of the Code.

 

“REIT Shares” means shares of common stock, $0.01 par value per share, of the Company.

 

“Residual Gain” or “Residual Loss” means any item of gain or loss, as the case may be, of the Partnership recognized for federal income tax purposes resulting from a sale, exchange or other disposition of Contributed Property or Adjusted Property, to the extent such item of gain or loss is not allocated pursuant to Section 2(B)(1)(a) or 2(B)(2)(a) of Exhibit B to eliminate Book-Tax Disparities.

 

“Sale of the Partnership” means (a) a sale or other disposition of all or substantially all of the assets of the Partnership or a related series of transactions that taken together, result in the sale or other disposition of all or substantially all of the assets of the Partnership, (b) a transaction or series of related transactions in which a Person, or group of related Persons, acquires more than 50% of the outstanding Partnership Units, or (c) the merger or consolidation of the Partnership with or into another Person that is not (i) an Affiliate of the Partnership or (ii) a Partner, in each case in clauses (b) and (c) above, under circumstances in which the holders of a majority of Partnership Units, immediately prior to such transaction, own less than a majority in voting power of the surviving or resulting Person immediately following such transaction.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Specified Redemption Date” means the 10th Business Day after receipt by the Partnership of a Notice of Redemption; provided, that if the Operating Partnership combines its outstanding OP Units, no Specified Redemption Date shall occur after the record date of such combination of OP Units and prior to the effective date of such combination.

 

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“Subsidiary” means, with respect to any Person, any real estate investment trust, corporation, partnership, limited liability company or other entity of which (a) a majority of (i) the voting power of the voting equity securities; or (ii) the outstanding equity interests, is owned, directly or indirectly, by such Person or (b) such Person acts as the general partner, sole member or sole manager.

 

“Substituted Limited Partner” means a Person who is admitted as a Limited Partner to the Partnership pursuant to Section 11.4.

 

“Target Balance” has the meaning set forth in Section 1(H)(1) of Exhibit B attached hereto.

 

“Tenant” means any tenant from which the Company derives rent either directly or indirectly through partnerships or limited liability companies, including the Partnership.

 

“Trading Days” means days on which the primary trading market for REIT Shares, if any, is open for trading.

 

“Transaction” has the meaning set forth in Section 15.12.

 

“transfer”, when used in this Article 11, has the meaning set forth in Section 11.1(A).

 

“Unrealized Gain” attributable to any item of Partnership property means, as of any date of determination, the excess, if any, of (i) the fair market value of such property (as determined under Exhibit A hereof) as of such date; over (ii) the Carrying Value of such property (prior to any adjustment to be made pursuant to Exhibit A hereof) as of such date.

 

“Unrealized Loss” attributable to any item of Partnership property means, as of any date of determination, the excess, if any, of (i) the Carrying Value of such property (prior to any adjustment to be made pursuant to Exhibit A hereof) as of such date; over (ii) the fair market value of such property (as determined under Exhibit A hereof) as of such date.

 

“Valuation Date” means the date of receipt by the General Partner of a Notice of Redemption or, if such date is not a Business Day, the first Business Day thereafter.

 

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“Value” means, with respect to an OP Unit, the greater of (i) the Company’s most recent net asset value as determined by the Board of Directors and (ii) if the REIT Shares are listed or admitted to trading on any national securities exchange, the volume weighted average price for the 10 consecutive Trading Days immediately preceding the Valuation Date. If the REIT Shares are not listed or admitted to trading on any national securities exchange, the volume weighted average price with respect to a REIT Share will be the volume weighted average price on such day or, if no sale takes place on such day, the average of the closing bid and asked prices on such day, as reported by a reliable quotation source designated by the General Partner or if no such closing bid and asked prices are available, the average of the reported high bid and low asked prices on such day, as reported by a reliable quotation source designated by the General Partner, or if there shall be no bid and asked prices on such day, the average of the high bid and low asked prices, as so reported, on the most recent day (not more than 10 days prior to the date in question) for which prices have been so reported; provided, that if there are no bid and asked prices reported during the 10 days prior to the date in question, the Value of the REIT Shares shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate. In the event the OP Unit Amount includes rights that a holder of OP Units would be entitled to receive, then the Value of such rights shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate.

 

ARTICLE 2.

ORGANIZATIONAL MATTERS

 

Section 2.1.     Continuation

 

The Partners hereby continue the Partnership as a limited partnership under and pursuant to the Act. Except as expressly provided herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. The Partnership Interest of each Partner shall be personal property for all purposes.

 

Section 2.2.     Name

 

The name of the Partnership heretofore formed and continued hereby shall be NREF OP IV, L.P. The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner following the direction and approval of the Board of Directors. The words “Limited Partnership,” “L.P.,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner, following the direction and approval of the Board of Directors, may change the name of the Partnership at any time and from time to time and shall notify the Limited Partners of such change in the next regular communication to the Limited Partners.

 

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Section 2.3.     Registered Office and Agent; Principal Office

 

The address of the registered office of the Partnership in the State of Delaware is 1209 Orange Street, Wilmington, New Castle County, Delaware, 19801 and the registered agent for service of process on the Partnership in the State of Delaware shall be The Corporation Trust Company. The principal office of the Partnership shall be 300 Crescent Court, Suite 700, Dallas, Texas 75201 or such other place as the General Partner, following the direction and approval of the Board of Directors, 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 Delaware as the General Partner and the Board of Directors deems advisable.

 

Section 2.4.     Power of Attorney

 

A.           Each Limited Partner and each Assignee hereby constitutes and appoints the General Partner, any Liquidator, 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 execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments or restatements thereof) that the General Partner or the Liquidator 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 Delaware and in all other jurisdictions in which the Partnership may or plans to conduct business or own property; (b) 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; (c) all conveyances and other instruments or documents that the General Partner or the Liquidator deems appropriate or necessary to reflect the dissolution and winding up of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (d) all instruments relating to the admission, withdrawal, removal or substitution of any Partner pursuant to Articles 11, 12 or 13 hereof or the Capital Contribution of any Partner; and (e) all conveyances and other instruments or documents that the General Partner or the Liquidator deems appropriate or necessary to reflect the distribution or exchange of assets of the Partnership pursuant to the terms of this Agreement. Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to amend this Agreement except in accordance with Article 14 hereof or as may be otherwise expressly provided for in this Agreement.

 

B.           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 Partners will be relying upon the power of the General Partner and any Liquidator to act as contemplated by this Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not be affected by the subsequent Incapacity of any Limited Partner or Assignee and the transfer of all or any portion of such Limited Partner’s or Assignee’s Partnership Units and shall extend to such Limited Partner’s or Assignee’s heirs, successors, assigns and personal representatives. Each such Limited Partner or Assignee hereby agrees to be bound by any representation made by the General Partner or any Liquidator, acting in good faith pursuant to such power of attorney, and each such Limited Partner or Assignee hereby waives any and all defenses which may be available to contest, negate or disaffirm the action of the General Partner or any Liquidator, taken in good faith under such power of attorney. Each Limited Partner or Assignee shall execute and deliver to the General Partner or the Liquidator, within 15 days after receipt of the General Partner’s or Liquidator’s request therefor, such further designation, powers of attorney and other instruments as the General Partner or the Liquidator, as the case may be, deems necessary to effectuate this Agreement and the purposes of the Partnership.

 

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C.           Notwithstanding anything in this Section 2.4, no General Partner, Liquidator, or authorized officer or attorney-in-fact of either, may exercise the power and authority under this Section 2.4 without the prior approval of the Board of Directors.

 

Section 2.5.     Term

 

The term of the Partnership commenced on the date that the Certificate was filed with the Secretary of State of the State of Delaware and shall continue until dissolved pursuant to the provisions of Article 13 or as otherwise provided by law.

 

Section 2.6.     Admission of Partners

 

Each Limited Partner being admitted to the Partnership from time to time after the date hereof shall be deemed admitted to the Partnership as a limited partner of the Partnership upon such Limited Partner’s execution and delivery of a counterpart to this Agreement or equivalent thereof, including but not limited to a power of attorney granted to the General Partner, and delivery to the Partnership of its initial Capital Contribution, such initial Capital Contribution specified on the books and records on the Partnership pursuant to Section 4.1.

 

ARTICLE 3.

PURPOSE

 

Section 3.1.     Purpose and Business

 

The purpose and nature of the business to be conducted by the Partnership is (i) to conduct any business that may be lawfully conducted by a limited partnership formed pursuant to the Act; provided, however, that such business shall be limited to and conducted in such a manner as to permit the Company at all times to qualify as a REIT, unless the Company ceases to qualify as a REIT for reasons other than as a result of the conduct of the business of the Partnership or voluntarily revokes its election to be a REIT; (ii) to enter into any partnership, joint venture or other similar arrangement to engage in any of the foregoing or to own interests in any entity engaged in any of the foregoing; and (iii) to do anything necessary, convenient or incidental to the foregoing. In connection with the foregoing, and without limiting the Company’s right, in its sole discretion, to cease qualifying as a REIT, the Partners acknowledge that the Company’s current status as a REIT inures to the benefit of all of the Partners and not solely to the General Partner, the Company or their Affiliates.

 

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Section 3.2.     Powers

 

The Partnership shall be empowered 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, and shall have, without limitation, any and all of the powers that may be exercised on behalf of the Partnership by the General Partner pursuant to and according to the terms of this Agreement; provided, however, that the Partnership may not, without the General Partner’s consent, following the direction and approval of the Board of Directors, take, or refrain from taking, any action which, in the judgment of the General Partner, following the direction and approval of the Board of Directors, (i) could adversely affect the ability of the Company to qualify and to continue to qualify as a REIT; (ii) could subject the Company to any additional taxes under Section 857 or Section 4981 of the Code or any other related or successor provision of the Code; or (iii) could violate any law or regulation of any governmental body or agency having jurisdiction over the Company, its securities or the Partnership, unless such action (or inaction) under clause (i), clause (ii) or clause (iii) above shall have been specifically consented to by the Company in writing.

 

Section 3.3.     Representations and Warranties by the Parties

 

A.           Each Partner that is an individual represents and warrants to each other Partner that (i) such Partner has the legal capacity to enter into this Agreement and perform such Partner’s obligations hereunder, (ii) the consummation of the transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any agreement by which such Partner or any of such Partner’s property is or are bound, or any statute, regulation, order or other law to which such Partner is subject, (iii) such Partner is a “United States person” within the meaning of Section 7701(a)(30) of the Code, and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms.

 

B.           Each Partner that is not an individual represents and warrants to each other Partner that (i) its execution and delivery of this Agreement and all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, director(s) and/or shareholder(s), as the case may be, as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its certificate of limited partnership, partnership agreement, trust agreement, limited liability company operating agreement, declaration of trust, charter or bylaws, as the case may be, any agreement by which such Partner or any of such Partner’s properties or any of its partners, beneficiaries, trustees or shareholders, as the case may be, is or are bound, or any statute, regulation, order or other law to which such Partner or any of its partners, trustees, beneficiaries or shareholders, as the case may be, is or are subject, (iii) such Partner is a “United States person” within the meaning of Section 7701(a)(30) of the Code and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms.

 

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C.           Each Partner represents, warrants and agrees that it has acquired and continues to hold its interest in the Partnership for its own account for investment only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof, nor with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances. Each Partner further represents and warrants that it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds it has invested in the Partnership in what it understands to be a highly speculative and illiquid investment.

 

D.           Each Partner further represents, warrants, covenants and agrees as follows:

 

(1)    Except as provided in Exhibit E hereto, at any time such Partner actually or Constructively Owns a 25% or greater capital interest or profits interest in the Partnership, it does not and will not, without the approval of the Board of Directors, actually own or Constructively Own (a) with respect to any Tenant that is a corporation, any stock of such Tenant, and (b) with respect to any Tenant that is not a corporation, any interest in either the assets or net profits of such Tenant.

 

(2)    Upon request of the General Partner, it will promptly disclose to the General Partner and the Company the amount of REIT Shares or other capital shares of the Company that it actually owns or Constructively Owns.

 

(3)    Without the approval of the Board of Directors, no Partner shall take any action that would cause the Partnership at any time to have more than 100 partners (including as partners those Persons indirectly owning an interest in the Partnership through a partnership, limited liability company, S corporation or grantor trust (such entity, a “flow through entity”), but only if substantially all of the value of such person’s interest in the flow through entity is attributable to the flow through entity’s interest (direct or indirect) in the Partnership).

 

E.           The representations and warranties contained in this Section 3.3 shall survive the execution and delivery of this Agreement by each Partner and the dissolution and winding up of the Partnership.

 

F.            Each Partner hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Partnership or the Company have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, which may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or implied.

 

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G.           Each Partner understands that if, for any reason, (a) the representations, warranties or agreements set forth in this Section 3.3 are violated, or (b) the Partnership’s actual or Constructive Ownership of REIT Shares or other capital shares of the Company violates the limitations set forth in the Charter, then (x) some or all of the Redemption Rights of the Partners may become non-exercisable, and (y) some or all of the REIT Shares owned by the Partners may be automatically transferred to a trust for the benefit of a charitable beneficiary, as provided in the Charter.

 

Section 3.4.     Not Publicly Traded

 

The Partners intend for the Partnership to be treated as a partnership for United States federal income tax purposes and no election to the contrary shall be made. The General Partner, on behalf of the Partnership, shall use its best efforts not to take any action which would result in the Partnership being a publicly traded partnership within the meaning of either Section 469(k)(2) or 7704(b) of the Code. Subject to this Section 3.4, it is expressly acknowledged and agreed by the Partners that the General Partner may, following the direction and approval of the Board of Directors, waive or otherwise modify the application with respect to any Partner(s) or Assignee(s) of any provision herein restricting, prohibiting or otherwise relating to (i) the transfer of a Limited Partner Interest or the Partnership Units evidencing the same, (ii) the admission of any Limited Partners and (iii) the Redemption Rights of such Partners, and that such waivers or modifications may be made by the General Partner at any time or from time to time, including, without limitation, concurrently with the issuance of any Partnership Units pursuant to the terms of this Agreement.

 

ARTICLE 4.

CAPITAL CONTRIBUTIONS

 

Section 4.1.     Capital Contributions of the Partners

 

At the time of their respective execution of this Agreement by delivery of a counterpart signature page to the same or an equivalent thereof, the Partners shall make or shall have made Capital Contributions. The Partners shall own Partnership Units of the class or series and in the amounts and shall have a Percentage Interest in the Partnership in each case as set forth on the books and records of the Partnership. The Percentage Interest shall be adjusted from time to time by the General Partner to the extent necessary to reflect accurately exchanges, redemptions, additional Capital Contributions, the issuance of additional Partnership Units (pursuant to any merger or otherwise), or similar events having an effect on any Partner’s Percentage Interest. Except as provided in Section 4.2, Section 4.3, and Section 10.4, the Partners shall have no obligation to make any additional Capital Contributions or loans to the Partnership. Each Limited Partner that contributes any Contributed Property shall promptly provide the General Partner and the Board of Directors, upon either of their request, with any information regarding such Contributed Property, including for Partnership tax return reporting purposes.

 

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Section 4.2.     Issuances of Additional Partnership Interests

 

The General Partner is hereby authorized, following the direction and approval of the Board of Directors, to cause the Partnership from time to time to issue to any existing Partner (including the General Partner and the Company) or to any other Person, and to admit such Person as a limited partner in the Partnership, Partnership Units (including, without limitation, Common Units and preferred Partnership Units) or other Partnership Interests, in each case in exchange for the contribution by such Person of property or other assets, in one or more classes, or one or more series of any of such classes, or otherwise with such designations, preferences, redemption and conversion rights and relative, participating, optional or other special rights, powers and duties, including rights, powers and duties senior to Limited Partner Interests, all as shall be determined by the General Partner (following the direction and approval of the Board of Directors) subject to Delaware law, including, without limitation, (i) the allocations of items of Partnership income, gain, loss, deduction and credit to each such class or series of Partnership Interests; (ii) the right of each such class or series of Partnership Interests to share in Partnership distributions; and (iii) the rights of each such class or series of Partnership Interests upon dissolution and liquidation of the Partnership.

 

Section 4.3.     Additional Funds

 

A.           The General Partner may, following the direction and approval of the Board of Directors, reasonably determine from time to time that the Partnership requires additional funds (“Additional Funds”) for the acquisition of additional assets, for the redemption of Partnership Units or for other reasonable purposes. Subject to Section 7.1, Additional Funds may be obtained by the Partnership, at the election of the General Partner (following the direction and approval of the Board of Directors), in any manner provided in, and in accordance with, the terms of this Section 4.3, without the approval of any Limited Partner (unless such approval is required under the terms of this Agreement).

 

B.           Subject to the approval of the Board of Directors contemplated by Section 4.3(A) and the limitations set forth in Section 7.1, the General Partner, on behalf of the Partnership, may obtain any Additional Funds by accepting Capital Contributions from any Partners or other Persons. In connection with any such Capital Contribution, the General Partner is hereby authorized to cause the Partnership from time to time to issue additional Partnership Units (as set forth in Section 4.2 above) in consideration therefor, and the Percentage Interests of the Partners shall be adjusted to reflect the issuance of such additional Partnership Units.

 

C.           Subject to the approval of the Board of Directors contemplated by Section 4.3(A) and the limitations set forth in Section 7.1, the General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt upon such terms as the General Partner determines appropriate (following the direction and approval of the Board of Directors of such terms), including making such Debt convertible, redeemable or exchangeable for Partnership Units, OP Units or REIT Shares; provided, however, that the Partnership shall not incur any such Debt if such Debt is recourse to any Partner (unless the Partner otherwise agrees).

 

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D.           Following the direction and approval of the Board of Directors and subject to the limitations set forth in Section 7.1, the General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt with the Company; provided, however, that the Partnership shall not incur any such Debt if (a) a breach, violation or default of such Debt would be deemed to occur by virtue of the transfer of any Partnership Interest, or (b) such Debt is recourse to any Partner (unless the Partner otherwise agrees).

 

Section 4.4.     Preemptive Rights

 

No Person shall have any preemptive, preferential or other similar right with respect to (i) additional Capital Contributions or loans to the Partnership; or (ii) the issuance or sale of any Partnership Units or other Partnership Interests.

 

Section 4.5.     No Interest

 

No Partner shall be entitled to interest on its Capital Contribution or on such Partner’s Capital Account unless determined by the General Partner following the direction and approval of the Board of Directors.

 

ARTICLE 5.

DISTRIBUTIONS

 

Section 5.1.     Requirement and Characterization of Distributions

 

The General Partner shall distribute at least quarterly a portion of Available Cash generated by the Partnership during such quarter or shorter period, such portion as determined by the General Partner following the direction and approval of the Board of Directors, to the Partners that are Partners on the Partnership Record Date with respect to such quarter or shorter period in accordance with their Percentage Interests; provided, that in no event may a Partner receive a distribution of Available Cash with respect to a Partnership if such Partner is entitled to receive a distribution out of such Available Cash with respect to an OP Unit or a REIT Share for which such Partnership Unit has been exchanged, and any such distribution shall be made to the Operating Partnership or the Company.

 

Section 5.2.     Amounts Withheld

 

All amounts withheld pursuant to the Code or any provisions of any state, local or non-U.S. tax law and Section 10.4 hereof with respect to any allocation, payment or distribution to any Partner or Assignee shall be treated as amounts distributed to such Partner or Assignee pursuant to Section 5.1 for all purposes under this Agreement.

 

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Section 5.3.     Distributions Upon Liquidation

 

Proceeds from a Sale of the Partnership and any other cash received or reductions in reserves made after commencement of the liquidation of the Partnership shall be distributed to the Partners in accordance with Section 13.2.

 

Section 5.4.     Restricted Distributions

 

Notwithstanding any provision to the contrary contained in this Agreement, the Partnership, and the General Partner on behalf of the Partnership, shall not make a distribution to any Partner on account of its interest in the Partnership if such distribution would violate Section 17-607 of the Act or other applicable law.

 

Section 5.5.     Compliance with REIT Requirements

 

The General Partner shall make such reasonable efforts, following the direction and approval of the Board of Directors and consistent with the Company’s qualification as a REIT, to cause the Partnership to distribute sufficient amounts to enable the Company, for so long as the Company has determined to qualify as a REIT, to pay stockholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the Code and Regulations (the “REIT Requirements”) and (b) except to the extent otherwise determined by the Company, eliminate any federal income or excise tax liability of the Company.

 

 

ARTICLE 6.

ALLOCATIONS

 

Section 6.1.     Allocations For Capital Account Purposes

 

A.           After giving effect to the special allocations set forth in Section 1 of Exhibit B attached hereto for the applicable taxable year or other allocation period, and subject to Section 4 of Exhibit A attached hereto, Net Income for each taxable year or other allocation period shall be allocated to the Partners’ Capital Accounts in the following order of priority:

 

(1)    First, to the General Partner until the cumulative Net Income allocated to the General Partner under this Section 6.1(A)(1) equals the cumulative Net Loss allocated to the General Partner under Section 6.1(B)(2);

 

(2)    Next, to the holders of Common Units until the cumulative Net Income allocated to such holders under this Section 6.1(A)(2) equals the cumulative Net Loss allocated to such holders under Section 6.1(B)(1) (pro rata in accordance with the excess of such Net Loss over such Net Income for each such holder); and

 

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(3)    Thereafter, to the holders of Common Units pro rata in accordance with their respective Percentage Interests.

 

B.           After giving effect to the special allocations set forth in Section 1 of Exhibit B attached hereto for the applicable taxable year or other allocation period, and subject to Section 4 of Exhibit A attached hereto, Net Loss for each taxable year or other allocation period shall be allocated to the Partners’ Capital Accounts in the following order of priority.

 

(1)    First, to the holders of Common Units with positive balances in their Economic Capital Account Balances in accordance with such balances until their Economic Capital Account Balances are reduced to zero; and

 

(2)    Thereafter, to the General Partner.

 

ARTICLE 7.

MANAGEMENT AND OPERATIONS OF BUSINESS

 

Section 7.1.     Management

 

A.           Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner or other Person shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may be removed, with or without cause by the holders of a majority of the Common Units outstanding, subject to the approval of the Board of Directors. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the terms of this Agreement, shall have full power and authority to do all things deemed necessary, desirable or convenient by it to conduct the business of the Partnership, to exercise all powers set forth in Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1 hereof. Notwithstanding the foregoing, the General Partner shall not do any of the following without the prior approval of the Board of Directors:

 

(1)    the making of any expenditures, the lending or borrowing of money (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the Company (so long as the Company desires to maintain its qualification as a REIT) to avoid the payment of any U.S. federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its shareholders in amounts sufficient to permit the Company to maintain its REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidence of indebtedness (including the securing of the same by deed, mortgage, deed of trust or other lien or encumbrance on the Partnership’s assets or any assets of its Subsidiaries) and the incurring of any obligations it deems necessary for the conduct of the activities of the Partnership;

 

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(2)    the making of tax, regulatory and other filings or elections, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership;

 

(3)    the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any assets of the Partnership (including the exercise or grant of any conversion, option, privilege, or subscription right or other right available in connection with any assets at any time held by the Partnership) or the merger or other combination of the Partnership with or into another entity (all of the foregoing subject to any prior approval only to the extent required by Section 7.3 hereof);

 

(4)    the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms that it sees fit, including, without limitation, the financing of the conduct of the operations of the Partnership, the Company or any of the Partnership’s or the Company’s Subsidiaries, the lending of funds to other Persons (including, without limitation, the Subsidiaries of the Partnership and/or the Company) and the repayment of obligations of the Partnership and its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to its Subsidiaries;

 

(5)    the negotiation, execution, delivery and performance of any contracts (including leases), conveyances or other instruments that the General Partner considers useful or necessary or convenient to the conduct of the Partnership’s operations or the implementation of the General Partner’s powers under this Agreement, including, without limitation, contracting with consultants, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation out of the Partnership’s assets;

 

(6)    the distribution of Partnership cash or other Partnership assets in accordance with this Agreement;

 

(7)    holding, managing, investing and reinvesting cash and other assets of the Partnership;

 

(8)    the amending, restating and/or supplementing of this Agreement or the Certificate;

 

(9)    the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including, without limitation, employees who may be designated as officers with titles such as “president,” “vice president,” “secretary” and “treasurer” of the Partnership), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, and the determination of their compensation and other terms of employment or hiring;

 

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(10)    the formation of, or acquisition of an interest in, and the contribution of property to, any further limited or general partnerships, limited liability companies, real estate investment trusts, corporations, entities that are treated as REITs, “taxable REIT subsidiaries” or as foreign corporations for federal income tax purposes, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property or the making of loans to, its or the Company’s Subsidiaries and any other Person in which it has an equity investment from time to time or the incurrence of indebtedness on behalf of such Persons or the guarantee of obligations of such Persons and the making of any tax, regulatory or other filing or election with respect to any of the foregoing Persons); provided, that as long as the Company has determined to continue to qualify as a REIT, the Partnership may not engage in any such formation, acquisition or contribution that would cause the Company to fail to qualify as a REIT;

 

(11)    the control of any matters affecting the rights and obligations of the Partnership, including the settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment of, any claim, cause of action, liability, Debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and the representation of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurrence of legal expense, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

 

(12)    the undertaking of any action in connection with the Partnership’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the contribution or loan of funds by the Partnership to such Persons);

 

(13)    the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt;

 

(14)    the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership;

 

(15)    the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership;

 

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(16)    the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person;

 

(17)    the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest pursuant to contractual or other arrangements with such Person;

 

(18)    the making, execution, delivery and performance of any and all deeds, leases, notes, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary, appropriate or convenient, in the judgment of the General Partner, for the accomplishment of any of the powers of the General Partner enumerated in this Agreement;

 

(19)    the issuance of additional Partnership Units and other partnership interests to any Partners or other Persons;

 

B.           Subject to the rights of the Partners and the approval of the Board of Directors as set forth in this Agreement, including, but not limited to, Section 7.1, each of the Limited Partners agrees that the General Partner is authorized to execute, deliver and perform the above-mentioned agreements and transactions on behalf of the Partnership, and otherwise to exercise any power of the General Partner under this Agreement or the Act, without any further act, approval or vote of the Partners, notwithstanding any other provision of this Agreement (except as provided in Section 7.3), the Act or any applicable law, rule or regulation, to the fullest extent permitted under the Act or other applicable law, rule or regulation. The execution, delivery or performance by the General Partner or the Partnership of any agreement authorized or permitted under this Agreement shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement or of any duty stated or implied by law or equity.

 

C.           At all times from and after the date hereof, the General Partner, following the direction and approval of the Board of Directors, may cause the Partnership to establish and maintain at any and all times working capital accounts and other cash or similar balances in such amounts as the General Partner, following the direction and approval of the Board of Directors, deems appropriate and reasonable from time to time.

 

D.           In exercising its authority under this Agreement, the General Partner (solely to the extent directed by the Board of Directors, and in all cases in accordance with such direction from the Board of Directors) shall take into account the tax consequences to any Partner of any action taken (or not taken) by it. The General Partner, the Board of Directors and the Partnership shall not be liable to a Limited Partner under any circumstances as a result of an income tax or other tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner taken pursuant to its authority under this Agreement or at the direction of the Board of Directors.

 

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Section 7.2.     Certificate of Limited Partnership

 

The Initial General Partner filed the Certificate with the Secretary of State of the State of Delaware as required by the Act. The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents as may be reasonable and necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which the limited partners have limited liability) in the State of Delaware and any other state, or the District of Columbia, in which the Partnership may elect to do business or own property. To the extent that such action is determined by the General Partner to be reasonable and necessary or appropriate or convenient, the General Partner shall file amendments to and restatements of the Certificate and do all of the things to maintain the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) under the laws of the State of Delaware and each other state, or the District of Columbia, in which the Partnership may elect to do business or own property. Subject to the terms of Section 8.5(A)(2) hereof, the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto or restatement thereof to any Limited Partner.

 

Section 7.3.     Restrictions on General Partner Authority

 

The General Partner may not take any action in contravention of an express prohibition or limitation of this Agreement without the written consent of Limited Partners holding a majority of the Percentage Interests held by Limited Partners, or such other percentage of the Limited Partners as may be specifically provided for under a provision of this Agreement.

 

Section 7.4.     Reimbursement of the General Partner and the Company

 

A.           Except as provided in this Section 7.4 and elsewhere in this Agreement (including the provisions of Articles 5 and 6 regarding distributions, payments, and allocations to which it may be entitled), the General Partner shall not be compensated for its services as general partner of the Partnership.

 

B.           The Partnership shall be responsible for and shall pay all expenses relating to the Partnership’s and the General Partner’s organization and the ownership of each of their assets and operations. The General Partner shall be reimbursed on a monthly basis for all expenditures that it reasonably incurs relating to the ownership and operation of, or for the benefit of, the Partnership; provided, that the amount of any such reimbursement shall be reduced by any interest earned by the General Partner with respect to bank accounts or other instruments or accounts held by it on behalf of the Partnership; and provided, further, that the General Partner shall not be reimbursed for any (i) trustees’/directors’ fees, (ii) income tax liabilities or (iii) filing or similar fees in connection with maintaining the General Partner’s continued existence that are incurred by the General Partner, but the Partners acknowledge that all other expenses of the General Partner is deemed to be for the benefit of the Partnership. Such reimbursement shall be in addition to any reimbursement made as a result of indemnification pursuant to Section 7.7 hereof. Included among the expenditures for which the General Partner shall be entitled to reimbursement hereunder shall be any payments of debt service made by the General Partner, in its capacity as General Partner, as guarantor or otherwise, with respect to indebtedness encumbering any property held by the Partnership.

 

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Section 7.5.     Outside Activities of the General Partner

 

The General Partner and any Affiliates of the General Partner shall only conduct the activities contemplated by this Agreement. Notwithstanding the foregoing, the General Partner and any Affiliates of the General Partner may (a) acquire Limited Partner Interests and shall be entitled to exercise all rights of a Limited Partner relating to such Limited Partner Interests and (b) acquire less than 5% of the equity securities of any Person, which securities are listed on any national securities exchange and the General Partner or such Affiliate has no other business relationship, direct or indirect, with the issuer of such securities. For the avoidance of doubt, family members of Affiliates of the General Partner are permitted to own real estate for commercial purposes.

 

Section 7.6.     Contracts with Affiliates

 

A.           The Partnership may lend or contribute funds or other assets to, and borrow funds from, its or the Company’s Subsidiaries or other Persons in which it or the Company has an equity or other interests and such Persons may borrow funds from, and lend or contribute funds or assets to, the Partnership, on terms and conditions established by the General Partner, following the direction and approval of the Board of Directors. The foregoing authority shall not create any right or benefit in favor of any Subsidiary or any other Person.

 

B.           Except as provided in Section 7.5, the Partnership may transfer assets to joint ventures, other partnerships, limited liability companies, real estate investment trusts, corporations or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law as the General Partner deems appropriate, following the direction and approval of the Board of Directors.

 

C.           Except as expressly permitted by this Agreement, neither the General Partner nor any of its Affiliates shall sell, transfer or convey any property to, or purchase any property from, the Partnership, directly or indirectly, except pursuant to transactions that are determined by the General Partner in good faith to be fair and reasonable following the direction and approval of the Board of Directors.

 

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Section 7.7.     Indemnification

 

A.           To the fullest extent permitted by Delaware law, the Partnership shall indemnify each Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership or the Company as set forth in this Agreement, in which such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, except to the extent such Indemnitee acted in bad faith, or with gross negligence or willful misconduct. Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise for any indebtedness of the Partnership or any Subsidiary of the Partnership (including without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, and neither the General Partner nor any Limited Partner shall have any obligation to contribute to the capital of the Partnership, or otherwise provide funds, to enable the Partnership to fund its obligations under this Section 7.7.

