Exhibit 10.1
 
 
 
 
CONTRIBUTION AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
 
By and Among
 
 
Asset Managers, Inc.
 
D&A Daily Mortgage Fund III, L.P.
D&A Semi-Annual Mortgage Fund III, L.P.
D&A Intermediate-Term Mortgage Fund III, L.P.
American Spectrum Realty, Inc.
American Spectrum Dunham Properties LLC
American Spectrum Operating Partnership, L.P.
 
Effective Date:  December __, 2013
 
 
 

--------------------------------------------------------------------------------

 
 
TABLE OF CONTENTS
 

   
Page
     
ARTICLE 1
CERTAIN DEFINITIONS AND FUNDAMENTAL PROVISIONS 1       ARTICLE 2
CONTRIBUTION OF PROJECTS AND ISSUANCE OF SENIOR PREFERRED STOCK
4       ARTICLE 3
CONTRIBUTION VALUE AND PAYMENT OF CONTRIBUTION VALUE
4 3.1
Contribution Value
4 3.2 Payment of Contribution Value
4
3.3
Allocation of Contribution Value, Sale Payment and Participation Payment
7 3.4
Project Indebtedness
9       ARTICLE 4
INTENTIONALLY OMITTED
10       ARTICLE 5  ENTRY, INSPECTIONS AND DUE DILIGENCE 11 5.1
Inspections, Tests and Studies
11 5.2
Dunham's Books and Records
11 5.3
Indemnity
12       ARTICLE 6 ESCROW 12 6.1
Opening of Escrow
12 6.2
Rights and Obligations of Escrow Holder
12 6.3
Closing Date
13 6.4
Dunham's Deliveries
13 6.5
American Spectrum's Deliveries
15 6.6
Prorations
16 6.7
Disbursements and Other Actions by Escrow Holder
19 6.8
Dunham's Deliveries to American Spectrum Dunham Properties Upon Closing
20 6.9
Information Report
21 6.10
Natural Hazards Disclosure
21       ARTICLE 7
CONDITIONS TO CLOSING
22 7.1 Conditions Precedent to Buyer's Obligations   22 7.2 Conditions Precedent
to Dunham's Obligations   23       ARTICLE 8
DUNHAM'S REPRESENTATIONS AND WARRANTIES
23 8.1 Dunham's Authority 23 8.2
Project
25

 
 
(i)

--------------------------------------------------------------------------------

 
 

   
Page
      8.3 Existing Financing, Tenant Leases, etc 27 8.4
General
28
 
   
ARTICLE 9
PROJECTS CONVEYED "AS IS"
29       ARTICLE 10
AMERICAN SPECTRUM'S REPRESENTATIONS AND WARRANTIES
30 10.1
Due Formation
30 10.2
Power
30 10.3
Requisite Action
30
10.4
Authority
30 10.5
Validity
30 10.6 No Conflicts 30 10.7
Valid Issuance of Senior Preferred Stock
31 10.8 Governmental Consents and Filings  31 10.9
SEC Filings; Financial Statements
31 10.10
General Representation
31 10.11
Survival
32       ARTICLE 11
COVENANTS OF DUNHAM AND AMERICAN SPECTRUM
32 11.1
Broker
32 11.2
Required Actions of Parties
32       ARTICLE 12
REMEDIES
32 12.1
General
32 12.2
Attorneys' Fees
32 12.3
No Assumption of Liability
32 12.4
Termination
33 12.5
Effect of Termination
33       ARTICLE 13
INTENTIONALLY OMITTED
33       ARTICLE 14
ARBITRATION OF DISPUTES
34       ARTICLE 15
CONFIDENTIALITY
36 15.1
Use of Confidential Information
36 15.2
Disclosure of Confidential Information
36 15.3
Breach and Remedies
36       ARTICLE 16
MISCELLANEOUS
37  16.1
Entire Agreement
37  16.2 Agreement Binding on Parties 37  16.3
Notice
37

 
 
(ii)

--------------------------------------------------------------------------------

 
 

   
Page
      16.4
Governing Law
38
16.5
Partial Invalidity
38 16.6
No Implied Agreement
38 16.7
Facsimile or Electronic Mail Signatures
38 16.8
Waivers
38 16.9
Time of Essence
38 16.10
Construction
38 16.11
Business Day
39 16.12
Currency
39 16.13
Multiple Counterparts
39

 
 
(iii)

--------------------------------------------------------------------------------

 
 

   
Page
     
Exhibits
          1.16
Existing Financing
        1.25
Preliminary Title Reports
        1.26
Identification of Projects
        3.2.2
Allocation of Senior Preferred Stock Among Dunham Funds
        3.3.1
Allocation of Net Contribution Value Among Projects
        3.3.2
Examples of Sale Payments, Participation Payments and Deficit Payments
        6.4.1
Form of Deed
        6.4.2
Form of Bill of Sale
        6.4.3
Form of Tenant Lease Assignment
        6.4.4
Form of General Assignment
        6.4.9
Form of Assignment of Interest
        6.4.10A
Form of Federal Non-Foreign Certificate
        6.4.10B
Form of California Non-Foreign Certificate
        6.4.12
Form of Dunham's Affirmation Certificate
        6.5.4
Form of American Spectrum's Affirmation Certificate
        7.2.3
Form of Articles Supplementary
        8.3.2
Rent Rolls
 

 
 
(iv)

--------------------------------------------------------------------------------

 
 
CONTRIBUTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS
 
THIS CONTRIBUTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS ("Agreement") is made
and entered into as of the Effective Date by and among Asset Managers, Inc., D&A
Daily Mortgage Fund III, L.P., D&A Semi-Annual Mortgage Fund III, L.P., D&A
Intermediate-Term Mortgage Fund III, L.P., American Spectrum Realty, Inc.,
American Spectrum Realty Operating Partnership, L.P., and American Spectrum
Dunham Properties LLC.  The terms of this Agreement and the Escrow Holder's
instructions are as follows
 
ARTICLE 1
 
CERTAIN DEFINITIONS AND FUNDAMENTAL PROVISIONS
 
Set forth below are certain definitions and fundamental provisions for the
purposes of this Agreement.
 
1.1           AMI means Asset Managers, Inc., a California corporation.
 
1.2           ASROP means American Spectrum Realty Operating Partnership, L.P.,
a Maryland limited partnership.
 
1.3           Agreement means this Contribution Agreement and Joint Escrow
Instructions.
 
1.4           American Spectrum means, collectively and jointly and severally,
American Spectrum Realty, ASROP and American Spectrum Dunham Properties unless
the context expressly requires that the reference is applicable only to one of
such Parties whereupon such reference shall apply only to such Party.
 
1.5           American Spectrum Dunham Properties means American Spectrum Dunham
Properties LLC, a Delaware limited liability company and a wholly owned
subsidiary of American Spectrum and a special purpose entity organized for the
purpose of acquiring and owning the Projects and the Nevada Treasure Interest
pursuant to this Agreement.
 
1.6           American Spectrum Realty means American Spectrum Realty, Inc., a
Maryland corporation.
 
1.7           American Spectrum's Representative means William J. Carden.
 
1.8           Closing Date means the date (but not later than the 3rd Business
Day after the satisfaction or waiver of the last of the conditions set forth in
Article 7, other than those conditions that by their nature are to be satisfied
at Closing, but subject to the satisfaction or waiver of such condition) on
which the Closing actually occurs.
 
1.9           Contribution Value means Eighty-Four Million Eight Hundred
Twenty-Thousand Dollars ($84,820,000).
 
 
 

--------------------------------------------------------------------------------

 
 
1.10           Daily Fund means D&A Daily Mortgage Fund III, L.P., a California
limited partnership, the general partner of which is AMI.
 
1.11           Due Diligence Materials means those items, documents,
correspondence and other matters described in that certain Drop Box entitled
“American Spectrum Realty.”
 
1.12           Dunham means AMI, Daily Fund, Semi-Annual Fund and Intermediate
Fund collectively and jointly and severally unless the context expressly
requires that the reference is applicable to one of such Parties whereupon such
reference shall apply only to such Party.
 
1.13           Dunham Funds means Daily Fund, Semi-Annual Fund and Intermediate
Fund, together with their respective successors and assigns, collectively unless
the context expressly requires that the reference is applicable to one of such
Parties whereupon such reference shall apply only to such Party.
 
1.14           Dunham's Representative means Jeffrey Dunham or Neil Gascon,
individually and collectively.
 
1.15           Escrow Holder means First American Title Insurance Company whose
address is:
 

 
First American Title Insurance Company
18500 Von Karman Avenue, Suite 600
Irvine, California 92612
Attn:  Patty Beverly
Facsimile No.:  877-372-0260
Telephone No.:  949-885-2465
E-Mail Address:  pbeverly@firstam.com
Escrow No.:  NCS-636862
 

 
1.16           Existing Financing means the indebtedness described on
Exhibit 1.16 attached hereto with an outstanding unpaid principal balance of
approximately Seventeen Million Two Hundred Thousand Dollars ($17,200,000) as of
the Effective Date, which Exhibit describes the Existing Financing on a Project
by Project basis and lists each of the documents which evidences, secures and/or
governs the Existing Financing ("Existing Financing Documents").
 
1.17           Improvements means all buildings, fixtures, structures, parking
areas, landscaping and other improvements now or hereafter constructed and
located on the Land, together with all machinery and mechanical, electrical,
HVAC and plumbing systems (other than Personal Property) used in the operation
of the Land, but excluding any such items owned by Tenants in possession or
public or private utilities or contractors under contract.
 
1.18           Intermediate Fund means D&A Intermediate-Term Mortgage Fund III,
L.P., a California limited partnership, the general partner of which is AMI.
 
1.19           Land means that certain real property described in and the
subject of the Preliminary Title Reports, together with all right, title and
interest, if any, of any Owner in and to (i) all strips and gores and any land
lying in the bed of any street, road or avenue, opened or proposed, in front of
or adjoining a Project, (ii) any real property owned, claimed or fenced by any
Owner which adjoins a Project, (iii) any unpaid award made or to be made for the
taking by condemnation or otherwise of a Project, for public or quasi-public use
or purpose of such right, title or interest, (iv) any unpaid award for damage to
any or all of the Land by reason of change of grade of any such street, road or
avenue, (v) all easements, right-of-way, privileges, licenses (written or oral),
and (vi) any and all development rights, mineral rights, oil and gas rights, and
other intangible rights, titles, interests, privileges and appurtenances of
every kind and description appurtenant to or benefiting a Project.
 
 
2

--------------------------------------------------------------------------------

 
 
1.20           Net Contribution Value means the Contribution Value less the sum
of the principal amount of the Existing Financing on the Closing plus or minus
any adjustments to be debited or credited, as applicable, to American Spectrum
pursuant to Section 6.6.
 
1.21           Nevada Treasure means Nevada Treasure RV Resort, LLC, a Nevada
limited liability company.
 
1.22           Nevada Treasure Interest means one hundred percent (100%) of the
limited liability company interest and/or other equity or ownership interest in
Nevada Treasure.
 
1.23           Observer has the meaning set forth in Section 3.5
 
1.24           Senior Preferred Stock has the meaning set forth in
Section 3.2.2.
 
1.25           Preliminary Title Reports means those Preliminary Title Reports
issued by the Title Company with respect to each Property listed on
Exhibit 1.25.
 
1.26           Project(s) means, collectively, (a) the Nevada Treasure Interest,
and (b) all of Dunham’s right, title and interest, in and to the Land described
in each of the Preliminary Title Reports together with the Improvements
thereon.  Each of the Projects is identified on Exhibit 1.26 attached hereto and
shall be conveyed to American Spectrum Dunham Properties pursuant to the terms
and conditions of this Agreement.
 
1.27           San Jacinto means the Project identified on Exhibit 1.27 as San
Jacinto.
 
1.28           Semi-Annual Fund means D&A Semi-Annual Mortgage Fund III, L.P., a
California limited partnership, the general partner of which is AMI.
 
1.29           Survival Period means the period commencing on the Closing and
ending December 31, 2014.
 
1.30           Title Company means First American Title Insurance Company whose
address is.
 

 
First American Title Insurance Company
5 First American Way
Santa Ana, California 92707
Attn:  Vince Tocco and Linda Slavik
Facsimile No.:  877-461-2094
Telephone No.:  858-410-3886
E-Mail Address:  vtocco@firstam.com
 

 
 
3

--------------------------------------------------------------------------------

 
 
In addition to those terms defined above, capitalized terms used in this
Agreement shall have the meanings following the use of such terms or, if no
definition is so set forth, such capitalized terms shall have the meanings set
forth in the Glossary of Terms attached to this Agreement.
 