 

B.           Reasonable expenses incurred by an Indemnitee who is a party to a proceeding shall be paid or reimbursed by the Partnership in advance of the final disposition of the proceeding, upon receipt by the Partnership of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall be determined that the Indemnitee is not entitled to be indemnified as authorized in Section 7.7(A).

 

C.           The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity unless otherwise provided in a written agreement pursuant to which such Indemnitees are indemnified.

 

D.           The Partnership may purchase and maintain insurance, on behalf of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership’s activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.

 

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E.           For purposes of this Section 7.7, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of this Section 7.7; and actions taken or omitted by the Indemnitee with respect to an employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Partnership.

 

F.            In no event may an Indemnitee subject any of the Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.

 

G.           An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

 

H.           The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the Partnership’s liability to any Indemnitee under this Section 7.7, as in effect immediately prior to such amendment, modification, or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

 

Section 7.8.     Liability of the General Partner

 

A.           Notwithstanding anything to the contrary set forth in this Agreement, none of the General Partner, its Affiliates, or any of their respective officers, trustees, directors, shareholders, partners, members, employees, representatives or agents or any officer, employee, representative or agent of the Partnership and its Affiliates (individually, a “Covered Person” and collectively, the “Covered Persons”) shall be liable for monetary damages to the Partnership, any Partners or any Assignees for losses sustained or liabilities incurred as a result of errors in judgment or of any act or omission if the Covered Person’s conduct did not constitute bad faith, gross negligence or willful misconduct.

 

B.           The Limited Partners expressly acknowledge that the General Partner is acting on behalf of the Partnership, the Limited Partners and the Company collectively, that the General Partner is under no obligation to consider the separate interests of the Limited Partners (except as otherwise provided herein) in deciding whether to cause the Partnership to take (or decline to take) any actions. In the event of a conflict between the interests of the Company on the one hand and the Limited Partners on the other, the General Partner shall, consult with the Board of Directors, endeavor in good faith to resolve the conflict in a manner not adverse to either the Company or the Limited Partners; provided, however, that any such conflict that the General Partner in good faith determines cannot be resolved in a manner not adverse to either the Company or the Limited Partners shall be resolved in favor of the Company. The General Partner shall not be liable for monetary damages for losses sustained, liabilities incurred, or benefits not derived by Limited Partners in connection with such decisions; provided, that the General Partner has acted in good faith.

 

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C.           Subject to its obligations and duties as General Partner set forth in Section 7.1(A) hereof, the General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its employees and agents.

 

D.           Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Covered Person’s liability to the Partnership and the Limited Partners under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

 

E.            To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or to the Partners, any Covered Person acting under this Agreement or otherwise shall not be liable to the Partnership or to any Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the Partners to replace such other duties and liabilities of such Covered Person.

 

Section 7.9.     Other Matters Concerning the General Partner

 

A.           The General Partner may rely and shall be protected in acting, or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties.

 

B.           The General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers, architects, engineers, environmental consultants and other consultants and advisers selected by it, following the direction and approval of the Board of Directors, and any act taken or omitted to be taken in reliance upon the opinion of such Persons as to matters which the General Partner reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.

 

C.           The General Partner shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers and duly appointed attorneys-in-fact. Each such attorney shall, to the extent provided by the General Partner in the power of attorney, have full power and authority to do and perform each and every act and duty which is permitted or required to be done by the General Partner hereunder.

 

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D.           Notwithstanding any other provisions of this Agreement or the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the Company to continue to qualify as a REIT; (ii) for the Company to otherwise satisfy the REIT Requirements; or (iii) to avoid the Company incurring any taxes under Section 337(d), 857, 1374 or 4981 of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners.

 

Section 7.10.     Title to Partnership Assets

 

Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof.

 

Section 7.11.     Reliance by Third Parties

 

Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority, without consent or approval of any other Partner or Person (unless set forth herein), to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and take any and all actions on behalf of the Partnership and such Person shall be entitled to deal with the General Partner as if the General Partner were the Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies which may be available against such Person to contest, negate or disaffirm any action of the General Partner in connection with any such dealing. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect; (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership; and (iii) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.

 

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ARTICLE 8.

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

 

Section 8.1.     Limitation of Liability

 

Each Limited Partner acting in its capacity as such shall have no liability under this Agreement except for liability resulting from: (a) an act or omission on the part of such Limited Partner that was committed in bad faith or was the result of active and deliberate dishonesty; (b) in the case of any criminal proceeding, an act or omission that such Limited Partner had reasonable cause to believe was unlawful; (c) any transaction for which such Limited Partner actually received an improper personal benefit in money, property or services in violation or breach of any provision of this Agreement; or (d) as expressly provided in this Agreement or under the Act.

 

Section 8.2.     Management of Business

 

No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any officer, trustee, director, member, employee or agent of the General Partner, the Partnership or any of their Affiliates, in their capacity as such) shall take part in the operation, management or control (within the meaning of the Act) of the Partnership’s business, transact any business in the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership. The transaction of any such business by the General Partner, any of its Affiliates or any officer, trustee, director, member, employee or agent of the General Partner, the Partnership or any of their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners or Assignees under this Agreement.

 

Section 8.3.     Outside Activities of Limited Partners

 

Subject to any agreements entered into by a Limited Partner or its Affiliates with the Partnership or any of its Subsidiaries, any Limited Partner (other than the Company) and any officer, trustee, director, member, employee, agent, trustee, Affiliate or shareholder of any such Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities that are in direct competition with the Partnership or that are enhanced by the activities of the Partnership. Neither the Partnership nor any Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee. None of the Limited Partners (other than the Company) nor any other Person shall have any rights by virtue of this Agreement or the Partnership relationship established hereby in any business ventures of any other Person and such Person shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures to the Partnership, any Limited Partner or any such other Person, even if such opportunity is of a character which, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person.

 

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Section 8.4.     Return of Capital

 

Except pursuant to the right of redemption set forth in Section 8.6, no Limited Partner shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon termination of the Partnership as provided herein. Except to the extent provided by Exhibit B hereof or as otherwise expressly provided in this Agreement, no Limited Partner or Assignee shall have priority over any other Limited Partner or Assignee, either as to the return of Capital Contributions or as to profits, losses or distributions.

 

Section 8.5.     Rights of Limited Partners Relating to the Partnership

 

A.           In addition to the other rights provided by this Agreement or by the Act, and except as limited by Section 8.5(C), each Limited Partner shall have the right, for a purpose reasonably related to such Limited Partner’s interest as a limited partner in the Partnership, upon written demand with a statement of the purpose of such demand and at such Limited Partner’s own expense (including such copying and administrative charges as the General Partner may establish from time to time):

 

(1)    to obtain a copy of the Partnership’s federal, state and local income tax returns for each Partnership Year;

 

(2)    to obtain a copy of this Agreement and the Certificate and all amendments thereto, together with executed copies of all powers of attorney pursuant to which this Agreement, the Certificate and all amendments thereto have been executed; and

 

(3)    to obtain true and full information regarding the amount of cash and a description and statement of any other property or services contributed by each Partner and which each Partner has agreed to contribute in the future, and the date on which each became a Partner.

 

B.           The Partnership shall notify each Limited Partner, upon request, of the then current Conversion Factor.

 

C.           Notwithstanding any other provision of this Section 8.5, the General Partner may keep confidential from the Limited Partners for such period of time as the General Partner determines, following the direction and approval of the Board of Directors to be reasonable, any information that (i) the General Partner reasonably believes to be in the nature of trade secrets or other information, the disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or could damage the Partnership or its business; or (ii) the Partnership is required by law or by agreements with an unaffiliated third party to keep confidential.

 

Upon written request by any Limited Partner, the General Partner shall cause the ownership of Partnership Interests by such Limited Partner to be evidenced by a certificate in such form as the General Partner may determine with respect to any class of Partnership Interests issued from time to time under this Agreement. The General Partner may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Partnership alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated. Unless otherwise determined by the General Partner, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Partnership a bond in such sum as the General Partner may direct as indemnity against any claim that may be made against the Partnership.

 

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Section 8.6.     Redemption Right

 

A.           Subject to Sections 8.6(B) and 8.6(C) hereof and at any time on or after such date as expressly provided for in any agreement entered into between the Partnership and any Limited Partner, each holder of a Common Unit (if other than the General Partner) shall have the right (the “Redemption Right”) to require the Partnership to redeem on a Specified Redemption Date all or a portion of the Partnership Units (provided that such Partnership Units constitute Common Units) held by such holder at a redemption price equal to and in the form of the Cash Amount to be paid by the Partnership; provided that the Partnership Units shall have been outstanding for at least one year; provided, further, that the General Partner, following the direction and approval of the Board of Directors, may allow a holder to exercise its Redemption Right prior to the Common Units being outstanding for one year in its discretion. The Redemption Right shall be exercised pursuant to a Notice of Redemption delivered to the Partnership (with a copy to the General Partner) by the holder who is exercising the redemption right (the “Redeeming Partner”); provided, however, that the Partnership shall not be obligated to satisfy such Redemption Right if the Operating Partnership elects to purchase the Partnership Units subject to the Notice of Redemption pursuant to Section 8.6(B). A holder under this Section 8.6(A) may not exercise the Redemption Right for less than 1,000 Partnership Units at any one time or, if such holder holds less than 1,000 Partnership Units, all of the Partnership Units held by such Partner. The Redeeming Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid on or after the Specified Redemption Date. The Assignee of any holder herein may exercise the rights of such Limited Partner pursuant to this Section 8.6(A), and such Limited Partner shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Assignee. In connection with any exercise of such rights by an Assignee on behalf of a holder in this Section 8.6(A), the Cash Amount shall be paid by the Partnership directly to such Assignee and not to such holder. Any Partnership Units redeemed by the Partnership pursuant to this Section 8.6(A) shall be cancelled upon such redemption.

 

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B.           Notwithstanding the provisions of Section 8.6(A), a Limited Partner that exercises the Redemption Right shall be deemed to have offered to sell the Partnership Units described in the Notice of Redemption to the Operating Partnership, and the Operating Partnership may, in its sole and absolute discretion, elect to purchase directly and acquire such Partnership Units by paying to the Redeeming Partner either the Cash Amount or the OP Unit Amount, as elected by the Operating Partnership in its sole and absolute discretion, on the Specified Redemption Date, whereupon the Operating Partnership shall acquire the Partnership Units offered for redemption by the Redeeming Partner and shall be treated for all purposes of this Agreement as the owner of such Partnership Units. If the Operating Partnership shall elect to exercise its right to purchase Partnership Units under this Section 8.6(B) with respect to a Notice of Redemption, it shall so notify the Redeeming Partner within five Business Days after the receipt by it of such Notice of Redemption. Unless the Operating Partnership (in its sole and absolute discretion) shall exercise its right to purchase Partnership Units from the Redeeming Partner pursuant to this Section 8.6(B), the Operating Partnership shall not have any obligation to the Redeeming Partner or the Partnership with respect to the Redeeming Partner’s exercise of the Redemption Right. In the event the Operating Partnership shall exercise its right to purchase Partnership Units with respect to the exercise of a Redemption Right in the manner described in the first sentence of this Section 8.6(B), the Partnership shall have no obligation to pay any amount to the Redeeming Partner with respect to such Redeeming Partner’s exercise of such Redemption Right, and each of the Redeeming Partner, the Partnership and the Operating Partnership shall treat the transaction between the Operating Partnership and the Redeeming Partner, for federal income tax purposes, as a sale of the Redeeming Partner’s Partnership Units to the Operating Partnership. Each Redeeming Partner agrees to execute such documents as the Operating Partnership may reasonably require in connection with the issuance of OP Units upon exercise of the Redemption Right. In case of any reclassification of OP Units (including, but not limited to, any reclassification upon a consolidation or merger in which the Operating Partnership is the surviving entity) into securities other than OP Units, for purposes of this Section 8.6(B), the Operating Partnership (or its successor) may thereafter exercise its right to purchase Partnership Units for the kind and number of such securities receivable upon such reclassification by a holder of the number of OP Units for which such Partnership Units could be purchased pursuant to this Section immediately prior to such reclassification. In case of any subdivision or reclassification of OP Units into one or more classes or series of OP Units, for purposes of this Section 8.6(B), the Operating Partnership (or its successor) may thereafter exercise its right to purchase Partnership Units for the units of one or more of the classes or series of OP Units that the Operating Partnership (or its successor) selects in its sole discretion; provided, however, that the economic rights of each unit of the selected classes or series are equivalent to the economic rights of an OP Unit immediately prior to such subdivision or reclassification.

 

C.           Notwithstanding the provisions of Section 8.6(A) and Section 8.6(B), a Partner shall not be entitled to exercise the Redemption Right pursuant to Section 8.6(A) to the extent that the delivery of OP Units to such Partner on the Specified Redemption Date by the Operating Partnership pursuant to Section 8.6(B) (regardless of whether or not the Operating Partnership would in fact exercise its rights under Section 8.6(B)) would (i) be prohibited, as determined in the sole discretion of the Operating Partnership, by law or any other agreement applicable to the Operating Partnership or (ii) cause the acquisition of OP Units by such Partner to be “integrated” with any other distribution of OP Units for purposes of complying with the Securities Act.

 

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D.           Each Partner covenants and agrees that all Partnership Units delivered for redemption shall be delivered to the Partnership free and clear of all liens; and, notwithstanding anything contained herein to the contrary, the Partnership shall be under no obligation to acquire Partnership Units which are or may be subject to any liens. Each Partner further agrees that, if any state or local property transfer tax is payable as a result of the transfer of its Partnership Units to the Partnership, such Partner shall assume and pay such transfer tax.

 

ARTICLE 9.

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section 9.1.     Records and Accounting

 

The General Partner shall keep or cause to be kept at the principal office of the Partnership those records and documents required to be maintained by the Act and other books and records deemed by the General Partner to be appropriate with respect to the Partnership’s business, including, without limitation, all books and records necessary to provide to the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 9.3 hereof. The books of the Partnership shall be maintained, for financial and tax reporting purposes, on an accrual basis in accordance with GAAP, or such other basis as the General Partner determines to be necessary or appropriate following the direction and approval of the Board of Directors.

 

Section 9.2.     Fiscal Year

 

The fiscal year of the Partnership shall be the calendar year.

 

Section 9.3.     Reports

 

A.           As soon as practicable, but in no event later than 105 days after the close of each Partnership Year, the General Partner shall cause to be mailed to each Limited Partner as of the close of the Partnership Year, an annual report containing financial statements of the Partnership, or of the Company if such statements are prepared solely on a consolidated basis with the Company, for such Partnership Year, presented in accordance with GAAP, such statements to be audited by a nationally recognized firm of independent public accountants selected by the Company; provided, that if such financial statements of the Company are available on the Securities and Exchange Commission’s website, then this obligation shall be satisfied.

 

B.           As soon as practicable, but in no event later than 105 days after the close of each calendar quarter (except the last calendar quarter of each year), the General Partner shall cause to be mailed to each Limited Partner as of the last day of the calendar quarter, a report containing unaudited financial statements of the Partnership, or of the Company, if such statements are prepared solely on a consolidated basis with the Company, and such other information as may be required by applicable law or regulation, or as the General Partner determines to be appropriate; provided that if such financial statements of the Company are available on the Securities and Exchange Commission’s website, then this obligation shall be satisfied.

 

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C.           The Partnership shall also cause to be promptly prepared such reports and/or information as are necessary for the Company to determine its qualification as a REIT and its compliance with the requirements for REITs pursuant to the Code and Regulations.

 

ARTICLE 10.

TAX MATTERS

 

Section 10.1.     Preparation of Tax Returns

 

The General Partner, following the direction and approval of the Board of Directors, shall arrange for the preparation and timely filing of all returns of Partnership income, gains, deductions, losses and other items required of the Partnership for federal and state income tax purposes and shall furnish by July 31 of the year immediately following each taxable year, or as soon as reasonably practicable thereafter, the tax information reasonably required by Limited Partners for federal and state income tax reporting purposes.

 

Section 10.2.     Tax Elections

 

Except as otherwise provided herein, the General Partner, following the direction and approval of the Board of Directors, shall determine whether to make any available election pursuant to the Code. Notwithstanding the above, in making any such tax election the General Partner and the Board of Directors may, but shall be under no obligation to, take into account the tax consequences to the Limited Partners resulting from any such election.

 

The General Partner can, following the direction and approval of the Board of Directors, elect to use any method permitted by Section 704(c) of the Code and the Regulations thereunder to take into account any variation between the adjusted basis of any property contributed (or deemed contributed) to the Partnership by any Partner after the date hereof and such property’s initial Carrying Value. The General Partner shall have the right, following the direction and approval of the Board of Directors, regarding the exercise of that right, to seek to revoke any tax election it makes (including, without limitation, an election under Section 754 of the Code) upon the General Partner’s determination, following the direction and approval of the Board of Directors, that such revocation is in the best interests of the Partners.

 

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Section 10.3.     Partnership Representative

 

A.           The General Partner, or such Person as may alternatively be designated by the General Partner, following the direction and approval of the Board of Directors, shall be the “partnership representative” (within the meaning of Section 6223 of the Code) (the “Partnership Representative”). The taking of any action and the incurring of any expense by the Partnership Representative in connection with any such proceeding, except to the extent required by law, is a matter of the Partnership Representative, following the direction and approval of the Board of Directors, and the provisions relating to indemnification provisions set forth in Section 7.7 of this Agreement shall be fully applicable to the Partnership Representative in its capacity as such. Each Partner hereby agrees to cooperate with, and to take all reasonable actions requested by the Partnership Representative and the Partnership, to avoid or reduce any tax imposed under Section 6225 of the Code, including (i) taking such actions as may be required to effect the General Partner’s designation as the Partnership Representative, and on behalf of the Partnership, the General Partner’s (or its designee’s) appointment of any “designated individual,” (ii) providing any information or taking such other actions as may be reasonably requested by the Partnership Representative in order to determine whether any “imputed underpayment” (within the meaning of Section 6225 of the Code) may be modified pursuant to Section 6225(c) of the Code, (iii) providing any information or taking such other actions as may be reasonably requested by the Partnership Representative in connection with any election made by the Partnership Representative pursuant to Section 6226 of the Code, and (iv) upon the request of the Partnership Representative, filing any amended U.S. federal income tax return or comply with the alternative procedure described in Section 6225(c)(2)(B) of the Code, and paying any tax due in connection with such tax return in accordance with Section 6225(c)(2) of the Code or any corresponding provision of applicable state or local law. The provisions of this Section 10.3 and a Partner’s obligation to comply with this Section 10.3 shall survive any liquidation and dissolution of the Partnership and the transfer, assignment or liquidation of such Partner’s Partnership Interest (including for the avoidance of doubt through exercise of the Redemption Right).

 

B.           The Partnership Representative shall receive no compensation for its services. All third party costs and expenses incurred by the Partnership Representative in performing its duties as such (including legal and accounting fees and expenses) shall be borne by the Partnership. Nothing herein shall be construed to restrict the Partnership from engaging an accounting and/or law firm to assist the Partnership Representative in discharging its duties hereunder, so long as the compensation paid by the Partnership for such services is reasonable.

 

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Section 10.4.     Withholding

 

Each Limited Partner hereby authorizes the Partnership to withhold from, or pay on behalf of or with respect to, such Limited Partner any amount of federal, state, local, or foreign taxes that the General Partner, following the direction and approval of the Board of Directors determines that the Partnership is required to withhold or pay with respect to any amount distributable or allocable to such Limited Partner pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code, and any taxes paid by the Partnership with respect to an imputed underpayment. Any amount paid on behalf of or with respect to a Limited Partner shall constitute a loan by the Partnership to such Limited Partner, which loan shall be repaid by such Limited Partner within 15 days after notice from the General Partner that such payment must be made unless (i) the Partnership withholds such payment from a distribution which would otherwise be made to the Limited Partner, or (ii) the General Partner determines, following the direction and approval of the Board of Directors, that such payment may be satisfied out of the available funds of the Partnership which would, but for such payment, be distributed to the Limited Partner. Any amounts withheld pursuant to the foregoing clause (i) or (ii) shall be treated as having been distributed (or paid) to such Limited Partner. In the event that a Limited Partner fails to pay any amounts owed to the Partnership pursuant to this Section 10.4 when due, the General Partner may, following the direction and approval of the Board of Directors, elect to make the payment to the Partnership on behalf of such defaulting Limited Partner, and in such event shall be deemed to have loaned such amount to such defaulting Limited Partner and shall succeed to all rights and remedies of the Partnership as against such defaulting Limited Partner. Without limitation, in such event the General Partner shall have the right to receive distributions that would otherwise be distributable to such defaulting Limited Partner until such time as such loan, together with all interest thereon, has been paid in full, and any such distributions so received by the General Partner shall be treated as having been distributed to the defaulting Limited Partner and immediately paid by the defaulting Limited Partner to the General Partner in repayment of such loan. Any amounts payable by a Limited Partner hereunder shall bear interest at the lesser of (A) the base rate on corporate loans at large United States money center commercial banks, as published from time to time in The Wall Street Journal, plus four percentage points, or (B) the maximum lawful rate of interest on such obligation, such interest to accrue from the date such amount is due (i.e., 15 days after demand) until such amount is paid in full. Each Limited Partner shall take such actions as the Partnership or the General Partner shall request in order to perfect or enforce the security interest created hereunder. Upon a Limited Partner’s complete withdrawal from the Partnership, such Limited Partner shall be required to restore funds to the Partnership to the extent that the cumulative amount of taxes withheld from or paid on behalf of, or with respect to, such Limited Partner exceeds the sum of such amounts (i) repaid to the Partnership by such Limited Partner, (ii) withheld from distributions to such Limited Partner and (iii) paid by the General Partner on behalf of such Limited Partner.

 

ARTICLE 11.

TRANSFERS AND WITHDRAWALS

 

Section 11.1.     Transfer

 

A.           The term “transfer,” when used in this Article 11 with respect to a Partnership Unit, shall be deemed to refer to a transaction by which the General Partner purports to assign all or any part of its General Partner Interest to another Person or by which a Limited Partner purports to assign all or any part of its Limited Partner Interest to another Person, and includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise. The term “transfer” when used in this Article 11 does not include (i) any redemption of Partnership Interests by the Partnership from a Limited Partner, (ii) any acquisition of Partnership Units from a Limited Partner by the Operating Partnership pursuant to Section 8.6, or (iii) any distribution of Partnership Units by a Limited Partner to its beneficial owners.

 

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B.           No Partnership Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11. Any transfer or purported transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void.

 

C.           Notwithstanding the other provisions of this Article 11, the Partnership Interests of the Company may be transferred, in whole or in part, at any time or from time to time, to any Person that is, at the time of such transfer, a Qualified REIT Subsidiary. Upon any transfer permitted by this Section 11.1(C), the Company shall be relieved of all its obligations under this Agreement. The provisions of Sections 11.2(B), 11.3, 11.4(A) and 11.5 hereof shall not apply to any transfer permitted by this Section 11.1(C).

 

Section 11.2.     Transfer of General Partner Interest

 

A.           The General Partner may not transfer any of its General Partner Interest or withdraw as General Partner, or transfer any of its Limited Partner Interest, except as provided in Section 11.2(B) or Section 11.2(C) hereof.

 

B.           Except as set forth in Section 11.2(C), the General Partner shall not withdraw from the Partnership and shall not transfer all or any portion of its Partner Interests in the Partnership (whether by sale, disposition, statutory merger or consolidation, liquidation or otherwise) unless approved by the Board of Directors. Upon any transfer of the General Partner’s Partnership Interest in accordance with the provisions of this Section 11.2(B), the transferee shall become a successor General Partner for all purposes herein, and shall be vested with the powers and rights of the transferor General Partner, and shall be liable for all obligations and responsible for all duties of the General Partner, once such transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the Partnership Interest so acquired. It is a condition to any transfer by the General Partner otherwise permitted hereunder that the transferee assumes, by operation of law or express agreement, all of the obligations of the transferor General Partner under this Agreement with respect to such transferred Partnership Interest; provided, such transfer shall not relieve the transferor General Partner of its obligations under this Agreement without the approval of the Board of Directors. In the event that the General Partner withdraws from the Partnership, in violation of this Agreement or otherwise, the remaining Partners may agree in writing to continue the business of the Partnership by selecting a successor General Partner in accordance with the Act.

 

C.           In the event a Bankruptcy Event occurs with respect to the General Partner, the General Partner shall automatically withdraw from the Partnership, in its role as the General Partner, without any action on the part of the General Partner or any other Person, and shall transfer all of its General Partner Interest in the Partnership to the successor general partner selected by the Board of Directors.

 

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Section 11.3.     Limited Partners’ Rights to Transfer

 

A.           Except as provided in Section 11.3(B), no Limited Partner shall transfer all or any portion of its Partnership Interest to any transferee without the approval of the Board of Directors; provided, however, that if a Limited Partner is subject to Incapacity, such Incapacitated Limited Partner may transfer all or any portion of its Partnership Interest.

 

B.           Notwithstanding any other provision of this Article 11, a Limited Partner may transfer all or any portion of its Partnership Interest to any of its Affiliates and such transferee shall be admitted as a Substituted Limited Partner, all without obtaining the approval of the Board of Directors, unless such Affiliate does not qualify as an “accredited investor” as such term is defined in Rule 501(a) of Regulation D.

 

C.           If a Limited Partner is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator or receiver of such Limited Partner’s estate shall have all of the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate and such power as the Incapacitated Limited Partner possessed to transfer all or any part of his or its interest in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.

 

D.           Without limiting the generality of Section 11.3(B) hereof, the Board of Directors may prohibit any transfer by a Limited Partner of its Partnership Interest if, in the opinion of legal counsel to the Partnership or the Company, such transfer would require filing of a registration statement under the Securities Act or would otherwise violate any federal or state securities laws or regulations applicable to the Partnership or the Partnership Units.

 

E.           No transfer by a Limited Partner of its Partnership Units may be made to any Person if (i) in the opinion of legal counsel for the Partnership or the Company it could result in the Partnership being treated as an association taxable as a corporation or a publicly traded partnership within the meaning of either Section 469(k)(2) or Section 7704(b) of the Code; (ii) such transfer could be treated as effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code; (iii) such transfer could cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA or to Section 4975 of the Code, a “party-in-interest” (as defined in Section 3(14) of ERISA) or a “disqualified person” (as defined in Section 4975(c) of the Code); (iv) such transfer could, in the opinion of legal counsel for the Partnership or the Company, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations Section 2510.3-101; or (v) such transfer could subject the Partnership to be regulated under the Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, or the fiduciary responsibility provisions of ERISA.

 

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F.            No transfer of any Partnership Units may be made to a lender to the Partnership or any Person who is related (within the meaning of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose loan constitutes a Nonrecourse Liability, without the approval of the Board of Directors.

 

G.           The General Partner shall keep a register for the Partnership on which the transfer, pledge or release of Partnership Units shall be shown and pursuant to which entries shall be made to effect all transfers, pledges or releases as required by the applicable sections of Article 8 of the Uniform Commercial Code, as amended, in effect in the State of Delaware. The General Partner shall (i) place proper entries in such register clearly showing each transfer and each pledge and grant of security interest and the transfer and assignment pursuant thereto, such entries to be endorsed by the General Partner, and (ii) maintain the register and make the register available for inspection by all of the Partners and their pledgees at all times during the term of this Agreement. Nothing herein shall be deemed a consent to any pledge or transfer otherwise prohibited under this Agreement.

 

Section 11.4.     Substituted Limited Partners

 

A.           No Limited Partner shall have the right to substitute a transferee as a Limited Partner in his or its place except upon approval of the Board of Directors. Following such approval of the Board of Directors, the transferee of the interest of such Limited Partner shall be admitted pursuant to this Section 11.4 as a Substituted Limited Partner. The Board of Directors’ failure or refusal to permit a transferee of any such interests to become a Substituted Limited Partner shall not give rise to any cause of action against the Partnership, any Partner, or the Board of Directors. A Person shall be admitted to the Partnership as a Substituted Limited Partner only upon the aforementioned consent of the Board of Directors and the furnishing to the Partnership of (i) evidence of acceptance in form satisfactory to the General Partner of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 hereof and (ii) such other documents to effect such Person’s admission as a Substituted Limited Partner. The admission of any Person as a Substituted Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the consent of the Board of Directors to such admission.

 

B.            A transferee who has been admitted as a Substituted Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Limited Partner under this Agreement.

 

C.           Upon the admission of a Substituted Limited Partner, the General Partner shall update the books and records of the Partnership to reflect the name, address, number of Partnership Units and Percentage Interest (as applicable) of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and interest of the predecessor of such Substituted Limited Partner.

 

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Section 11.5.     Assignees

 

If the Board of Directors does not consent to the admission of any permitted transferee as a Substituted Limited Partner, as described in Section 11.4, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be deemed to have had assigned to it, and shall be entitled to receive distributions from the Partnership and the share of Net Income, Net Losses, Recapture Income, and any other items, gain, loss, deduction and credit of the Partnership attributable to the Partnership Interest assigned to such transferee, but shall not be deemed to be a holder of a Partnership Interest for any other purpose under this Agreement, and shall not be entitled to vote such Partnership Interest in any matter presented to the Limited Partners for a vote (such Partnership Interest being deemed to have been voted on such matter in the same proportion as all other Partnership Interest held by Limited Partners are voted). In the event any such transferee desires to make a further assignment of any such Partnership Interest, such transferee shall be subject to all of the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of his or its Partnership Interest.

 

Section 11.6.     Drag-Along Rights

 

A.           In the event of an Approved Sale, the Partners who approved the Approved Sale (the “Approving Partners”) have the right to require each other Partner (the “Non-Approving Partners”) to transfer all Partnership Units then held by such Non-Approving Partner, free and clear of all liens, security interests or other restrictions of any kind, in accordance with this Section 11.6.

 

B.           In the event of an Approved Sale, the General Partner shall notify each Non-Approving Partner no more than 10 Business Days after the execution and delivery by all of the parties thereto of the definitive agreement entered into with respect to the Approved Sale and, in any event, no later than 20 Business Days prior to the closing date of such Approved Sale, and each Non-Approving Partner will, subject to satisfaction of the conditions in Section 11.6(C), (i) if such transaction requires approval by the Partners, with respect to all Partnership Units that such Partner owns or over which such Partner otherwise exercises voting power, to vote (in person, by proxy or by action by written consent, as applicable) all such Partnership Units in favor of, and adopt, such Approved Sale, and to vote in opposition to any and all other proposals that could reasonably be expected to delay or impair the ability of the Partnership to consummate such Sale of the Partnership, (ii) refrain from exercising any dissenter’s rights or rights of appraisal under applicable law at any time with respect to such Approved Sale, and (iii) if the Approved Sale is structured as a sale of Partnership Units, each Non-Approving Partner will agree to sell the same proportion of Partnership Units beneficially held by such Partner as is being sold by the Approving Partners to the Person(s) to whom the Approving Partners propose to sell their Partnership Units, on the same terms and conditions as the Approving Partners.

 

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C.           The obligations of the Partners pursuant to this Section 11.6 with respect to an Approved Sale are subject to the following conditions: (i) the aggregate consideration payable upon consummation of such Approved Sale to all of the Partners (the “Aggregate Consideration”) shall be allocated among the Partners as set forth in Section 5.3, (ii) upon the consummation of the Approved Sale, all of the Partners shall receive the same form of consideration per Partnership Unit of the same class or other equity interest, as allocated pursuant to subsection (i) hereof (except that a member of management may, with such Partner’s consent, receive securities pursuant to a management “rollover” which are not offered to all Partners), and (iii) that any indemnification, escrow, holdback and adjustment obligations undertaken by any Partner shall be pro rata among the Partners in proportion to the consideration to be received by the Partners in such Approved Sale; provided that indemnification obligations that relate solely to a particular Partner, such as indemnification with respect to representations and warranties made by a Partner with respect to such Partner (or such Partner’s ownership of Partnership Units) or covenants made by such Partner, shall be borne only by such Partner and shall not be deemed to reduce the Aggregate Consideration.