ARTICLE 2
 
CONTRIBUTION OF PROJECTS AND ISSUANCE OF SENIOR PREFERRED STOCK
 
On the Closing Date, Dunham hereby agrees to contribute each of the Projects to
American Spectrum Dunham Properties, and, in consideration thereof, American
Spectrum Realty agrees to issue to Dunham the Senior Preferred Stock, all upon
the terms and conditions set forth in this Agreement.  The Senior Preferred
Stock shall be allocated among and issued to the Dunham Funds in proportion to
each such entity’s respective share of the Net Contribution Value in accordance
with Section 3.2.2.
 
ARTICLE 3
 
CONTRIBUTION VALUE AND PAYMENT OF CONTRIBUTION VALUE
 
3.1           Contribution Value.  The aggregate Contribution Value for the
contribution and conveyance of the Projects is specified in Article 1.
 
3.2           Payment of Contribution Value.  The Contribution Value shall be
payable by American Spectrum to Dunham as follows:
 
3.2.1           Assumption of Existing Financing.  American Spectrum Dunham
Properties shall acquire the Projects subject to the Existing Financing (except
that the Existing Financing affecting San Jacinto which shall be released and
expunged by Dunham from the Official Records on or prior to Closing).  Upon the
terms and subject to the conditions set forth in this Agreement, on the Closing
Date, American Spectrum hereby assumes and agrees to pay, perform and discharge,
as and when due, any and all obligations owing with respect to the Existing
Financing, together with any and all costs, fees, expenses and other amounts
associated therewith which accrue and are payable on or after the Closing
Date.  Dunham hereby agrees and/or represents and warrants that it has paid or
will pay, has performed and discharged or will perform and discharge any
obligations owing with respect to the Existing Financing together with any and
all costs, fees, expenses and other amounts associated therewith which have
accrued and/or will accrue prior to the Closing Date.  Notwithstanding
anything  in this Agreement to the contrary, American Spectrum shall be solely
responsible for any and all amounts which become due and payable with respect to
the Existing Financing as a result of the assumption by American Spectrum of the
Existing Financing, including without limitation, any penalties, assumption
costs or related costs fees or expenses; provided, however, for all purposes,
American Spectrum shall not be in default of any obligation to Dunham or the
holder of any Senior Preferred Stock or the holder of any Dunham Note by reason
of any default under the Existing Financing which (a) arose prior to the Closing
or (b) arises by reason of the transactions described in this Agreement
(including the assumption of the Existing Financing without consent of the
holder of the Existing Financing) unless and until the holder of the applicable
Existing Financing forecloses upon or otherwise acquires the Project which is
governed by a lien created by such Existing Financing.  At Closing, the amount
of the then outstanding principal balance of the Existing Financing shall be
applied and credited toward payment of the Contribution Value.  American
Spectrum hereby agrees, from and after the Closing, to indemnify, defend and
hold harmless Dunham and its respective partners, directors, managers, officers,
employees, affiliates and representatives from and against any and all losses,
liabilities, damages, claims, suits, settlements, liabilities, costs, expenses
and other amounts (including reasonable attorneys fees) arising out of or
related to a breach by American Spectrum of its obligations set forth in this
Section 3.2.1 with respect to the Existing Financing (except the Existing
Financing affecting the San Jacinto Project). Dunham hereby agrees, from and
after the Closing, to indemnify, defend and hold harmless American Spectrum and
its respective partners, directors, managers, officers, employees, affiliates
and representatives from and against any and all losses, liabilities, damages,
claims, suits, settlements, liabilities, costs, expenses and other amounts
(including reasonable attorneys fees) arising out of or related to a breach by
Dunham of its obligations set forth in this Section 3.2.1 with respect to the
Existing Financing.
 
 
4

--------------------------------------------------------------------------------

 
 
3.2.2           Senior Preferred Stock.  In accordance with Section 6.5,
American Spectrum Realty shall deposit into Escrow Certificates (the "Senior
Preferred Stock Certificates") evidencing the Senior Preferred Stock to be
designated “8% Cumulative Preferred Stock, Series B” ("Senior Preferred Stock")
to be issued by American Spectrum Realty to Daily Fund, Semi-Annual Fund and
Intermediate Fund.  The value of the Senior Preferred Stock shall equal the Net
Contribution Value.  At the Closing, each of the Dunham Funds shall be issued a
Senior Preferred Stock Certificate for that number of shares of Senior Preferred
Stock set forth opposite its name on Exhibit 3.2.2 attached hereto.  The Senior
Preferred Stock shall have those rights, preferences and privileges set forth in
the Articles Supplementary (hereinbelow defined).  
 
 
(a)
Senior Preferred Stock Dividend.  As set forth in more detail in the Articles
Supplementary, the Senior Preferred Stock shall earn a dividend calculated like
simple interest as follows: (i) at the rate of eight percent (8%) per annum on
the then outstanding Net Contribution Value for the period commencing on the
Closing Date and terminating on December 31, 2014 (the “Initial Interest
Period”), and (ii) thereafter until the Senior Preferred Stock has been redeemed
in full, at the rate of twelve percent (12%) per annum on the then outstanding
Net Contribution Value.  The accrued and outstanding dividend shall be paid
monthly on the first business day of each calendar month commencing January 1,
2014 (each, a “Dividend Payment”); provided, however, that in connection with
each Dividend Payment attributable to the Initial Interest Period, only fifty
percent (50%) of the accrued dividend payable with respect each Dividend Payment
shall be payable in connection with the applicable Dividend Payment and the
balance of such dividend shall accrue and be paid in one lump sum payment on
December 1, 2015, which accrued amount shall earn simple interest at the same
rate as the then applicable dividend rate of the Senior Preferred Stock.  All
Dividend Payments shall be paid electronically via wire transfer of immediately
available funds to account(s) designated by Dunham.

 
 
5

--------------------------------------------------------------------------------

 
 
 
(b)
Redemption of Senior Preferred Stock.  As set forth more fully in the Articles
Supplementary, American Spectrum Realty shall be obligated to redeem the Senior
Preferred Stock issued to each of the Dunham Funds, pro rata in accordance with
the Senior Preferred Stock held by each of the Dunham Funds, as follows: (i) an
aggregate of Seventeen Million Dollars ($17,000,000) on December 1, 2014 in
consideration of approximately twenty-five percent (25%) of the Senior Preferred
Stock, (ii) an aggregate of Seventeen Million Dollars ($17,000,000) on June 1,
2015 in consideration of twenty-five percent (25%) of the Senior Preferred Stock
and (iii) on December 1, 2015 an amount equal to the Net Contribution Value less
the amounts theretofore paid in consideration of the redemption of Senior
Preferred Stock in consideration of the balance of the unredeemed Senior
Preferred Stock (each a "Redemption Payment").  Upon redemption of any of the
Senior Preferred Stock (A) the accrued but unpaid dividend with respect to such
redeemed Senior Preferred Stock shall also be paid to the holder of the Senior
Preferred Stock being so redeemed and (B) the Net Contribution Value shall be
reduced for purposes of determining the dividend to be earned
thereon.  Notwithstanding the foregoing, the accrued and unpaid dividend on the
Senior Preferred Stock that would not otherwise be payable until December 1,
2015 shall continue to accrue and earn interest as herein provided and be
payable on December 1, 2015.  Any Sale Payments (herein below defined) paid with
respect to the Senior Preferred Stock pursuant to this Agreement (x) shall
reduce the Net Contribution Value by the amount of such Sale Payment when such
Sale Payment is made and (y) shall be credited to the next Redemption Payment
required to be made by American Spectrum Realty.  Participation Payments (herein
below defined) shall not reduce the Net Contribution Value or be credited to any
Redemption Payment.  All Redemption Payments, Sale Payments and Participation
Payments shall be paid electronically via wire transfer of immediately available
funds to account(s) designated by Dunham.

 
 
(c)
Unconditional Payments.  Notwithstanding anything in this Agreement to the
contrary, the obligations of American Spectrum Realty to make the Dividend
Payments and the Redemption Payments pursuant to the schedule set forth herein
and in the Articles Supplementary is not conditioned in any way upon any future
sales or refinancings by American Spectrum Dunham Properties of any of the
Projects.

 
 
(d)
Articles Supplementary.  In the event of any conflict between the terms of the
Articles Supplementary and this Agreement, the Articles Supplementary shall
control.

 
 
6

--------------------------------------------------------------------------------

 
 
 
(e)
Compliance Certificate.  If the Chief Executive Officer or Chief Financial
Officer of American Spectrum Realty certifies to a third party lender that
American Spectrum Realty or any of its subsidiaries is in compliance with its
organizational documents (including the Articles Supplementary) and that no
consents (other than those obtained) are required for any transaction, such
third party lender shall have the right to conclusively rely on such
certificate.  American Spectrum Realty shall as soon as practicable provide a
copy of any such certificate to Dunham.

 
3.3           Allocation of Contribution Value, Sale Payment and Participation
Payment.
 
3.3.1           Allocation of Contribution Value.  Exhibit 3.3.1 sets forth the
mutually agreed upon allocation of the Net Contribution Value to each Project as
of the Closing Date (the "Project Allocation Amount").
 
3.3.2           Sale Payment and Participation Payments.  As set forth more
fully in the Articles Supplementary (except as otherwise provided in this
Agreement) when a Project is sold after the Closing to a Person unrelated to
American Spectrum (excluding the granting of any deed of trust or mortgage to
secure the repayment of any financing or refinancing), American Spectrum Realty
shall pay to the holders of the Senior Preferred Stock at the closing of such
sale, pro rata to the then outstanding Senior Preferred Stock then held by each
such holder, the sum of the following:
 
 
(a)
Sale Payment.  A payment (the "Sale Payment") in an amount equal to the
following:

 
 
(i)
if the gross sales price for such Project exceeds the Project Allocation Amount
with respect to such Project, an amount equal to fifty percent (50%) of the
difference between the applicable Project Allocation Amount for such Project and
the indebtedness secured by the Project which is repaid at the closing of such
sale; or

 
 
(ii)
if the Project Allocation Amount with respect to such Project exceeds the gross
sales price for such Project, an amount equal to fifty percent (50%) of the
difference between the gross sales price for such Project and the indebtedness
secured by such Project which is repaid at the closing of such sale.

 
The Dunham Loan will be evidenced by two (2) separate Secured Promissory  Notes
(each, a “Dunham Note”), each in the original principal amount of
$3,000,000.  The repayment of each of the Dunham Notes will be secured by, among
other things, a deed of trust on one or more of the Projects.  As set forth in
each of the Dunham Notes, the lenders thereunder have agreed that, in connection
with the sale of one or more of the Projects securing repayment of such Dunham
Note, that in lieu of repaying the applicable Note with the proceeds from such
transaction that the applicable Project may be replaced by a substitute property
(including one or more of the Projects) (a “Substitute Property”) on terms and
conditions set forth in the applicable Dunham Note.  In the event a Project
securing repayment of a Dunham Note is properly replaced by a Substitute
Property in accordance with the terms of the Note, then for purposes of
calculating the Sale Payments for purposes of Section 3.3.2(a)(i) and (ii), the
amount owing under the applicable Dunham Note shall not be included in
calculating the aggregate indebtedness being repaid at the closing of such sale.
 
 
7

--------------------------------------------------------------------------------

 
 
 
(b)
Participation Payment.  Subject to the provisions of Section 3.3.3, in the event
the gross sales price of a Project exceeds the Project Allocation Amount for
such Project,  a payment ("Participation Payment") in an amount equal to
twenty-five percent (25%) of the Profits (herein below defined) attributable to
the sale of such Project shall be paid to the Dunham Funds, pro rata to each
based on the Project Allocation Amount of the properties contributed by each of
the Dunham Funds pursuant to this Agreement.  For purposes hereof, the term
“Profits” with respect to the sale of a Project shall be an amount equal to the
gross sales price of such Project, less the sum of the following:

 
 
(i)
the applicable Project Allocation Amount, plus

 
 
(ii)
any amounts paid by American Spectrum to third parties with respect to such
Project to make capital improvements thereto or to pay to third party brokers to
secure leases thereof, plus

 
 
(iii)
any third-party costs incurred by American Spectrum to sell or market such
Project, including the cost of marketing materials, broker commissions,
consultant fees (including reasonable attorneys and accountants, etc.), plus

 
 
(iv)
normal and customary third-party closing costs paid by American Spectrum in
connection with the sale of such Project.

 
For purposes of calculating Profits, there shall not be deducted from the gross
sales price of such Project fees paid to American Spectrum or any other "soft"
costs of American Spectrum Dunham Properties other than as specified above,
including without limitation, any fees or interest paid to American Spectrum or
interest expense paid by American Spectrum, property taxes, insurance, or the
net income or loss generated from rents or operating activities with respect to
such Project.  Exhibit 3.3.2 sets forth examples with respect to the making of a
Sale Payment and a Participation Payment.
 
 
(c)
Termination of Sale Payments; Survival of Participation Payments.  American
Spectrum Dunham Properties’ obligation to make any Sale Payment pursuant to this
Section 3.3.2 shall terminate upon the redemption in full of the Senior
Preferred Stock.  Additionally, American Spectrum Dunham Properties’ obligation
to make any Participation Payment shall survive the redemption in full of the
Senior Preferred Stock and shall continue until all of the Projects have been
sold by American Spectrum Dunham Properties.

 
 
8

--------------------------------------------------------------------------------

 
 
 
(d)
Transfer of Senior Preferred Stock. In the event of any transfer or assignment
of any Senior Preferred Stock by the holder thereof, such holder shall be
obligated to transfer and assign to the applicable recipient such holder’s
rights to receive the Sale Payments attributable to the applicable Senior
Preferred Stock in connection with such transfer or assignment, and such
transferee shall acknowledge in writing that such transferee is taking the
Senior Preferred Stock subject to the applicable provisions of this Agreement.

 
3.3.3           Deficit Payments.  In the event the gross sales price for any
Project is less than the Project Allocation Amount with respect to such Project
(such difference being called the “Deficit,”), then one hundred percent (100%)
of the Profits associated with future sales of Projects shall be paid to the
then holders of the Senior Preferred Stock, pro rata to each based on the then
outstanding shares of Senior Preferred Stock, until the aggregate Deficit has
been paid in full (each, a “Deficit Payment”).  All such Deficit Payments
pursuant to this Section 3.3.3. shall be treated as a Sales Payment.  Exhibit
3.3.2 sets forth examples with respect to the making of a Deficit Payment.
 
3.4           Project Indebtedness.  American Spectrum covenants that it shall
not finance or refinance any Project that results in the aggregate outstanding
indebtedness on any Project (including Nevada Treasure) to exceed at any time
forty percent (40%) of the Project Allocation Amount of such Project (the
“Indebtedness Limit”).  American Spectrum further covenants that it shall not
permit any loan covenant that restricts or limits in any manner the payments
owing with respect to the Senior Preferred Stock hereunder and under the
Articles Supplementary.  The Limited Liability Company Agreement of American
Spectrum Dunham Properties shall contain covenants and restrictions evidencing
the rights granted with respect to the Senior Preferred Stock pursuant to this
Section 3.4, which covenants and restrictions may not be amended without the
prior written consent of AMI.  Notwithstanding anything contained herein to the
contrary, (a) the Existing Indebtedness (excluding any refinance of all or any
portion of the Existing Financing) shall not constitute a breach of this Section
3.4 to the extent the Existing Financing with respect to any Project securing
the Existing Financing exceeds the Indebtedness Limit for such Project, and (b)
the Dunham Loans shall not constitute a breach of this Section 3.4 to the extent
the Dunham Loans with respect to any Project securing the Dunham Loans exceeds
the Indebtedness Limit for such Project.
 
3.5           Board Observer Rights. For so long as Dunham Funds hold (and
continue to hold) any of the Senior Preferred Stock, American Spectrum Realty
shall permit a designee of Dunham Funds, reasonably approved by the Board of
Directors (the "Observer"), to attend all meetings of its Board of Directors
(whether in person, telephonic or other) (other than meetings of a committee of
the Board of Directors, unless other observers of the Board of Directors are
permitted to attend such meetings) in a nonvoting observer capacity and, in this
respect, shall provide the Observer, concurrently with the members of the Board
of Directors, with copies of all notices, minutes, consents, and other materials
that it provided to such members (other than in meetings of a committee of the
Board of Directors, unless other observers of the Board of Directors are
provided such materials); provided, however, that the Observer agrees to hold in
confidence and trust all information so provided to it or learned by it in
connection with its rights hereunder; it being understood and agreed that,
notwithstanding the foregoing, the Observer shall be permitted to use or
disclose such information to Dunham Funds and its affiliates in connection with
managing its investment in American Spectrum Realty; and provided, further, that
American Spectrum Realty reserves the right to withhold any information or to
exclude the Observer from any meeting or portion thereof if (i) access to such
information or attendance at such meeting could adversely affect the
attorney-client privilege between American Spectrum Realty and its counsel; or
(ii) access to such information or attendance at such meeting could result in a
conflict of interest between Dunham Funds or its representative and American
Spectrum Realty.  If requested, the Observer shall execute a standard
non-disclosure agreement with respect to the information disclosed in any such
board meeting.  The initial Observer shall be Jeffrey Dunham, who may be
replaced at any time by unanimous consent of the Dunham Funds, provided,
however, that the replacement of Jeffrey Dunham by anybody other than Denise
Iverson shall require the consent of American Spectrum Realty (which may not be
unreasonably withheld).
 
 
9

--------------------------------------------------------------------------------

 
 
3.6           American Spectrum Realty Obligations.  American Spectrum Realty
hereby agrees that it shall be jointly and severally liable for the performance
and satisfaction of any and all of American Spectrum Dunham Properties'
obligations owing under this Agreement or any of the other transaction documents
entered into in connection herewith.
 
3.7           Joint Ventures.  American Spectrum may transfer, assign,
contribute or otherwise convey one or more of the Projects to a joint venture
entity with a third party ("JV Transaction"); provided, however, that in
connection with any JV Transaction, American Spectrum shall not subordinate its
capital account in the joint venture entity attributable to the applicable
Project to the capital account  of any other party therein (but such capital
accounts may be on a pari passu basis).  In connection with any return of
capital from such joint venture entity attributable to a sale of the applicable
Project by the joint venture entity, the holders of the Senior Preferred Stock
and the Dunham Funds shall be entitled to receive Sale Payments and
Participation Payments from the cash returned to American Spectrum from the
joint venture entity in accordance with the provisions of Section 3.3.2
hereof.  Notwithstanding anything contained herein to the contrary, the
provisions of Section 3.4 shall apply to any Project which is transferred,
assigned, contributed or otherwise conveyed to a JV Transaction, which
provisions with respect to the applicable Project shall be set forth in the
organizational documents of such joint venture entity (the "JV Organizational
Documents").  American Spectrum shall deliver to Dunham and the holders of the
Senior Preferred Stock a copy of such JV Organizational Documents promptly
following the closing of any such JV Transaction.
 
ARTICLE 4
 
INTENTIONALLY OMITTED
 
 
10

--------------------------------------------------------------------------------

 
 
ARTICLE 5
 
ENTRY, INSPECTIONS AND DUE DILIGENCE
 
5.1           Inspections, Tests and Studies.  Subject to the terms of this
Agreement, American Spectrum shall have or has had the right to conduct such
economic, market, title, survey, environmental, physical and structural
examinations, inspections, tests, studies and investigations of each Property as
American Spectrum deems necessary.  Dunham shall permit American Spectrum and
its authorized agents and representatives to enter upon each Project at all
reasonable times during normal business hours to inspect and conduct reasonably
necessary tests and studies of the Project.  At Dunham's option, Dunham may be
present for any inspections, tests or studies.  American Spectrum Dunham
Properties shall bear the cost of all such inspections, tests and
studies.  Notwithstanding the foregoing, American Spectrum shall not conduct or
allow any physically intrusive testing of, on or under the Properties, without
first obtaining Dunham’s prior written consent as to the timing and scope of the
work to be performed and as to the contractor that American Spectrum will engage
to conduct such work.
 
In conducting any inspections, tests or studies, American Spectrum and its
authorized agents and representatives shall (a) comply with all applicable laws
and all terms of the Tenant Leases regarding entry rights and obligations of
Dunham to Tenants, (b)  not unreasonably disturb the Tenants or unreasonably
interfere with their use of the Property pursuant to their respective Tenant
Leases, (c) not unreasonably interfere with the operation, use and maintenance
of the Property, (d) not damage any part of a Property or any Personal Property
owned or held by any Tenant or any third party, (e) not injure or otherwise
cause bodily harm to Dunham or any of its respective agents, contractors and
employees or any Tenant or other third party, (f) promptly pay, when due, the
cost of all inspections, tests or studies, (g) not permit any liens to attach to
a Property by reason of the exercise of the rights under this Section, (h) fully
restore each Property to the condition in which the same was found before any
such inspections, tests or studies were undertaken, (i) not reveal or disclose
any information obtained as a result of such tests, inspections and studies
concerning the Property except as may otherwise be permitted in this
Agreement.  If American Spectrum fails to promptly repair or restore a Property
at its own expense as required above, American Spectrum agrees to reimburse
Dunham for any costs incurred by Dunham to so repair or restore such
Property.  The obligations set forth in this Section shall survive the Closing
or any earlier termination of this Agreement.
 
American Spectrum agrees that it will cause it and any person accessing the
Properties hereunder to be covered by not less than $1,000,000 commercial
general liability insurance (with, in the case of American Spectrum’s coverage,
a contractual liability endorsement, insuring its indemnity obligations under
this Agreement), insuring all activity and conduct of such Person while
exercising such right of access and naming Dunham and its affiliates as
insureds, issued by a licensed insurance company qualified to do business in the
State in which the Property in question is located and otherwise reasonably
acceptable to Dunham.
 
5.2           Dunham's Books and Records.  During the period commencing on the
date hereof and terminating on the Closing Date, Dunham shall permit American
Spectrum and its authorized agents and representatives to inspect and examine
all books, records and files of Dunham relating to the Property ("Dunham's Books
and Records") at all reasonable times during normal business hours on not less
than seventy-two (72) hours advance notice.  At Dunham's option, AMI may be
present for any inspection and examination of such Dunham Books and
Records.  American Spectrum shall be entitled to communicate directly with any
holder of the Existing Financing, the Authorities and any Tenant in connection
with the transaction contemplated by this Agreement.  American Spectrum shall
bear the cost of all inspections and examinations of Dunham's Books and Records
and of all communications with the holder of the Existing Financing, the
Authorities or any Tenant.
 
 
11

--------------------------------------------------------------------------------

 
 
5.3           Indemnity.  American Spectrum hereby agrees to indemnify, defend,
protect and hold Dunham and its agents, employees, partners, shareholders,
officers, directors, representatives and contractors harmless from and against
any and all liens, claims, losses, liabilities, damages, costs, expenses, causes
of action (including reasonable attorneys' fees and court costs) arising out of
(a) American Spectrum's inspections, tests and studies (excluding the mere
discovery of Hazardous Materials or other conditions that are not exacerbated by
such inspections, tests and studies), (b) American Spectrum's examination and
inspection of Dunham's Books and Records, (c) American Spectrum’s entry and
access to the Projects, and (d)  any violation by American Spectrum of the
provisions of Article 16.  The actions of American Spectrum’s agents, employees,
partners, shareholders, officers, directors, representatives and contractors
shall be deemed actions of American Spectrum for purposes of this
indemnity.  The foregoing indemnity shall survive the Closing or any earlier
termination of this Agreement.
 
ARTICLE 6
 
ESCROW
 
6.1           Opening of Escrow.  The Parties shall promptly cause the Opening
of Escrow to occur by delivering a fully executed copy of this Agreement to
Escrow Holder and requiring Escrow Holder to execute and deliver the Escrow
Joinder to the Parties.  American Spectrum and Dunham hereby authorize their
respective attorneys to execute and deliver to Escrow Holder any additional or
supplementary instructions as may be necessary or convenient to implement the
terms of this Agreement and close the transaction contemplated by this
Agreement.  American Spectrum and Dunham also agree to execute, if necessary,
Escrow Holder's standard or pre-printed Escrow Instructions but only to the
extent the same are consistent with this Agreement and do not impose any
obligations or liabilities on American Spectrum and/or Dunham not contemplated
by this Agreement or reduce or restrict any rights or remedies otherwise
available to American Spectrum and/or Dunham; provided, however, any such
additional, supplementary and/or preprinted standard Escrow Instructions shall
not supersede or conflict with this Agreement and any such conflict shall be
governed by the terms of this Agreement.
 
6.2           Rights and Obligations of Escrow Holder.
 
6.2.1           Indemnification of Escrow Holder.  If this Agreement or any
matter relating to this Agreement shall become the subject of any litigation or
controversy, American Spectrum and Dunham agree, jointly and severally, to hold
Escrow Holder free and harmless from any loss or expense, including attorneys'
fees, that may be suffered by it by reason thereof except in connection with
Escrow Holder's negligence, willful misconduct, or breach of its duties under
this Agreement.
 