 

D.           Subject to the foregoing, each Partner hereby agrees to execute and deliver all related documentation and take such other action in support of the Sale of the Partnership as shall reasonably be requested by the General Partner or the Approving Partners in order to carry out the terms and provision of this Section 11.6, including without limitation executing and delivering instruments of conveyance and transfer, and any purchase agreement, merger agreement, indemnity agreement, escrow agreement, consent, waiver, governmental filing, share certificates duly endorsed for transfer (free and clear of impermissible liens, claims and encumbrances) and any similar or related documents. Subject to the satisfaction of the conditions in Section 11.6(C), for purposes each Partner (and their respective spouses, if residing in a community property state) hereby appoint the General Partner as their agent and attorney-in-fact to execute any and all documents related in connection with an Approved Sale (including documents granting customary indemnities to a buyer of assets or securities consistent with this Agreement) on their behalf and expressly bind themselves to such document by the General Partner’s execution of such document without further action on their part.

 

Section 11.7.     General Provisions

 

A.           No Limited Partner may withdraw from the Partnership other than as a result of a permitted transfer of all of such Limited Partner’s Partnership Interest in accordance with this Article 11, pursuant to redemption of all of its Partnership Units, or the acquisition thereof by the Company, under Section 8.6.

 

B.           Any Limited Partner who shall transfer all of its Partnership Interest in a transfer permitted pursuant to this Article 11 shall cease to be a Limited Partner upon the admission of all Assignees of such Partnership Interest as Substituted Limited Partners. Similarly, any Limited Partner who shall transfer all of its Partnership Units pursuant to a redemption of all of its Partnership Units, or the acquisition thereof by the Company under Section 8.6 shall cease to be a Limited Partner.

 

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C.           Transfers pursuant to this Article 11 may only be made on the first day of a fiscal quarter of the Partnership, unless the General Partner and the Board of Directors otherwise agrees.

 

D.           If any Partnership Interest is transferred or assigned during any quarterly segment of the Partnership’s fiscal year in compliance with the provisions of this Article 11 or redeemed or transferred pursuant to Section 8.6 on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items attributable to such interest for such Partnership Year shall be divided and allocated between the transferor Partner and the transferee Partner by taking into account their varying interests during the Partnership Year in accordance with Section 706(d) of the Code, using the interim closing of the books method. All distributions of Available Cash attributable to such Partnership Interest with respect to which the Partnership Record Date is before the date of such transfer, assignment, or redemption shall be made to the transferor Partner or the Redeeming Partner, as the case may be, and in the case of a transfer or assignment other than a redemption, all distributions of Available Cash thereafter attributable to such Partnership Interest shall be made to the transferee Partner.

 

ARTICLE 12.

ADMISSION OF PARTNERS

 

Section 12.1.     Admission of Successor General Partner

 

A successor to all of the General Partner Interest pursuant to Section 11.2 hereof who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective immediately prior to such transfer. Any such transferee shall carry on the business of the Partnership without dissolution. In each case, the admission shall be subject to the successor General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission. In the case of such admission on any day other than the first day of a Partnership Year, all items attributable to the General Partner Interest for such Partnership Year shall be allocated between the transferring General Partner and such successor as provided in Section 11.6(D) hereof.

 

Section 12.2.     Admission of Additional Limited Partners

 

A.           A Person who makes a Capital Contribution to the Partnership in accordance with this Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon furnishing to the General Partner (i) evidence of acceptance in form satisfactory to the General Partner of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 hereof and (ii) such other documents or instruments as may be required in the discretion of the General Partner in order to effect such Person’s admission as an Additional Limited Partner, in each case, after approval of the Board of Directors.

 

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B.           Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Limited Partner without the approval of the Board of Directors. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the approval of the Board of Directors of such admission.

 

C.           If any Additional Limited Partner is admitted to the Partnership on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items allocable among Partners and Assignees for such Partnership Year shall be allocated among such Additional Limited Partner and all other Partners and Assignees by taking into account their varying interests during the Partnership Year in accordance with Section 706(d) of the Code, using the interim closing of the books method. All distributions of Available Cash with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and Assignees, other than such Additional Limited Partner, and all distributions of Available Cash thereafter shall be made to all of the Partners and Assignees, including such Additional Limited Partner.

 

Section 12.3.     Amendment of Agreement and Certificate of Limited Partnership

 

For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to amend the records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement and, if required by applicable law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 2.4 hereof. Notwithstanding Sections 7.1 and 14.1 hereof, the General Partner may amend this Agreement without the direction and approval of the Board of Directors if the changes to be reflected in this Agreement have previously been approved by the General Partner and the Board of Directors.

 

ARTICLE 13.

DISSOLUTION, LIQUIDATION AND TERMINATION

 

Section 13.1.     Dissolution

 

The Partnership shall not be dissolved by the admission of Substituted Limited Partners or Additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General Partner shall continue the business of the Partnership without dissolution. The Partnership shall dissolve, and its affairs shall be wound up, only upon the first to occur of any of the following (“Liquidating Events”):

 

A.           an election to dissolve the Partnership made by the General Partner following the direction and approval of the Board of Directors with the consent of Partners holding a majority of the Percentage Interests of the Limited Partners;

 

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B.           entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act;

 

C.           at any time that there are no limited partners of the Partnership unless the business of the Partnership is continued in accordance with the Act;

 

D.           the sale of all or substantially all of the assets and properties of the Partnership; or

 

E.           any other event sufficient under the Act to cause the dissolution of the Partnership.

 

Section 13.2.     Winding Up

 

A.           Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors and Partners. No Partner shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership’s business and affairs. The General Partner, or, in the event there is no remaining General Partner, any Person elected by a majority of the Percentage Interests of the Limited Partners (the General Partner or such other Person being referred to herein as the “Liquidator”), shall be responsible for overseeing the winding up and dissolution of the Partnership and shall take full account of the Partnership’s liabilities and property and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the Liquidator and approved by the Board of Directors, include OP Units of the Operating Partnership) shall be applied and distributed in the following order:

 

(1)    First, in satisfaction of all of the Partnership’s Debts and liabilities to creditors other than the Partners (whether by payment or the making of reasonable provision for payment thereof);

 

(2)    Second, to the payment and discharge of all of the Partnership’s Debts and liabilities to the General Partner (whether by payment or the making of reasonable provision for payment thereof), including, but not limited to, amounts due as reimbursements under Section 7.4;

 

(3)    Third, to the payment and discharge of all of the Partnership’s Debts and liabilities to the other Partners; and

 

(4)    The balance, if any, to the Partners in accordance with their Capital Accounts, after giving effect to all contributions, distributions, and allocations for all periods.

 

47

 

 

The General Partner shall not receive any additional compensation for any services performed pursuant to this Article 13.

 

B.           Notwithstanding the provisions of Section 13.2(A) hereof which require liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if prior to or upon dissolution of the Partnership the Liquidator, following the direction and approval of the Board of Directors, determines that an immediate sale of part or all of the Partnership’s assets would be impractical or would cause undue loss to the Partners, the Liquidator may defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership (including to those Partners as creditors) and/or distribute to the Partners, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2(A) hereof, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, following the direction and approval of the Board of Directors, such distributions in kind are in the best interest of the Partners, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.

 

C.           In the discretion of the Liquidator, following the direction and approval of the Board of Directors, a pro rata portion of the distributions that would otherwise be made to the Partners pursuant to this Article 13 may be:

 

(1)    distributed to a trust established for the benefit of the General Partner and Limited Partners for the purposes of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or the General Partner arising out of or in connection with the Partnership. The assets of any such trust shall be distributed to the General Partner and Limited Partners from time to time, in the reasonable discretion of the Liquidator, following the direction and approval of the Board of Directors, in the same proportions as the amount distributed to such trust by the Partnership would otherwise have been distributed to the General Partner and Limited Partners pursuant to this Agreement; or

 

(2)    withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership; provided, that such withheld or escrowed amounts shall be distributed to the General Partner and Limited Partners in the manner and order of priority set forth in Section 13.2(A) as soon as practicable.

 

48

 

 

Section 13.3.     Deficit Capital Account Restoration Obligation

 

In the event the Partnership or the General Partner’s interest therein (including its interest if any as a Limited Partner) is “liquidated” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article 13 to the General Partner and Limited Partners who have positive Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3). If any Partner has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), such Partner, if such Partner is a Limited Partner, shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a Debt owed to the Partnership or to any other Person for any purpose whatsoever, except to the extent otherwise expressly agreed to by such Limited Partner and the Partnership; provided, however, that such Partner, if such Partner is the General Partner, shall contribute to the capital of the Partnership the amount necessary to restore such deficit balance to zero in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3).

 

Section 13.4.     Deemed Contribution and Distribution

 

Notwithstanding any other provision of this Article 13, in the event the Partnership is “liquidated” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership’s property shall not be liquidated, the Partnership’s liabilities shall not be paid or discharged, and the Partnership’s affairs shall not be wound up. Instead, for federal income tax purposes and for purposes of maintaining Capital Accounts pursuant to Exhibit A hereto, the Partnership shall be deemed to have contributed all Partnership property and liabilities to a new limited partnership in exchange for an interest in such new limited partnership and, immediately thereafter, the Partnership will be deemed to liquidate by distributing interests in the new limited partnership to the Partners.

 

Section 13.5.     Rights of Limited Partners

 

Except as otherwise provided in this Agreement, each Limited Partner shall look solely to the assets of the Partnership for the return of its Capital Contributions and shall have no right or power to demand or receive property other than cash from the Partnership. Except as otherwise provided in this Agreement, no Limited Partner shall have priority over any other Partner as to the return of its Capital Contributions, distributions, or allocations.

 

Section 13.6.     Notice of Dissolution

 

In the event a Liquidating Event occurs, or an event occurs that would result in a dissolution of the Partnership, the General Partner shall, within 30 days thereafter, provide written notice thereof to each of the Partners.

 

49

 

 

Section 13.7.     Termination of Partnership and Cancellation of Certificate of Limited Partnership

 

Upon the completion of the winding up of the Partnership and liquidation of its assets, as provided in Section 13.2 hereof, the Partnership shall be terminated by filing a certificate of cancellation with the Secretary of State of the State of Delaware, canceling all qualifications of the Partnership as a foreign limited partnership in jurisdictions other than the State of Delaware and taking such other actions as may be necessary to terminate the Partnership.

 

Section 13.8.     Reasonable Time for Winding Up

 

A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 13.2 hereof, in order to minimize any losses otherwise attendant upon such winding up, and the provisions of this Agreement shall remain in effect among the Partners during the period of liquidation.

 

Section 13.9.     Waiver of 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 respective successors-in-interest shall be subject to the limitations and restrictions as set forth in this Agreement.

 

ARTICLE 14.

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

 

Section 14.1.     Amendment of Partnership Agreement

 

A.           A proposed amendment shall be adopted and be effective as an amendment hereto if it is approved by the General Partner following the direction and approval of the Board of Directors.

 

B.           Notwithstanding Section 14.1(A) hereof, this Agreement shall not be amended without the consent of each Partner materially adversely affected if such amendment would (i) convert a Limited Partner Interest in the Partnership into a General Partner Interest; (ii) modify the limited liability of a Limited Partner in a manner materially adverse to such Limited Partner; (iii) alter rights of such Partner to receive distributions pursuant to Article 5 or Article 13, or the allocations specified in Article 6 (except as permitted pursuant to Section 4.2 hereof) in a manner materially adverse to such Partner; or (vi) amend this Section 14.1(B); provided, however, that the consent of each Partner materially adversely affected shall not be required for any amendment or action that affects all Partners holding the same class or series of Partnership Units on a uniform or pro rata basis. Any amendment consented to by any Partner shall be effective as to that Partner, notwithstanding the absence of such consent by any other Partner.

 

50

 

 

Section 14.2.     Meetings of the Partners

 

A.           Meetings of the Partners may be called by the General Partner and shall be called upon the receipt by the General Partner of a written request either by the Limited Partners holding 20% or more of the Partnership Interests or by the Board of Directors. The request shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners not less than seven days nor more than 30 days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Except as otherwise expressly provided in this Agreement, the consent of holders of a majority of the Percentage Interests held by Limited Partners shall control.

 

B.           Any action required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a written consent setting forth the action so taken is signed by a majority of the Percentage Interests of the Partners (or such other percentage as is expressly required by this Agreement). Such consent may be in one instrument or in several instruments, and shall have the same force and effect as a vote of a majority of the Percentage Interests of the Partners (or such other percentage as is expressly required by this Agreement). Such consent shall be filed with the General Partner. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified.

 

C.           Each Limited Partner may authorize any Person or Persons to act for him by proxy on all matters in which a Limited Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Limited Partner or his or its attorney-in-fact. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Limited Partner executing it, such revocation to be effective upon the Partnership’s receipt of written notice of such revocation from the Limited Partner executing such proxy.

 

D.           Each meeting of the Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deems appropriate. Without limitation, meetings of Partners may be conducted in the same manner as meetings of the shareholders of the Company and may be held at the same time, and as part of, meetings of the shareholders of the Company.

 

51

 

 

ARTICLE 15.

GENERAL PROVISIONS

 

Section 15.1.     Addresses and Notice

 

Any notice, demand, request or report required or permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written communication to such Partner or Assignee at the address provided by or on behalf of such Partner or Assignee or such other address of which the same shall notify the General Partner in writing.

 

Section 15.2.     Titles and Captions

 

All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to “Articles” and “Sections” are to Articles and Sections of this Agreement.

 

Section 15.3.     Pronouns and Plurals

 

Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neutral forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

 

Section 15.4.     Further Action

 

The parties 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.

 

Section 15.5.     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.

 

Section 15.6.     Creditors

 

The provisions of this Agreement are solely for the purpose of defining the interests of the Partners, inter se; and no other Person (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; provided, that Indemnitees are intended third-party beneficiaries of Section 7.7. No creditor or other third party having dealings with the Partnership 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.

 

52

 

 

Section 15.7.     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 a waiver of any such breach or any other covenant, duty, agreement or condition.

 

Section 15.8.     Counterparts

 

This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all of the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing his or its signature hereto.

 

Section 15.9.     Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial

 

This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflict of laws. In the event of a conflict between any provision of this Agreement and any non-mandatory provision of the Act, the provisions of this Agreement shall control and take precedence.

 

Section 15.10.     Invalidity of Provisions

 

A.           If any provision of this Agreement 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.

 

B.           Each Partner and Assignee hereby (i) submits to the exclusive jurisdiction of any state or federal court sitting in the State of Delaware (collectively, the “Delaware Courts”), with respect to any dispute arising out of this Agreement or any transaction contemplated hereby to the extent such courts would have subject matter jurisdiction with respect to such dispute, (ii) to the fullest extent permitted by law, irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of any of the Delaware Courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper, (iii) to the fullest extent permitted by law, agrees that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall be properly served or delivered if delivered to such Partner or Assignee at such Partner’s or Assignee’s last known address as set forth in the Partnership’s books and records, and (iv) to the fullest extent permitted by law, irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby.

 

53

 

 

Section 15.11.     Entire Agreement

 

This Agreement contains the entire understanding and agreement among the Partners with respect to the subject matter hereof and supersedes the Prior Agreement and any other prior written or oral understandings or agreements among them with respect thereto.

 

Section 15.12.     Legal Counsel Relationships

 

The Partners acknowledge and agree that Winston & Strawn LLP has only represented the Company in connection with this Agreement and the other transactions related hereto (the “Transactions”). Each Limited Partner is relying solely on his or its own tax and legal advisors, and not Winston & Strawn LLP, with respect to the tax and other legal aspects of his, her or its investment in the Partnership. Further, except for Winston & Strawn LLP’s representation of the Company with respect to the Transactions, or as may otherwise expressly be agreed in writing by Winston & Strawn LLP, in no event shall an attorney-client relationship exist between Winston & Strawn LLP on the one hand and any other Limited Partner and/or their Affiliates, on the other hand. The Limited Partners further agree and consent that Winston & Strawn LLP shall be permitted to render legal advice and to provide legal services to any Limited Partner or the Partnership from time to time, and each Limited Partner covenants and agrees that such representation of a Limited Partner or the Partnership by such firm from time to time shall not disqualify such firm from providing legal advice and legal services to their respective client Limited Partners or Affiliates in matters related or unrelated to this Agreement.

 

54

 

 

 

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

 

	
			 

				
			GENERAL PARTNER: 

				
			 

			
	 	 	 
	 	
			NexPoint Real Estate Finance Operating

			Partnership, L.P.

				 
	 	 	 
	 	By: NexPoint Real Estate Finance OP GP, LLC	 
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ Dana Sprong

				
			 

			
	
			 

				
			Name: 

				
			Dana Sprong 

				
			 

			
	
			 

				
			Title: 

				
			Sole Member 

				
			 

			

 

 

	
			 

				
			LIMITED PARTNERS: 

				
			 

			
	 	 	 
	 	
			All Limited Partners now and hereafter admitted

			pursuant to powers of attorney granted to the

			General Partner by each Limited Partner.

				 
	 	 	 
	 	
			By: NexPoint Real Estate Finance Operating

			Partnership, L.P.

				 
	 	 	 
	 	By: NexPoint Real Estate Finance OP GP, LLC	 
	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			By: 

				
			/s/ Dana Sprong

				
			 

			
	
			 

				
			Name: 

				
			Dana Sprong 

				
			 

			
	
			 

				
			Title: 

				
			Sole Member 

				
			 

			
	 	 	 	 
	 	
			As attorney-in-fact for the Limited Partners hereby

			admitted in accordance with the Agreement, to

			the extent not already so admitted.

				 

 

[Signature Page to Second Amended and Restated Limited Partnership Agreement of NREF OP IV, L.P.]

 

 

 

EXHIBIT A

CAPITAL ACCOUNT MAINTENANCE

 

	
			1.

				
			Capital Accounts of the Partners

			

 

A.           The Partnership shall maintain for each Partner a separate Capital Account in accordance with the rules of Regulations Section 1.704-l(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of all Capital Contributions and any other deemed contributions made by such Partner to the Partnership pursuant to the Agreement; and (ii) all items of Partnership income and gain (including income and gain exempt from tax) computed in accordance with Section 1.B hereof and allocated to such Partner pursuant to Section 6.1(A) of the Agreement and Exhibit B of the Agreement, and decreased by (x) the amount of cash or Agreed Value of all actual and deemed distributions of cash or property made to such Partner pursuant to the Agreement, and (y) all items of Partnership deduction and loss computed in accordance with Section 1.B hereof and allocated to such Partner pursuant to Section 6.1.B of the Agreement and Exhibit B hereof.

 

B.           For purposes of computing the amount of any item of income, gain, deduction or loss (including “Net Income” or “Net Loss”) to be reflected in the Partners’ Capital Accounts, unless otherwise specified in the Agreement, the determination, recognition and classification of any such item shall be the same as its determination, recognition and classification for federal income tax purposes determined in accordance with Section 703(a) of the Code (for this purpose all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:

 

(1)    Except as otherwise provided in Regulations Section 1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and deduction shall be made without regard to any election under Section 754 of the Code which may be made by the Partnership; provided, that the amounts of any adjustments to the adjusted bases of the assets of the Partnership made pursuant to Section 734 of the Code as a result of the distribution of property by the Partnership to a Partner (to the extent that such adjustments have not previously been reflected in the Partners’ Capital Accounts) shall be reflected in the Capital Accounts of the Partners in the manner and subject to the limitations prescribed in Regulations Section 1.704-1(b)(2)(iv)(m)(4).

 

(2)    The computation of all items of income, gain, and deduction shall be made without regard to the fact that items described in Sections 705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable in gross income or are neither currently deductible nor capitalized for federal income tax purposes.

 

(3)    Any income, gain or loss attributable to the taxable disposition of any Partnership property shall be determined as if the adjusted basis of such property as of such date of disposition were equal in amount to the Partnership’s Carrying Value with respect to such property as of such date.

 

A-1

 

 

(4)    In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such fiscal year.

 

(5)    In the event the Carrying Value of any Partnership asset is adjusted pursuant to Section 1.D hereof, the amount of any such adjustment shall be taken into account as gain or loss from the disposition of such asset.

 

(6)    Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition shall be added to such taxable income or loss.

 

(7)    Notwithstanding any other provision of this Section 1.B, any items that are specially allocated pursuant to Exhibit B of the Agreement shall not be taken into account for purposes of computing Net Income or Net Loss.

 

The amounts of the items of Partnership income, gain, loss or deduction available to be specially allocated pursuant to Exhibit B of the Agreement shall be determined by applying rules analogous to those set forth in Sections 1.B(1) through 1.B(5) above.

 

C.           Generally, a transferee (including an Assignee) of a Partnership Unit shall succeed to a pro rata portion of the Capital Account of the transferor.

 

D.           (1) Consistent with the provisions of Regulations Section 1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the Carrying Value of all Partnership assets shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership property, as of the times of the adjustments provided in Section 1.D(2) hereof, as if such Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each such property and allocated pursuant to Section 6.1 of the Agreement.

 

(2)    Such adjustments shall be made as of the following times: (a) immediately prior to the acquisition of an additional interest in the Partnership by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) immediately prior to the distribution by the Partnership to a Partner of more than a de minimis amount of property as consideration for an interest in the Partnership; (c) in connection with the grant of an interest in the Partnership (other than a de minimis interest), as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity or by a new partner acting in a partner capacity or in anticipation of being a partner; and (d) immediately prior to the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to clauses (a), (b) and (c) above shall be made only if the General Partner determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership.

 

A-2

 

 

(3)    In accordance with Regulations Section 1.704-1(b)(2)(iv)(e), the Carrying Value of Partnership assets distributed in kind shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Partnership property, as of the time any such asset is distributed.

 

(4)    The Carrying Value of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 734(b) or Section 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and Section 1.B(1) hereof or Section 1.F of Exhibit B of the Agreement; provided, however, that Carrying Values shall not be adjusted pursuant to this Section 1.D(4) to the extent that an adjustment pursuant to Section 1.D(2) hereof is required in connection with a transaction that would otherwise result in an adjustment pursuant to this Section 1.D(4).

 

(5)    In determining Unrealized Gain or Unrealized Loss for purposes of this Exhibit A, the aggregate cash amount and fair market value of all Partnership assets (including cash or cash equivalents) shall be determined by the General Partner using such reasonable method of valuation as it may adopt, or in the case of a liquidating distribution pursuant to Article 13 of the Agreement, shall be determined and allocated by the Liquidator using such reasonable method of valuation as it may adopt. The General Partner, or the Liquidator, as the case may be, shall allocate such aggregate value among the assets of the Partnership (in such manner as it determines following the direction and approval of the Board of Directors to arrive at a fair market value for individual properties).

 

If the Carrying Value of an asset has been determined or adjusted pursuant to Section 1.B(2) or Section 1.B(4) of this Exhibit A, such Carrying Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset, for purposes of computing Net Income and Net Loss.

 

E.           The provisions of the Agreement (including this Exhibit A and other Exhibits to the Agreement) relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-l(b), and shall be interpreted and applied in a manner consistent with such Regulations. In the event the General Partner shall determine that it is prudent to modify (i) the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities which are secured by contributed or distributed property or which are assumed by the Partnership, the General Partner, or the Limited Partners) are computed; or (ii) the manner in which items are allocated among the Partners for federal income tax purposes, in order to comply with such Regulations or to comply with Section 704(c) of the Code, the General Partner may make such modification without regard to Article 14 of the Agreement; provided, that it is not likely to have a material effect on the amounts distributable to any Person pursuant to Article 13 of the Agreement upon the dissolution of the Partnership. The General Partner also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q); and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause the Agreement not to comply with Regulations Section 1.704-1(b). In addition, the General Partner may adopt and employ such methods and procedures for (i) the maintenance of book and tax capital accounts; (ii) the determination and allocation of adjustments under Sections 704(c), 734 and 743 of the Code; (iii) the determination of Net Income, Net Loss, taxable income, taxable loss and items thereof under the Agreement and pursuant to the Code; (iv) the adoption of reasonable conventions and methods for the valuation of assets and the determination of tax basis; (v) the allocation of asset value and tax basis; and (vi) conventions for the determination of cost recovery, depreciation and amortization deductions, as it determines in its sole discretion are necessary or appropriate to execute the provisions of the Agreement, to comply with federal and state tax laws, and are in the best interest of the Partners.

 

A-3

 

 

	
			2.

				
			No Interest

			

 

No interest shall be paid by the Partnership on Capital Contributions or on balances in Partners’ Capital Accounts.

 

	
			3.

				
			No Withdrawal

			

 

No Partner shall be entitled to withdraw any part of his or its Capital Contribution or his or its Capital Account or to receive any distribution from the Partnership, except as provided in Articles 4, 5, 7 and 13 of the Agreement.

 

	
			4.

				
			Special Allocations in Connection with a Liquidating Event

			

 

Partners intend that the allocation of Net Income, Net Loss and other items of income, gain, loss, deduction and credit required to be allocated to the Capital Accounts of the Partners pursuant to the Agreement will result in final Capital Account balances that will permit the amount each Partner is entitled to receive upon “liquidation” of the Partnership (within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations) to equal the amount such Partner would have received if such amount was distributable pro rata in accordance with the Partners’ respective Percentage Interests. Accordingly, notwithstanding the provisions of Section 6.1(a) and Section 6.1(b) of the Agreement, in the taxable year of the event precipitating a Liquidating Event and thereafter, appropriate adjustments to allocations of Net Income and Net Losses (and items thereof) to the Partners shall be made to achieve such result to the maximum extent possible.

 

A-4

 

 

 

 

EXHIBIT B

SPECIAL ALLOCATION RULES; OTHER TAX MATTERS

 

	
			1.

				
			Special Allocation Rules

			

 

Notwithstanding any other provision of the Agreement or this Exhibit B, the following special allocations shall be made:

 

A.           Minimum Gain Chargeback. Notwithstanding the provisions of Section 6.1 of the Agreement or any other provisions of this Exhibit B, if there is a net decrease in Partnership Minimum Gain during any Partnership taxable year, then, subject to the exceptions set forth in Regulations Sections 1.704-2(f)(2)-(5), each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Partner’s share of the net decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f)(6). This Section 1.A is intended to comply with the minimum gain chargeback requirements in Regulations Section 1.704-2(f) and shall be interpreted consistently therewith. Solely for purposes of this Section 1.A, each Partner’s Adjusted Capital Account Deficit shall be determined prior to any other allocations pursuant to Section 6.1 of the Agreement with respect to such Partnership taxable year and without regard to any decrease of Partner Minimum Gain during such Partnership taxable year.

 

B.           Partner Minimum Gain Chargeback. Notwithstanding any other provision of Section 6.1 of the Agreement or any other provisions of this Exhibit B (except Section 1.A hereof), if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership taxable year, then, subject to the exceptions referred to in Regulations Section 1.704-2(i)(4), each Partner who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Partner’s share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(i)(4). This Section 1.B is intended to comply with the minimum gain chargeback requirement in such section of the Regulations and shall be interpreted consistently therewith. Solely for purposes of this Section 1.B, each Partner’s Adjusted Capital Account Deficit shall be determined prior to any other allocations pursuant to Section 6.1 of the Agreement or this Exhibit with respect to such Partnership taxable year, other than allocations pursuant to Section 1.A hereof.

 

B-1

 

 

C.           Qualified Income Offset. In the event any Partner unexpectedly receives any adjustments, allocations or distributions described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), and after giving effect to the allocations required under Sections 1.A and 1.B hereof such Partner has an Adjusted Capital Account Deficit, items of Partnership income and gain (consisting of a pro rata portion of each item of Partnership income, including gross income and gain for the Partnership taxable year) shall be specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent required by the Regulations, its Adjusted Capital Account Deficit created by such adjustments, allocations or distributions as quickly as possible; provided, that an allocation pursuant to this Section 1.C shall be made only if and to the extent that such Partner would have an Adjusted Capital Account Deficit after all other allocations provided for in Section 6.1 of the Agreement or any other provisions of this Exhibit B have been tentatively made as if this Section 1.C were not in this Agreement. This Section 1.C is intended to constitute a qualified income offset under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

D.           Nonrecourse Deductions. Nonrecourse Deductions for any Partnership taxable year shall be allocated to the Partners in accordance with their respective Percentage Interests. If the General Partner determines in its good faith discretion that the Partnership’s Nonrecourse Deductions must be allocated in a different ratio to satisfy the safe harbor requirements of the Regulations promulgated under Section 704(b) of the Code, the General Partner is authorized, upon notice to the Limited Partners, to revise the prescribed ratio to the numerically closest ratio for such Partnership taxable year which would satisfy such requirements.

 

E.           Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for any Partnership taxable year shall be specially allocated to the Partner who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(i).

 

F.            Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such item of gain or loss shall be specially allocated to the Partners in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such section of the Regulations.

 

G.           Curative Allocations. The allocations set forth in Section 1.A through 1.F of this Exhibit B (the “Regulatory Allocations”) are intended to comply with certain requirements of the Regulations under Section 704(b) of the Code. The Regulatory Allocations may not be consistent with the manner in which the Partners intend to divide Partnership distributions. Accordingly, the General Partner is hereby authorized to divide other allocations of income, gain, deduction and loss among the Partners so as to prevent the Regulatory Allocations from distorting the manner in which Partnership distributions will be divided among the Partners. In general, the Partners anticipate that, if necessary, this will be accomplished by specially allocating other items of income, gain, loss and deduction among the Partners so that the net amount of the Regulatory Allocations and such special allocations to each person is zero. However, the General Partner will have discretion to accomplish this result in any reasonable manner; provided, however, that no allocation pursuant to this Section 1.G shall cause the Partnership to fail to comply with the requirements of Regulations Sections 1.704-1(b)(2)(ii)(d), -2(e) or -2(i).

 

B-2

 

 

H.           Forfeiture Allocations

 

(1)    If any holder forfeits (or has repurchased at less than fair market value) all or a portion of such holder’s Partnership Units, the Partnership shall make forfeiture allocations to such holder in the manner and to the extent required by proposed Regulations Section 1.704-1(b)(4)(xii) (as such proposed Regulations may be amended or modified, including upon the issuance of temporary or final Treasury Regulations).

 

	
			2.

				
			Allocations for Tax Purposes

			

 

A.           Except as otherwise provided in this Section 2, for federal income tax purposes, each item of income, gain, loss and deduction shall be allocated among the Partners in the same manner as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit B.

 

B.           In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or Adjusted Property, items of income, gain, loss, and deduction shall be allocated for federal income tax purposes among the Partners as follows:

 

(1)     (a)     In the case of a Contributed Property, such items attributable thereto shall be allocated among the Partners, consistent with the principles of Section 704(c) of the Code and the Regulations thereunder, and with the procedures and methods described in Section 10.2 of the Agreement, to take into account the variation between the 704(c) Value of such property and its adjusted basis at the time of contribution; and

 

          (b)     any item of Residual Gain or Residual Loss attributable to a Contributed Property shall be allocated among the Partners in the same manner as its correlative item of “book” gain or loss is allocated pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit B.

 

(2)     (a)      In the case of an Adjusted Property, such items shall

 

B-3

 

 

(1)    first, be allocated among the Partners in a manner consistent with the principles of Section 704(c) of the Code and the Regulations thereunder to take into account the Unrealized Gain or Unrealized Loss attributable to such property and the allocations thereof pursuant to this Exhibit A; and

 

(2)    second, in the event such property was originally a Contributed Property, be allocated among the Partners in a manner consistent with Section 2.B(1) of this Exhibit B; and

 

          (b)     any item of Residual Gain or Residual Loss attributable to an Adjusted Property shall be allocated among the Partners in the same manner as its correlative item of “book” gain or loss is allocated pursuant to Section 6.1 of the Agreement and Section 1 of this Exhibit B.

 

C.           To the extent that the Treasury Regulations promulgated pursuant to Section 704(c) of the Code permit the Partnership to utilize alternative methods to eliminate the disparities between the Carrying Value of property and its adjusted basis, the General Partner shall have the authority to elect the method to be used by the Partnership and such election shall be binding on all Partners.

 

	
			3.

				
			No Withdrawal

			

 

No Partner shall be entitled to withdraw any part of its Capital Contribution or its Capital Account or to receive any distribution from the Partnership, except as provided in Articles 4, 5, 8 and 13 of the Agreement.

 

B-4

 

 

 

EXHIBIT C

NOTICE OF REDEMPTION

 

The undersigned Limited Partner hereby irrevocably requests NREF OP IV, L.P., a Delaware limited partnership (the “Partnership”), to redeem                       Partnership Units in the Partnership in accordance with the terms of the Amended and Restated Limited Partnership Agreement of the Partnership and the Redemption Right referred to therein; and the undersigned Limited Partner irrevocably (i) surrenders such Partnership Units and all right, title and interest therein; and (ii) directs that the Cash Amount or OP Unit Amount (as determined by the Operating Partnership) deliverable upon exercise of the Redemption Right be delivered to the address specified below, and if OP Units are to be delivered, such OP Units be registered or placed in the name(s) and at the address(es) specified below. The undersigned hereby represents, warrants, and certifies that the undersigned (a) has marketable and unencumbered title to such Partnership Units, free and clear of the rights or interests of any other person or entity; (b) has the full right, power, and authority to request such redemption and surrender such Partnership Units as provided herein; and (c) has obtained the consent or approval of all persons or entities, if any, having the right to consent or approve such redemption and surrender of Units. The undersigned Limited Partner further agrees that, in the event that any state or local property tax is payable as a result of the transfer of its Partnership Units to the Partnership or the Operating Partnership, the undersigned Limited Partner shall assume and pay such transfer tax.

 

	Dated:	 	 	 
	 	 	 
	Name of Limited Partner:	 	 
	 	 	 	Please Print
	 	 	 	 
	 	 	 	(Signature of Limited Partner)
	 	 	 	 
	 	 	 	(Street Address)
	 	 	 	 
	 	 	 	(City) (State) (Zip Code)
	 	 	 	 
	 	 	 	Signature Guaranteed by:
	 	 	 	 
	 	 	 	 
	If OP Units are to be issued, issue to:	 	 
	 	 	 
	Name:	 	 	 
	 	 	 
	Please insert social security or identifying number:	 	 

       

C-1

 

 

 

EXHIBIT D

CONSTRUCTIVE OWNERSHIP DEFINITION

 

The term “Constructively Owns” means ownership determined through the application of the constructive ownership rules of Section 318 of the Code, as modified by Section 856(d)(5) of the Code. Generally, as of the date first set forth above, these rules provide the following:

 

a. an individual is considered as owning the Ownership Interest that is owned, actually or constructively, by or for his spouse, his children, his grandchildren, and his parents;

 

b. an Ownership Interest that is owned, actually or constructively, by or for a partnership, limited liability company or estate is considered as owned proportionately by its partners or beneficiaries;

 

c. an Ownership Interest that is owned, actually or constructively, by or for a trust is considered as owned by its beneficiaries in proportion to the actuarial interest of such beneficiaries (provided, however, that in the case of a “grantor trust” the Ownership Interest will be considered as owned by the grantors);

 

d. if ten (10) percent or more in value of the stock in a corporation is owned, actually or constructively, by or for any person, such person shall be considered as owning the Ownership Interest that is owned, actually or constructively, by or for such corporation in that proportion which the value of the stock which such person so owns bears to the value of all the stock in such corporation;

 

e. an Ownership Interest that is owned, actually or constructively, by or for a partner or member which actually or constructively owns a 25% or greater capital interest or profits interest in a partnership or limited liability company, or by or to or for a beneficiary of an estate or trust shall be considered as owned by the partnership, limited liability company, estate, or trust (or, in the case of a grantor trust, the grantors);

 

f. if ten (10) percent or more in value of the stock in a corporation is owned, actually or constructively, by or for any person, such corporation shall be considered as owning the Ownership Interest that is owned, actually or constructively, by or for such person;

 

g. if any person has an option to acquire an Ownership Interest (including an option to acquire an option or any one of a series of such options), such Ownership Interest shall be considered as owned by such person;

 

h. an Ownership Interest that is constructively owned by a person by reason of the application of the rules described in paragraphs (a) through (g) above shall, for purposes of applying paragraphs (a) through (g), be considered as actually owned by such person; provided, however, that (i) an Ownership Interest constructively owned by an individual by reason of paragraph (a) shall not be considered as owned by him for purposes of again applying paragraph (a) in order to make another person the constructive owner of such Ownership Interest, (ii) an Ownership Interest constructively owned by a partnership, estate, trust, or corporation by reason of the application of paragraphs (e) or (f) shall not be considered as owned by it for purposes of applying paragraphs (b), (c), or (d) in order to make another person the constructive owner of such Ownership Interest, (iii) if an Ownership Interest may be considered as owned by an individual under paragraph (a) or (g), it shall be considered as owned by him under paragraph (g), and (iv) for purposes of the above described rules, an S corporation shall be treated as a partnership and any shareholder of the S corporation shall be treated as a partner of such partnership except that this rule shall not apply for purposes of determining whether stock in the S corporation is constructively owned by any person.

 

i. For purposes of the above summary of the constructive ownership rules, the term “Ownership Interest” means the ownership of stock with respect to a corporation and, with respect to any other type of entity, the ownership of an interest in either its assets or net profits.

 

D-1

 

 

 

EXHIBIT E

SCHEDULE OF PARTNERS’ OWNERSHIP

WITH RESPECT TO TENANTS

 

NONE

 

E-1Exhibit 10.1

 

Execution Version

 

 

PURCHASE AND SALE AGREEMENT

 

among

 

BLADE URBAN AIR MOBILITY, INC.,

 

and

 

the Target Companies, the Sellers and the
Seller Members set forth in the signature pages hereto

 

 

 

dated as of

 

September 2, 2021

 

 

 

     

     

    

 

TABLE OF CONTENTS

 

Page

 

		1.	PURCHASE OF TARGET COMPANY INTERESTS; PURCHASE PRICE; PAYMENT	1

 

		1.1	Transaction	1

		1.2	Purchase Price	1

		1.3	Payment of Estimated Purchase Price at Closing	1

		1.4	Purchase Price Adjustment	2

		1.5	Earn-Out	3

		1.6	Tax Treatment of Payments	5

 

		2.	REPRESENTATIONS AND WARRANTIES OF THE TARGET COMPANIES	5

 

		2.1	Due Organization and Power	5

		2.2	Authority	5

		2.3	No Violation	6

		2.4	Capitalization	6

		2.5	Financial Statements; No Undisclosed Liabilities	6

		2.6	Absence of Certain Developments	6

		2.7	Tax Matters	7

		2.8	No Litigation	7

		2.9	Legal Compliance	8

		2.10	Environmental Matters	8

		2.11	Property and Assets	8

		2.12	Insurance	9

		2.13	Material Contracts	9

		2.14	Labor Matters	11

		2.15	Employee Benefit Plans	12

		2.16	Intellectual Property	13

		2.17	Brokers and Finders	13

		2.18	Customers and Suppliers	14

		2.19	Affiliated Transactions	14

		2.20	NO OTHER REPRESENTATIONS AND WARRANTIES.	14

 

		3.	REPRESENTATIONS AND WARRANTIES OF SELLER MEMBERS AND SELLERS	15

 

		3.1	Legal Capacity	15

		3.2	Ownership of Target Company Interests	15

		3.3	No Violation	15

		3.4	No Litigation	15

		3.5	Brokers and Finders	15

 

     

     

    

 

TABLE OF CONTENTS

(continued)

Page

 

		4.	REPRESENTATIONS AND WARRANTIES OF BUYER	16

 

		4.1	Due Organization and Power	16

		4.2	Authority	16

		4.3	No Violation	16

		4.4	No Litigation	16

		4.5	Investment Intent	16

		4.6	Sandbagging	17

		4.7	Brokers and Finders	17

		4.8	Sufficiency of Funds	17

 

		5.	COVENANTS	17

 

		5.1	Interim Operations of the Target Company	17

		5.2	Access to Information	19

		5.3	Exclusivity	19

		5.4	Restrictions on Share Transfers	19

		5.5	Tax Matters	20

		5.6	Confidentiality	22

		5.7	Resignation of Directors and Officers	23

		5.8	Further Assurances	23

		5.9	Budgets	23

		5.10	Employees; Benefit Plans; Equity Awards	23

		5.11	Employee Severance Packages	24

 

		6.	CLOSING CONDITIONS	24

 

		6.1	Buyer’s Conditions to Closing	24

		6.2	Sellers’ Conditions to Closing	25

		6.3	Mutual Closing Conditions	25

 

		7.	TERMINATION	25

 

		7.1	Termination	25

 

		8.	INDEMNIFICATION	26

 

		8.1	Survival	26

		8.2	Indemnification by Seller Members	27

		8.3	Indemnification by Buyer	27

		8.4	Limitations	27

		8.5	Procedures Relating to Indemnification among Sellers and Buyer	28

		8.6	Procedures Relating to Indemnification for Third Party Claims	30

		8.7	Mitigation	31

		8.8	No Indemnification by the Target Company	31

		8.9	No Duplicate Damages	31

		8.10	Offset	32

		8.11	Purchase Price Adjustment	32

		8.12	Remedies	32

		8.13	Indemnity Payments	32

 

    (ii)

     

    

 

TABLE OF CONTENTS

(continued)

Page

 

		9.	CLOSING	32

 

		9.1	Closing Date	32

		9.2	Items to be Delivered by Sellers, Seller Members and the Target Companies	33

		9.3	Items to be Delivered by Buyer	34

 

		10.	MISCELLANEOUS	34

 

		10.1	Sellers’ Representative	34

		10.2	Publicity	35

		10.3	Entire Agreement	36

		10.4	Assignment	36

		10.5	Governing Law	36

		10.6	Jurisdiction	36

		10.7	Amendment	36

		10.8	Waiver	36

		10.9	Notice	37

		10.10	Expenses	38

		10.11	No Third Party Beneficiaries	38

		10.12	Severability	38

		10.13	Interpretive Provisions	39

		10.14	Counterparts	39

		10.15	Waiver of Jury Trial	39

		10.16	Definitions	40

 

	Annex A	Ownership of Shares; Pro Rata Portion; Purchase Price Payment
	 	 
	Annex B	Estimated Closing Statement; Closing Indebtedness; Closing Net Working Capital
	 	 
	Annex C	Contracted Accounts
	 	 
	Annex D	Sample Calculation of Adjusted EBITDA, Gross Profit
	 	 
	Annex E	Third Party Consents
	 	 
	Annex F	Buyer Accounts
	 	 
	Annex G	Specified Employees
	 	 
	Annex H	Key Employees
	 	 
	 	 
	Exhibit A	Form of Escrow Agreement
	 	 
	Exhibit B	Form of Seller Member Employment Contract
	 	 
	Exhibit C	Form of Non-Competition Agreement

 

    (iii)

     

    

 

PURCHASE AND SALE AGREEMENT

 

This Purchase and Sale Agreement
(this “Agreement”), is dated as of September 2, 2021, and is between Blade
Urban Air
Mobility, Inc., a Delaware corporation (“Buyer”),
JB3 Holdings LLC, an Arizona limited liability company (“JB3”),
and S. Wunsch LLC, a Washington limited liability company (“SW”,
and together with JB3, “Sellers” and each individually, “Seller”), Seth
Bacon, an individual residing in the State of Arizona (“Bacon”), Scott
Wunsch, an individual residing in the State of Washington (“Wunsch”; each of Bacon and Wunsch, individually,
a “Seller Member” and collectively, “Seller Members”), the Target Companies, and Seth
Bacon, an individual residing in the State of Arizona, in his capacity as agent and representative of the Target Companies and Sellers
(“Sellers’ Representative”). Capitalized terms used but not otherwise defined in this Agreement are as
defined in Section 10.16.

 

INTRODUCTION

 

Sellers own all of the Equity
Securities of the Target Companies (the “Target Company Interests”), with each Seller owning the Target Company
Interests as specified in Annex A.

 

The Target Companies are engaged
in the business of the transportation of organs and medical services, by air and by ground, and the ancillary services related thereto
(the “Business”).

 

Buyer desires to purchase
from Sellers, and Sellers desire to sell to Buyer, all of the Target Company Interests, in accordance with the provisions of this Agreement.

 

The Parties therefore agree
as follows:

 

		1.	PURCHASE OF TARGET COMPANY INTERESTS; PURCHASE PRICE; PAYMENT

 

1.1             
Transaction. Upon the terms and subject to the conditions in this Agreement, on the Closing Date, each Seller shall sell
to Buyer and Buyer shall purchase from each Seller, all the Target Company Interests owned by such Seller, free and clear of all Liens.

 

1.2             
Purchase Price. The aggregate purchase price for the Target Company Interests is equal to the Base Purchase Price, as adjusted
under Section 1.4.

 

1.3             
Payment of Estimated Purchase Price at Closing. At the Closing:

 

(a)           
Payment to Sellers’ Representative. Buyer shall deliver to each Seller, in cash by wire transfer of immediately available
funds to the accounts and in accordance with their pro rata ownership of the Target Company Interests (as specified in Annex A,
under the column entitled “Pro Rata Portion,” with respect to each Seller (and its corresponding Seller Member), its “Pro
Rata Portion”), the Base Purchase Price, as adjusted under Section 1.4, as estimated in good faith by Sellers’
Representative (the “Estimated Purchase Price”), less the Escrow Amount. .

 

    1 

     

    

 

(b)            Payment
of Escrow Amount to Escrow Agent. Buyer shall deposit an amount equal to 7% of the Estimated Purchase Price (the
 “Escrow Amount”) into an escrow account (the “Escrow Account”) established
pursuant to an escrow agreement between Buyer, Sellers and Citibank, N.A., as escrow agent (the “Escrow
Agent”), substantially in the form of Exhibit A (the “Escrow Agreement”).

 

(c)           
Payment to Former Shareholders. In addition to the Base Purchase Price, Buyer shall also deliver, in cash by wire transfer
of immediately available funds to the Former Shareholders, on behalf of the Sellers and the Seller Members, the amount of $1,500,000.00
(“Former Shareholder Payment Amount”), pursuant to the Former Shareholder Release.

 

1.4             
Purchase Price Adjustment.

 

(a)           
Estimated Closing Statement. At least three (3) Business Days, but not more than five (5) Business Days prior
to the Closing Date, Sellers’ Representative shall deliver to Buyer a statement showing the calculation of the Estimated Purchase
Price, including the Former Shareholder Payment Amount, the estimated Net Working Capital Adjustment Amount, the estimated Company Transaction
Expenses and the estimated Closing Indebtedness as of the Closing Date (“Estimated Closing Statement”). The
Estimated Closing Statement shall be prepared in accordance with Annex B.

 

(b)           
Preliminary Post-Closing Price Adjustment Schedule. No later than sixty (60) days after the Closing Date, Buyer shall prepare
and deliver to Sellers’ Representative a statement showing Buyer’s calculation of the actual Net Working Capital Adjustment
Amount, actual Target Company Transaction Expenses and the actual Closing Indebtedness as of the Closing Date and the adjustment to the
Base Purchase Price as referred to in Section 1.2 (the “Preliminary Post-Closing Price Adjustment Schedule”).
If Buyer does not timely deliver the Preliminary Post-Closing Price Adjustment Schedule by such deadline and such delay is not attributable
to Sellers’ or Seller Members’ delay or failure to cooperate or provide access to any information Buyer needs to prepare such
schedule, then Sellers’ Representative may give Buyer written notice of such failure to timely deliver the Preliminary Post-Closing
Adjustment Schedule and, if Buyer shall fail to timely deliver the same within ten (10) days after the date such written notice is given
by Sellers’ Representative, the Preliminary Post-Closing Price Adjustment Schedule shall be conclusively deemed to be the Final
Price Adjustment Schedule (as defined below).

 

(c)            Objections
to Preliminary Post-Closing Price Adjustment Schedule. If Sellers’ Representative objects to the Preliminary Post-Closing
Price Adjustment Schedule, Sellers’ Representative shall deliver to Buyer a written notice of objection (a “Price
Adjustment Objection Notice”) within fifteen (15) days following delivery of the Preliminary Post-Closing Price
Adjustment Schedule setting forth in reasonable detail the substance and basis of its objection, showing calculations. If
Sellers’ Representative has no objection to the Preliminary Post-Closing Price Adjustment Schedule, Sellers’
Representative shall promptly deliver to Buyer a written notice of acceptance (a “Price Adjustment Acceptance
Notice”). The Preliminary Post-Closing Price Adjustment Schedule will be final and binding on the Parties if a Price
Adjustment Acceptance Notice is delivered or if no Price Adjustment Objection Notice is delivered to Buyer within such 15-day
period. Any Price Adjustment Objection Notice must specify in reasonable detail the disputed items on the Preliminary Post-Closing
Price Adjustment Schedule and describe in reasonable detail the basis for the objection and all information in the possession of
Sellers’ Representative which forms the basis of the dispute, as well as the amount in dispute. If Sellers’
Representative gives a Price Adjustment Objection Notice, the Parties shall consult with each other with respect to the objection.
If the Parties do not agree on the objection within fifteen (15) days after Buyer’s receipt of the Price Adjustment Objection
Notice, either Buyer or Sellers’ Representative may, within an additional fifteen (15) days, refer any unresolved disputed
items to the Reviewing Accounting Firm. The Reviewing Accounting Firm will be directed to resolve disputed issues in accordance with
this Agreement, to render a written report on the unresolved disputed issues with respect to the Preliminary Post-Closing Price
Adjustment Schedule as promptly as practicable and to resolve only those issues of dispute described in the Price Adjustment
Objection Notice. The Reviewing Accounting Firm’s resolution of the dispute will be final and binding on the Parties. The
fees, costs, and expenses of the Reviewing Accounting Firm shall be allocated between the Sellers, on the one hand, and the Buyer on
the other hand, in the same proportion that the aggregate amount of the disputed items submitted to the Reviewing Accounting Firm
that are unsuccessfully disputed by each such Party (as finally determined by the Reviewing Accounting Firm) bears to the total
amount of such disputed items so submitted. For example, should the items in dispute total in amount to $1,000 and the Reviewing
Accounting Firm awards $600 in favor of the Sellers’ position, 60% of the costs of its review would be borne by the Buyer and
40% of the costs would be borne by the Sellers. None of the Sellers or Buyer or their Representatives shall have any ex parte
communications or meetings with the Reviewing Accounting Firm concerning the subject matter hereof without the prior written consent
of the Buyer and Seller, as applicable. The Preliminary Post-Closing Price Adjustment Schedule as finally determined under this Section 1.4(c)
is referred to as the “Final Price Adjustment Schedule.”

 

    2 

     

    

 

(d)           
Purchase Price Adjustment. Within five (5) Business Days after determination of the Final Price Adjustment Schedule in accordance
with Section 1.4(c):

 

(i)                
If the Base Purchase Price as adjusted after the Closing Date under Section 1.4(b) and Section 1.4(c) (the
 “Final Purchase Price”), is greater than the Estimated Purchase Price, then Buyer shall distribute to each Seller
an amount equal to its Pro Rata Portion of the difference between the Final Purchase Price and the Estimated Purchase Price, by wire transfer
of immediately available funds.

 

(ii)             
If the Final Purchase Price is less than the Estimated Purchase Price, then Buyer and Sellers’ Representative shall jointly
instruct the Escrow Agent to distribute to Buyer, by wire transfer of immediately available funds, an amount equal to the difference between
the Final Purchase Price and the Estimated Purchase Price.

 

1.5             
Earn-Out.

 

(a)            Subject
to Section 1.5(h), in addition to the Final Purchase Price, and as additional consideration for the purchase of the
Target Company Interests, within sixty (60) days after the end of calendar years 2021, 2022 and 2023 (each such calendar year, an
 “Earn-Out Period”), Buyer shall pay to Sellers in accordance with their Pro Rata Portion, the Earn-Out
Payment, if any, for the applicable Earn-Out Period, in accordance with this Section 1.5 (each, an “Earn-Out
Payment”). As determined by Buyer in its sole and absolute discretion, any portion of an Earn-Out Payment may be made
by wire transfer of immediately available funds to an account designated by Sellers’ Representative or through the issuance of
the required number (rounded down to the nearest whole number) of shares of common stock of Buyer’s parent company, Blade Air
Mobility, Inc., based on the average closing price of such shares for the thirty (30)-day period immediately preceding the date of
the Earn-Out Payment; provided, however, that no less than 70% of any Earn-Out Payment shall be made in cash.

 

(b)           
If the Contracted EBITDA generated during the calendar year 2021 (the “2021 Contracted EBITDA”) is greater
than the 2021 Contracted EBITDA Target, then Buyer will pay Sellers by wire transfer of immediately available funds an Earn-Out Payment
in an amount equal to (i) the positive difference between the 2021 Contracted EBITDA and 2021 Contracted EBITDA Target, multiplied by
(ii) twelve (12). If the 2021 Contracted EBITDA is less than the 2021 Contracted EBITDA Target, then Sellers shall pay Buyer the amount
by which the 2021 Contracted EBITDA Target exceeds the 2021 Contracted EBITDA (the “2021 Contracted EBITDA Shortfall”)
provided, however, that any such payment will be paid from the Escrow Account (pursuant to a joint written instruction from
Buyer and Sellers’ Representative) to the extent any portion of the Escrow Amount remains in the Escrow Account at such time and
any remainder of the 2021 Contracted EBITDA Shortfall in excess of the Escrow Amount will be deducted from any future Earn-Out Payments.

 

    3 

     

    

 

(c)           
If the Contracted EBITDA generated during calendar year 2022 (the “2022 Contracted EBITDA”) is greater
than the 2021 Contracted EBITDA and the 2021 Contracted EBITDA Target, then Buyer will pay Sellers by wire transfer of immediately available
funds an Earn-Out Payment in an amount equal to (i) the positive difference between the 2022 Contracted EBITDA and the higher of: (A)
the 2021 Contracted EBITDA and (B) the 2021 Contracted EBITDA Target, multiplied by (ii) six (6).

 

(d)           
If the Contracted EBITDA generated during calendar year 2023 (the “2023 Contracted EBITDA”) is greater
than the 2022 Contracted EBITDA, the 2021 Contracted EBITDA, and the 2021 Contracted EBITDA Target, then Buyer will pay Sellers by wire
transfer of immediately available funds an Earn-Out Payment in an amount equal to (i) the positive difference between the 2023 Contracted
EBITDA and the higher of: (A) the 2022 Contracted EBITDA, (B) the 2021 Contracted EBITDA and (C) the 2021 Contracted EBITDA Target, multiplied
by (ii) three (3).

 

(e)           
Delivery of Earn-Out Calculation. As soon as reasonably practicable after the end of each Earn-Out Period, Buyer shall deliver
to Sellers’ Representative a statement reflecting the calculation of Contracted EBITDA for the applicable Earn-Out Period (the “Earn-Out
Calculation”). Such statement shall be prepared using the sample calculations attached as Annex D.

 

(f)             Objections
to Earn-Out Calculation. If Sellers’ Representative objects to the Earn-Out Calculation, Sellers’ Representative
shall deliver to Buyer a written notice of objection (an “Earn-Out Calculation Objection Notice”) within
thirty (30) days following delivery of the Earn-Out Calculation setting forth in reasonable detail the substance and basis of its
objection, showing calculations. If Sellers’ Representative has no objection to the Earn-Out Calculation, Sellers’
Representative shall promptly deliver to Buyer a written notice of acceptance (an “Earn-Out Calculation Acceptance
Notice”). The Earn-Out Calculation will be final and binding on the Parties if an Earn-Out Calculation Acceptance
Notice is delivered or if no Earn-Out Calculation Objection Notice is delivered to Buyer within such 30-day period. Any Earn-Out
Calculation Objection Notice must specify in reasonable detail the disputed items on the Earn-Out Calculation and describe in
reasonable detail the basis for the objection and all information in the possession of Sellers’ Representative which forms the
basis of the dispute, as well as the amount in dispute. If Sellers’ Representative gives an Earn-Out Calculation Objection
Notice, the Parties shall consult with each other with respect to the objection. If the Parties do not agree on the objection within
fifteen (15) days after Buyer’s receipt of the Earn-Out Calculation Objection Notice, either Buyer or Sellers’
Representative may, within an additional fifteen (15) days, refer any unresolved disputed items to the Reviewing Accounting Firm.
The Reviewing Accounting Firm will be directed to resolve disputed issues in accordance with this Agreement, to render a written
report on the unresolved disputed issues with respect to the Earn-Out Calculation as promptly as practicable and to resolve only
those issues of dispute described in the Earn-Out Calculation Objection Notice. The Reviewing Accounting Firm’s resolution of
the dispute will be final and binding on the Parties. The fees, costs, and expenses of the Reviewing Accounting Firm shall be
allocated as described in Section 1.4(c). None of the Sellers or Buyer or their Representatives shall have any ex parte
communications or meetings with the Reviewing Accounting Firm concerning the subject matter hereof without the prior written consent
of the Buyer and Seller, as applicable.

 

(g)           
Buyer further acknowledges and agrees that following the Closing and throughout the Earn-Out Period, (i) Buyer shall use commercially
reasonable efforts to create and maintain the conditions, and operate the Business in a manner, under which the Earn-Out Payments may
reasonably be achieved, and (ii) Buyer shall avoid taking any action or inaction that, without an independent commercially reasonable
business purpose for doing so, has the effect of: (A) depriving the Sellers of an Earn-Out Payment, (B) materially reducing an Earn-Out
Payment, or (C) materially reducing the likelihood of achieving an Earn-Out Payment, which may include, for example purposes only: (1)
an action to reduce, divert or defer Contracted Gross Profit, (2) selling, transferring, assigning, terminating, or otherwise disposing
of material assets or contracts to any third-party, (3) making or permitting changes to its ownership, capital structure, capitalization
or shareholders, or (4) entering into any covenants or restrictions, whether in documents pertaining to indebtedness or otherwise, that
specifically restrict payment of any Earn-Out Payment or impede the promotion and sale of the Target Companies’ services to the
customers that could reasonably be expected to utilize them. Subject to and without limiting or restricting the obligations set forth
herein, Seller acknowledges that: (i) any Earn-Out Payment is speculative and is subject to numerous factors outside the control of Buyer,
(ii) (A) Buyer has not, prior to or after the date hereof, promised or projected any amounts to be received by Sellers in respect of any
Earn-Out Payments, (B) none of Sellers is relying on or has relied on any promises, projections or other information, documents or materials
(or absence thereof) in respect of any Earn-Out Payments, and (C) each of Sellers hereby (1) disclaims reliance on any such promises,
projections or other information, documents or materials (or absence thereof), (2) understands and agrees that any promises and projections
are specifically disclaimed by Buyer and (3) waives any right it may otherwise have with respect to any such promises, projections or
other information, documents or materials (or absence thereof).

 

    4 

     

    

 

 

(h)           
 Each Seller understands and agrees that the contingent right to receive the Earn-Out Payment (or any portion thereof) (i) is solely
a contractual right and is not a security for purposes of any federal or state securities law, (ii) shall not be represented by any form
of certificate or other instrument, is not transferable, except by operation of law relating to descent and distribution, divorce and
community property, and does not constitute an equity or ownership interest in the Target Company, (iii) does not give any Party the right
to any dividend rights, voting rights, liquidation rights, preemptive rights or other rights, (iv) is not redeemable, (v) for any Earn-Out
Period is contingent on such Seller’s Seller Member remaining continuously employed in the Business until the end of the applicable
Earn-Out Period (provided, that, subject to the terms of such Seller Member’s Employment Contract, in the event that
such Seller Member resigns from his or her employment in the Business for Good Reason or the employer terminates such Seller Member’s
employment without Cause, the contingency in this sub-clause (v) shall not be applicable and such Seller Member shall be entitled to the
following and any other Earn-Out Payment, such Seller Member would have otherwise been entitled to; provided, that the calculation of
any future Earn-Out Payments shall include only those Contracted Accounts that pre-date such Seller Member’s termination or resignation),
(vi) is contingent on such Seller’s Seller Member remaining in compliance with his Non-Competition Agreement, (vii) may not be sold,
assigned, pledged, gifted, conveyed, transferred or otherwise disposed of (and any such transfer in violation hereof shall be null and
void), and (viii) no interest is payable with respect to any amount payable under this Section 1.5. In addition to the foregoing,
Sellers and Seller Members shall not have any rights as a securityholder of Buyer or the Target Company or any of their respective Affiliates
as a result of Sellers’ contingent right to receive any Earn-Out Payment.

 

1.6            
Tax Treatment of Payments. The Parties agree that any payment with respect to adjustments made pursuant to this Article
1, and any indemnification payment pursuant to Section 8.2(a) or Article 9 (including any payment from the Escrow Account)
shall be deemed to be, and Buyer, the Target Company, and Sellers shall treat such payment as, an adjustment to the Base Purchase Price,
as applicable, for Tax purposes, except as otherwise required by applicable Law.

 

		2.	REPRESENTATIONS AND WARRANTIES OF THE TARGET COMPANIES

 

Each Target Company represents
and warrants to Buyer that each statement contained in this Article 2 is true and correct as of the date of this Agreement,
and will be deemed to be true and correct as of the Closing Date.

 

2.1            
Due Organization and Power. The Target Company is a business entity of its respective type set forth in Section 10.16,
duly formed, validly existing and in good standing under the Laws of its respective State of set forth in Section 10.16. The Target
Company is duly qualified to transact business and is in good standing in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities makes such qualification necessary, except where the failure to be so qualified or
in good standing has not had and would not reasonably be expected to be materially adverse to the Target Company.

 

2.2             Authority.
The execution, delivery and performance by the Target Company of the Transaction Documents to be executed and delivered by the
Target Company, the consummation by the Target Company of the Transaction, and performance of its obligations under the Transaction
Documents have been duly authorized and approved by the Target Company. No other or further corporate or other act or proceeding on
the part of the Target Company is necessary to authorize the Transaction Documents to be executed and delivered by the Target
Company, the consummation by the Target Company of the Transaction or performance of its obligations under the Transaction
Documents. Assuming the due authorization, execution and delivery by the other parties to the Transaction Documents, this Agreement
constitutes, and the other Transaction Documents to be executed by the Target Company will constitute, valid and binding agreements
of the Target Company, enforceable in accordance with their respective terms, except as such may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar Legal Requirements now or later in effect relating to or affecting
creditors’ rights generally and by general equitable principles (regardless of whether enforceability is considered in a
proceeding in equity or at law).

 

    5 

     

    

 

2.3            
No Violation. Except as set forth in Section 2.3 of the Target Company Disclosure Letter, neither the execution
and delivery by the Target Company of the Transaction Documents nor the consummation by the Target Company of the Transaction (without
or with notice or the lapse of time or both) (a) will violate any Legal Requirement applicable to the Target Company or by which the Target
Company’s properties or assets are bound, (b) will require any action by (including any Consent) or in respect of (including notice
to) any Person under any Contract of the Target Company, except as set forth in Section 2.3 of the Target Company Disclosure
Letter, (c) will violate or conflict with, or constitute a default under, the Organizational Documents of the Target Company, (d) will
violate or conflict with, or constitute a default under, or result in the automatic termination, acceleration or material modification
(or provide a Person the right of termination, acceleration or material modification) of, or accelerate the performance required by, the
payment of any kind required under, or the loss of any benefits under, or result in a breach of any Contract of the Target Company, or
(e) will result in the creation or imposition of any Lien upon any of the Target Company Interests, properties or assets of the Target
Company.