 
12

--------------------------------------------------------------------------------

 
 
6.2.2           Nonliability of Escrow Holder.  Escrow Holder shall not be
liable for the sufficiency or correctness as to form, manner, execution or
validity of any instrument deposited with it, nor as to the identity, authority
or rights of any Person executing such instrument, nor for failure to comply
with any of the provisions of any agreement, contract or other instrument filed
with Escrow Holder or referred to herein except that Escrow shall not be
released from any liability arising from its negligence, willful misconduct, or
breach of its duties under this Agreement.  Subject to the exceptions contained
in the immediately preceding sentence, Escrow Holder's duties hereunder shall be
limited to the safekeeping of such money, instruments or other documents
received by it as Escrow Holder, and for their disposition in accordance with
the terms of this Agreement.  Notwithstanding the foregoing, if Escrow Holder is
also acting as the Title Company under the terms of this Agreement, nothing in
this Section 6.2.2 shall limit the liability of Title Company under the Title
Policy.
 
6.3           Closing Date.  The Closing shall occur through Escrow on the
Closing Date.
 
6.4           Dunham's Deliveries.  Dunham hereby covenants and agrees to
deliver or caused to be delivered to Escrow Holder at least one (1) Business Day
prior to the Closing Date the following instruments and documents with respect
to each Project (other than Nevada Treasure):
 
6.4.1           Deed.  A deed ("Deed"), duly executed by Dunham and
acknowledged, and in a form suitable for recordation in the Official Records,
conveying the Project to American Spectrum Dunham Properties.  The Deed shall be
in the form attached hereto as Exhibit 6.4.1 together with a customary owner’s
affidavit sufficient to enable Title Company to remove the standard exceptions
from the Title Policy.
 
6.4.2           Bill of Sale.  One (1) counterpart original of a bill of sale
("Bill of Sale") duly executed by Dunham in favor of American Spectrum Dunham
Properties, assigning and conveying to American Spectrum Dunham Properties all
of Dunham's right, title and interest in and to the Personal Property.  The Bill
of Sale shall be in the form of attached hereto as Exhibit 6.4.2.
 
6.4.3           Assignment of Tenant Leases.  Two (2) counterpart originals of
an Assignment of Tenant Leases ("Tenant Lease Assignment") duly executed by
Dunham assigning to American Spectrum Dunham Properties all of Dunham's right,
title and interest in and to the Tenant Leases.  The Tenant Lease Assignment
shall be in form attached hereto as Exhibit 6.4.3.
 
6.4.4           General Assignment.  Two (2) counterpart originals of an
assignment ("General Assignment") duly executed by Dunham assigning to American
Spectrum Dunham Properties all of Dunham's right, title and interest in and to
all Intangible Property.  The General Assignment shall be in the form attached
hereto as Exhibit 6.4.4.
 
6.4.5           Tenant Notification Letter.  A letter to each of the Tenants
("Tenant Notification Letter") duly executed by Dunham and dated as of the
Closing Date, notifying each Tenant that:  (a) the Project has been sold to
American Spectrum Dunham Properties, (b) all of Dunham's right, title and
interest in and to the Tenant Leases and Tenant Deposits have been assigned to
American Spectrum Dunham Properties, including the security deposit, the amount
of which shall be specified, and (c) commencing immediately, all rent and other
payments and any notices under the Tenant Leases are to be paid and sent to
American Spectrum Dunham Properties.
 
 
13

--------------------------------------------------------------------------------

 
6.4.6           Non-Cash Tenant Deposits.  All letters of credit and other
non-cash Tenant Deposits for which American Spectrum Dunham Properties is not
receiving a credit under Section 6.6 below, together with documents of
assignment running in favor of American Spectrum Dunham Properties, if any.
 
6.4.7           Change of Address.  Upon request of American Spectrum delivered
not later than five (5) business days prior to the scheduled Closing Date,
written notices executed by Dunham to each holder of the Existing Financing and
to taxing Authorities having jurisdiction over a Project, changing the address
for service of notice and delivery of statements and bills.
 
6.4.8           Lien Affidavits.  Any lien affidavits or mechanic's lien
indemnifications as may be reasonably requested by the Title Company in order to
issue the Title Policy, without exception for mechanics’ liens for work at the
Project, that is being performed by or for Dunham.
 
6.4.9           Nevada Treasure Interest and Assignment of Interest.  Two
counterpart originals of an assignment of interest ("Assignment of Interest")
duly executed by Semi-Annual Fund assigning to American Spectrum Dunham
Properties the Nevada Treasure Interest.  The Assignment of Interest shall be in
the form of Exhibit 6.4.12.
 
In addition to the above deliveries respecting the Projects, Dunham shall
deliver or cause to be delivered to Escrow Holder at least one (1) business day
prior to the Closing Date the following instruments and documents:
 
6.4.10           Non-Foreign Certification.  A certification duly executed by
the Dunham Funds, as applicable, under penalty of perjury in the form of (a) the
Non-Foreign Certificate Transferor's Certification of Non-Foreign Status
attached hereto as Exhibit 6.4.10A ("Federal Non-Foreign Certificate") and
(b) the Real Estate Withholding Exemption Certificate and Waiver Request for
(California Form 593-C) attached hereto as Exhibit 6.4.10B (the "California
Non-Foreign Certificate").
 
6.4.11           Proof of Authority.  Such proof of Dunham's authority and
authorization to enter into this Agreement and to consummate the transactions
contemplated by this Agreement, and such proof of the power and authority of the
individual(s) executing and/or delivering any instruments, documents or
certificates on behalf of Dunham to act for and bind Dunham as may be reasonably
required by Title Company and/or American Spectrum.
 
6.4.12           Affirmation Certification.  A certificate ("Dunham's
Affirmation Certificate") made by Dunham indicating all of the representations
and warranties made in this Agreement by Dunham remain as of the Closing Date
true, correct and complete in all material respects as if remade on such date
(except to the extent any representations and warranties address matters only as
of a particular date or only with respect to a specific period of time, in which
case as of such date or with respect to such period).
 
 
14

--------------------------------------------------------------------------------

 
6.4.13           Resignation Letters.  Resignation letters executed by Denise
Iverson and Court Warren resigning as Managers of Nevada Treasure effective as
of the Closing Date.
 
6.4.14           Additional Documents.  Any additional documents that Escrow
Holder or the Title Company may reasonably require for the proper consummation
of the transaction contemplated by this Agreement.
 
6.5           American Spectrum's Deliveries.  American Spectrum hereby
covenants and agrees to deliver or cause to be delivered to Escrow Holder on or
at least one (1) Business Day prior to the Closing Date the following:
 
6.5.1           Intentionally Omitted.
 
6.5.2           Tenant Lease Assignment.  Two (2) counterpart originals of each
Tenant Lease Assignment duly executed by American Spectrum Dunham Properties.
 
6.5.3           General Assignment.  Two (2) counterpart originals of each
General Assignment duly executed by American Spectrum Dunham Properties.
 
6.5.4           Affirmation Certification.  A certificate ("American Spectrum's
Affirmation Certificate") made by American Spectrum Dunham Properties indicating
all of the representations and warranties made in this Agreement by American
Spectrum remain as of the Closing Date true, correct and complete as if remade
on such date.
 
6.5.5           Proof of Authority.  Such proof of American Spectrum's authority
and authorization to enter in this Agreement and to consummate the transactions
contemplated by this Agreement, including without limitation, the filing of the
Articles Supplementary and the issuance of the Senior Preferred Stock, and such
proof of the power and authority of the individual(s) executing and/or
delivering any instruments, documents or certificates on behalf of American
Spectrum to act for and bind American Spectrum as may be reasonably required by
Dunham, including evidence of approval of this Agreement and the transactions
contemplated herein  by the Board of Directors of American Spectrum Realty.
 
6.5.6           Additional Documents.  Any additional documents that American
Spectrum, Escrow Holder or the Title Company may reasonably require for the
proper consummation of the transaction contemplated by this Agreement.
 
On or before the first to occur of (a) ten (10) Business Days following the
Closing Date , or (b) final prorations with respect to the Projects being
approved in accordance herewith, American Spectrum shall instruct the transfer
agent for American Spectrum Realty to issue to Daily Fund, Intermediate Fund and
Semi-Annual Fund the Senior Preferred Stock Certificate(s) in accordance with
Article 2.
 
 
15

--------------------------------------------------------------------------------

 
 
6.6         Prorations.
 
6.6.1           General.  Prorations and adjustments shall be made with respect
to each Project (other than Nevada Treasure).  All items to be prorated shall be
prorated as of 11:59 P.M. on the day preceding the Closing Date.  For purposes
of calculating prorations, American Spectrum Dunham Properties shall be deemed
to be in title to the applicable Project and therefore entitled to the income
and responsible for the expenses for the Closing Date.  All proration items
pertaining to the month in which the Closing Date occurs shall be prorated based
upon the actual number of days in such month.
 
6.6.2           Revenues.  Subject to the provisions of Sections 6.6.3 and
6.6.4, Revenues shall be prorated as of the Closing Date.
 
6.6.3           Delinquent Revenues.  Revenues are delinquent when payment
thereof is due prior to the Closing Date but has not been received by the
Closing Date.  Delinquent Revenues shall be prorated between Dunham and American
Spectrum Dunham Properties as of the Closing Date but not until they are
actually collected by American Spectrum Dunham Properties.  American Spectrum
Dunham Properties shall have the right to collect any delinquent Revenues, but
shall not have the obligation to do so.  American Spectrum Dunham Properties
shall use commercially reasonable efforts to collect or attempt to collect
delinquent Revenues but shall have no obligation to bring a lawsuit against any
Tenant.  Dunham shall also have the right to collect delinquent Revenues from
Tenants after the Closing, but shall not be entitled to commence any litigation
or disposition or eviction proceedings against the delinquent
Tenant.  Delinquent Revenues collected by American Spectrum Dunham Property, net
of the reasonable costs of collection (including attorneys' fees), shall be
applied first against any amount currently due and then to amounts most recently
overdue.  Payments due to Dunham as a result of collected Delinquent Revenues
shall be payable by American Spectrum Dunham Properties to Dunham upon receipt
thereof.
 
6.6.4           Operating Cost Pass-Throughs, Etc.  Operating cost
pass-throughs, percentage-rentals, additional rentals and other retroactive
rental escalations, sums or charges (“Additional Rents”) payable by Tenants
which accrue to the Closing Date but are not then due and payable, shall be
prorated as of the Closing Date; provided, however, no payment thereof shall be
made to Dunham unless and until American Spectrum Dunham Properties collects
such revenues from the Tenants.  American Spectrum Dunham Properties shall use
commercially reasonable efforts  to collect such Additional Rents on Dunham’s
behalf and shall pay such amounts to Dunham promptly upon receipt.  Dunham shall
also have the right to collect, after Closing, Additional Rents due to Dunham
from Tenants, but shall not be entitled to commence any litigation or
disposition or eviction proceeding against a Tenant.  Dunham shall not be
entitled to any such Additional Rents received by American Spectrum Dunham
Properties from a Tenant after the Closing Date unless such Tenant is current in
its obligations under its Tenant Lease for periods occurring from and after the
Closing.  Such Additional Rents collected by American Spectrum Dunham
Properties, net of the reasonable costs of collection (including attorneys'
fees), shall be applied first to any amount currently due, and, to the extent
amounts are available, American Spectrum Dunham Properties shall pay to Dunham
amounts accruing prior to the Closing, computing same on a per diem basis after
amortizing them over the respective periods for which such amounts are
payable.  Payments of such prorated amounts collected by American Spectrum
Dunham Properties shall be made to Dunham promptly after receipt and shall be
accompanied by a report showing how same were calculated and such reasonably
detailed supporting documentation evidencing the calculation of the amount due
Dunham.
 
 
-16-

--------------------------------------------------------------------------------

 
 
6.6.5           Tenant Deposits.  At the Closing, Dunham shall transfer all
Tenant Deposits then held by Dunham to American Spectrum Dunham Properties
(i.e., security deposits and cleaning deposits, whether in the form of cash or
letters of credit) or, to the extent not transferred, American Spectrum Dunham
Properties shall be credited and Dunham shall be debited with an amount equal to
all Tenant Deposits being held by Dunham (or by any other Person for the benefit
of Dunham) under the Tenant Leases and Dunham shall retain all such Tenant
Deposits so credited and debited.
 
6.6.6           Prepaid Rentals.  Rentals received by Dunham prior to the
Closing Date attributable to periods after the Closing Date shall be credited to
American Spectrum Dunham Properties and debited to Dunham at the
Closing.  Dunham shall retain all such prepaid rentals.
 
6.6.7           Taxes and Assessments.  Real property tax refunds and credits
received after the Closing which are attributable to a fiscal tax year which
ended prior to the Closing shall belong to Dunham.  Any such refunds and credits
attributable to the fiscal tax year during which the Closing occurs shall be
apportioned between Dunham and American Spectrum Dunham Properties after
deducting the reasonable out-of-pocket expenses of collection thereof.  All real
estate taxes and assessments on each Project shall be prorated on the basis of
the fiscal period for which assessed (if the Closing shall occur before the tax
rate is fixed, the apportionment of taxes shall be based on the tax rate for the
preceding period applied to the latest assessed valuation and when the actual
real property taxes are finally fixed, the Parties shall promptly make a
recalculation of such proration, and the appropriate Party shall make the
applicable payment reflecting the recalculation to the other Party).
 
6.6.8           Operating Expenses.  All utility service charges for
electricity, water, heat, air conditioning service and other utilities, elevator
maintenance, common area maintenance, taxes (other than real estate taxes and
assessments) such as rental taxes, other expenses incurred in operating a
Project that Dunham customarily pays, and any other costs incurred in the
ordinary course of business and operation of a Project shall be prorated as of
the Closing Date on an accrual basis and American Spectrum Dunham Properties
shall receive a credit for any accrued and unpaid amounts, and Dunham shall be
debited with such amounts.  If any such amounts are paid in advance, Dunham
shall receive a credit from American Spectrum Dunham Properties for the portion
of such amounts allocable to any period from and after the Closing Date.  Dunham
shall pay all such expenses that accrue prior to the Closing Date and American
Spectrum Dunham Properties shall pay all such expenses accruing on the Closing
Date and thereafter.  To the extent possible, Dunham and American Spectrum
Dunham Properties shall obtain billings and meter readings as of the Closing
Date to aid in such prorations.  No proration shall be made with respect to
operating costs that are paid directly by Tenants under the Tenant
Leases.  Notwithstanding the foregoing, American Spectrum Dunham Properties
shall not receive any credit for operating expenses due after the Closing to the
extent that (i) Tenants are obligated under their Tenant Leases to pay such
amounts, and (ii) Dunham has not received any payments from such Tenants on
account of amounts due after the Closing.  Further, if Dunham has paid any
operating credits that are required to be reimbursed by Tenants, American
Spectrum Dunham Properties shall use commercially reasonable efforts  to collect
such amounts on Dunham’s behalf and shall pay such amounts to Dunham promptly
upon receipt.  Dunham shall also have the right to collect, after Closing, such
reimbursable amounts due to Dunham from Tenants, but shall not be entitled to
commence any litigation or disposition or eviction proceeding against a Tenant.
 
 
-17-

--------------------------------------------------------------------------------

 
 
Utility Deposits, plus any interest on the Utility Deposits, to which Dunham
will be entitled that are held by the provider of the utilities and which are
freely transferable to American Spectrum Dunham Properties, shall at the
election of Dunham be assigned by Dunham to American Spectrum Dunham Properties
and American Spectrum Dunham Properties shall pay to Dunham the full amount
thereof at the Closing.  Dunham shall retain the right to obtain a refund of any
Utility Deposits which are not assigned to American Spectrum Dunham Properties,
and American Spectrum Dunham Properties will cooperate with Dunham as reasonably
requested (at no out-of-pocket cost or expense to Dunham) in obtaining any
refund.
 
Furthermore, Dunham shall retain all right, title and interest in and to all
performance bonds, DRE postings and other similar amounts and shall be
authorized to seek a return of such amounts from and after the Closing Date and
American Spectrum Dunham Properties will cooperate with Dunham, as reasonably
requested by Dunham, in obtaining any refund.
 
6.6.9           Lease Expenses.  Dunham shall pay in full all Lease Expenses
incurred with respect to new leases, or amendments of existing Leases executed
prior to the Closing Date without contribution or proration from American
Spectrum.
 
6.6.10           Capital Expenditures.  All capital and other improvements
(including labor and materials) which are performed or contracted for by Dunham
prior to the Closing Date shall be paid by Dunham, without contribution or
proration from American Spectrum.
 
6.6.11           Existing Financing.  The outstanding principal balance of the
Existing Financing as of the Closing Date shall be credited toward payment of
the Contribution Value.  Accrued and unpaid interest payable under the Existing
Financing shall be prorated on an accrual basis.  Dunham shall be debited with
all such interest which accrues prior to the Closing Date and American Spectrum
Dunham Properties shall be credited with such amount.  Upon the Closing Date,
title to any impound or escrow account under the Existing Financing for taxes,
insurance, capital improvements, deferred maintenance or other items shall be
deemed assigned by Dunham to American Spectrum Dunham Properties and Dunham
shall be credited and American Spectrum Dunham Properties debited with the
amount(s) in such account(s) as of the Closing Date.
 
6.6.12           Contracts.  Amounts payable under Contracts shall be prorated
on an accrual basis.  American Spectrum Dunham Properties shall receive a credit
for any accrued and unpaid amounts as of the Closing Date, and Dunham shall be
debited with such amounts.  If any such amounts are paid in advance, including
any excess cash provided by Dunham to property managers with respect to any of
the Projects, Dunham shall receive a credit (and American Spectrum shall be
debited) for such amounts allocable to any period on or after the Closing
Date.  Dunham shall pay all amounts due thereunder prior to the Closing Date and
American Spectrum Dunham Properties shall pay all amounts due on the Closing
Date and thereafter.  There shall not be any adjustment with respect to
Contracts terminated prior to the Closing and any and all accounts payable under
such Contracts shall be paid by Dunham.
 
 
-18-

--------------------------------------------------------------------------------

 
 
6.6.13           Method of Proration.  All prorations shall be made on a
Project-by-Project basis in accordance with customary practice in the
jurisdiction in which the Project is situated, except as expressly provided in
this Agreement.  Dunham shall cause its accountants or employees to prepare a
schedule of tentative prorations.  Such prorations, if and to the extent known
and agreed upon by American Spectrum as of the Closing Date, shall be paid by
American Spectrum to Dunham (if the prorations result in a net credit to Dunham)
by increasing the Net Contribution Value by the amount owed to Dunham, or by
Dunham to American Spectrum Dunham Properties (if the prorations result in a net
credit to American Spectrum Dunham Properties), by decreasing the Net
Contribution Value by the amount owed to American Spectrum Dunham Properties.
 
        6.6.14           Nevada Treasure.  All real property taxes and
assessments with respect to Nevada Treasure shall be pro rated  between the
Parties as set forth in this Section 6.6.  Notwithstanding anything to the
contrary contained herein, there shall be no other pro rations with respect to
Nevada Treasure.
 
         6.7           Disbursements and Other Actions by Escrow Holder.  Upon
the Closing, Escrow Holder shall promptly undertake all of the following in the
manner herein below indicated:
 
6.7.1           Recordation.  Cause to be recorded in the appropriate Official
Records the Deeds (with documentary transfer tax, if any, to be shown by a
separate unrecorded statement), and any other documents which Dunham and
American Spectrum may mutually direct to be recorded in the Official Records and
obtain conformed copies thereof for distribution to American Spectrum and
Dunham.
 
6.7.2           Delivery of Documents.  Escrow Holder shall:
 
6.7.2.1              Cause the Title Company to issue the Title Policy to
American Spectrum.
 
6.7.2.2              Combine into two separate fully executed originals and
deliver one each to Dunham and American Spectrum Dunham Properties of the two
(2) original counterparts of the Tenant Lease Assignment and General Assignment
executed by Dunham and American Spectrum Dunham Properties.
 
6.7.2.3              Deliver to American Spectrum Dunham Properties the Federal
Non-Foreign Certificate, the California Non-Foreign Certificate, the Bill of
Sale, the Assignment of Interest and Dunham's Affirmation Certificate executed
by Dunham.
 
6.7.2.4              Deliver the Tenant Notices to the applicable Tenants by
certified mail, return receipt requested (and deliver to Dunham, the return
receipts, when received by Escrow Holder).
 
6.7.2.5              Deliver to Dunham American Spectrum's Affirmation
Certificate executed by American Spectrum.
 
 
-19-

--------------------------------------------------------------------------------

 
 
6.7.2.6              Deliver to American Spectrum Dunham's Affirmation
Certificate executed by Dunham.
 
6.7.2.7              Deliver to Dunham the Senior Preferred Stock
Certificate(s).
 
        6.7.3           Closing Costs.  Dunham shall pay (a) the premium for the
Title Policy allocable to the "standard coverage" thereunder, (b) all
documentary and other transfer taxes assessed on recordation of the Deeds,
(c) one-half (½) of all escrow fees and costs and (d) all sales and gross
receipts taxes.  American Spectrum Dunham Properties shall pay (w) all transfer,
assumption and prepayment fees and similar costs incurred in connection with
American Spectrum Dunham Properties acquiring any Project subject to the
Existing Financing, (x) any document recording charges, (y) one-half (½) of all
escrow fees and costs, and (z) the premium for the Title Policy allocable to the
"extended coverage" thereunder and any endorsements attached thereto.  Dunham
and American Spectrum shall each pay all legal and professional fees and fees of
other consultants incurred by American Spectrum and Dunham, respectively.  All
other costs and expenses shall be allocated between on a Project-by-Project
basis (where applicable) among the Projects in accordance with the customary
practice in the County where the particular Project is situated.
 
        6.8           Dunham's Deliveries to American Spectrum Dunham Properties
Upon Closing.  Dunham shall deliver to American Spectrum Dunham Properties, on
or prior to the Closing Date, the following with respect to each Project:
 
6.8.1           Possession.  Possession of the Projects, subject only to the
rights of Tenants under the Tenant Leases and rights created under the Permitted
Exceptions.
 
6.8.2           Tenant Leases.  Originals of all of the Tenant Leases or, to the
extent an original Tenant Lease is unavailable, the best copy thereof in
Dunham's possession,  Dunham warranting the authenticity of such duplicate
original.
 
6.8.3           Rent Roll.  A rent roll ("Rent Roll"), updated as of the
Closing, certified as to its accuracy and executed by Dunham.
 
6.8.4           Contracts.  Originals of all Contracts, or, to the extent an
original of any such Contract is unavailable, the best copy thereof in Dunham's
possession, Dunham warranting the authenticity of such duplicate
original.  American Spectrum acknowledges that the purchase and sale agreement
with respect to the Project known as Calimesa which was previously entered into
has been terminated.
 
6.8.5           Licenses and Permits.  Originals of all Licenses and Permits or,
to the extent an original of a License or Permit is unavailable, the best copy
thereof in Dunham's possession, Dunham warranting the authenticity of such
duplicate original.
 
6.8.6           Plans and Reports.  Originals of the Plans and Reports, or to
the extent an original of a Plan or Report is unavailable, the best copy thereof
in Dunham's possession,  Dunham warranting the authenticity of such duplicate
original.
 
 
-20-

--------------------------------------------------------------------------------

 
 
6.8.7           Keys.  Keys to all entrance doors to the Improvements and keys
to all Personal Property, which keys shall be properly tagged for
identification.
 
6.8.8           Personal Property.  Possession of the Personal Property.
 
6.8.9           Consents.  A certificate from Dunham stating, (a) to the
knowledge of Dunham, there are no defaults under the Existing Financing and
(b) the amount of the outstanding principal due under the Existing Financing,
the accrued and unpaid interest thereunder and being held in any impound or
escrow account thereunder.
 
American Spectrum Dunham Properties shall have the right to waive the receipt of
any of the foregoing at the Closing whereupon Dunham shall be required to obtain
and deliver such item as soon as reasonably possible after the Closing but not
later than ninety (90) days after the Closing.
 