 

2.4            
Capitalization. Section 2.4 of the Target Company Disclosure Letter contains a list of (a) all issued and outstanding
Target Company Interests of each Target Company, (b) the holder of record of each outstanding Target Company Interest of each Target Company.
All of the Target Company Interests have been duly authorized and validly issued, are fully paid and non-assessable, were not issued in
violation of the terms of any Contract of the Target Company and were issued in compliance with the Target Company’s Organizational
Documents and all applicable Legal Requirements. Except as set forth in Section 2.4 of the Target Company Disclosure Letter,
(a) no Equity Rights with respect to the Target Company’s Equity Securities exist, (b) the Target Company has no obligation to issue
or grant any Equity Rights with respect to Equity Securities of the Target Company, (c) the Target Company is not party to any Contract
relating to the issuance, sale or transfer of any of its Equity Securities or any Equity Rights with respect to the Equity Securities
of the Target Company, and (d) the Target Company does not own any Equity Securities of any Person or Equity Rights with respect Equity
Securities of any Person.

 

2.5            
Financial Statements; No Undisclosed Liabilities 

 

(a)            Section 2.5
of the Target Company Disclosure Letter contains an unaudited consolidated balance sheet of the Target Companies as of August 31,
2021 (the “Recent Balance Sheet”) and unaudited consolidated balance sheet of the Target Companies for the
twelve months then ended, and a profit and loss statement for the 12-month period ending July 31, 2021 and for the period beginning
January 1, 2021 through August 26, 2021 (collectively, the “Financial Statements”). Except as set forth in
the notes thereto or in Section 2.5 of the Target Company Disclosure Letter and subject to year-end adjustments (which
adjustments will not be material individually or in the aggregate), the Financial Statements were consistently applied, are
consistent in all material respects with the books and records of the Target Company and applied on a basis consistent with past
practices, and fairly present, in all material respects, the financial condition, stockholders’ equity, results of operations
and cash flows of the Target Companies as of the respective dates thereof and for the respective periods covered thereby.

 

(b)           
Except as set forth in Section 2.5(b) of the Target Company Disclosure Letter, the Target Company has no Liabilities,
except for those which have been incurred since January 1, 2021 in the ordinary course of business and which are not, individually or
in the aggregate, material in amount.

 

2.6           
Absence of Certain Developments. Since July 30, 2021, (a) no event, change, condition or state of facts or circumstances
exists or has occurred that has had or could reasonably be expected to have, individually or in the aggregate, a material adverse effect
on the condition (financial or otherwise), operations or results of operations of the Target Company, and the Target Company has not taken
any action that, if taken subsequent to the execution of this Agreement and on or prior to the Closing Date, would constitute a breach
of any of the covenants in Section 5.1.

 

    6 

     

    

 

2.7             
Tax Matters. Except as set forth in Section 2.7 of the Target Company Disclosure Letter:

 

(a)           
Returns. The Target Company has timely filed or will timely file all Tax Returns required to be filed before the Closing
Date. All such Tax Returns were or will be (when filed) complete and accurate and prepared in compliance with all applicable Legal Requirements.
All Taxes payable by the Target Company, whether or not shown on any Tax Return, have been or will be paid in full when due. The Target
Company currently is not a beneficiary of any extension of time within which to file any Tax Return. There are no Liens on any assets
of the Target Company or the Business that arose in connection with any failure or alleged failure to pay any Tax. The Target Company
has not waived any statute of limitations in respect of Taxes or agreed to the extension of time with respect to a Tax assessment or deficiency.
The Target Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, equity holder or other Person. All Forms W-2 and Forms 1099 required with respect to such
withholding and payment have been properly completed and timely filed to the Target Company’s knowledge.

 

(b)            Audits.
The Target Company has not been, or is not currently the subject of, an audit examination, deficiency or proposed adjustment of
Taxes by the Tax authorities of any nation, state or locality, and no examination or adjustment is pending or threatened with
respect to the Target Company, nor has the Target Company received any notices from any taxing authority relating to any issue which
could reasonably be expected to affect the Tax liability of the Target Company. There are no outstanding Contracts or waivers
extending the statutory period of limitations for a Tax assessment applicable to the Target Company with respect to a taxable period
for which such statute of limitations is open, other than extensions to file Tax Returns made in the ordinary course of business.
The Target Company is not presently contesting the Tax liability of the Target Company before any court, tribunal or agency.

 

(c)           
Other. No Tax dispute, inquiry or investigation is pending with respect to the Target Company or any Seller. No written
claim has been made by a Tax authority in a jurisdiction where the Target Company does not file Tax Returns that the Target Company is
or may be subject to or responsible for the payment of any Tax to that jurisdiction. There is no dispute or claim concerning any Tax liability
of the Target Company pending or threatened by any Tax authority. The Target Company is not party to any Tax allocation or sharing Contract.

 

(d)           
Additional Income. The Target Company will not be required to include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any of the following that
occurred or existed on or prior to the Closing Date: (i) a change in method of accounting; (ii) a “closing agreement” as described
in Code Section 7121 (or any similar provision of state, local or foreign Law); (iii) an intercompany item under Treasury Regulation Section
1.1502-13 or an excess loss account under Treasury Regulation Section 1.1502-19; (iv) an installment sale or open transaction disposition;
(v) election by the Target Company under Code Section 108(i) or (vi) prepaid amount.

 

(e)           
S-Election. Since 2015, TAM Inc. has been a validly electing S corporation within the meaning of Code Sections 1361 and
1362, and TAM Inc. will be an S corporation up to and including the Closing Date.

 

(f)           
1374 Taxes. The Target Company has no potential liability for any Tax under Code Section 1374 in connection with the Transaction.

 

2.8           
No Litigation. Except as set forth in Section 2.8 of the Target Company Disclosure Letter or as would, individually
or in the aggregate, not result in a material Liability to the Target Company, (a) there is, and in the past three (3) years there has
been, no action, suit, litigation, arbitration, proceeding at law or in equity, or any administrative or similar proceeding by, before
or against any other Person or Government Body, pending, or, to the knowledge of the Target Company, threatened, against or affecting
the Target Company, or any of its properties, assets or rights, and (b) there is no outstanding Order against the Target Company.

 

    7 

     

    

 

2.9           
Legal Compliance 

 

(a)           
The Target Company is and has been since inception in material compliance with its Organizational Documents and there is no basis
which would reasonably be expected to constitute a failure to comply in any material respect. The Target Company is in material compliance
with all Laws and Orders applicable to the Target Company and the Business. The Target Company has not received any notice from any Government
Body of any material violations of any Legal Requirements which remains uncorrected.

 

(b)            Except
as set forth in Section 2.9(b) of the Target Company Disclosure Letter, (i) the Target Company has all material Permits
required for the conduct of the Business or that are necessary for the lawful ownership of their respective properties and assets
(the “Target Company Permits”), (ii) the Target Company is, and in the past three (3) years has been, in
compliance in all material respects with all Target Company Permits, and all are valid and in full force and effect and have not
lapsed, been cancelled, terminated or withdrawn, (iii) the Target Company has not received any written notice of any cancellation,
suspension, revocation, invalidation or non-renewal of any Target Company Permit, and (iv) to the Target Company’s knowledge,
the Target Company Permits will continue to be valid and in full force and effect on identical terms following consummation of the
Transaction. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in
the revocation, suspension, lapse or limitation of any Target Company Permit.

 

2.10         
Environmental Matters. Since January 1, 2017, the Target Company has been, and currently is, in compliance in all material
respects with all applicable Environmental Laws and Permits required of them under applicable Environmental Law. There are no claims,
proceedings, investigations or actions by any Government Body or other Person pending, or to the knowledge of the Target Company, threatened
against the Target Company under any Environmental Law. There are no facts, circumstances or conditions relating to the past or present
business or operations of the Target Company or any of their respective predecessors (including the release, threatened release, or disposal
of any wastes, Hazardous Substance or other substances at any location), or to any real property or facility at any time owned, leased,
or operated by the Target Company, or any of their respective predecessors, that would reasonably be expected to give rise to any claim,
proceeding, or action, or to any Liability, under any Environmental Law except as have not had and would not reasonably be expected to
have, individually or in the aggregate, a material effect on the continuing operations of the Target Company or the Business.

 

2.11         
Property and Assets. Except as set forth in Section 2.11 of the Target Company Disclosure Letter, the Target
Company has a valid leasehold interest in all real property and interests in real property leased, licensed or occupied by the Target
Company, which are identified in Section 2.11 of the Target Company Disclosure Letter, and good and marketable title or leasehold
title (as applicable) to all of their personal property and assets (tangible and intangible), free and clear of all Liens, other than
Permitted Liens. The Target Company does not own any real property or interests in real property. The personal properties and assets that
are owned, leased or used by the Target Company (a) are in good operating condition, working order and repair, subject to ordinary wear
and tear, free from defects, are usable in the ordinary course of the business and are suitable for the purposes for which they are currently
being used and (b) constitute all the personal properties and assets necessary for the conduct of its business as presently conducted.
No properties or assets related to or used by the Target Company are owned or leased by any Affiliate of any Seller or the Target Company
(other than another Target Company). Upon consummation of the Transaction, the Target Company will be entitled to continue to use all
the properties and assets which are currently employed by the Target Company in the conduct of the Business.

 

    8 

     

    

 

2.12          Insurance.
The Target Company has made available to Buyer copies of all material policies of insurance currently maintained by the Target
Company, which cover the Target Company, the Business or the Target Company’s properties, assets or employees and are
currently in effect for the current policy period (collectively, the “Target Company Insurance Policies”). Section 2.12
of the Target Company Disclosure Letter contains an accurate and complete list of all Target Company Insurance Policies and all
pending claims and the claims history for the Target Company during the current year and the preceding three (3) years. There are no
pending claims under any of such Target Company Insurance Policies as to which coverage has been questioned, denied or disputed by
the insurer or in respect of which the insurer has reserved its rights. All Target Company Insurance Policies are issued by an
insurer with a Best’s Rating of A- or above and are in full force and effect. All premiums due under the Target Company
Insurance Policies have been paid in full or, with respect to premiums not yet due, accrued. The Target Company Insurance Policies
are sufficient for compliance with all Legal Requirements and Contracts to which the Target Company is party or a beneficiary or by
which the Target Company or its assets are subject. The Target Company has not received a notice of cancellation or termination of
any Target Company Insurance Policy or of any material changes that are required in the conduct of the Target Company’s
business as a condition to the continuation of coverage under, or renewal of, any such Target Company Insurance Policy. The Target
Company has no self-insurance arrangements.

 

2.13         
Material Contracts. Section 2.13 of the Target Company Disclosure Letter sets forth an accurate and complete
list as of the date hereof of each of the following Contracts to which the Target Company is party or by which the Target Company is bound
or to which any asset of the Target Company is subject or under which the Target Company has any rights or the performance of which is
guaranteed by the Target Company or under which the Target Company is conducting the Business (each, a “Material Contract”):

 

(a)           
Each Contract with the Contracted Accounts;

 

(b)           
each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property;

 

(c)           
each Contract (or series of related Contracts) that involves delivery or receipt of services (other than with respect to products
or inventory) of an amount or value in excess of $50,000 or that involves expenditures or receipts in excess of $50,000;

 

(d)           
each Contract with a Material Customer;

 

(e)           
each Contract with a Material Supplier;

 

(f)            
each Contract for Indebtedness with an outstanding balance in excess of $50,000;

 

(g)           
each licensing agreement or other Contract with respect to intellectual property of any Third Party, including any agreement with
any current or former employee, consultant or contractor regarding the appropriation or non-disclosure of any Intellectual Property or
intellectual property of any Third Party;

 

(h)          
each labor agreement or collective bargaining agreement with any labor union, labor organization, organized group of employees,
or similar labor organization (collectively, “Union”);

 

(i)           
 each Contract (other than a Target Company Plan) providing for the employment or consultancy (including on an independent contractor
basis) of an individual (or, in the case of a consultant or independent contractor, an entity) on a full-time, part-time, consulting or
other basis or otherwise providing compensation or other benefits to any director, shareholder, officer, partner, employee or consultant,
in each case, involving at least $50,000 per annum for the 12 month period ending on the date of the Recent Balance Sheet;

 

    9 

     

    

 

(j)            
each joint venture, partnership or Contract involving a sharing of profits, losses, costs or Liabilities with any other Person;

 

(k)           
each Contract (other than the Transaction Documents) to which any Seller Member, Seller or any Affiliate of such Seller is party
or otherwise has any rights, obligations or interests;

 

(l)           
each Contract that provides for payments to or by any Person in excess of Two Hundred Fifty Thousand Dollars ($250,000) during
the twelve (12) month period immediately prior to the date hereof that is not terminable without payment of a termination penalty;

 

(m)         
each Contract relating to (i) the purchase, sale, lease or disposal of any Equity Securities of the Target Company, (ii) the purchase,
sale, lease or disposal of any assets of the Target Company other than in the ordinary course of business, or (iii) granting to any Person
any option of first refusal, first offer or similar preferential right to purchase or acquire any of its assets or properties;

 

(n)          
each Contract containing any non-competition or other restrictive covenant that materially restricts the future business activity
of the Target Company with respect to the Business (including any non-solicits or no-hires);

 

(o)          
each Contract entered into other than in the ordinary course of business that contains or provides for an express undertaking by
the Target Company to be responsible for consequential, incidental or punitive damages;

 

(p)           
each Contract that contains restrictions with respect to payment of dividends or any other distribution in respect of the Target
Company Interests;

 

(q)           
each Contract relating to capital expenditures in excess of $50,000 individually, or $150,000 in the aggregate;

 

(r)           
each Contract involving a loan (other than accounts receivable owing from trade debtors in the ordinary course of business) or
advance to (other than travel and entertainment advances to the employees of the Target Company extended in the ordinary course of business),
or investment in, any Person or any Contract relating to the making of any such loan, advance or investment;

 

(s)          
each Contract under which any Person (other than the Target Company) has directly or indirectly guaranteed Indebtedness of the
Target Company;

 

(t)           
 each management service, consulting, financial advisory or any other similar type Contracts and all Contracts with investment
or commercial banks;

 

(u)          
each Contract (including letters of intent) (A) involving the future disposition or acquisition of assets or properties involving
consideration of more than $50,000, individually or in the aggregate, or any merger, consolidation or similar business combination transaction,
whether or not enforceable, or (B) relating to the acquisition by the Target Company of any operating business or the Equity Securities
or other equity interests of any other Person pursuant to which the Target Company has continuing obligations as of the date hereof;

 

    10 

     

    

 

(v)          
each Contract involving any resolution or settlement of any actual or threatened litigation, arbitration, claim or other dispute;

 

(w)         
each Contract involving a confidentiality, standstill or similar arrangement;

 

(x)           
each Contract with a Government Body; and

 

(y)          
each Contract involving any provisions providing for exclusivity, “change in control”, “most favored nations”,
rights of first refusal or first negotiation or similar rights.

 

With respect to each Material
Contract, assuming the due authorization, execution and delivery of such Material Contract by each other party thereto, such Material
Contract is in full force and effect, a legal, valid and binding obligation of the Target Company and the other parties thereto and enforceable
by the Target Company in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization, moratorium,
conveyance or other similar Laws now or later in effect relating to or affecting creditors’ rights generally and by general equitable
principles (regardless of whether enforceability is considered in a proceeding in equity or at law) or the implied covenant of good faith
and fair dealing and has not been terminated or repudiated. The Target Company and, to the knowledge of the Target Company, each other
party thereto are in compliance in all material respects with all terms and requirements of each Material Contract. The Target Company
has not received any written notice by another party to a Material Contract of any intention to breach, terminate, repudiate or disclaim
any such Material Contract to which it is party. To the knowledge of the Target Company, no event has occurred or circumstance exists
which, with the delivery of notice, the passage of time or both, would constitute a breach or default a Material Contract, or permit the
termination, modification or acceleration of any obligation or Liability under a Material Contract. The Target Company has delivered or
made available to Buyer true and complete copies, including all amendments, of each Contract set forth in Section 2.13 of
the Target Company Disclosure Letter.

 

2.14         
Labor Matters.

 

(a)            Section 2.14
of the Target Company Disclosure Letter lists: (i) all employees, independent contractors, and consultants of the Target Company;
and (ii) for each individual described in clause (i), (A) the individual’s title or position, hire date, and compensation, (B)
any Contracts entered into between the Target Company and such individual, and (C) the fringe benefits provided to each such
individual. All compensation payable to all employees, independent contractors, or consultants of the Target Company for services
performed on or prior to the Closing Date have been paid in full.

 

(b)          
The Target Company is not, nor has been, a party to or bound by any collective bargaining agreement or other Contract with a Union,
and no Union has represented or purported to represent any employee of the Target Company. There has never been, nor has there been any
threat of, any strike, work stoppage, slowdown, picketing, or other similar labor disruption or dispute affecting the Target Company or
any of its employees.

 

(c)          
The Target Company is and has been in compliance in all material respects with: (i) all applicable employment Laws and agreements
regarding hiring, employment, termination of employment, plant closings and mass layoffs, employment discrimination, harassment, retaliation,
and reasonable accommodation, leaves of absence, terms and conditions of employment, wages and hours of work, employee classification,
employee health and safety, engagement and classification of independent contractors, payroll taxes, and immigration with respect to all
employees, independent contractors, and contingent workers; and (ii) all applicable Laws relating to the relations between it and any
Union, work council, or other body representing employees of the Target Company.

 

    11 

     

    

 

2.15         
Employee Benefit Plans.

 

(a)          
Benefit Plans. Section 2.15(a) of the Target Company Disclosure Letter sets forth a complete and accurate list
of all “employee benefit plans” as defined in Section 3(3) of the Employment Retirement Income Security Act of 1974, as amended
(“ERISA”), each Employment Contract, consulting, termination, fringe benefit, severance, incentive or bonus,
retention, change in control, deferred compensation, profit sharing, retirement, welfare, post-employment welfare, vacation or paid-time-off,
stock purchase, stock option or equity-based incentive plan, policy, program, agreement or arrangement, whether or not in writing and
whether or not funded, in each case, that is sponsored, contributed to or maintained by the Target Company or with respect to which the
Target Company or any employers (whether or not incorporated) that would be treated together with the Target Company as a single employer
within the meaning of Section 414 of the Code (each, an “ERISA Affiliate”) has any liability, direct or indirect,
contingent or otherwise (each, a “Target Company Plan”).

 

(b)           
Target Company Plans. With respect to each Target Company Plan, to the extent applicable, the Target Company has made available
to Buyer a copy of (i) the plan document or other governing Contract or a description of any unwritten plan, (ii) the most recently distributed
summary plan description (and any subsequent summaries of material modifications), (iii) each trust or other funding Contract, (iv) the
two (2) most recently filed IRS Form 5500 (including schedules and attachments), (v) the most recently received IRS determination letter
or IRS opinion letter (in the case of a prototype plan), and (vi) the most recently prepared financial statements.

 

(c)            Multiemployer
and Funded Plans. No Target Company Plan is or has at any time been covered by Title IV or ERISA or subject to Section 412 of
the Code or Section 302 of ERISA, and neither the Target Company nor any ERISA Affiliate has ever maintained, established,
participated in or contributed to, or is or has been obligated to contribute to, or has otherwise incurred any Liability (including
any contingent liability) under, (i) a “multiemployer plan,” (ii) a “multiple employer plan,” or (iii) a
 “multiple employer welfare arrangement,” as such terms are defined by ERISA and/or by the Code.

 

(d)          
Compliance. The Target Company has made all contributions, premium payments or any other payments required to be made by
it to each Target Company Plan. Each Target Company Plan (and any related trust or fund) has been funded, administered and maintained,
in form and operation, in accordance with its terms and in all material respects with the applicable requirements of all applicable Law,
including, without limitation (and where applicable) ERISA and the Code. Each Target Company Plan that is intended to meet the requirements
of a “qualified plan” under Section 401(a) of the Code has received a favorable determination letter from the IRS stating
that such Target Company Plan meets the requirements of Section 401(a) of the Code, and, to the Target Company’s knowledge, no events
have occurred since the date of such favorable determination letter that would reasonably be expected to adversely affect such Target
Company Plan’s qualified status. There do not exist any pending or, to the knowledge of the Target Company, threatened claims (other
than claims for benefits in the ordinary course), suits, actions, disputes, audits or investigations with respect to any Target Company
Plan.

 

(e)           
Effect of Transactions. Neither the execution of this Agreement nor the consummation of the Transaction by the Target Company
will limit or restrict the right of the Target Company to merge, amend, terminate or transfer the assets of any Target Company Plan or
Employment Contract on or after the Closing Date. Neither the execution nor the delivery of this Agreement nor the consummation of the
Transaction could, either alone or in conjunction with any other event (whether contingent or otherwise) (i) accelerate the time of the
payment or vesting of, or increase the amount of, or result in the forfeiture of compensation or benefits under any Target Company Plan
or Employment Contract, (ii) entitle any employee, director, officer or independent contractor of the Target Company to severance pay
or any material increase in severance pay, (iii) directly or indirectly cause the Target Company to transfer or set aside any assets to
fund any material benefits under any Target Company Plan, (iv) otherwise give rise to any material liability under any Target Company
Plan, (v) require a “gross-up,” indemnification for, or payment to any individual for any taxes imposed under Section 409A
or Section 4999 of the Code or any other tax, or (vi) result in the payment of any amount that could, individually or in combination with
any other such payment, constitute an “excess parachute payment” as defined in Section 280G(b)(1) of the Code.

 

    12 

     

    

 

(f)            
No Post-Employment Obligations. No Target Company Plan provides (or could require the Target Company to provide) retiree
or other post-employment health benefits or life insurance or other welfare benefits to any Person, excluding, for purposes of such representation,
any arrangements that may be required under COBRA or similar Laws.

 

(g)            Neither
the Target Company, any Target Company Plan nor, to the knowledge of the Target Company, any trustee, administrator or other Third
Party fiduciary and/or party-in-interest thereof, has engaged in any breach of fiduciary responsibility or any “prohibited
transaction” (as such term is defined in Section 406 of ERISA or Section 4975 of the Code) to which Section 406 of ERISA or
Section 4975 of the Code applies and which could subject the Target Company or any ERISA Affiliate to the tax or penalty on
prohibited transactions imposed by Section 4975 of the Code, which, assuming the taxable period of such transaction expired as of
the date hereof, could reasonably be expected to result in a material liability to the Target Company. The Target Company has not
engaged in a transaction that would reasonably be expected to result in a material civil penalty under Sections 409 or 502(i) of
ERISA. Neither the Target Company nor any ERISA Affiliate is subject to any material liability or penalty under Sections 4976
through 4980 of the Code or Title 1 of ERISA with respect to any Target Company Plan.

 

(h)           
Each Target Company Plan which is a “nonqualified deferred compensation plan” (within
the meaning of Section 409A of the Code) is and has been in full compliance with Section 409A of the Code.

 

(i)            
Each Target Company Plan can be amended, terminated or otherwise discontinued after the Effective Time in accordance with its terms,
without material Liabilities to Buyer or the Target Company other than ordinary administration expenses typically incurred in a termination
event.

 

2.16         
Intellectual Property 

 

(a)           
The term “Intellectual Property” means any and all of the following in any jurisdiction throughout the
world: (i) issued patents and patent applications; (ii) trademarks, service marks, trade names, and other similar indicia of source or
origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration,
and renewals of, any of the foregoing; (iii) copyrights, including all applications and registrations; (iv) trade secrets, know-how, inventions
(whether or not patentable), technology, and other confidential and proprietary information and all rights therein; and (v) internet domain
names and social media accounts and pages.

 

(b)           
Section 2.16(b) of the Target Company Disclosure Letter lists all issued patents, registered trademarks, domain names
and copyrights, and pending applications for any of the foregoing and all material unregistered Intellectual Property that are owned by
the Target Company (the “Target Company IP Registrations”). To the knowledge of the Target Company, the Target
Company owns or has the valid and enforceable right to use all Intellectual Property used or held for use in or necessary for the conduct
of the Business (the “Target Company Intellectual Property”), free and clear of all Liens. No Third Party or
Affiliate of the Target Company owns any Target Company Intellectual Property or has any right to use any Target Company Intellectual
Property. All of the Target Company Intellectual Property is valid and enforceable, and all Target Company IP Registrations are subsisting
and in full force and effect. The Target Company has taken all commercially reasonable steps necessary to maintain and enforce the Target
Company Intellectual Property.

 

(c)           
To the knowledge of the Target Company, the conduct of the Business has not infringed, misappropriated, or otherwise violated and
will not infringe, misappropriate, or otherwise violate the Intellectual Property or other rights of any Person. To the knowledge of the
Target Company, no Person has infringed, misappropriated, or otherwise violated any Target Company Intellectual Property.

 

2.17         
 Brokers and Finders. Neither the Target Company nor any of its Affiliates has paid or become obligated to pay any fee,
commission or similar compensation to any broker, finder, agent, Person or firm and no such broker, finder, agent, Person or firm is entitled
to such payment in connection with the Transaction or in connection with the Agreement (including the negotiation thereof) or any other
subsequent acquisition or divestiture by the Target Company.

 

    13 

     

    

 

2.18         
Customers and Suppliers.

 

(a)           
Section 2.18(a) of the Target Company Disclosure Letter lists the top ten (10) customers (including agents and distributors)
based on gross revenues of the Target Companies for each of the calendar years ending December 31, 2018, December 31, 2019, and December
31, 2020 (and the revenues generated from such customer) (collectively, the “Material Customers”). Over the
past three (3) years, the Target Company has not received any written notice from any Material Customer that such Material Customer intends,
anticipates or otherwise expects to terminate or materially change its relationship (whether related to payment, price, amounts purchased
or otherwise) with the Target Company or limit its usage or purchase of the services and products of the Target Company as a result of
the Transaction or otherwise.

 

(b)           
Section 2.18(b) of the Target Company Disclosure Letter lists the top five (5) vendors, suppliers, service providers
and other similar business relations of the Target Company based on the amounts paid to such Persons for each of the calendar years ending
December 31, 2018, December 31, 2019, and December 31, 2020 (the “Material Suppliers”). The Target Company has
not received any notice from any Material Supplier that such Material Supplier intends, anticipates or otherwise expects to terminate
or materially change its relationship (whether related to payment, price, amounts sold or otherwise) with the Target Company or limit
its services, supplies or materials to the Target Company.

 

2.19         
Affiliated Transactions. Except as set forth in Section 2.19 of the Target Company Disclosure Letter, no officer,
director, employee, equityholder or Affiliate (including Sellers) of the Target Company or any individual related by blood, marriage or
adoption to any such individual or any entity in which any such Person or individual owns any beneficial interest, (a) is party to any
Contract with the Target Company (other than an Employment Contract or other Material Contract described in Section 2.13(i)), (b)
has any interest in any property, asset or right used by the Target Company or necessary for the Business, (c) has received any funds
from the Target Company since the date of the Recent Balance Sheet, (d) provides services or resources to the Target Company or is dependent
on services or resources provided by the Target Company (except to the extent that such services may be provided pursuant to an Employment
Contract or other Material Contract described in Section 2.13(i)) or (e) holds a position as a director, officer or employee of,
any Person which is a client, supplier, customer, lessor, lessee, or competitor or potential competitor of the Target Company.

 

2.20         
NO OTHER REPRESENTATIONS AND WARRANTIES.

 

(a)            EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NONE OF SELLERS, SELLER MEMBERS, THE TARGET COMPANIES OR THEIR RESPECTIVE AFFILIATES MAKE
ANY REPRESENTATION OR WARRANTY, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, IN RESPECT OF SELLERS, SELLER MEMBERS, THE TARGET
COMPANIES OR THEIR RESPECTIVE AFFILIATES.

 

(b)           
Without limiting the generality of the foregoing, none of Sellers, Seller Members nor the Target Companies has made, and shall
not be deemed to have made, any representations or warranties in the materials relating to the Business made available to Buyer, including
due diligence materials, or in any presentation of the Business by Sellers or their Affiliates or others in connection with the transactions
contemplated hereby, and no statement contained in any of such materials or made in any such presentation shall be deemed a representation
or warranty hereunder or otherwise or deemed to be relied upon by Buyer in executing, delivering and performing this Agreement and the
transactions contemplated hereby. It is understood that any cost estimates, projections or other predictions, any data, any financial
information or any memoranda or offering materials or presentations, including but not limited to, any offering memorandum or similar
materials made available by Seller Members, Sellers or their Affiliates were made in good faith and are not and shall not be deemed to
be or to include representations or warranties of the Target Companies, and are not and shall not be deemed to be relied upon by Buyer
in executing, delivering and performing this Agreement and the transactions contemplated hereby.

 

    14 

     

    

 

		3.	REPRESENTATIONS AND WARRANTIES OF SELLER MEMBERS AND SELLERS

 

Each of the Seller Members
and the Sellers, severally as to itself and not jointly, represents and warrants to Buyer that each statement contained in this Article 3
is true and correct as of the date of this Agreement, and will be deemed to be true and correct as of the Closing Date.

 

3.1             
Legal Capacity. Such Seller Member is a competent adult and has all requisite power, legal right, authority and capacity
to enter into the Transaction Documents to be executed and delivered by such Seller Member. Such Seller is a limited liability company
duly organized, validly existing and in good standing under the laws of the state of such entity’s formation. Such Seller has all
requisite power, legal right and authority (corporate and other) to enter into the Transaction Documents and to carry out the Transaction.
Such Seller has duly executed and delivered this Agreement on the date hereof with the intent to be legally bound hereby and to perform
its obligations hereunder. Assuming the due authorization, execution and delivery of the Transaction Documents by the other parties to
the Transaction Documents, the Transaction Documents, when executed and delivered by such Seller, will constitute valid and binding agreements
of such Seller, enforceable in accordance with their respective terms, except as such may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or later in effect relating to or affecting creditors’ rights generally and by general equitable
principles (regardless of whether enforceability is considered in a proceeding in equity or at law).

 

3.2              Ownership
of Target Company Interests. Such Seller owns, beneficially and of record and has good and valid title to all of the Target
Company Interests identified in Annex A opposite such Seller’s name free and clear of all Liens. At the Closing, such
Seller will convey to Buyer all of such Seller’s right, title and interest in and to the Target Company Interests identified
in Annex A opposite such Seller’s name, free and clear of all Liens. Such Seller has not, and as of the Closing will
not have, sold, or granted any options or rights to purchase, and such Seller has not entered, and as of the Closing Date will not
have entered, into any Contract obligating such Seller to sell or grant options or rights to purchase, any of such Target Company
Interests, except to Buyer.

 

3.3             
No Violation. Neither the execution and delivery by such Seller of the Transaction Documents nor the consummation by such
Seller of the Transaction (without or with notice or the lapse of time or both) (a) will violate any Legal Requirement applicable to such
Seller or by which such Seller’s properties or assets are bound, (b) will require any action by (including any Consent) or in respect
of (including notice to), any Person under any Contract of such Seller, except as set forth in Section 2.3 of the Target Company
Disclosure Letter, (c) will violate or conflict with, or constitute a default under, or result in the automatic termination, acceleration
or material modification (or provide a Person the right of termination, acceleration or material modification) of, or accelerate the performance
required by, the payment of any kind required under, or the loss of any benefits under, or result in a breach of any Contract of such
Seller, or (d) will result in the creation or imposition of any Lien upon any of the Target Company Interests.

 

3.4             
No Litigation. As of the date of this Agreement, such Seller is not a party to or, to such Seller’s knowledge, threatened
with any litigation, arbitration or similar proceeding at law or in equity or before or by any Government Body with respect to the Transaction,
and such Seller has not received written notice of a claim or dispute that is reasonably likely to result in any such litigation, arbitration
or similar proceeding with respect to the Transaction.

 

3.5             
Brokers and Finders. No Seller has paid or become obligated to pay any fee, commission or similar compensation to any broker,
finder, agent, Person or firm and no such broker, finder, agent, Person or firm is entitled to such payment in connection with the Transaction
or in connection with the Agreement (including the negotiation thereof) or any other subsequent acquisition or divestiture by the Target
Company.