       6.9           Information Report.  The "Reporting Person" within the
meaning of Section 1.6045-4(e)(5) of the Regulations with respect to the
transactions contemplated by this Agreement shall be Escrow Holder.  It is
agreed that Escrow Holder is an eligible person under Section 1.6045-4(e)(5)(ii)
of the Regulations.  Escrow Holder hereby agrees to be responsible for complying
with the reporting and other requirements of Section 6045(e) of the
Code.  Pursuant to the Regulations, the address for the transferor and
transferee are as set forth in this Agreement, and the identifying information
regarding the real estate transferred is the legal description for the Land set
forth in this Agreement.  Escrow Holder agrees to file the form required by the
Regulations between the end of the calendar year in which the Closing Date
occurs and February 28 of the following calendar year.  Dunham and American
Spectrum agree (i) to cooperate with Escrow Holder and with each other in
completing any report and/or other information required to be delivered to the
Internal Revenue Service pursuant to Section 6045(e) of the Code regarding the
real estate sales transaction contemplated by this Agreement, including without
limitation, Internal Revenue Service Form 1099-S as such may be hereafter
modified or amended by the Internal Revenue Service, or as may be required
pursuant to any Regulation now or hereafter promulgated by the Treasury
Department with respect thereto; (ii) that American Spectrum and Dunham, their
respective employees and attorneys, and Escrow Holder and its employees may
disclose to the Internal Revenue Service, this Agreement or the transaction
contemplated herein as such party reasonably deems to be required to be
disclosed to the Internal Revenue Service by such party pursuant to 6045(e) of
the Code; (iii) that neither American Spectrum nor Dunham shall seek to hold any
such party liable for the disclosure to the Internal Revenue Service of any such
information; and (iv) to retain this Agreement for at least four (4) years
following the end of the calendar year in which the Closing Date occurs.
 
       6.10           Natural Hazards Disclosure.  Dunham and American Spectrum
acknowledge that the Disclosure Statutes provide that a seller of real property
must make certain disclosures regarding certain natural hazards potentially
affecting such real property, as more particularly provided therein.  Dunham has
ordered a Natural Hazard Disclosure Report (the "Disclosure Report") for each of
the Projects from the Escrow Holder and shall deliver the Disclosure Report to
American Spectrum promptly upon Dunham's receipt thereof.  American Spectrum
hereby agrees as follows with respect to the Disclosure Statutes and the
Disclosure Report.
 
 
-21-

--------------------------------------------------------------------------------

 
 
6.10.1           The delivery of the Disclosure Report to American Spectrum as
provided above shall be deemed to satisfy all obligations and requirements of
Dunham under the Disclosure Statutes.
 
6.10.2           Dunham shall not be liable for any error or inaccuracy in, or
omission from, the information in the Disclosure Report.
 
6.10.3           The Disclosure Report is being provided by Dunham for purposes
of complying with the Disclosure Statutes and shall not be deemed to constitute
a representation or warranty by Dunham as to the presence or absence in, at or
around a Project of the conditions that are the subject of the Disclosure
Statutes.
 
6.10.4           The Disclosure Report is for Dunham and American Spectrum
Dunham Properties only and is not for the benefit of, or be used for any
purposes by, any other party, including, without limitation, insurance
companies, lenders or the Authorities.
 
ARTICLE 7
 
CONDITIONS TO CLOSING
 
       7.1           Conditions Precedent to Buyer's Obligations.  The Closing
and American Spectrum's obligations with respect to the transactions
contemplated by this Agreement are subject to the satisfaction, not later than
the Closing Date (unless otherwise provided), of the following conditions:
 
7.1.1           Inspections and Studies.  American Spectrum shall have approved,
in American Spectrum's sole and absolute discretion, every aspect of the
Projects.
 
7.1.2           Representations and Warranties of Dunham.  Dunham's
representations and warranties made in this Agreement shall be true and correct
as of the Closing Date in all material respects as if made at and as of the
Closing Date (except to the extent any representations and warranties address
matters only as of a particular date or only with respect to a specific period
of time, in which case as of such date or with respect to such period).
 
7.1.3           Covenants.  Dunham shall have duly performed each and every
covenant to be performed by Dunham under this Agreement prior to the Closing
Date.
 
7.1.4           Title Insurance.  As of the Closing Date, the Title Company be
committed to issue to American Spectrum Dunham Properties one or more A.L.T.A.
(Form B) Owner's Policies of Title Insurance with any title endorsements which
are reasonably requested by American Spectrum and are customarily and reasonably
available in the applicable jurisdiction, including, without limitation, the
following:  (a) Form 9 – Comprehensive endorsement (modified as appropriate for
an owner's policy); (b) Form 3.1 Zoning (including parking and loading);
(c) survey endorsement; (d) access endorsement; (e) if the land on which the
Property is located consists of more than one parcel, a contiguity endorsement;
(f) a tax parcel endorsement; (g) subdivision endorsement; (h) utility facility
endorsement; (i) deletion of the creditor's rights exception; (j) deletion of
the arbitration clause; (k) environmental lien endorsement; and (l) the
so-called "fairway" endorsement, showing fee title to each Project vested in
American Spectrum Dunham Property, subject only to the Permitted Exceptions
(collectively, the "Title Policy") (other than Nevada Treasure, which shall be
vested in Nevada Treasure).  Dunham shall use its commercially reasonable
efforts to cause any Unacceptable Exceptions to be satisfied, terminated,
reconveyed or otherwise expunged from the Official Records prior to the Closing
Date.  The Title Policy shall be issued with liability in an amount equal to the
Contribution Value.  American Spectrum shall have the right, at no cost to
American Spectrum, to require the Title Company to obtain coinsurance or
facultative reinsurance (together with agreements in a form and content
satisfactory to American Spectrum providing American Spectrum Dunham Properties
with the right of "direct access" against the reinsurance) with respect to the
Title Policy in such amount and with such title companies as American Spectrum
determines in American Spectrum's reasonable discretion.
 
 
-22-

--------------------------------------------------------------------------------

 
 
7.2           Conditions Precedent to Dunham's Obligations.  The Closing and
Dunham's obligations with respect to the transactions contemplated by this
Agreement are subject to the satisfaction, not later than the Closing Date
(unless otherwise provided), of the following conditions:
 
7.2.1           Representations and Warranties of American Spectrum
Realty.  American Spectrum's representations and warranties set forth in this
Agreement being true and correct as of the Closing Date in all material respects
as if made at and as of the Closing Date.
 
7.2.2           Covenants of American Spectrum.  American Spectrum shall have
duly performed each and every covenant to be performed by American Spectrum
under this Agreement prior to the Closing Date.
 
7.2.3           Articles Supplementary.  An Articles Supplementary (the
"Articles Supplementary") in the form attached hereto as Exhibit 7.2.3 shall
(a) have been filed with and approved by the Maryland Secretary of State not
later than three (3) business days prior to the Closing Date; and (b) shall have
been filed with and approved by the principal national securities exchange on
which American Spectrum Realty's securities are listed or admitted to trading.
 
ARTICLE 8
 
DUNHAM'S REPRESENTATIONS AND WARRANTIES
 
In addition to any express agreements of Dunham contained herein, the following
constitute representations and warranties of Dunham to American Spectrum.  All
of the representations in this Article 8 are qualified by the matters set forth
on the Schedules attached hereto.
 
8.1           Dunham's Authority.
 
8.1.1           Due Formation.  AMI is a corporation duly formed and validly
existing under the laws of the State of California and has the requisite
corporate power and authority to carry on its business as now being
conducted.  Daily Fund, Intermediate Fund and Semi-Annual Fund, and each of
them, are limited partnerships duly formed and validly existing under the laws
of the State of California and are duly qualified or licensed in the State of
California to do business as a limited partnership and are in good standing in
such other states to the extent required by law.  Each of the Dunham Funds has
previously filed a Certificate of Dissolution with the California Secretary of
State to affect the dissolution of such party pursuant to the affirmative
consent of a majority of the Limited Partners in each such fund.  Each of the
Dunham Fund’s ability to conduct business and otherwise bind the Fund continues
until such Fund ultimately files a Certificate of Cancellation with the
California Secretary of State.
 
 
-23-

--------------------------------------------------------------------------------

 
 
8.1.2           Power.  Dunham has the legal power, right and authority to enter
into this Agreement and the instruments referenced in this Agreement, and to
consummate the transactions contemplated by this Agreement.
 
8.1.3           Requisite Action.  All requisite action has been taken by Dunham
in connection with (a) the entering into of this Agreement and the instruments
referenced in this Agreement, (b) the performance of its obligations under this
Agreement and (c) the consummation of the transactions contemplated by this
Agreement.  No other consent of any member, partner, shareholder, creditor,
investor, judicial or administrative body, Authority or other Person is required
in connection therewith.
 
8.1.4           Authority.  The individuals executing this Agreement and the
instruments referenced herein on behalf of Dunham have the legal power, right,
and actual authority to bind Dunham, to the terms and conditions hereof and
thereof.
 
8.1.5           Validity.  This Agreement and all documents required hereby to
be executed by Dunham are valid, legally binding obligations of and enforceable
against Dunham, in accordance with their terms, subject only to applicable
bankruptcy, insolvency, reorganization, moratorium laws or similar laws or
equitable principles affecting or limiting the rights of contracting parties
generally.
 
8.1.6           No Conflict.  Neither the execution and delivery of this
Agreement and the documents in this Agreement, nor the incurrence of the
obligations set forth in this Agreement, nor the consummation of the
transactions herein contemplated, nor compliance with the terms of this
Agreement and the documents referenced in this Agreement conflict with or result
in the material breach of any terms, conditions or provisions of, or constitute
a default under, any bond, partnership agreement, lease or other agreements or
instruments to which Dunham is a party or affecting a Project; provided,
however, that Dunham is making no representation or warranty as to any default,
acceleration, or breach of a covenant that may result under the Existing
Financing from the conveyance of any Project to American Spectrum Dunham
Properties subject to the Existing Financing.
 
8.1.7           Prohibited Person and Transactions.  Neither Dunham nor, to the
best of Dunham's knowledge, its affiliates, is in violation of any laws relating
to terrorism, money laundering or the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Action
of 2001, Public Law 107-56 and Executive Order No. 13224 (Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism) (the "Executive Order") (collectively, the "Anti-Money Laundering and
Anti-Terrorism Laws").  Neither Dunham nor, to the best of Dunham's knowledge,
its affiliates, is acting, directly or indirectly, on behalf of terrorists,
terrorist organizations or narcotics traffickers, including those persons or
entities that appear on the Annex to the Executive Order, or are included on any
relevant lists maintained by the Office of Foreign Assets Control of U.S.
Department of Treasury, U.S. Department of State, or other U.S. government
agencies, all as may be amended from time to time.  Neither Dunham, nor to the
best of Dunham's knowledge, its affiliates, and, without inquiry, any of its
brokers or other agents, in any capacity in connection with the sale of the
Project (A) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any person
included in the lists referenced above, (B) deals in, or otherwise engages in
any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order, or (C) engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Money
Laundering and Anti-Terrorism Laws.  Neither Dunham, nor any Affiliate of
Dunham, is a Person named on a Government List, and the monies used in
connection with this Agreement and amounts committed with respect thereto, were
not and are not derived from any activities that contravene any applicable
anti-money laundering or anti-bribery laws and regulations (including funds
being derived from any Person on a Government List or engaged in any unlawful
activity defined under Title 18 of the United States Code, Section 1956(c)(7)).
 
 
-24-

--------------------------------------------------------------------------------

 
 
8.2           Project.
 
8.2.1           Legal Actions.  To the best of Dunham's knowledge, there are no
pending actions, suits, arbitrations, claims or proceedings, at law or in equity
(or any that are threatened in writing), affecting the Project or in which
Dunham is, or to the best of Dunham's knowledge will be, a party by reason of
Dunham's ownership of the Project, including, but not limited to, judicial,
municipal or administrative proceedings in eminent domain, unlawful detainer or
Tenant evictions, collections, alleged building code, health and safety or
zoning violations, employment discrimination or unfair labor practices, or
worker's compensation, personal injuries or property damages alleged to have
occurred at a Project or by reason of the condition or use of the Project.
 
8.2.2           Bankruptcy.  No Bankruptcy Event has occurred with respect to
Dunham.  Except as otherwise set forth herein, there is not pending (or
threatened in writing) any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
recomposition of Dunham or seeking appointment of a receiver, trustee, custodian
or similar official for Dunham for all or any substantial part of its or their
assets.  Each of the Dunham Funds has previously filed a Certificate of
Dissolution with the California Secretary of State to affect the dissolution of
each of the Dunham Funds pursuant to the affirmative consent of a majority of
the Limited Partners in each such fund.  Each of the Dunham Fund’s ability to
conduct business and otherwise bind such Fund continues until such Fund
ultimately files a Certificate of Cancellation with the California Secretary of
State.
 
8.2.3           Licenses and Permits.  To the best of Dunham's knowledge, all
Licenses and Permits from the Authorities or private parties necessary for the
use and operation of a Project as it is currently being used and operated are
currently possessed by Dunham.  The Licenses and Permits are included in the Due
Diligence Materials.
 
 
-25-

--------------------------------------------------------------------------------

 
 
8.2.4           Insurance Company Notices.  To the best of Dunham’s knowledge,
neither Dunham nor any Tenant has received any written notices from any
insurance company of any material defects or inadequacies in any Project.
 