 

    15 

     

    

 

		4.	REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants
to Sellers that each statement contained in this Article 4 is true and correct as of the date of this Agreement, and will
be deemed to be true and correct as of the Closing Date.

 

4.1             
Due Organization and Power. Buyer is a corporation duly organized or incorporated, validly existing and in good standing
under the laws of Delaware. Buyer has all requisite power, legal right and authority (corporate and other) to enter into the Transaction
Documents and to carry out the Transaction.

 

4.2              Authority.
The execution, delivery and performance by Buyer of the Transaction Documents to be executed and delivered by Buyer, the
consummation by Buyer of the Transaction, and performance of its obligations under the Transaction Documents have been duly
authorized and approved by Buyer. No other or further corporate or other act or proceeding on the part of Buyer is necessary to
authorize the Transaction Documents to be executed and delivered by Buyer, the consummation by Buyer of the Transaction or
performance of its obligations under the Transaction Documents. Assuming the due authorization, execution and delivery by the other
parties to the Transaction Documents, this Agreement constitutes, and the other Transaction Documents to be executed by Buyer will
constitute, valid and binding agreements of Buyer, enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar Legal Requirements now or later in effect relating to
or affecting creditors’ rights generally and by general equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law).

 

4.3             
No Violation. Neither the execution and delivery by Buyer of the Transaction Documents nor the consummation by Buyer of
the Transaction (without or with notice or the lapse of time or both) (a) will violate any Legal Requirement applicable Buyer or by which
any of its properties or assets are bound, (b) will require any action by (including any Consent) or in respect of (including notice to),
any Person under any Contract of Buyer, (c) will violate or conflict with, or constitute a default under, the Organizational Documents
of Buyer, or (d) will violate or conflict with, or constitute a default under, or result in the automatic termination, acceleration or
material modification (or provide a Person the right of termination, acceleration or material modification) of, or accelerate the performance
required by, the payment of any kind required under, or the loss of any benefits under, or result in a breach of any Contract of Buyer,
except for such violations, conflicts, defaults, terminations or accelerations that, individually or in the aggregate, would not be reasonably
expected to have the effect of preventing, delaying, making illegal or otherwise interfering with any of the Transaction.

 

4.4             
No Litigation. As of the date of this Agreement, there is no litigation, arbitration or similar proceeding pending or, to
the knowledge of Buyer, threatened against Buyer or any of its Affiliates, and there is no outstanding Order against Buyer or any of its
Affiliates, that, individually or in the aggregate, would be reasonably expected to have the effect of preventing, delaying, making illegal
or otherwise interfering with any of the Transaction.

 

4.5             
Investment Intent. Buyer is acquiring the Target Company Interests for its own account and not with a current view toward
any resale or distribution of the same or any beneficial interest therein. Buyer acknowledges and agrees that the Target Company Interests
may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities
Act of 1933, as amended, or an applicable exemption therefrom and without compliance with other securities Laws to the extent applicable.
Buyer (either alone or together with its advisors) has sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of its investment in the Target Company Interests and is capable of bearing the economic
risks of such investment. For the avoidance of doubt, the disposition of Buyer’s property shall at all times remain within the sole
control of Buyer.

 

    16 

     

    

 

4.6             
Sandbagging. The Parties agree and acknowledge that no review by Buyer shall affect the representations and warranties made
by Seller Members, Sellers or the Target Company pursuant to this Agreement or the right to indemnification, payment of Losses, or any
other remedy of Buyer for breaches of those representations and warranties. The waiver of any condition based on the accuracy of any representation
or warranty, or on the performance of or compliance with any covenant or agreement, will not affect the right to indemnification, payment
of Losses, or any other remedy based on any such representation, warranty, covenant or agreement.

 

4.7             
 Brokers and Finders. Neither Buyer nor any of its Affiliates has paid or become obligated to pay any fees or commissions
to any broker, finder, agent, Person or firm in connection with the Transaction or in connection with the negotiation thereof.

 

4.8             
Sufficiency of Funds. Buyer currently has, and will have as of the Closing, sufficient cash on hand of immediately available
funds to make the payment of the Estimated Purchase Price and consummate the Transaction.

 

		5.	COVENANTS

 

5.1             
Interim Operations of the Target Company. Except with the prior written consent of Buyer (which shall not be unreasonably
withheld, conditioned or delayed), as specifically contemplated by this Agreement or as set forth in Annex C, the Target Company
and Seller Members agree that, during the period commencing on the date of this Agreement and ending on the earlier to occur of (i) the
Closing Date or (ii) the termination of this Agreement in accordance with Article 7:

 

(a)           
The Business shall be conducted in the ordinary course of business and Sellers shall use commercially reasonable efforts to preserve
intact the present business organization of the Target Company, keep available the services of their current officers and employees and
preserve satisfactory relationships with customers, suppliers, distributors and others having business dealings with them; and

 

(b)           
The Target Company shall not do any of the following:

 

(i)               
except in the ordinary course of business, increase or decrease the compensation (including wages, salaries, bonuses or any other
remuneration) payable or to become payable to any employee of the Target Company, or change, establish, adopt, entered into, amend or
terminate any insurance, pension, retirement, profit sharing, employee benefit, collective bargaining, thrift, compensation or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employees, nor paid any commission or bonus
to any of such officers, key employees or agents, including, for the avoidance of doubt, any arrangement whereby any director, officer
or employee is or becomes entitled to severance payments for any reason;

 

(ii)             
make any material change in its sales, credit or collection terms and conditions or write off as uncollectible any notes or accounts
receivable;

 

(iii)            (1)
incur any Liability or assume, guarantee, endorse, modify or otherwise become responsible for the Liabilities of any other Person or
entity (whether absolute, accrued, contingent or otherwise), except normal trade or business obligations incur in the ordinary
course of business; (2) discharge or satisfy any Lien or pay any Liability, other than in the ordinary course of business; (3)
mortgage, pledge, create or subject to Lien any of its existing assets or properties; (4) sell, assign, transfer, lease, license,
amend, terminate, release, waive or otherwise dispose of any of its existing tangible or intangible assets or properties, except
sales of inventory in the ordinary course of business, or acquire any tangible or intangible assets, properties or interest therein,
except in the ordinary course of business; (5) amend, terminate, waive or release any rights or cancel any debt owing to or claim by
the Target Company; or (6) enter into, become subject to, modify, change or terminate in any material respect any Material Contracts
or real property lease;

 

    17 

     

    

 

(iv)           
acquire any business, line of business or Person by merger or consolidation, purchase of substantial assets or equity interests,
or by any other manner, in a single transaction or a series of related transactions, or enter into any Contract, letter of intent or similar
arrangement (whether or not enforceable) with respect to the foregoing;

 

(v)             
permit any insurance policy naming it as a beneficiary or a loss payable payee to be canceled, terminated or modified or any of
the coverage thereunder to lapse;

 

(vi)            
maintain their books, accounts and records in any manner other than in the usual, regular and ordinary manner, on a basis consistent
with prior years;

 

(vii)           
make any Tax election, prepare any material return in a manner which is inconsistent with the past practices with respect to the
treatment of items on such Tax Returns, incur any liability for Taxes other than in the ordinary course of business, or file an amended
Tax Return or a claim for a tax refund with respect to the income, operations or property of the Target Company;

 

(viii)         
make any commitment to make any capital expenditures or enter into any operating lease in excess of Twenty-Five Thousand Dollars
($25,000.00) individually or Sixty-Five Thousand Dollars ($65,000.00) in the aggregate or enter into any Contract, letter of intent or
similar arrangement (whether or not enforceable) with respect to the foregoing;

 

(ix)            
write-off as uncollectible any notes or accounts receivable, except write-offs in the ordinary course of business consistent with
past practice charged to applicable reserves;

 

(x)              
pay, discharge, settled or satisfy any actions, Liabilities, payments, discharges, settlements or satisfactions in the ordinary
course of business and consistent with past practice of Liabilities reflected or reserved against in the Financial Statements;

 

(xi)            
plan, announce, implement or effect any reduction in force, lay-off, early retirement program, severance program or other program
or effort concerning the termination of employment of employees of the Target Company (other than routine employee terminations for cause);

 

(xii)          
form any subsidiary; or

 

(xiii)          
make any change in any method of accounting or auditing practice.

 

    18 

     

    

 

5.2             
 Access to Information.

 

(a)           
During the period from the date hereof to the earlier of the Closing Date or the date that this Agreement is terminated in accordance
with its terms, the Target Company shall, and shall cause each of its personnel to, grant or cause to be granted to Buyer and its Representatives
reasonable access, on reasonable advance written notice and during normal business hours, to the personnel, properties, books, and records
of the Target Company. Buyer and its Representatives shall use their commercially reasonable efforts to minimize any disruption to the
business of the Target Company.

 

(b)           
After the Closing, each Party shall afford the other Party and its counsel, accountants and other Representatives, during normal
business hours, upon reasonable notice, upon receipt of a written request and at the requesting Party’s sole cost and expense, reasonable
access to the books, records and other information in such Party’s possession or control relating to the assets, Liabilities or
operations of the Target Company with respect to periods prior to the Closing in existence on the Closing Date, and the right to make
copies and extracts therefrom at its expense, to the extent such access is reasonably required by the requesting Party for any proper
business purpose. Without limitation, after the Closing, each Party shall make available to the other Party and its counsel, accountants
and other Representatives, during normal business hours, upon reasonable notice, upon receipt of a written request and at the requesting
Party’s sole cost and expense, and to any Tax authority that is legally permitted to receive the following pursuant to its subpoena
power or the equivalent, the books, records and other information relating to Tax Liabilities or potential Tax Liabilities for all periods
prior to or including the Closing Date in existence on the Closing Date and shall preserve all such books, records and other information
for a period of five (5) years after the Closing Date, to the extent such access is reasonably required by the requesting Party for assessment
or refund of Taxes or extensions thereof. Subject to the previous sentence, for a period of five (5) years after the Closing Date, Buyer
shall and shall direct the Target Company to retain all of the books, records or other information described in this Section 5.2
in existence on the Closing Date for a period of five (5) years after the Closing Date. While the existence of an adversarial proceeding
between the Parties in litigation or arbitration will not abrogate or suspend the provisions of this Section 5.2, as to such records
or other information directly pertinent to such dispute, the Parties may not utilize this Section 5.2 but rather, absent agreement,
must utilize the applicable rules of discovery.

 

5.3             
Exclusivity. During the period from the date hereof to the earlier of the Closing Date and the date that this Agreement
is terminated in accordance with its terms, Sellers and the Target Company shall, and shall cause their respective officers, managers,
directors, employees and Representatives to, cease and terminate immediately all solicitations, initiations, encouragements, activities,
discussions and/or negotiations with any Person conducted prior to the date hereof with respect to any proposed, potential or contemplated
Alternative Transaction. In addition, during such period, Sellers and the Target Company shall not, and shall cause their respective officers,
managers, directors, employees and Representatives not to, directly or indirectly, (a) solicit, initiate or intentionally encourage the
submission of any proposal or indication of interest relating to an Alternative Transaction, (b) participate in any discussions or negotiations
regarding, or furnish to any Person any information with respect to any Alternative Transaction, or (c) authorize, engage in or enter
into any agreement or understanding with respect to any Alternative Transaction.

 

5.4             
 Restrictions on Share Transfers. Each Seller hereby agrees not to transfer, assign or pledge, directly or indirectly, by
operation of law or otherwise, any of his or her Target Company Interests (other than the sale of such Target Company Interests pursuant
to this Agreement) during the period from the date hereof through and including the earlier of (a) the Closing and (b) date of termination
of this Agreement in accordance with its terms. Any such attempted transfer, assignment or pledge during such period will not be effective
and the Sellers shall cause the Target Company not to record such transfer, assignment or pledge in the stock and option transfer records
of the Target Company.

 

    19 

     

    

 

5.5             
Tax Matters. From and after the Closing:

 

(a)           
Tax Indemnification. Without duplication of the indemnification obligations set forth in Section 8.2(a) and
subject to the limitations in Section 8.5, Seller Members shall, severally and not jointly in accordance with their Pro Rata
Portion, indemnify and hold harmless the Target Companies and Buyer from and against all Losses from all Pre-Closing Taxes.

 

(b)           
Straddle Period. For all purposes of this Agreement, in the case of any Tax period that includes, but does not end on, the
Closing Date (each, a “Straddle Period”), the amount of any Taxes of the Target Company allocated to the Pre-Closing
Tax Period based upon, or measured by, net or gross income or gain or payment or receipts or that are triggered by the occurrence of activities
or events will be determined based on an interim closing of the books as of the close of business on the Closing Date; provided,
that exemptions, allowances or deductions that are calculated on an annual or periodic basis (such as deductions for depreciation and
real estate Taxes) will be apportioned between such periods on a daily basis. The amount of any other Taxes of the Target Company allocated
to the Pre-Closing Tax Period in the case of a Straddle Period will be deemed to be the amount of such Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator
of which is the number of days in such Straddle Period.

 

(c)           
Section 338(h)(10) Election. At the election of Buyer, each Seller Member and each Seller shall join with Buyer in making
an election under Code Section 338(h)(10) (and any corresponding election under state and local tax Law) with respect to the purchase
and sale of the Target Shares hereunder (collectively, a “Section 338(h)(10) Election”). Should Buyer elect
to make a Section 338(h)(10) Election, Buyer will increase the Final Purchase Price by an amount such that each Seller and each Seller
Member receives and retains, on an after tax basis, the same amount that it would have received and retained had a Section 338(h)(10)
Election not been made (such increase, the “Section 338(h)(10) Adjustment”). Buyer, Sellers and Seller Members
shall cooperate fully with each other in the making of any such election. Any Section 338(h)(10) Adjustment will be treated as an adjustment
to the Final Purchase Price by the parties for Tax purposes.

 

(d)            Filing
of Returns. Sellers’ Representative shall prepare or cause to be prepared all Tax Returns of the Target Company for all
Pre-Closing Tax Periods at the expense of the Target Company. Sellers shall submit each such Tax Return to Buyer for review and
comment as promptly as practicable but in any event at least 45 days prior to the due date for the filing of such Tax Return,
including applicable extensions. Buyer shall cause the appropriate officer of the Target Company to sign and file such Tax Return
(or any amendment to such Tax Return), unless Buyer determines in good faith that such Tax Return does not have sufficient legal
support to avoid the imposition of penalties, fines or similar amounts. Except as required by applicable Law, the Target Company
shall not file any amendment to any Tax Return for any Pre-Closing Tax Periods without the express written consent of Sellers’
Representative. Sellers may retain such certified public accountants as it chooses for purposes of preparing Tax Returns for
Pre-Closing Tax Periods required under this Section 5.5(d), and the reasonable expenses of preparing such Tax Returns
shall be paid by the Target Company.

 

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(e)           
Tax Proceedings. If an audit, investigation or similar proceeding with respect to Tax matters shall be commenced, or a claim
shall be made, by any Tax authority, with respect to Pre-Closing Taxes, Buyer shall, or shall cause the Target Company to, promptly notify
Sellers’ Representative in writing of such audit, investigation or similar proceeding or claim (a “Tax Proceeding”);
provided, however, that failure to give such notice shall not affect Sellers’ indemnification obligations unless such failure
prevents Sellers’ Representative from taking meaningful control of such Tax Proceeding or Sellers are materially prejudiced by such
failure. Sellers’ Representative shall have the primary right to contest such Tax Proceeding (at Sellers’ expense) and shall
have discretion and authority to pay, settle or compromise any such Tax Proceeding (including selection of counsel, the pursuit or waiver
of any administrative proceeding or the right to pay the Tax and sue for a refund or contest the Tax Proceeding in any permissible manner);
provided, however, that (i) Buyer (or its advisors) may fully participate at Buyer’s sole expense in the Tax Proceeding,
and (ii) Sellers’ Representative shall not settle any Tax Proceeding in a manner that could reasonably be expected to materially
adversely affect Buyer or the Target Company or any of their Affiliates after the Closing Date without the prior written consent of Buyer
(which consent shall not be unreasonably withheld, conditioned or delayed). The Target Company shall provide duly completed powers of
attorney and authorization forms to permit the foregoing. Sellers’ Representative shall keep Buyer timely informed with respect
to the commencement, status and nature of any Tax Proceeding. Upon the conclusion of any Tax Proceeding in accordance with the foregoing,
whether by way of settlement or otherwise, Buyer shall cause the Target Company and an appropriate officer of the Target Company to execute
any and all agreements, instruments or other documents that are necessary or appropriate to conclude such Tax Proceeding. This Section
5.5(e) and not Section 8.6 shall control any Tax Proceeding.

 

(f)             Cooperation
on Tax Matters. The Parties shall cooperate fully, as and to the extent reasonably requested by any other Party, in connection
with the preparation and filing of Tax Returns pursuant to this Section 5.5 and any audit, appeal, hearing, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon another Party’s reasonable
request) the provision of records and information that are reasonably relevant to any such audit, appeal, hearing, litigation or
other proceeding and making employees available during normal business hours and on a mutually convenient basis to provide
additional information, testimony and explanation of any material provided hereunder. Such cooperation shall also include Buyer
causing the Target Company, at Buyer’s sole cost and expense, to prepare all such information, schedules and worksheets that,
consistent in time and manner with past practice, are requested in writing by Sellers’ Representative for the preparation of
Tax Returns to be prepared by Sellers’ Representative pursuant to this Section 5.5. The Parties shall (i) retain all
books and records with respect to Tax Proceedings pertinent to the Target Company or Sellers relating to any Pre-Closing Tax Period
until the expiration of the applicable statute of limitations (and, to the extent notified by Buyer or Sellers’
Representative, any extensions thereof) of the respective taxable periods, and abide by all record retention agreements entered into
with any taxing authority, and (ii) give Sellers’ Representative or Buyer, as the case may be, reasonable written notice prior
to transferring, destroying or discarding any such books and records and, if Sellers’ Representative or Buyer so requests, the
Target Company or Sellers, as the case may be, shall allow the other Party to take possession of such books and records.

 

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(g)           Notwithstanding
anything in this Agreement to the contrary, the provisions of Section 2.7 and this Section 5.5 shall survive
for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation, or extension thereof) plus ninety
(90) days.

 

5.6             Confidentiality.
Each of the Seller Members and the Sellers acknowledges that it is in possession of Confidential Information concerning the Target Company
and the Business. Each Seller shall, and shall cause their respective Affiliates and Representatives to, treat confidentially and not
disclose all or any portion of such Confidential Information and will use such Confidential Information solely for the purpose of consummating
the Transaction and for no other purpose. Each of the Seller Members and the Sellers acknowledges and agrees that such Confidential Information
is proprietary and confidential in nature and may be disclosed to its Representatives only to the extent necessary for Sellers to consummate
the Transaction (it being understood that Sellers shall be severally responsible for any disclosure by any such Representative not permitted
by this Agreement). Each of the Seller Members and the Sellers and their respective Affiliates and Representatives may disclose Confidential
Information only for purposes of (a) compliance with any agreement between such Seller or Seller Member or any of their respective Affiliates,
on the one hand, and Buyer or any of its Affiliates, on the other hand, and (b) compliance with any reasonable request by Buyer or any
of its Affiliates; and (c) compliance with any applicable Law or Order, or (d) in connection with a dispute or any Tax Proceeding regarding,
the amount of any Tax imposed on such Seller or Seller Member, as applicable, or the preparation of any Tax Return related to any such
Tax; provided, that with respect to any request for disclosure made pursuant to clauses (c) and (d) above, such Seller or Seller
Member, as applicable, has used its commercially reasonable efforts to avoid such disclosure and after promptly advising and consulting
with Buyer about such Seller’s or Seller Member’s, as applicable, intention to make, and the proposed contents of, such disclosure
and such Seller or Seller Member, as applicable, shall, or shall cause such Affiliate or Representative, to provide Buyer with prompt
written notice of such request so that Buyer may seek an appropriate protective order or other appropriate remedy. At any time that such
protective order or remedy has not been obtained, such Seller, Seller Member or such Affiliate or Representative may disclose only that
portion of the Confidential Information which such Person is legally required to disclose or of which disclosure is required to avoid
sanction for contempt or any similar sanction, and each Seller and each Seller Member shall exercise their respective commercially reasonable
efforts to obtain assurance that confidential treatment will be accorded to such Confidential Information so disclosed. Each Seller and
each Seller Member further agrees that such Seller and such Seller Member, as applicable, and their respective Affiliates and Representatives,
upon the request of Buyer or the Target Company, promptly will deliver to Buyer or the Target Company all documents, or other tangible
embodiments, constituting Confidential Information or other information with respect to the Target Company, without retaining any copy
thereof, and shall promptly destroy all other information and documents constituting or containing Confidential Information.

 

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5.7             Resignation
of Directors and Officers. At the written request of Buyer (which request shall be delivered at least three (3) Business Days prior
to the Closing), the Target Company shall cause any so requested officer and member of the management committees of the Target Company
to tender his/her resignation from such position effective immediately prior to the Closing Date and in the event any such individual
does not tender his/her resignation, the Target Company shall take such actions necessary to remove such individuals from such positions.

 

5.8             Further
Assurances. From time to time after the Closing Date, upon the request of any other Party and without further consideration, each
Party shall execute and deliver to the requesting Party such documents and take such action as the requesting Party reasonably requests
to consummate more effectively the intent and purposes of the Parties under this Agreement and the Transaction.

 

5.9             Budgets. Subject to Buyer’s obligations under Section 1.5(g), from time to time after the Closing Date, Buyer
and Seller Members shall collaborate in good faith to establish budgets for the operation of the Business of the Target Companies that
are proportionate with the revenue being serviced by the Target Companies, including, without limitation, employment budgets. The Parties
agree that: (a) the operating budget for the remainder of the calendar 2021 year following the Closing Date will be based on the current
monthly selling, general and administrative expenses set forth in the Financial Statements, provided that Seller Members will have the
ability to increase this budget by up to 10% at their discretion or as otherwise mutually agreed to by Buyer and Seller Members, (b) the
operating budgets for calendar year 2022 and 2023 shall be equal to or exceed the full year operating budget for 2021, set forth in the
Financial Statements and (c) throughout the remainder of 2021 and the duration of the Earn-Out Period, Sellers shall have sole discretion
to maintain the employment or engagement of all employees, independent contractors or consultants listed in Section 2.14 of
the Target Company Disclosure Letter, so long as such salaries and fees do not increase as a percentage of the Target Companies’
annual revenues. Notwithstanding anything to the contrary, all budgets, rights, and obligations set forth in this Section 5.9
are conditioned on, and subject to, compliance with securities laws and regulations and all policies and procedures of the Target Company,
in effect now or in the future, including without limitation any policies related to insider trading, Regulation FD disclosure, related
party transactions, Sarbanes-Oxley Act compliance, and related policies and procedures.

 

5.10           Employees; Benefit Plans; Equity Awards.

 

(a)           Subject
to Section 5.8, during the period commencing at the Closing and throughout the Earn-Out Period, Buyer shall provide each
of the Target Companies’ employees specified in Annex G (the “Specified Employees”), as long as
such Specified Employee is employed by Buyer, with compensation at least equal to the amount provided by the Target Companies to such
Specified Employee as of the date of this Agreement (provided such Specified Employee has substantially similar duties and responsibilities
and is of the same status (i.e., full-time or part-time) after the Closing Date as immediately prior to the date of this Agreement).

 

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(b)           After
Closing, all Specified Employees (as long as they remain employed by Buyer) will be provided with employee benefits subject to the Buyer’s
benefit plans which are provided generally to employees as Buyer.

 

(c)           After
Closing, Buyer shall grant a one-time equity award to each Specified Employee (other than the Seller Members), in an amount equal to
twenty percent (20%) of the amount of such Specified Employee’s compensation earned during the 12-month period preceding the date
of this Agreement, pursuant to an award agreement under the Blade Air Mobility, Inc. 2021 Omnibus Incentive Plan.

 

(d)           After
Closing, Buyer shall set aside $250,000.00 to be paid to certain employees of the Target Company as mutually agreed between Buyer and
Sellers’ Representative.

 

5.11           Employee
Severance Packages. During the period commencing on the conclusion of the Earn-Out Period and for twelve (12) months thereafter,
in the event the position of any employee listed on Annex H attached hereto (the “Key Employees”) is
eliminated by Buyer or such employee’s employment is otherwise terminated by Buyer, without Cause, such employee shall be entitled
to a severance payment in an amount not less than six (6) months of such employee’s monthly salary at the time of termination.

 

		6.	CLOSING CONDITIONS

 

6.1             Buyer’s
Conditions to Closing. The obligation of Buyer to consummate the Transaction is subject to fulfillment at or prior to the Closing
of the following conditions, any one or more of which may be waived in writing by Buyer:

 

(a)           Representations
and Warranties. (i) The representations and warranties of Sellers, Seller Members and the Target Companies in Section 2.4
and Section 3.2 shall be true and correct on the Closing Date as though made on and as of the Closing Date, and (ii)
all other representations and warranties of Sellers, Seller Members and the Target Companies in Article 2 and Article 3
shall be true and correct (without giving effect to any “material”, “materially”, “materiality”,
 “material adverse effect”, “material adverse change” or similar qualifiers contained in any of such representations
and warranties other than those contained in Section 2.6, 2.7 or 2.13) in all material respects as of
the Closing Date as if made at and as of such time (other than those representations and warranties made as of a specified date, which
such representations and warranties shall be true and correct in all respects as of such specified date).

 

(b)           Compliance
with Agreements. Each of the Sellers, Seller Members and the Target Company shall have performed in all material respects with all
terms, agreements, and covenants required under this Agreement to be performed by such Seller and the Target Company prior to the Closing.

 

(c)            Absence
of Certain Changes. During the period from the date of this Agreement until the Closing, no event has occurred that has had, or could
reasonably be expected to have, a material adverse effect on the condition (financial or otherwise), operations or results of operations
of the Target Company, taken as a whole.

 

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(d)           Closing Deliverables. Sellers’ Representative shall have delivered or caused to be delivered to Buyer the items listed
in Section 9.2.

 

6.2             Sellers’
Conditions to Closing. The obligation of Sellers to consummate the Transactions is subject to fulfillment at or prior to the Closing
of the following conditions, any one or more of which may be waived in writing by Sellers’ Representative:

 

(a)           Representations
and Warranties. The representations and warranties of Buyer in Article 4 shall be true and correct in all material respects
at and as of the Closing Date as if made at and as of such time.

 

(b)          Compliance
with Agreements. Buyer shall have performed in all material respects with all terms, agreements, and covenants required under this
Agreement to be performed by Buyer prior to the Closing.

 

(c)            Closing
Deliverables. Buyer shall have delivered or caused to be delivered to Sellers’ Representative the items listed in Section 9.3.

 

6.3             Mutual
Closing Conditions.

 

(a)           No
Government Body shall have issued, enacted, entered, promulgated or enforced any Law or Order (that has not been vacated, withdrawn or
overturned) restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement.

 

(b)           
No action or proceedings shall have been instituted, threatened against Buyer before a court or other Government Body to restrain
or prohibit materially delay or invalidate any of the transactions contemplated hereby.

 

		7.	TERMINATION

 

7.1             Termination.
This Agreement may be terminated and the transactions contemplated hereby may be abandoned, at any time prior to the Closing:

 

(a)           by
mutual written consent of Sellers’ Representative and Buyer;

 

(b)           by
either Sellers’ Representative or Buyer, if:

 

(i)            any
court or other Government Body shall have issued, enacted, entered, promulgated or enforced any Law or Order (that is final and non appealable
and that has not been vacated, withdrawn or overturned) restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement; or

 

(ii)            the Closing Date shall not have occurred on or prior to October 31, 2021 (the “End Date”); provided,
that neither party may terminate this Agreement pursuant to this Section 7.1(b)(ii) if such party is in material breach of
this Agreement;

 

(c)            by
Sellers’ Representative, if: (i) any of the representations and warranties of Buyer contained in Article 4 shall fail
to be true and correct or (ii) there shall be a breach by Buyer of any covenant or agreement of Buyer in this Agreement that, in either
case, (A) would result in the failure of a condition set forth in Section 6.2(a) or Section 6.2(b) and (B) which
is not curable or, if curable, is not cured upon the occurrence of the earlier of (1) the thirtieth (30th) day after written notice thereof
is given by Sellers’ Representative to Buyer and (2) the day that is five (5) Business Days prior to the End Date; provided that
Sellers’ Representative may not terminate this Agreement pursuant to this Section 7.1(c) if Seller is in material breach
of this Agreement;

 

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(d)           by
Buyer, if: (i) any of the representations and warranties of Seller contained in Article 3 shall fail to be true and correct, or
(ii) there shall be a breach by Seller of any covenant or agreement of Seller in this Agreement that, in either case, (A) would result
in the failure of a condition set forth in Section 6.1(a) or Section 6.1(b) and (B) which is not curable or,
if curable, is not cured upon the occurrence of the earlier of (1) the thirtieth (30th) day after written notice thereof is given by
Buyer to Sellers’ Representative and (2) the day that is five (5) Business Days prior to the End Date; provided, that Buyer
may not terminate this Agreement pursuant to this Section 7.1(d) if Buyer is in material breach of this Agreement; or

 

(e)           by
Buyer if there has been any event, development, state of facts, occurrence or change (or any series of events, developments, state of
facts, occurrences or changes) that has had or which would reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect; provided, that Buyer may not terminate this Agreement pursuant to this Section 7.1(e) if Buyer is
in material breach of this Agreement.

 

		8.	INDEMNIFICATION

 

8.1             Survival.
The representations and warranties of the Parties contained in this Agreement shall survive the Closing for a period of twelve (12) months
after the Closing Date; provided that (a) the representations and warranties contained in Sections 2.1 (Due Organization
and Power), 2.2 (Authority), 2.4 (Capitalization), 2.17 (Brokers and Finders), 3.1 (Legal Capacity), 3.2
(Ownership of Target Company Interests), 3.5 (Brokers and Finders), 4.1 (Due Organization and Power), 4.2 (Authority)
and 4.7 (Brokers and Finders) (each, a “Fundamental Representation”), shall survive indefinitely, and
(b) the representations and warranties contained in Section 2.7 (Tax Matters), and Section 2.10 (Environmental
Matters), Section 2.14 (Labor Matters) and Section 2.15 (Employee Benefit Plans) shall survive the Closing until
sixty (60) days following the expiration of the applicable statute of limitations (including any extensions thereof), in each case, unless
and then only to the extent that non-compliance with such representations and warranties is waived in writing by the Party for whose
benefit such representations and warranties are being made. All of the covenants contained in this Agreement that by their nature are
required to be performed prior to or at the Closing shall survive the Closing for a period of twelve (12) months after the Closing. All
of the covenants and agreements contained in this Agreement that by their nature are required to be performed after the Closing shall
survive the Closing until fully performed or fulfilled, unless and then only to the extent that non-compliance with such covenants or
agreements is waived in writing by the Party entitled to such performance. Any breach or inaccuracy of any covenant, agreement, representation
or warranty in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding three sentences until such claim is resolved if notice of the breach or inaccuracy thereof giving rise to such
right of indemnity shall have been given to the Party against whom such indemnity or other relief may be sought prior to such time and
such notice satisfies the requirements for an Indemnification Notice set forth in Section 8.5 in all material respects. With
respect to any claim that any Party may have against any other Party that is permitted pursuant to the terms of this Agreement, the survival
periods set forth in this Section 8.1 shall govern when any such claim may be brought and shall replace and supersede any
statute of limitations that may otherwise be applicable.