8.2.5           No Liens or Personal Property, etc.  To the best of Dunham’s
knowledge, the Personal Property and Intangible Property have been fully paid
for and are not subject to any liens, encumbrances or claims of any kind except
for the Existing Financing.
 
8.2.6           Hazardous Materials.  To the best of Dunham’s knowledge, there
has been no production, disposal or storage at the Project of any Hazardous
Materials or other toxic substance and there is no proceeding or inquiry by any
Authority with respect thereto.
 
8.2.7           Nevada Treasure Liquor License.  Nevada Treasure owns the
requisite liquor license, held in the name of Court Warren, for its current
activities with respect to the sale of liquor, and such liquor license is
currently in full force and effect.  Dunham has not received any written notice
from any Governmental Authority regarding the potential revocation, termination
or withdrawal of such liquor license or any violation of the terms, conditions
and provisions of the liquor license.  American Spectrum Dunham Properties shall
be responsible, at its expense, for preparing, filing and prosecuting all
applications before Governmental Authorities for the maintenance or reissuance
of such liquor license.  Dunham shall cooperate fully with American Spectrum
Dunham Properties in any manner requested by American Spectrum Dunham Properties
as required to successfully maintain the existing liquor license or effectuate
the issuance of a new liquor license.  If a transfer or reissuance of any liquor
license is required by the Authorities due to the transactions contemplated by
this Agreement, Dunham shall enter into a lease, concession agreement or other
arrangement in form substantially and substance reasonably satisfactory to
American Spectrum and Dunham which shall commence as of the Closing and contain
other commercially reasonable terms which would permit continued operation of
the liquor operations conducted by Nevada Treasure until such time as all
necessary approvals have been granted and American Spectrum Dunham Properties
(or its nominee) is able to lawfully take over the sale of liquor at the Project
owned by Nevada Treasure.  To the maximum extent permitted by applicable laws,
any such arrangement shall be structured so as to preserve to the economic or
other benefits of the transactions contemplated by this Agreement.
 
8.2.8           Nevada Treasure Liabilities.  To the best of Dunham's knowledge,
Nevada Treasure has no liabilities other than those liabilities set forth on the
balance sheet of Nevada Treasure, dated October 31, 2013, included in the Due
Diligence Materials, and the liabilities of Nevada Treasure set forth on such
balance sheet have not increased between October 31, 2013 and the Closing Date
other than in immaterial amounts incurred in the ordinary course of business of
Nevada Treasure.
 
8.2.9           Property Information.  To the best of Dunham's knowledge, Dunham
has delivered to American Spectrum or its representatives, or made available in
the Due Diligence Materials, all material contracts and other information in
Dunham’s possession relating to the Projects, and has  assisted ASR personnel
with all requests Dunham has received to inspect the Projects and to answer any
questions ASR has asked relating to the Projects.
 
 
-26-

--------------------------------------------------------------------------------

 
 
8.3           Existing Financing, Tenant Leases, etc.
 
8.3.1           Existing Financing Documents.  To the best of Dunham's
knowledge, there is no current material default by Dunham under the terms and
provisions of any of the Existing Financing Documents.  American Spectrum
acknowledges that it is acquiring the Projects subject to the Existing Financing
and Dunham is making no representations or warranties as to default,
acceleration or breach of a covenant that may result under the Existing
Financing Documents from conveyance of any Project to American Spectrum Dunham
Properties subject to the Existing Financing.  True, correct and complete copies
of every instrument or document executed in connection with the Existing
Financing are included in the Due Diligence Materials.
 
8.3.2           Tenant Leases.  There are no leases, subleases, occupancies or
tenancies in effect pertaining to a Project, except the Tenant Leases (all of
which are listed on the Rent Roll(s) attached hereto as Schedule 8.3.2 and
included in the Due Diligence Materials together with all guaranties of the
Tenant Lease).  To Dunham's knowledge, there are no uncured defaults under the
Tenant Leases and no Tenant has asserted, or has any defense to, offsets or
claims against rent payable or obligations under its Tenant Lease.  To the best
of Dunham's knowledge, all of the landlord's obligations under the Tenant Leases
which accrued prior to the Effective Date have been performed.  Dunham has no
reason to believe that any Tenant is or may become unable or unwilling to
perform any or all of the Tenant's obligations under its Tenant Lease.  All
Tenants are in occupancy of their premises under their respective Tenant Leases,
and, to the best of Dunham's knowledge, no Tenant intends to abandon its
premises or default under its Tenant Lease.  To the best of Dunham's knowledge,
no claim, controversy, dispute, quarrel or disagreement exists between any
Tenant and Dunham.  All of the improvements to be constructed by Dunham, if any,
contemplated under the Tenant Leases or as required therein and in all
collateral agreements, plans and specifications respecting same have been
completed as so required.  Dunham has not at any time waived any provision under
any Tenant Lease, or granted any concessions to any Tenant not disclosed in such
Tenant's Tenant lease.  Neither Dunham's interest in the Tenant Leases nor any
of the rentals due or to become due under the Tenant Leases has been, or will
be, assigned, encumbered or subject to any liens at the Closing.  No leasing or
brokerage fees or commissions of any nature whatsoever shall be or become due or
owing to any Person after the Closing with respect to any Tenant Lease.
 
8.3.3           Contracts.  To the best of Dunham’s knowledge, there are no
Contracts (whether oral or written) which affect or will affect or which are or
will be obligations of American Spectrum or the Project after the Closing, other
than those included in the Due Diligence Materials, which cannot be terminated
without penalty or other payment on thirty (30) days' notice.  To the best of
Dunham's knowledge, there is no current material default or breach under the
terms and provisions of any Contract by either party thereto.  To the best of
Dunham’s knowledge, the Due Diligence Materials contains a list of the amounts
of (i) all prepayments under Contracts, (ii) prepaid Operating Expenses,
(iii) Utility Deposits and (iv) deposits and/or premiums paid in respect of any
performance or other bond, to the extent such amounts are intended to result in
a debit to American Spectrum pursuant to the prorations and/or adjustment to be
made pursuant to this Agreement.
 
 
-27-

--------------------------------------------------------------------------------

 
 
8.3.4           Licenses and Permits.  To the best of Dunham's knowledge, the
Licenses and Permits included in the Due Diligence Materials are all of the
Licenses and Permits that affect the Project.
 
8.3.5           Plans.  To the best of Dunham's knowledge, the Plans delivered
by Dunham to American Spectrum are all the Plans which are within the possession
of, under the control of, or reasonably available to, Dunham.
 
8.3.6           Financial Statements.  To the best of Dunham’s knowledge, the
Financial Statements are complete and accurate in all material respects as of
the date thereof.  All Financial Statements are included in the Due Diligence
Materials.
 
8.3.7           Employees.  There are no employees of Dunham who, by reason of
any Governmental Regulations, contract or agreement with Dunham or for any other
reason whatsoever would become employees of American Spectrum; provided,
however, Nevada Treasure has, and will continue to have, employees after the
Closing.  After the Closing, Dunham shall provide American Spectrum Dunham
Properties with a list identifying each employee of Nevada Treasure and setting
forth such employee's current tenure, compensation and any employment or related
agreement with such employee.  Dunham hereby agrees, from and after the Closing,
to indemnify, defend and hold harmless American Spectrum and its respective
partners, directors, managers, officers, employees, affiliates and
representatives from and against and all losses, liabilities, damages, claims,
suits, settlements, liabilities, costs, expenses, and other amounts (including
reasonable attorney's fees) arising out of or related to the employment of any
Person by Nevada Treasure which accrues and/or arises prior to the Closing
except to the extent American Spectrum has been afforded a credit for any such
amount pursuant to the terms of this Agreement whereupon after the Closing
American Spectrum shall be solely responsible for the costs of all such
employees (including accrued compensation, bonuses, vacation time, health and
other benefits, etc.) to the extent American Spectrum received a credit for any
such amount pursuant to this Agreement.
 
8.4           General.
 
8.4.1           Knowledge Defined.  References to the "knowledge" or “best
knowledge” of Dunham, or similar references, shall refer only to the actual
knowledge of either of Dunham's Representatives without any duty or inquiry of
investigation.  Nothing herein is intended (a) to imply that Dunham's
Representative is making any representations or warranties under this Agreement
or (b) to impose any liability whatsoever on Dunham's Representative.
 
8.4.2           Notice.  Dunham shall provide American Spectrum prompt written
notice if Dunham becomes aware of any facts or circumstances that make any of
the representations and warranties of Dunham contained in this Agreement untrue
or incorrect in any material respect (together with the applicable facts and
circumstances and identification of the applicable representation and/or
warranty).
 
8.4.3           Survival.  The representations and warranties of Dunham set
forth Section 8.1 shall survive the Closing until the expiration of the Survival
Period whereupon such representations and warranties shall be of no further
force or effect unless American Spectrum has made a claim for a breach with
respect thereof.
 
 
-28-

--------------------------------------------------------------------------------

 
 
ARTICLE 9
 
PROJECTS CONVEYED "AS IS"
 
AMERICAN SPECTRUM REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND
SOPHISTICATED ACQUIRER OF REAL ESTATE AND THAT IT HAS RELIED AND SHALL RELY
SOLELY UPON (A) ITS OWN EXPERTISE AND THAT OF BUYER'S CONSULTANTS IN PURCHASING
THE PROPERTY, AND (B) AMERICAN SPECTRUM'S OWN KNOWLEDGE OF THE PROPERTY BASED ON
ITS INVESTIGATIONS AND INSPECTIONS OF THE PROPERTY.  AMERICAN SPECTRUM HAS
CONDUCTED, OR BY THE CLOSING WILL CONDUCT, SUCH INSPECTIONS AND INVESTIGATIONS
OF THE PROJECT AS AMERICAN SPECTRUM DEEMED OR SHALL DEEM NECESSARY, INCLUDING,
BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS OF THE PROJECT AND
SHALL RELY UPON SAME.
 
EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, DUNHAM MAKES NO REPRESENTATION OR
WARRANTY AS TO THE TRUTH, ACCURACY OR COMPLETENESS OF ANY MATERIALS, DATA OR
INFORMATION DELIVERED  BY DUNHAM OR DUNHAM’S AGENTS OR REPRESENTATIVES IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
 
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED
THAT DUNHAM IS MAKING NO REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE PROJECTS, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
 
AMERICAN SPECTRUM ACKNOWLEDGES AND AGREES THAT, UPON THE CLOSING, DUNHAM SHALL
SELL AND CONVEY TO AMERICAN SPECTRUM  AND AMERICAN SPECTRUM SHALL ACCEPT THE
PROJECTS “AS IS, WHERE IS, WITH ALL FAULTS,” EXCEPT TO THE EXTENT EXPRESSLY
PROVIDED OTHERWISE IN THIS AGREEMENT.  AMERICAN SPECTRUM HAS NOT AND WILL NOT
RELY ON, AND DUNHAM IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED
WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO
THE PROJECTS OR RELATING THERETO MADE OR FURNISHED TO AMERICAN SPECTRUM, OR ANY
AGENT OR REPRESENTATIVE REPRESENTING DUNHAM, TO WHOMEVER MADE OR GIVEN, DIRECTLY
OR INDIRECTLY, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT.  AMERICAN
SPECTRUM ACKNOWLEDGES THAT THE CONTRIBUTION VALUE REFLECTS AND TAKES INTO
ACCOUNT THAT THE PROJECTS ARE BEING SOLD “AS IS, WHERE IS, WITH ALL FAULTS.”
 
 
-29-

--------------------------------------------------------------------------------

 
 
ARTICLE 10
 
AMERICAN SPECTRUM'S REPRESENTATIONS AND WARRANTIES
 
In addition to any express agreements of American Spectrum contained herein, the
following constitute representations and warranties of American Spectrum to
Dunham:
 
10.1           Due Formation.  ASROP is a limited partnership duly formed and
validly existing under the laws of the State of Maryland and has the requisite
limited liability power and authority to carry on its business as now being
conducted.  American Spectrum Realty is a corporation which is duly formed and
validly existing under the laws of the State of Maryland and has the corporate
power and authority to carry on its business as now being conducted.  American
Spectrum Dunham Properties is a Delaware limited liability company which is duly
formed and validly existing under the laws of the State of Delaware and has the
requisite limited liability power and authority to carry on its business as now
being conducted.  American Spectrum Dunham Properties is duly qualified or
licensed in the State of California to do business as a foreign limited
liability company and is in good standing in the States of Delaware and the
State of California.
 
10.2           Power.  American Spectrum has the legal power, right and
authority to enter into this Agreement and the instruments referenced herein,
and to consummate the transactions contemplated hereby.
 