 

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8.2             Indemnification
by Seller Members. Following Closing, and subject to the terms and conditions of this Article 8, (a) Seller Members, jointly
and severally, shall indemnify, defend and hold harmless Buyer, its Affiliates, and their respective directors, officers and employees
(collectively, the “Buyer Indemnitees”), from and against all Losses asserted against, incurred, suffered or
paid, directly or indirectly, by any Buyer Indemnitee by reason of, relating to or resulting from any (i) breach or inaccuracy of the
representations and warranties of the Target Companies set forth in this Agreement (whether or not contained in Article 2)
or in any schedule, exhibit or certificate delivered pursuant to this Agreement (other than the representations and warranties contained
in Section 2.7, which are addressed in Section 5.5) to be true and correct in all respects (without giving effect
to any “material,” “materially,” “materiality,” “material adverse effect,” “material
adverse change” or similar qualification contained in any such representation or warranty other than those contained in Section 2.5
and Section 2.13), (ii) breach of the covenants or agreements of the Target Companies, Seller Members or Sellers in this Agreement
or (iii) Target Company Transaction Expenses or Indebtedness (to the extent not a reduction to the Final Purchase Price), and (b) each
Seller Member, severally, shall indemnify and hold harmless the Buyer Indemnitees from and against all Losses asserted against or incurred
by any Buyer Indemnitee by reason of, relating to or resulting from any (i) breach or inaccuracy of the representations and warranties
of such Seller or its Seller Member set forth in Article 3 or (ii) breach of the covenants of such Seller or its Seller Member
set forth in this Agreement.

 

8.3             Indemnification
by Buyer. Subject to the terms and conditions of this Article 8, Buyer shall indemnify and hold harmless Sellers and
their respective Affiliates and their respective directors, officers and employees (collectively, the “Seller Indemnitees”)
from and against all Losses asserted against or incurred by any such Person by reason of or resulting from (a) any breach of the representations
and warranties of Buyer set forth in this Agreement (whether or not contained in Article 4) or in any schedule, exhibit or certificate
delivered pursuant to this Agreement to be true and correct in all respects (without giving effect to any “material,” “materially,”
 “materiality,” “material adverse effect,” “material adverse change” or similar qualification contained
in any such representation or warranty); (b) any breach of the covenants or agreements of Buyer set forth in this Agreement; or (c) any
additional tax liability resulting from the Sellers’ 338(h)(10) Election, in excess of 338(h)(10) Adjustment, incurred by Sellers
or any Seller Member resulting from a dispute or investigation by the applicable taxing authority.

 

8.4             Limitations.
Seller Members’ obligations under Section 8.2 shall be subject to the following limitations:

 

(a)            none
of Seller Members shall have any liability for Losses under Section 8.2(a)(i) or Section 8.2(b)(i) for any individual item,
or group of items arising out of the same condition or circumstance, where the Losses related thereto for which Seller Members would
otherwise be required to provide indemnification are less than $200,000.00 (“Threshold”). After such Losses
exceed the Threshold, Seller Members will be liable for the portion of such Losses in excess of $100,000.00 (the “Deductible”),
and no Losses related thereto shall be aggregated for purposes of Section 8.4(b); provided, however, that the limitation
set forth in this Section 8.4(a) shall not apply to any claim brought for breach of a Fundamental Representation;

 

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(b)           Seller
Members shall not have any liability for Losses under Section 8.2(a)(i) or Section 8.2(b)(i) to the extent the aggregate
amount of Losses related thereto for which Seller Members would otherwise be required to provide indemnification exceeds on a cumulative
basis the Escrow Amount; provided, however, that the limitation set forth in this Section 8.4(b) shall not apply to any
claim brought for breach of a Seller Fundamental Representation;

 

(c)           Seller
Members shall not have any liability for Losses under Section 8.2(a)(i) or Section 8.2(b)(i) to the extent such Loss
is taken into account when calculating the Closing Net Working Capital as finally determined under Section 1.4 and the full
amount of such Losses were included in such calculation (and resulted in a dollar-for-dollar reduction in the Final Purchase Price),
and no such Losses shall be aggregated for purposes of Section 8.4(b);

 

(d)           the
obligation of Seller Members to indemnify the Buyer Indemnitees against any Losses under Section 8.2 shall be reduced by the amount
of insurance proceeds, cash receipts or other sources of reimbursement receivable by the Buyer Indemnitees from Third Parties, including
Third Party insurers, with respect to such Losses or the underlying reasons therefor; and

 

(e)           in
addition to all other limitations set forth in this Section 8.3, the amount of all indemnification payments required to be
made by any Seller Member pursuant to Section 8.2 or this Article 8 in connection with the breach of any Fundamental Representation
shall not, individually or in the aggregate, exceed the portion of the Final Purchase Price paid or payable to such Seller Member’s
Seller pursuant to Section 1.4 and, further, the recourse of the Buyer Indemnitees under Section 8.2 in respect of the
Fundamental Representations shall, first, be solely and strictly limited to recovery against amounts in the Escrow Amount, and, secondly
if such amounts in the Escrow Account are extinguished or no longer available for distribution, then the Buyer Indemnitees may seek recourse
from such Seller Member, in all cases subject to the limits set forth in this Section 8.4(e).

 

(f)             The
Escrow Account and the indemnities described in this Article 8 shall be Buyer Indemnitees’ sole and exclusive remedies against
any Seller Member to satisfy the indemnification obligations set forth in Section 5.5(a) or Section 8.2.

 

8.5             Procedures
Relating to Indemnification among Sellers and Buyer.

 

(a)            Following
the discovery of any facts or conditions that could reasonably be expected to give rise to a Loss or Losses for which indemnification
under this Article 8 can be obtained, the Party that may seek indemnification under this Article 8 (the “Indemnitee”)
shall, provide written notice to the Party from whom indemnification may be sought (the “Indemnitor”) setting
forth the specific facts and circumstances, in reasonable detail (to the extent known at such time), relating to such Loss or Losses,
the amount of Loss or Losses (or a non-binding, reasonable estimate thereof if the actual amount is not known or not capable of reasonable
calculation) and the specific Section(s) of this Agreement upon which the Indemnitor may rely in seeking such indemnification (an “Indemnification
Notice”). An Indemnitee’s failure to provide an Indemnification Notice shall not relieve the Indemnitor from its
indemnification obligations with respect to the subject of the Indemnification Notice except to the extent the Indemnitee is actually,
materially and adversely prejudiced thereby and in such case, only to the extent of such prejudice. The Parties expressly intend that
the remedies provided for in this Article 8 shall apply to direct claims between the parties hereto for breach of this Agreement
(whether or not involving a Third Party).

 

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(b)           In
the event that the Indemnitee shall object to the indemnification of an Indemnitee in respect of any claim or claims specified in any
Indemnification Notice (other than a Third Party Claim, which is addressed in Section 8.6), the Indemnitee shall, within
thirty (30) days after receipt by the Indemnitee of such Indemnification Notice, deliver to the Indemnitor a notice to such effect, specifying
in reasonable detail the basis for such objection, and the Indemnitee and the Indemnitor shall, within the sixty (60) day period beginning
on the date of receipt by the Indemnitor of such objection and prior to submitting such dispute to the courts set forth in Section 10.6,
attempt in good faith to agree upon the rights of the respective parties with respect to each of such claims to which the Indemnitee
shall have so objected. If the Indemnitor and the Indemnitee shall succeed in reaching agreement on their respective rights with respect
to any of such claims, the Indemnitor and the Indemnitee shall promptly prepare and sign a memorandum of agreement setting forth such
agreement. Should the Indemnitor and the Indemnitee be unable to agree as to any particular item or items or amount or amounts within
such time period, then the Indemnitor shall be permitted to submit such dispute to the courts set forth in Section 10.6.
The party that prevails in such dispute shall be entitled to reimbursement from the other party for all reasonable attorney and consultant
fees or expenses incurred by the prevailing party.

 

(c)            Claims
for Losses specified in any Indemnification Notice to which an Indemnitor shall not object in writing within thirty (30) days of receipt
of such Indemnification Notice (other than a Third Party Claim, which is addressed in Section 8.6), claims for Losses covered
by a memorandum of agreement of the nature described in Section 8.5(b), and claims for Losses the validity and amount of which
have been the subject of judicial determination as described in Section 8.5(b) and 10.6 hereof or shall have been settled as described
in Section 8.6, are hereinafter referred to, collectively, as “Agreed Claims.” Within ten (10) Business
Days of the determination of the amount of any Agreed Claim (or at such other time as the Indemnitor and the Indemnitee shall agree),
the Indemnitee shall pay to the Indemnitor (except in the case where a payment has been already effected pursuant to the Escrow Agreement)
an amount equal to the Agreed Claim by wire transfer in immediately available funds to the bank account or accounts designated by the
Indemnitor in a notice to the Indemnitee not less than two (2) Business Days prior to such payment.

 

(d)           Under all circumstances, Sellers and the Seller Indemnitees shall act solely through Sellers’ Representative and Sellers’
Representative’s determination with respect to all matters under this Article 8 (including a determination as to whether
to seek indemnity or not) shall be final and binding on each Seller Indemnitee.

 

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8.6             Procedures Relating to Indemnification for Third Party Claims.

 

(a)            Notice. For an Indemnitee to be entitled to any indemnification provided for under this Agreement arising out of or involving
a claim or demand made by any Third Party, including any Government Body (a “Third Party Claim”), the Indemnitee
shall provide an Indemnification Notice to the Indemnitor relating to the Third Party Claim as soon as possible after the Indemnitee’s
receipt of notice of the Third Party Claim. Thereafter, the Indemnitee shall promptly deliver to the Indemnitor copies of all notices
and documents, including all court papers, received by the Indemnitee relating to the Third Party Claim. An Indemnitee’s failure
to provide an Indemnification Notice shall not relieve the Indemnitor from its indemnification obligations with respect to the subject
of the Indemnification Notice, except to the extent the Indemnitor is actually, materially and adversely prejudiced thereby and in such
case, only to the extent of such prejudice.

 

(b)            Defense.
If a Third Party Claim is made against an Indemnitee, then the Indemnitor shall be entitled to participate in the defense of the Third
Party Claim and, if the Indemnitor so chooses, to assume the defense of the Third Party Claim by providing written notice within ten
(10) days of receipt of an Indemnification Notice to the Indemnitor, and such written notice to assume the defense of any claim shall
include a certification that the Indemnitor will indemnify the Indemnitee from and against the entirety of any Losses the Indemnitee
may suffer resulting from, arising out of, relating to, in the nature of or caused by such claim; provided, that the Indemnitor
shall not be entitled to assume the defense (or continue the defense) (i) unless such claim involves only money damages and does not
seek an injunction or other equitable relief, (ii) if such claim relates to or arises in connection with a criminal or quasi criminal
proceeding, action, indictment, allegation or investigation, (iii) if the settlement of, or an adverse judgment with respect to, such
claim is, in the good faith judgment of the Indemnitee, likely to establish a precedent, custom or practice materially adverse to the
continuing business interests of the Indemnitee or the Indemnitee has been advised in writing by counsel that a reasonable likelihood
exists of a some other conflict of interest between the Indemnitee and the Indemnitor, (iv) such Third Party Claim may give rise to Losses
which are more than the remaining Escrow Amount at the time such claim is submitted by the Indemnitee, (v) the Indemnitee reasonably
believes an adverse determination with respect to the action, lawsuit, investigation, proceeding or other claim giving rise to such claim
for indemnification would be detrimental to or injure the Indemnitee’s reputation or future business prospects, or (vi) upon
petition by the Indemnitee, the appropriate court rules that the Indemnitor failed or is failing to vigorously prosecute or defend such
Third Party Claim. If the Indemnitor so elects to assume the defense of a Third Party Claim, then the Indemnitor shall not be liable
to the Indemnitee for legal expenses subsequently incurred by the Indemnitee in connection with the defense of the Third Party Claim
unless (A) the Indemnitor shall have failed, or is not entitled, to assume the defense of such Third Party Claim in accordance with
this Section 8.6(b), (B) the employment of such counsel has been specifically authorized in writing by the Indemnitor, which
authorization shall not be unreasonably withheld, or (C) the named parties to any such action (including any impleaded parties)
include both such Indemnitee and the Indemnitor and such Indemnitee shall have been advised in writing by such counsel that there may
be one (1) or more legal defenses available to the Indemnitee which are not available to the Indemnitor, or available to the Indemnitor
the assertion of which would be adverse to the interests of the Indemnitee. If the Indemnitor assumes such defense, then the Indemnitor
shall do so through counsel reasonably acceptable to the Indemnitee at the expense of the Indemnitor and the Indemnitee shall have the
right to participate in the defense of the Third Party Claim and to employ counsel, at its own expense, separate from the counsel employed
by the Indemnitor, it being understood, however, that the Indemnitor shall control such defense, including any settlement or compromise
of the Third Party Claim, but no such settlement or compromise may be effected without the Indemnitee’s consent, which will not
be unreasonably withheld, conditioned or delayed; provided, however, that the Indemnitee’s consent shall not be required
if (1) such settlement is for monetary payment (all of which is indemnifiable by the Indemnitor) only and does not impose injunctive
relief or other restrictions of any kind or nature on any Indemnitee and (2) expressly and unconditionally releases the Indemnitee from
all Liabilities with respect to such Third Party Claim, without prejudice pursuant to an unconditional term thereof. If the Indemnitor
chooses to defend any Third Party Claim, then the Parties shall cooperate in the defense of the Third Party Claim in all reasonable respects.
Such cooperation shall include the retention and (upon the Indemnitor’s request) provision to the Indemnitor of records that are
reasonably relevant to the Third Party Claim and making employees available on a mutually convenient basis as may be reasonably necessary
to provide additional information and explanation of any material provided. If the Indemnitor, within ten (10) days of receipt of an
Indemnification Notice relating to a Third Party Claim, chooses not to assume defense of the Third Party Claim or fails to notify the
Indemnitee that it is assuming the defense of such claim or, within a reasonable time after receipt of an Indemnification Notice relating
to a Third Party Claim, fails to defend the Third Party Claim actively and in good faith, then the Indemnitee shall have the right to
contest, settle or compromise the Third Party Claim but shall not thereby waive any right to indemnity therefor pursuant to this Agreement.
The Indemnitee shall have the right to pay or settle any Third Party Claim; provided, that, in such event it shall waive any right
to indemnity therefor by the Indemnitor for such Third Party Claim or it shall have received the Indemnitor’s prior written consent
(which will not be unreasonably withheld, conditioned or delayed).

 

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8.7             Mitigation.
Each Indemnitee shall use commercially reasonable efforts to mitigate Losses under Section 8.2 and Section 9.3, as applicable
and as otherwise required by Law, as soon as reasonably practicable after such Indemnitee becomes aware of any event which does, or could
reasonably be expected to, give rise to any such Losses; provided, that neither such Indemnitee nor any of its Affiliates shall
be required to make any material monetary expenditure, commence any action or offer or grant any material accommodation (financial or
otherwise) to any Third Party in connection with such mitigation.

 

8.8             No
Indemnification by the Target Company. Each Seller acknowledges and agrees that, upon and following the Closing, the Target Company
shall not have any liability or obligation to indemnify, save or hold harmless or otherwise pay, reimburse or make any Seller whole for
or on account of any indemnification or other claims made by any Buyer Indemnitee hereunder. None of the Sellers shall have any right
of contribution against the Target Company with respect to any such indemnification or other claim.

 

8.9             No
Duplicate Damages. In the event an Indemnitee shall recover Losses in respect of a claim of indemnification under this Article
8, no other Indemnitee shall be entitled to recover the same Losses in respect of a separate claim for indemnification related to
the same subject matter.

 

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8.10           Offset. Buyer shall, at Buyer’s election, at any time and from time to time, be permitted to offset from any Earn-Out
Payment payable by Buyer under this Agreement, any amounts due by any Seller to Buyer or any of Buyer’s Affiliates, including the
amount of (i) any indemnity payment that any Seller is required to pay, and that has not been paid, to the Buyer Indemnitees under this
Agreement and (ii) any fees and expenses Sellers are obligated to pay pursuant to this Agreement.

 

8.11           Purchase
Price Adjustment. The Parties agree that any indemnification payment made by Sellers pursuant to this Agreement shall be treated
as an adjustment to the Final Purchase Price for Tax purposes, unless otherwise required by Law.

 

8.12           Remedies. Except with respect to the matters covered in the next succeeding sentence, the indemnification rights of the
Parties under Article 8 shall be the sole and exclusive remedies of the Indemnitees should the Closing occur for any Losses
(other than claims of, or cause of action arising from, fraud) that it may at any time suffer or incur, or become subject to, as a result
of, or in connection with, any breach of any representation or warranty in this Agreement by Buyer, the Target Companies or Sellers, respectively,
or any failure by Buyer, the Target Companies or Sellers, respectively, to perform or comply with any covenant or agreement in this Agreement
that, by its terms, was to have been performed, or complied with, by Buyer, the Target Companies or Sellers, respectively. Notwithstanding
the foregoing, the Parties (a) shall have the right to seek specific performance, and (b) shall also have the right to seek rescission
or restitution but only in the case of fraud.

 

8.13           Indemnity Payments. On the date that is twelve (12) months from the Closing Date, Buyer and Sellers’ Representative
shall jointly instruct the Escrow Agent to immediately release to Sellers’ Representative (on behalf of Sellers) an amount equal
to the remaining balance of the Escrow Amount as of such date, less the amount necessary to satisfy all outstanding claims which are the
subject of an Indemnification Notice delivered pursuant to this Article 8, by wire transfer of immediately available funds to an
account designated by Sellers’ Representative in writing to Buyer at least three (3) Business Days prior to such date. Buyer and
Sellers’ Representative shall cause the Escrow Agent to disperse any amounts not released pursuant to the preceding sentence due
to any such then-pending claim to Buyer or Sellers’ Representative, as applicable, promptly upon the resolution of such claim in
favor of the Buyer Indemnitee or Sellers, respectively.

 

		9.	CLOSING

 

9.1             Closing
Date. The closing of the Transaction and the other Transaction Documents (the “Closing”) shall take place
by electronic exchange of documents on the third Business Day following the satisfaction or waiver of the conditions in Article 6
(other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction thereof at
the Closing), or at such other time, date and place as may be mutually agreed upon in writing by the parties (the date on which the Closing
actually occurs being referred to as the “Closing Date”). The Closing will be deemed effective as of 12:01
A.M. (Central Time) on the Closing Date.

 

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9.2             Items to be Delivered by Sellers, Seller Members and the Target Companies. At the Closing, Buyer shall have received at
or prior to the Closing the following documents, instruments and certificates:

 

(a)           certificates
representing the Target Shares, duly endorsed in blank, or accompanied by either stock powers duly executed in blank by each Seller or
such other instruments of transfer as are reasonably acceptable to Buyer;

 

(b)           counterparts
of an assignment of membership interests of each of the Target Companies (other than TAM Inc.) in a form acceptable to Sellers and Buyer,
duly executed by Sellers (the “Interest Assignment”);

 

(c)           a
certificate signed by each Seller and an authorized officer or authorized representative of each Target Company, dated as of the Closing
Date, confirming the matters in Section 6.1(a), Section 6.1(b) and Section 6.1(d).

 

(d)           counterparts
of the Escrow Agreement, duly executed by Sellers and the Escrow Agent;

 

(e)            the
Third Party Consents, if any, specified in Annex E;

 

(f)            a
copy of a payoff letter, in form and substance reasonably satisfactory to Buyer, from MidFirst Bank, evidencing the discharge or payment
in full of all debt owed under that certain line of credit established on April 28, 2020, which will be deducted from the Base Purchase
Price at Closing and paid directly to MidFirst Bank, with an agreement to provide termination statements on Form UCC 3 following such
payoff, which when filed will release and satisfy all liens relating to such indebtedness, together with proper authority to file such
termination statements following the Closing;

 

(g)           a
counterpart of a lease assignment and assumption agreement, duly executed by TAM Inc., with respect to the Lease Agreement for 1437 W
Auto Drive, Tempe, Arizona 85284, dated January 23, 2017, as amended, by and between Evergreen Village, LLC and Trinity Air Medical,
Inc. (“Tempe Lease Assignment”);

 

(h)           a
counterpart of a lease assignment and assumption agreement, duly executed by TAM Inc., with respect to the Lease Agreement for Suite
6 of the Dodge Business Center, 3621 E 44th Street, Tucson, Arizona 85713, dated November 13, 2019, by and between Presson Corporation
and Trinity Air Medical, Inc. (“Tucson Lease Assignment”);

 

(i)             a
non foreign person affidavit from each Seller dated as of the Closing Date as required by Section 1445 of the Code, in a form reasonably
acceptable to Buyer;

 

(j)             copies
of duly executed resignation letters delivered under Section 5.7; and

 

(k)           copies
of duly executed Employment Contracts with each Seller Member, substantially in the form attached as Exhibit B (the “Seller
Member Employment Contracts”); and

 

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(l)             copies of duly executed Non-Competition Agreements between (i) Buyer and (ii) each Seller Member, substantially in the form attached
as Exhibit C (the “Non-Competition Agreements”).

 

9.3             Items
to be Delivered by Buyer. At the Closing, Sellers and Sellers’ Representative, as applicable, shall have received the following
documents, instruments and certificates:

 

(a)           
a certificate signed by an authorized officer of Buyer, dated as of the Closing Date, confirming the matters in Section 6.2(a)
and Section 6.2(b);

 

(b)           
a counterpart of the Escrow Agreement, duly executed by an authorized officer of Buyer;

 

(c)           
a counterpart of the Interest Assignment, duly executed by an authorized officer of Buyer;

 

(d)           
a counterpart of the Tempe Lease Assignment, duly executed by an authorized officer Buyer; and

 

(e)           
a counterpart of the Tucson Lease Assignment, duly executed by an authorized officer Buyer.

 

		10.	MISCELLANEOUS

 

10.1           Sellers’ Representative.

 

(a)           Appointment.
Each Seller hereby irrevocably appoints Seth Bacon as Sellers’ Representative hereunder, as the sole representative of Sellers
to act as the agent and on behalf of Sellers regarding any matter relating to or under this Agreement, and Seth Bacon hereby accepts
such appointment. As the representative of Sellers under this Agreement, Sellers’ Representative shall act as the agent for all
Sellers, shall have authority to bind each such Person in accordance with this Agreement, and Buyer may rely on such appointment and
authority until the receipt of notice of the appointment of a successor upon two (2) Business Days’ prior written notice to Buyer.
Buyer may conclusively rely upon, without independent verification or investigation, all decisions made by Sellers’ Representative
in connection with this Agreement in writing and signed by Sellers’ Representative.

 

(b)           Power
of Attorney. Each Seller, by execution of this Agreement, hereby constitutes and appoints Sellers’ Representative as its, his
or her true and lawful attorney in fact and agent, with full power in its, his or her name and on its, his or her behalf:

 

(i)             to
act on behalf of such Seller according to the terms of this Agreement, including the power to amend this Agreement; to give and
receive notices, communications, demands, claims, actions or proceedings on behalf of such Seller (including in respect of the
purchase price adjustment pursuant to Section 1.4); to assert the attorney-client privilege on behalf of such Seller
with respect to any communications that relate in any way to the Transaction; to give any and all Consents under this Agreement; to
receive any payments made to any Seller pursuant to this Agreement; and to act on behalf of such Seller in connection with any
matter as to which any Seller is an Indemnitor or Indemnitee under Article 8; all in the absolute discretion of
Sellers’ Representative;

 

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(ii)            in general, to do all things and to perform all acts, including executing and delivering all agreements, certificates, receipts,
instructions and other instruments contemplated by or deemed advisable in connection with this Agreement or amending or waiving any provision
hereof; and

 

(iii)           to
pursue any rights or remedies of and Sellers under this Agreement and negotiate and compromise any dispute which may arise under, and
exercise or refrain from exercising remedies available under this Agreement (including in respect of the purchase price adjustment pursuant
to Section 1.4 and the indemnification obligations pursuant to Article 8) and sign any releases or other documents
with respect to such dispute or remedy.

 

This power of attorney, and all authority hereby
conferred, is granted subject to the interests of Buyer hereunder and in consideration of the mutual covenants and agreements made herein
and shall be irrevocable and shall not be terminated by any act of the Target Company or any Seller or by operation of Law, whether by
the merger, dissolution or liquidation of the Target Company, by the death or incapacity of any Seller or by the occurrence of any other
event. All decisions, acts, Consents or instructions taken by Sellers’ Representative hereunder shall be final and binding all Sellers.
Sellers agree, severally and not jointly and in proportion to their respective aggregate ownership of Target Company Interests, to hold
Sellers’ Representative free and harmless from any and all Loss that they, or any one of them, may sustain as a result of any action
taken in good faith by Sellers’ Representative hereunder. Buyer and its Affiliates and the Escrow Agent will be entitled to rely
upon, and will be fully protected in relying upon, the power and authority of Sellers’ Representative without independent investigation.
Buyer and its Affiliates and the Escrow Agent will have no liability whatsoever to any of Sellers or any other Persons for any acts or
omissions of Sellers’ Representative, or any acts or omissions taken or not taken by Buyer or any other Persons at the direction
of or in accordance with any decision, act, Consent or instruction of Sellers. Upon payment by Buyer of any amount required to be paid
by Buyer to Sellers’ Representative (on behalf of Sellers) under this Agreement or the Escrow Agreement, Buyer will have no further
Liabilities to Sellers’ Representative or any Seller with respect to such payment, and such Seller or such Seller with respect to
such payment.

 

10.2           Publicity.
No public release or announcement concerning the Transaction (including, without limitation, any information relating to the Base Purchase
Price or other amounts payable to any Seller) shall be issued or made by or on behalf of any Seller or the Target Companies without the
prior written consent of Buyer (which consent, other than with respect to the release or announcement of the Base Purchase Price hereunder,
shall not be unreasonably withheld, conditioned or delayed). The Parties agree to keep the terms of this Agreement confidential, except
to the extent required by applicable Law or regulations of any applicable stock exchange and except that the Parties may disclose such
terms to their respective accountants and other Representatives as necessary in connection with the ordinary conduct of their respective
businesses (so long as such persons agree to keep the terms of this Agreement and the Transaction confidential).

 

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10.3           Entire Agreement. This Agreement (including the exhibits and schedules attached hereto) supersedes all prior agreements
and understandings, oral and written, and constitutes (together with the other documents and instruments to be executed and delivered
pursuant hereto) a complete and exclusive statement of the terms of the agreement, between the Parties with respect to its subject matter.

 

10.4           Assignment.
No Seller shall assign, transfer or encumber this Agreement, or its rights or obligations hereunder, in whole or in part, voluntarily
or by operation of Law (including by virtue of a merger or similar transaction), other than as a result of the death of such Seller,
without the prior written consent of Buyer. Buyer shall not assign, transfer or encumber this Agreement, or its rights or obligations
hereunder, in whole or in part, voluntarily or by operation of Law (including by virtue of a merger or similar transaction), without
the prior written consent of Sellers’ Representative. Any attempted assignment, transfer or encumbrance without such consent shall
be void and without effect; provided that, notwithstanding the foregoing, Buyer may assign all or any portion of its rights and
obligation under this Agreement to (a) Buyer’s Affiliates, (b) Buyer’s lenders who are providing debt financing to Buyer
or its Affiliates (including the Target Companies following the Closing) or (c) in connection with the transfer by Buyer of all or substantially
all of the Equity Securities and/or assets of the Target Companies. Subject to the previous sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the Parties and their respective permitted successors and permitted assigns.

 

10.5           Governing
Law. This Agreement shall be construed and interpreted according to the Laws of the State of Delaware, excluding any choice of law
rules that may direct the application of the Laws of another jurisdiction.

 

10.6           Jurisdiction.
Each Party stipulates that any dispute or disagreement between the Parties whether in law or equity as to the interpretation of any provision
of, or the performance of obligations under, this Agreement and the other documents and instruments to be executed and delivered pursuant
hereto shall be commenced and prosecuted in its entirety exclusively in, and consents to the exclusive jurisdiction and proper venue
of, (a) the United States District Court for the Southern District of New York, or (b) if the federal court in clause (a) does not have
jurisdiction as a matter of law because of lack of diversity, then the state court located in New York. Each Party consents to personal
and subject matter jurisdiction and venue in such applicable court and waives and relinquishes all right to assert such Party or such
Party’s property’s immunity from any legal process issued by such courts or object to the suitability or convenience of such
venue or forum by reason of their present or future domiciles or by any other reason. The Parties acknowledge that all directions issued
by the forum court, including all injunctions and other decrees, will be binding and enforceable in all jurisdictions. Each Party agrees
that service of process on such Party in a manner described in Section 10.9 for the giving of notice shall be deemed effective
service of process on such Party.

 

10.7           Amendment. No amendments or supplements to this Agreement shall be valid and binding unless set forth in a written agreement
executed and delivered by Sellers’ Representative and Buyer.

 

10.8           Waiver.
No waiver by any Party of any of the provisions of this Agreement shall be effective unless set forth in a written instrument executed
and delivered by Buyer or Sellers’ Representative, as applicable. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement shall be deemed to constitute a waiver by the Party taking such action of compliance with any representations,
warranties or covenants set forth in this Agreement and in any documents delivered or to be delivered pursuant hereto. The waiver by
any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any prior or subsequent breach.

 

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10.9           Notice.
All notices, requests, demands and other communications under this Agreement shall be given in writing and shall be personally delivered,
sent by private overnight courier or email transmission and in the case of email transmission, with copies by overnight courier service
as follows:

 

(a)           
If to Buyer, to:

 

Blade Urban Air Mobility, Inc.

31 Hudson Yards, 11th Floor

New York, New York
10001

Attention: Melissa
Tomkiel

Email: melissa@blade.com

 

(with a copy to)

White & Case LLP

1221 Avenue of the Americas

New York, New York 10020

Attention: Morton A.
Pierce and William Parish

Email: morton.pierce@whitecase.com

bill.parish@whitecase.com

 

(b)           
If to Sellers, Seller Members or the Sellers’ Representative, to:

 

Seth Bacon

[*]

[*]

Email: sbacon@trinityairmedical.com

 

(with a copy to)

 

Scott Wunsch

[*]

[*]

Email: swunsch@trinityairmedical.com

 

(with a copy to)

 

Frame Law, PLLC

3120 W. Carefree Hwy

Suite One, PMB 336

Attention: Kristy Frame

Email: kframe@framelawpllc.com

 

or to such other person or address as any Party
shall have specified by notice in writing to the other Party. If personally delivered, then such communication shall be deemed delivered
on the date of actual receipt; if sent by facsimile transmission or email, then such communication shall be deemed delivered the date
of the transmission or, if the transmission is not made before 5:00 p.m., at the place of receipt, on a Business Day, the first Business
Day after transmission (and sender shall bear the burden of proof of delivery); and if sent by overnight courier, then such communication
shall be deemed delivered on the date of receipt.

 

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10.10         Expenses. Regardless of whether or not the Transaction is consummated, except to the extent expressly set forth in this
Agreement, each Party shall bear its own costs and expenses and the costs expenses of its counsel and other Representatives in connection
with this Agreement and the consummation of the Transaction, including in connection with claims by any Person that it is entitled to
brokerage commissions or finder’s fees as a result of the action of such Party or any Affiliate of such Party; provided, however,
that Sellers, jointly and severally, shall be solely responsible for the payment and discharge of all claims for brokerage commissions
or finder’s fees arising as a result of the retention, employment or other use of any broker or finder by the Target Companies in
connection with the Transaction or the negotiation thereof and all fees and expenses of the Target Companies’ legal, accounting,
investment banking and other professional counsel in connection with the Transaction and shall indemnify Buyer in accordance with Section
9.2(a)(i)(C), unless and to the extent that such commissions, fees and expenses have been paid by the Target Companies prior to or
at the Closing or are accounted for as Target Company Transaction Expenses in the Final Purchase Price.

 

10.11         No
Third Party Beneficiaries. This Agreement does not and is not intended to confer any rights or remedies upon any Person, including
any employee, any beneficiary or dependents thereof, or any collective bargaining representative thereof, other than the Parties; provided,
however, that in the case of Article 8 the other Indemnitees and their respective heirs, executors, administrators, legal
representatives, successors and assigns, are intended third party beneficiaries of the provisions contained in such Article; provided
further that in the event of death or Disability of a Seller, his or her beneficiaries shall be entitled to the first Earn-Out Payment,
if any, immediately following his or her death or Disability, but not to any subsequent Earn-Out Payments.

 

10.12         Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Government Body
to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the Transaction
is not affected in any manner materially adverse to any Party. Upon such a determination, the Parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner so that the Transaction
be consummated as originally contemplated to the fullest extent possible.

 

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10.13         Interpretive Provisions. For purposes of this Agreement, (a) unless the context otherwise clearly requires, the words “including”
and “include” shall be deemed to be followed by the words “without limitation,” (b) the words “herein,”
 “hereof,” “hereby,” “hereto” or “hereunder” refer to this Agreement as a whole, and not
to any particular provision of this Agreement, (c) the term “knowledge” when used in the phrase “to the knowledge of
the Target Company” or words of similar import means the knowledge, after due inquiry, of Bacon or Wunsch, (d) references to “$”
refer to United States Dollars and (e) unless the context clearly requires otherwise, any reference to the Target Company shall include
references to any predecessor of the Target Company. When calculating the period of time before which, within which or following which
any act is required to be done pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded
and, if the last day of such period is not a Business Day, then the period in question shall end on the next succeeding Business Day.
Unless the context otherwise clearly requires, references in this Agreement (i) to Articles, Sections, Annexes, Sections of the Target
Company Disclosure Letter are references to articles, sections, annexes and disclosure schedules attached to, this Agreement and (ii)
to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof. The Annexes, Exhibits and the Target Company Disclosure Letter are
incorporated into and form an integral part of this Agreement. Capitalized terms used but not otherwise defined in the Annexes, Exhibits
and the Target Company Disclosure Letter are as defined in this Agreement. Titles to Articles and headings of Sections are inserted for
convenience of reference only and shall not be deemed a part of or to affect the meaning or interpretation of this Agreement. Where any
group or category of items or matters is defined collectively in the plural number, any item or matter within such definition may be
referred to using such defined term in the singular number, and vice versa. Each Party confirms that both it and its counsel have reviewed,
negotiated and adopted this Agreement as the joint agreement and understanding of the Parties and, therefore, each Party waives the application
of any Law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document. The language used in this Agreement shall be deemed to be the language chosen by the Parties
to express their mutual intent, and no rule of strict construction shall be applied against any Party. Any covenant, obligation or agreement
of the Target Company shall include a covenant, obligation or agreement of Sellers to cause the Target Company to perform such covenant,
obligation or agreement.

 

10.14         Counterparts.
This Agreement may be executed by signatures exchanged via facsimile or other electronic means and in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signed counterparts of
this Agreement may be delivered by facsimile and by scanned .pdf image.

 

10.15         Waiver
of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, AND SHALL CAUSE ITS AFFILIATES TO WAIVE, ALL RIGHT
TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

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10.16         Definitions. For purposes of this Agreement, the following terms shall have the following respective meanings:

 

“Affiliate”
means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such
other Person; provided, that for purposes of Section 2.13(j) and Section 2.19 an Affiliate of any Person shall also
include (a) any Person that directly or indirectly owns, or in which such Person directly or indirectly owns more than five percent (5%)
of any class of Equity Securities or other equity interest of such Person, (b) in the case of a corporation, any officer or director of
such corporation, (c) in the case of a partnership, any general partner of such partnership, (d) in the case of a trust, any trustee or
beneficiary of such trust, (e) any spouse, parent, sibling or child or lineal descendant of any individual described in clauses (a) through
(d) above, and (f) any trust for the benefit of any individual described in clauses (a) through (e) above. For purposes of this definition,
 “control” when used with respect to any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by Contract or otherwise, and the terms “controlling”
and “controlled” have correlative meanings.

 

For purposes of this Agreement,
the Target Company will be considered (a) Affiliates of each Seller before (but not after) the Closing and (b) Affiliates of Buyer as
of and following (but not before) the Closing.

 

“Agreed Claims”
has the meaning specified in Section 8.5(c).

 

“Alternative Transaction”
means (a) any investment in, capital contribution or loan to, or reorganization, dissolution, liquidation or recapitalization of all or
any portion of the Target Company, (b) any merger, consolidation, share exchange or other similar transaction involving all or any portion
of the Target Company, (c) any sale or other disposition of at least twenty-five percent (25%) of the assets of, or any issuance, sale
or transfer of at least twenty-five percent (25%) of the equity interests in, the Target Company or (d) any similar transaction or business
combination involving at least twenty-five percent (25%) of the assets of the Target Company or the business or capital stock or assets
of any of the foregoing.

 

“Base Purchase
Price” means $21,600,000.00.

 

“Best’s
Rating” means Best’s Financial Strength Rating of an insurer’s financial strength and ability to meet its ongoing
insurance policy and contract obligations.

 

“Business”
has the meaning specified in the Introduction.

 

“Business Day”
means any day other than Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by
Law to be closed.

 

“Business Entity”
means any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership,
joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association,
organization, entity or group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934).

 

    40 

     

    

 

“Buyer”
has the meaning specified in the preamble.

 

“Buyer Indemnitees”
has the meaning specified in Section 8.2.

 

“Cause”
means (a) conduct by a Seller Member constituting a material act of misconduct in connection with the performance of such employee’s
duties, including, without limitation, misappropriation of funds or property of the Target Company, the Buyer or an Affiliate of the Buyer
other than the occasional, customary and de minimis use of the Target Company’s, the Buyer’s or an Affiliate of the
Buyer’s property for personal purposes; (b) the conviction of such Seller Member of, or the plea of guilty or nolo contendere by
such Seller Member to, any felony; (c) any conduct by such Seller Member that would reasonably be expected to result in material injury
or reputational harm to the Target Company, the Buyer or an Affiliate of the Buyer if such Seller Member were retained in such Seller
Member’s position; (d) a material breach by such Seller Member of any provision of any agreement between the Target Company, the
Buyer or an Affiliate of the Buyer and the Seller Member, including restrictive covenants between such Seller Member and the Target Company,
the Buyer or an Affiliate of the Buyer; (e) a material violation by such Seller Member of any of the Target Company’s, the Buyer’s
or an Affiliate of the Buyer’s written employment policies, which has continued for more than thirty (30) days following written
notice of such violation from the board of directors of the Target Company, the Buyer or an Affiliate of the Buyer; (f) failure to cooperate
with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the
Target Company, the Buyer or an Affiliate of the Buyer to cooperate, or the willful destruction or failure to preserve documents or other
materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other
materials in connection with such investigation; or (g) material breach of any confidentiality or intellectual property agreement to which
such Seller Member and the Target Company, the Buyer or an Affiliate of the Buyer are a party.

 

“Closing”
has the meaning specified in Section 9.1.

 

“Closing Cash”
means all cash and cash equivalents (whether restricted or unrestricted), including money market instruments, treasury bills, bank deposits
and commercial paper of the Target Companies on a consolidated basis as of 12:01 A.M. on the Closing Date.

 

“Closing Date”
has the meaning specified in Section 9.1.

 

“Closing Indebtedness”
means the aggregate outstanding amount of Indebtedness of the Target Companies on a consolidated basis as of 12:01 A.M. on the Closing
Date. Closing Indebtedness shall be calculated in accordance with the methodology and sample calculations in Annex B.

 

“Closing Net Working
Capital” means an amount equal to, without duplication, the difference between (a) the total current Liabilities of the
Target Companies (excluding Indebtedness and Target Company Transaction Expenses), and (b) the total current assets of Target Companies
(excluding any Closing Cash), determined as of 12:01 A.M. on the Closing Date. Closing Net Working Capital shall be calculated in accordance
with the methodology and sample calculations in Annex B.

 

    41 

     

    

 

 

“COBRA”
means Part 6 of Title I of ERISA, Section 4980B of the Code, and any similar state Law.

 

“Code”
means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

“Confidential
Information” means all information (written or oral) that is confidential or proprietary to the Target Company or is not
otherwise generally available to the public regarding the Target Company. The term “Confidential Information” shall not include
(a) information that is or becomes generally available to the public, other than as a result of disclosure by Seller or its Representatives
in violation of this Agreement or (b) becomes available to Seller or its Representatives from a Person other than Buyer or the Target
Company on a non confidential basis, provided that such Person was not known by Seller or its Representatives to be bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of confidentiality to Buyer, the Target Company or its Representatives
with respect to such materials.

 

“Consent”
means any consent, waiver or approval of, or authorization, order, license, permission, permit, qualification, exemption, novation or
waiver by, any Third Party or Government Body.

 

“Contract”
means, with respect to any Person, any contract, agreement, deed, mortgage, lease, license, commitment, promise, undertaking, arrangement,
performance bond, warranty obligation or understanding, whether written or oral and whether express or implied, or other document or instrument
(including any document or instrument evidencing or otherwise relating to any Indebtedness), to which or by which such Person is party
or otherwise subject or bound or to which or by which any property, business, operation or right of such Person is subject or bound.

 

“Contracted Accounts”
means:

 

(i)            the
Persons specified in Annex C;

 

(ii)           any
Person with whom any Target Company enters into a Contract with, provided that such Contract:

 

(A)          contains
a term of one (1) or more years; and

 

(B)          contains
any of the following provisions:

 

(1)              
“first call” status for the provision of services related to the Business

 

(2)              
a right of first refusal for any Target Company to provide services related to the Business, or

 

(3)              
exclusivity in any Target Company’s ability to provide services related to the Business.

 

or

 

    42 

     

    

 

(iii)         any Person from whom the Target Companies, individually or collectively, has:

 

(A)         during
any consecutive twelve (12) months from January 2021 through the expiration of the Earn-Out Period, derived revenue equal to or exceeding
One Hundred Thousand Dollars ($100,000.00); and

 

(B)          in the three (3) months immediately preceding the payment of any Earn-Out Period:

 

(1)              
derived revenue equal to or exceeding Twenty Thousand Dollars ($20,000.00); or

 

(2)              
serviced at least six (6) service requests on behalf of.

 

Such Person(s) set forth
in this subsection (iii) will each be referred to as a “Key Non-Preferred Contracted Account”.

 

Notwithstanding the foregoing,
the definition of “Contracted Accounts” does not include any Person:

 

(i)           under
a Contract that was not originally entered into by any Target Company (i.e., Buyer’s organ transportation contracts), including,
without limitation,

 

(A)            
those Persons set forth on Annex F or their Affiliates, or

 

(B)             
any Person with a customer relationship that is assigned to or assumed by any Target Company pursuant to an acquisition of another
business entity or similar transaction, except to the extent such Person described in this clause (B) would otherwise qualify as a Contracted
Account notwithstanding any such assignment or assumption (such as in the case of a pre-existing relationship between such Person and
a Target Company); or

 

(ii)          under
a Contract that was terminated or otherwise expired prior to the delivery of an Earn-Out Payment, unless such Person otherwise meets
the definition of a Key Non-Preferred Contracted Account.

 

“Contracted EBITDA”
means the Contracted Gross Profit for a given period multiplied by the EBITDA Conversion Ratio.

 

“Contracted Gross
Profit” means, for the applicable Earn-Out Period, an amount equal to all revenues generated exclusively from Contracted
Accounts, including from Persons working directly with such Contracted Accounts, determined by the Person making the transportation request
(including amounts paid by medical services providers (e.g., transplant centers and hospitals)), less direct costs associated with
servicing those revenues (including amounts paid to third-party air and ground transportation providers, company drivers and any other
incidental costs (e.g., catering) that may be charged to such Contracted Accounts).

 

“Disability”
means a Seller Member’s inability, due to physical or mental incapacity, to perform his essential duties under his Seller
Member Employment Contract with the Target Company, even with any reasonable accommodation to the extent required by applicable
Legal Requirements, for one hundred eighty (180) days (including weekends and holidays) out of any three hundred sixty-five (365)
day period or for one hundred twenty (120) consecutive days.

 

    43 

     

    

 

“Earn-Out Calculation”
has the meaning specified in Section 1.5(e).

 

“Earn-Out Calculation
Acceptance Notice” has the meaning specified in Section 1.5(f).

 

“Earn-Out Calculation
Objection Notice” has the meaning specified in Section 1.5(f).

 

“Earn-Out Payment”
has the meaning specified in Section 1.5(a).

 

“Earn-Out Period”
has the meaning specified in Section 1.5(a).

 

“EBITDA Conversion
Ratio” means 0.3165, which is calculated on the basis of the historical ratio of EBITDA to Gross Profit set forth in Annex
D.

 

“Effective Time”
means the opening of business on the Closing Date.

 

“Employment Contract”
means any Contract between the Target Company and an employee relating to employment.

 

“End Date”
has the meaning specified in Section 7.1(b)(ii).

 

“Environmental
Laws” means all Legal Requirements, now or hereafter in effect, in each case as amended or supplemented from time to time,
relating to the regulation and protection of human health, safety, the environment, and natural resources, including any federal, state,
or local transfer of ownership notification or approval statutes.

 

“Equity Rights”
means with respect to a Person (i) options, warrants, rights of first refusal or first offer, convertible securities, exchangeable securities,
subscription rights, conversion rights, exchange rights, calls, puts, voting trusts, registration rights or other rights, agreements or
commitments relating to the issuance, disposition or acquisition of such Person’s Equity Securities or securities convertible into
or exchangeable or exercisable for its Equity Securities or other Contracts that could require a Person to issue Equity Securities or
to sell Equity Securities it owns in another Person, (ii) any other securities convertible into, exchangeable or exercisable for, or representing
the right to subscribe for any Equity Securities of a Person or owned by a Person, (iii) statutory pre-emptive rights or pre-emptive rights
granted under a company’s organizational documents or any other pre-emptive rights and (iv) equity appreciation rights, phantom
equity, profit participation, or other similar rights with respect to a company.

 

“Equity Securities”
means any (a) partnership interests; (b) any membership interests or units; (c) shares of capital stock; (d) other interest or participation
that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets of, the issuing entity.

 

“ERISA”
has the meaning specified in Section 2.15(a).

 

“ERISA Affiliate”
has the meaning specified in Section 2.15(a).

 

    44 

     

    

 

“Escrow Account”
has the meaning specified in Section 1.3(b).

 

“Escrow Agent”
has the meaning specified in Section 1.3(b).

 

“Escrow Agreement”
has the meaning specified in Section 1.3(b).

 

“Escrow Amount”
has the meaning specified in Section 1.3(b).

 

“Estimated Closing
Statement” has the meaning specified in Section 1.4(a).

 

“Estimated Purchase
Price” has the meaning specified in Section 1.3(a)

 

“Final Purchase
Price” has the meaning specified in Section 1.4(d)(i).

 

“Financial Statements”
has the meaning specified in Section 2.5.

 

“Former Shareholder
Payment Amount” has the meaning specified in Section 1.3(c).

 

“Former Shareholder
Release” means that certain Confidential Release Agreement between the Former Shareholders, the Target Company and the Seller
Members, dated as of the date of this Agreement.

 

“Former Shareholders”
means, collectively, Marreel Slater, LLC, Miracle 323 LLC, UTA Holdings, LLC, Tom Marreel, Paul McHale, John Linder and Nina Linder.

 

“Fundamental Representations”
has the meaning specified in Section 8.1.

 

“GAAP”
means generally accepted accounting principles in the United States, consistently applied.

 

“Good
Reason” means the occurrence, without a Seller Member’s consent, of: (a) a material reduction in such
Seller Member’s base salary (and excluding any broad-based salary reduction); (b) material diminution or commercially
unreasonable increase in such Seller Member’s authority, duties or responsibilities, taking into consideration the
consideration set forth in this Agreements and the circumstances surrounding this Agreement and the transactions contemplated
hereby; (c) Buyer’s material breach of its obligations under Section 1.5(g); (d) Buyer’s breach of its
obligations under Section 5.9; (e) Buyer’s material breach of the Seller Employment Contract with Seller; or (f)
Buyer’s engagement, or direction to such Seller Member to engage, in any conduct that is illegal or unethical. None of the
events described above will constitute Good Reason unless and until (i) the Seller Member reasonably determines in good faith
that a Good Reason condition has occurred, (ii) the Seller Member first notifies the Target Company in writing describing in
reasonable detail the condition which constitutes Good Reason within sixty (60) days of its initial occurrence, (iii) Buyer fails to
cure such condition within thirty (30) days after Buyer’s receipt of such written notice, and the Seller Member has cooperated
in good faith with Buyer’s efforts to cure such condition, (iv) notwithstanding such efforts, the Good Reason condition
continues to exist, and (v) the Seller Member terminates his employment within thirty (30) days after the end of such thirty
(30)-day cure period. If Buyer cures the Good Reason condition during such cure period, if capable of cure, Good Reason will be
deemed not to have occurred.

 

    45 

     

    

 

“Government Body”
means any government, court, arbitrator, arbitral tribunal, department, commission, board, bureau, agency, authority, instrumentality,
administrative agency, commission or other governmental or regulatory agency or authority, whether federal, state, provincial, local,
foreign or other (including national antitrust authorities that have jurisdiction to review the Transaction) or any securities exchange.

 

“Hazardous Substance”
means (a) “hazardous materials,” “hazardous wastes,” “hazardous substances,” “industrial wastes,”
or “toxic pollutants,” as such terms are defined under any Environmental Laws; (b) any other hazardous or radioactive substance,
contaminant, or waste; and (c) any other substance with respect to which any Environmental Law or Government Body requires environmental
investigation, regulation, monitoring, or remediation.

 

“Indebtedness”
means, with respect to any Person, and without duplication, all Liabilities in respect of principal, accrued interest, penalties, fees
and premiums, of such Person (a) for borrowed money (including amounts outstanding under overdraft facilities) or in respect of loans
or advances (including, in any case, any prepayment premiums due or arising as a result of the consummation of the transaction contemplated
hereby), (b) evidenced by notes, bonds, debentures or other similar contracts, (c) in respect of “earn-out” obligations and
other obligations for the deferred purchase price of property, goods or services (other than trade payables or accruals incurred in the
ordinary course of business consistent with past practice), (d) for the capitalized liability under all capital leases of such Person
(e) in respect of letters of credit and bankers’ acceptances, (f) for contracts relating to interest rate protection, swap agreements
and collar agreements and (g) in the nature of guarantees of the obligations described in clauses (a) through (f) above of any other Person.

 

“Indemnification
Notice” has the meaning specified in Section 8.5(a).

 

“Indemnitee”
has the meaning specified in Section 8.5(a).

 

“Indemnitor”
has the meaning specified in Section 8.5(a).

 

“Intellectual
Property” has the meaning specified in Section 2.16(a).

 

“Interest Assignment”
has the meaning specified in Section 9.2(b).

 

“IRS”
means the United States Internal Revenue Service.

 

“JB3”
has the meaning specified in the preamble.

 

“Key Non-Preferred
Contracted Account” has the meaning specified in the definition of Contracted Accounts.

 

“Law”
means any federal, state, local, foreign or other statute, law, common law, ordinance, rule or regulation or Order of any Government Body
and all judicial interpretations thereof.

 

    46 

     

    

 

“Legal Requirement”
means any Law, Order or Permit.

 

“Liability”
or “Liabilities” means any debt, liability, commitment, duty or obligation of any nature, whether pecuniary
or not, asserted or unasserted, accrued or unaccrued, absolute or contingent, matured or unmatured, liquidated or unliquidated, determined
or determinable, incurred or consequential, known or unknown and whether due or to become due, including those arising under any Law or
action and those arising under any Contract or otherwise, including any Tax liability or tort liability.

 

“Lien”
means any mortgage, lien, pledge, charge, security interest, license, option, easement, restrictive covenant or encumbrance, right of
first refusal, claim, indentures, deeds of trust, rights of way, restrictions on the use of real property, encroachments, licenses to
Third Parties, leases to Third Parties, security agreements, or any other encumbrances and other restrictions or limitations on ownership
or use of real or personal property or irregularities in title thereto.

 

“Loss”
means (a) all Liabilities owed to or at the behest of any other Person, (b) all damages, judgments, awards, penalties, Liabilities, Taxes,
losses, settlements and costs, (c) all demands, claims, suits, actions, causes of action, proceedings and assessments, and (d) all costs
and expenses, court costs and fees and expenses of attorneys and expert witnesses of investigating, defending, asserting or settling any
of the foregoing, whether or not the underlying claim, action or cause of action is actually asserted or is merely alleged or threatened,
in each case as such Loss has been actually incurred by the subject party.

 

“Material Adverse
Effect” means a material adverse effect on (a) the business, results of operations, condition (financial or otherwise) or
assets of the Target Company, or (b) the ability of the Target Company, Sellers or Seller Members to consummate the Transaction on a timely
basis.

 

“Material
Contract” has the meaning specified in Section 2.13.

 

“Material Customers”
has the meaning specified in Section 2.18(a).

 

“Material Suppliers”
has the meaning specified in Section 2.18(b).

 

“Net Working Capital
Adjustment Amount” means the result of (i) the Closing Net Working Capital, minus (ii) the Target Net Working Capital, calculated
in accordance with the methodology set forth in Annex B.

 

“Non-Competition
Agreements” has the meaning specified in Section 9.2(l).

 

“Order”
means any order, writ, injunction, judgment, plan, decree, order or license of any Government Body.

 

“ordinary course
of business” means actions by the Target Company that are consistent in nature, scope and magnitude with the past practices
of the Business and are taken in the ordinary course of the normal day-to-day operations of the Business.

 

    47 

     

    

 

“Organizational
Documents” means, with respect to any Business Entity, the certificate or articles of incorporation, formation or partnership,
bylaws, partnership agreement, limited liability company agreement, trust agreement or similar organizational document or agreement, as
applicable, of such Person, in each case as the same have been amended and restated from time to time and are in effect as of any applicable
date of determination.

 

“Parties”
means the Sellers, the Target Companies and Buyer and “Party” means any of them.

 

“Permit”
means, with respect to any Person, any license, franchise, permit, Consent, approval, right, privilege, certificate or other similar authorization
issued by, or otherwise granted by, any Government Body or any other Person to which or by which such Person is subject or bound or to
which or by which any property, business, operation or right of such Person is subject or bound.

 

“Permitted Liens”
means (a) statutory Liens for current Taxes, special assessments or other governmental charges not yet due and payable or the amount or
validity of which is being contested in good faith by appropriate proceedings and for which appropriate reserves have been established
in books and records, (b) Liens arising by operation of Law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers
or suppliers, incurred in the ordinary course of business securing amounts that are not yet due and payable or being contested in good
faith by appropriate proceedings, and (c) restrictions on the transfer of Equity Securities arising under federal and state securities
Laws.

 

“Person”
means an individual, Business Entity or Government Body.

 

“Pre-Closing Taxes”
means, without duplication, (a) all Taxes of the Target Companies for all Pre-Closing Tax Periods and (b) all Taxes of the Target Companies
for Straddle Periods to the extent apportioned to a Pre-Closing Tax Period under Section 5.5(b).

 

“Pre-Closing Tax
Period” means any taxable period ending on or before the Closing Date.

 

“Preliminary Post-Closing
Price Adjustment Schedule” has the meaning specified in Section 1.4(b).

 

“Price Adjustment
Acceptance Notice” has the meaning specified in Section 1.4(c).

 

“Price Adjustment
Objection Notice” has the meaning specified in Section 1.4(c).

 

“Pro Rata Portion”
has the meaning specified in Section 1.3(a).

 

“Recent Balance
Sheet” has the meaning specified Section 2.5(a).

 

“Representatives”
of any Person means such Person’s directors, managers, members, partners, officers, employees, agents, advisors and representatives
(including attorneys, accountants, consultants, financial advisors, financing sources and any representatives of such advisors or financing
sources).

 

    48 

     

    

 

“Reviewing Accounting
Firm” means an independent accounting firm of national reputation mutually acceptable to Buyer and Sellers’ Representative.

 

“Section 338(h)(10)
Adjustment” has the meaning specified in Section 5.5(c).

 

“Section 338(h)(10)
Election” has the meaning specified in Section 5.5(c).

 

“Seller Indemnitees”
has the meaning specified in Section 8.3.

 

“Seller”
and “Sellers” have the meaning specified in the preamble.

 

“Seller Member”
has the meaning specified in the preamble.

 

“Seller Member
Employment Contract” has the meaning specified in Section 9.2(k).

 

“Sellers’
Representative” has the meaning specified in the preamble.

 

“Straddle Period”
has the meaning specified in Section 5.5(b).

 

“SW”
has the meaning specified in the preamble.

 

“TAM Inc.”
means Trinity Air Medical, Inc., an Arizona corporation.

 

“Target Company”
means any of the following, and “Target Companies” means all of them:

 

(a)       Trinity
Air Medical, Inc., an Arizona corporation.

 

(b)       Trinity
Air Medical AR, LLC, an Arkansas limited liability company.

 

(c)       Trinity
Air Medical CA, LLC, an Arizona limited liability company registered to do business in the State of California.

 

(d)        Trinity
Air Medical MA, LLC, an Arizona limited liability company registered to do business in the State of Massachusetts.

 

(e)       Trinity
Air Medical NV, LLC, a Nevada limited liability company.

 

(f)       Trinity
Air Medical UT, LLC, a Utah limited liability company.

 

(g)       Trinity
Air Medical, LLC, a Texas limited liability company.

 

(h)       Trinity
Air Medical WA, LLC, a Washington limited liability company.

 

(i)       Trinity
Medical Solutions FL, LLC, a Florida limited liability company also registered to do business in the State of West Virginia.

 

(j)       Trinity
Medical Solutions CO, LLC, a Colorado limited liability company.

 

    49 

     

    

 

(k)        Trinity
Medical Solutions LA, LLC, an Arizona limited liability company, registration pending in Louisiana.

 

(l)        Trinity
Medical Solutions GA, LLC, a Georgia limited liability company.

 

“Target Company
Disclosure Letter” means the disclosure schedule dated and delivered as of the date hereof by the Sellers’ Representative
to Buyer, which is attached to this Agreement.

 

“Target Company
Insurance Policies” has the meaning specified in Section 2.12.

 

“Target Company
IP Registrations” has the meaning specified in Section 2.16(b).

 

“Target Company
Intellectual Property” has the meaning specified in Section 2.16(b).

 

“Target Company
Permits” has the meaning specified in Section 2.9(b).

 

“Target Company
Plan” has the meaning specified in Section 2.15(a).

 

“Target Company
Transaction Expenses” means, to the extent not paid before the Closing, all expenses of the Target Company incurred or to
be incurred prior to and through the Closing Date in connection with the negotiation, preparation and execution of this Transaction Documents
and the consummation of the Transaction and the Closing, including out of pocket costs, fees and disbursements of financial advisors,
attorneys, accountants and other advisors and service providers, severance payments to directors, officers and employees, bonuses, retention
payments and any other change of control or similar payments payable as a result of or in connection with the transactions contemplated
by this Agreement (including the employer portion of any Taxes relating to such payments), payable by the Target Companies (prior to and
through and including the Closing Date).

 

“Target Net Working
Capital” means $1,450,000.

 

“Target Shares”
means the shares of common stock, $ par value per share, of Trinity Air Medical, Inc.

 

“Taxes”
means any and all federal, state, local, foreign or other taxes of any kind whatsoever (together with any and all interest, penalties,
additions to tax and additional amounts imposed in respect of the foregoing), including income, franchises, windfall or other profits,
gross receipts, property, sales, use, ad valorem, value-added, payroll, employment, social security, workers’ compensation, unemployment
compensation, or net worth and other taxes or other like assessment or charges; provided, however, that “Taxes” shall
not include any utility (e.g., water or sewer) charges or fees.

 

“Tax Proceeding”
has the meaning specified in Section 5.5(e).

 

“Tax Return”
means any return, declaration, report, estimate, claim for refund, or information return or statement relating to, or filed or required
to be filed in connection with, any Taxes, including any schedule, form, attachment or amendment.

 

    50 

     

    

 

“Tempe Lease Assignment”
has the meaning specified in Section 9.2(g).

 

“Third Party”
means a Person other than (a) Sellers, (b) the Target Companies, (c) Buyer or (d) an Affiliate of (a), (b) or (c). 

 

“Third Party Claim”
has the meaning specified in Section 8.6(a).

 

“Threshold”
has the meaning specified in Section 8.4(a).

 

“Transaction Documents”
means, collectively, this Agreement and each other agreement or document referred to in this Agreement or to be executed in connection
with the Transaction.

 

“Transaction”
means, collectively, the transactions contemplated in the Transaction Documents.

 

“Tucson Lease
Assignment” has the meaning specified in Section 9.2(h).

 

“Union”
has the meaning specified in Section 2.13(h).

 

“2021 Contracted
EBITDA Shortfall” has the meaning specified in Section 1.5(b).

 

“2021 Contracted
EBITDA Target” means One Million Eight Hundred Thousand Dollars ($1,800,000.00).

 

“2021 Contracted
EBITDA” has the meaning specified in Section 1.5(c).

 

“2022 Contracted
EBITDA” has the meaning specified in Section 1.5(c).

 

“2023 Contracted
EBITDA” has the meaning specified in Section 1.5(d).

 

[The signatures begin on the next page]

 

    51 

     

    

 

IN WITNESS WHEREOF,
the Parties have duly executed and delivered this Sale and Purchase Agreement as of the day and year first written above.

 

	 	BUYER:  
	 	 
	 	Blade Urban Air Mobility, Inc.  
	 	 
	 	By:	/s/ Rob Wiesenthal
	 	Name:	Robert Wiesenthal
	 	Title:	Chief Executive Officer

   

[The signatures are continued
on the next page]

 

Signature Page to Purchase
and Sale Agreement

 

    

     

    

 

	 	TARGET COMPANIES:
	 	   
	 	Trinity Air Medical, Inc.    
	 	 
	 	By: 	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO
	 	   
	 	Trinity Air Medical AR, LLC  
	 	 
	 	By: 	/s/ Seth Bacon
	 	Name:	 Seth Bacon
	 	Title:	CEO
	 	   
	 	Trinity Air Medical CA, LLC  
	 	 
	 	By:  	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO
	 	 
	 	Trinity Air Medical nv, LLC  
	 	 
	 	By:	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO
	 	 
	 	Trinity Air Medical wa, llc  
	 	 
	 	By:	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO
	 	 
	 	Trinity Air Medical, LLC  
	 	 
	 	By:	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO

   

Signature Page to Purchase and Sale Agreement

 

    

     

    

 

	 	Trinity Air Medical ma, llc  
	 	 
	 	By:  	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO
	 	 
	 	Trinity Air Medical solutions fl, llc  
	 	 
	 	By: 	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO
	 	 
	 	Trinity Air Medical solutions co, llc  
	 	 
	 	By: 	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO
	 	 
	 	Trinity Air Medical solutions la, llc  
	 	 
	 	By:  	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO
	 	 
	 	Trinity Air Medical solutions ga, llc  
	 	 
	 	By: 	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO
	 	 
	 	Trinity Air Medical UT, llc  
	 	 
	 	By:	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO

 

[The signatures are continued on the next page.]

 

Signature Page to Purchase
and Sale Agreement

 

    

     

    

 

	 	SELLERS’ REPRESENTATIVE:  
	 	 
	 	By: 	/s/ Seth Bacon                                           
	 	Name:	Seth Bacon  
	 	        
	 	SELLER:  
	 	 
	 	JB3 HOLDINGS LLC  
	 	 
	 	By:  	/s/ Seth Bacon
	 	Name:	Seth Bacon
	 	Title:	CEO
	 	   
	 	SELLER:  
	 	 
	 	S. WUNSCH LLC  
	 	 
	 	By:  	/s/ Scott M. Wunsch
	 	Name:	Scott Wunsch
	 	Title:	COO
	 	   
	 	SELLER MEMBER:  
	 	 
	 	By:	/s/ Scott M. Wunsch
	 	Name:	 Scott Wunsch
	 	   
	 	SELLER MEMBER:  
	 	 
	 	By: 	/s/ Seth Bacon
	 	Name:	 Seth Bacon

 

Signature Page to Purchase
and Sale Agreement

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