10.3           Requisite Action.  All requisite action has been taken by
American Spectrum in connection with (a) the entering into this Agreement and
the instruments referenced in this Agreement, (b) the performance of its
obligations under this Agreement, including, without limitation, the issuance of
the Senior Preferred Stock, and (c) the consummation of the transactions
contemplated by this Agreement.  No other consent of any member, partner,
shareholder, creditor, investor, judicial or administrative body, Authority or
other party is required in connection therewith.
 
10.4           Authority.  The individuals executing this Agreement and the
instruments referenced herein on behalf of American Spectrum have the legal
power, right and actual authority to bind American Spectrum to the terms and
conditions hereof and thereof.
 
10.5           Validity.  This Agreement and all documents required hereby to be
executed by American Spectrum are and shall be valid, legally binding
obligations of and enforceable against American Spectrum in accordance with
their terms subject only to applicable bankruptcy, insolvency, reorganization,
moratorium laws or similar laws or equitable principles affecting or limiting
the rights of contracting parties generally.
 
10.6           No Conflicts.  Neither the execution and delivery of this
Agreement and the documents in this Agreement, nor the incurrence of the
obligations set forth in this Agreement, nor the consummation of the
transactions herein contemplated, nor compliance with the terms of this
Agreement and the documents referenced in this Agreement conflict with or result
in the material breach of any terms, conditions or provisions of, or constitute
a default under, any bond, note, or other evidence of indebtedness or any
contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease
or other agreements or instruments to which American Spectrum is a party.
 
 
-30-

--------------------------------------------------------------------------------

 
 
       10.7           Valid Issuance of Senior Preferred Stock.  The Senior
Preferred Stock, when issued and delivered in accordance with the terms and
conditions set forth in this Agreement, will be validly issued, fully paid and
nonassessable and free of restrictions on transfer other than restrictions on
transfer under applicable state and federal securities laws.  The Senior
Preferred Stock will be issued in compliance with all applicable federal and
state securities laws.
 
       10.8           Governmental Consents and Filings.  No consent, approval
order or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local governmental authority
is required on the part of American Spectrum in order to issue the Senior
Preferred Stock as contemplated by this Agreement, except for (i) the consent
required of holders of currently issued and outstanding preferred stock of
American Spectrum Realty, (ii) the filing of the Articles Supplementary, which
will be filed on the Closing Date, (iii) filings pursuant to Regulation D of the
Securities Act, and applicable state securities laws, which have been made or
will be made in a timely manner.
 
       10.9           SEC Filings; Financial Statements.
 
10.9.1           SEC Reports.  Since January 1, 2011, American Spectrum Realty
has filed all forms, reports and other documents (including exhibits and other
information incorporated therein) required to be filed by it with the SEC (such
documents, as they have been amended since the respective time of their filing,
the “SEC Reports”).  Except as disclosed in the SEC Reports, the SEC Reports (i)
were prepared and filed in all material respects in accordance with either the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations promulgated thereunder, in each case, as in effect as
of the respective time of filing of such SEC Reports, and (ii) did not, at the
time they were filed, or, if amended, as of the date of such amendment,
contain  any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
 
10.9.2           Each of the financial statements contained in the SEC Reports
(including, in each case, any notes thereto) was reviewed and audited by EEPB
and, to the actual knowledge of American Spectrum's Representatives and except
as disclosed in the SEC Reports each fairly presents, in all material respects,
the financial position, results of operations and cash flows of the Company as
at the respective dates thereof and for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments and any other adjustments described therein).
 
       10.10           General Representation.  To the actual knowledge of
American Spectrum's Representatives no representation, warranty or statement of
American Spectrum in this Agreement or in any document, certificate or schedule
furnished or to be furnished to Dunham pursuant hereto contains or will contain
any untrue statement of a material fact or, omits or will omit to state a
material fact necessary to make the statements or facts contained therein not
misleading.
 
 
-31-

--------------------------------------------------------------------------------

 
 
       10.11           Survival.  The representations and warranties of American
Spectrum set forth in this Article 10, shall survive the Closing until the
expiration of the Survival Period whereupon such representations and warranties
shall be of no further force or effect unless Dunham has made a claim for a
breach with respect thereof.
 
ARTICLE 11
 
COVENANTS OF DUNHAM AND AMERICAN SPECTRUM
 
       11.1           Broker.  Dunham represents and warrants to American
Spectrum, and American Spectrum represents and warrants to Dunham, that no
broker or finder has been engaged by it, respectively, in connection with any of
the transactions contemplated by this Agreement, or to its knowledge is in any
way connected with any of such transactions.  In the event of any such claims
for additional brokers' or finders' fees or commissions in connection with the
negotiation, execution or consummation of this Agreement, then American Spectrum
shall indemnify, save harmless and defend Dunham from and against such claims if
they shall be based upon any statement or representation or agreement by
American Spectrum, and Dunham shall indemnify, save harmless and defend American
Spectrum if such claims shall be based upon any statement, representation or
agreement made by Dunham.
 
       11.2           Required Actions of Parties.  Each Party agrees to execute
all such instruments and documents and to take all actions pursuant to the
provisions of this Agreement in order to consummate the transactions herein
contemplated and shall use their good faith and commercially reasonable efforts
to accomplish the Closing in accordance with the provisions of this Agreement.
 
ARTICLE 12

 
REMEDIES
 
       12.1           General.  Each Party shall have all rights and remedies at
law or equity in the event of a breach of any covenant, representation or
warranty of another Party in this Agreement; provided, however, that American
Spectrum’s sole remedy with respect to any breach by Dunham of a representation
or warranty made by Dunham (other than for fraud) shall be to offset any damages
by reason of such breach which are either (a) finally adjudicated in favor of
American Spectrum, or (b) consented to by Dunham in writing, against any amounts
payable as a Dividend Payment, Sale Payment, Participation Payment or Redemption
Payment.
 
       12.2           Attorneys' Fees.  If any action or proceeding is commenced
by either Party to enforce its rights or remedies under this Agreement, the
prevailing Party in such action or proceeding, including any appellate
proceedings or proceedings resulting from a Bankruptcy Event, shall be entitled
to recover its reasonable attorneys' fees and court costs incurred therewith.
 
 
-32-

--------------------------------------------------------------------------------

 
 
       12.3           No Assumption of Liability.  Notwithstanding any provision
contained in this Agreement to the contrary, this Agreement is intended as and
shall be deemed to be an agreement for the conveyance of assets and none of the
provisions hereof shall be deemed to create any obligation or liability of any
Person that is not a Party, whether under a third-party beneficiary theory, laws
relating to transferee liabilities or otherwise.  Except with respect to the
Existing Financing and as provided otherwise in this Agreement, American
Spectrum shall not assume and shall not be obligated to discharge or be liable
for any debts, liabilities or obligations of Dunham including, but not limited
to, any (a) liabilities or obligations of Dunham to its creditors, shareholders,
members, partners, managers,  or owners, (b) liabilities or obligations of
Dunham with respect to any acts, events or transactions occurring prior to, on
or after the Closing, (c) liabilities or obligations of Dunham for any federal,
state, county or local taxes, or (d) any contingent liabilities or obligations
of Dunham, whether known or unknown by Dunham or American Spectrum.  Except as
provided otherwise in this Agreement, American Spectrum shall have no duty
whatsoever to take any action or receive or make any payment or credit arising
from or related to any services provided or costs incurred in connection with
the management and operation of a Project or any business conducted on a Project
prior to the Closing, including, but not limited to, any matters relating to
cost reports, collections, audits, hearings, or legal action arising therefrom.
 
ARTICLE 13
 
TERMINATION
 
       13.1           Termination.  Notwithstanding anything to the contrary
herein, this Agreement may be terminated, and the transactions contemplated
herein abandoned, prior to the Closing Date:
 
13.1.1           by mutual written consent of Dunham and American Spectrum; or
 
13.1.2           by either American Spectrum or Dunham by providing written
notice to the other if the Closing Date has not occurred by December 31, 2013.
 
       13.2           Effect of Termination.  In the event of a termination of
this Agreement as provided in Section 13.1, this Agreement shall forthwith
become void and of no further force or effect, and there shall be no liability
or obligation on the part of any party; provided, however, that the provisions
of this Section 13.2 and Article 15 and Article 16 shall survive the termination
of this Agreement and shall remain in full force and effect.  In connection with
any termination of this Agreement, the Escrow Agent shall return any agreements,
documents or instruments any documents delivered to the Escrow Agent by each of
the Parties pursuant to Section 6.4 and 6.5.
 
ARTICLE 14
 
INTENTIONALLY OMITTED
 
 
-33-

--------------------------------------------------------------------------------

 
 
ARTICLE 15

 
ARBITRATION OF DISPUTES
 
THE PARTIES AGREE TO SUBMIT ALL CONTROVERSIES, CLAIMS AND MATTERS OF DIFFERENCE
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT TO BINDING ARBITRATION IN ORANGE COUNTY, CALIFORNIA, IN
ACCORDANCE WITH JAMS STREAMLINED ARBITRATION PROVISIONS FROM TIME TO TIME IN
EFFECT (THE "RULES").  THIS SUBMISSION AND AGREEMENT TO ARBITRATE SHALL BE
MANDATORY, EXCLUSIVE AND SPECIFICALLY ENFORCEABLE.  ALL REFERENCES IN THIS
AGREEMENT TO LITIGATION BETWEEN AMERICAN SPECTRUM AND DUNHAM, SHALL BE GOVERNED
BY THE PROVISION OF THIS ARTICLE 15.  WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, THE FOLLOWING SHALL BE CONSIDERED CONTROVERSIES FOR THIS PURPOSE:
 
(A)           ALL QUESTIONS RELATING TO THE BREACH OF ANY OBLIGATION, WARRANTY,
REPRESENTATION, COVENANT OR AGREEMENT HEREUNDER OR UNDER ANY EXHIBIT HERETO AND
ALL QUESTIONS RELATING TO THE CONSTRUCTION AND INTERPRETATION THEREOF.
 
(B)           ALL QUESTIONS RELATING TO REPRESENTATIONS, NEGOTIATIONS AND OTHER
PROCEEDINGS LEADING TO THE EXECUTION OF THIS AGREEMENT AND ALL MODIFICATIONS OF
THIS AGREEMENT OF EVERY NATURE AND DESCRIPTION.
 
(C)           FAILURE OF ANY PARTY TO DENY OR REJECT A CLAIM OR DEMAND OF
ANOTHER PARTY.
 
(D)           ALL QUESTIONS AS TO WHETHER THE RIGHT TO ARBITRATE ANY QUESTIONS
EXISTS OR AS TO THE EXISTENCE OF ANY AGREEMENT TO ARBITRATE.
 
(E)           ALL ISSUES RAISED BY ANY SUBSEQUENT ALLEGED AMENDMENT TO THIS
AGREEMENT, WHETHER WRITTEN OR ORAL, UNLESS SUCH AMENDMENT EXPRESSLY CANCELS THIS
ARBITRATION PROVISION IN WRITING SIGNED BY ALL AFFECTED PARTIES HERETO.
 
DUNHAM AND AMERICAN SPECTRUM MAY AGREE ON A RETIRED JUDGE AS SOLE
ARBITRATOR.  IN THE ABSENCE OF SUCH AGREEMENT, THERE SHALL BE THREE (3)
ARBITRATORS, SELECTED IN ACCORDANCE WITH THE RULES:  ONE (1) ATTORNEY AND/OR
RETIRED JUDGE, ONE (1) EXPERT IN COMMERCIAL MORTGAGE AND REAL ESTATE
TRANSACTIONS, AND ONE (1) CERTIFIED PUBLIC ACCOUNTANT.  A DECISION AGREED ON BY
TWO (2) OF THE ARBITRATORS SHALL BE THE DECISION OF THE ARBITRATION PANEL;
PROVIDED, HOWEVER, THAT IN THE CASE OF MONETARY DAMAGES, IF THERE IS NO
AGREEMENT OF TWO ARBITRATORS AS TO THE AMOUNT OF THE AWARD, THEN THE FINAL AWARD
OF THE ARBITRATION PANEL FOR THE PURPOSE OF THIS AGREEMENT SHALL BE THE AMOUNT
LEFT AFTER EXCLUDING THE HIGHEST AND LOWEST AMOUNTS.  THE PARTIES AGREE TO ABIDE
BY ALL AWARDS RENDERED IN SUCH PROCEEDINGS.  SUCH AWARDS SHALL BE FINAL AND
BINDING ON ALL PARTIES.  THERE SHALL BE NO APPEAL THEREFROM OTHER THAN FOR FRAUD
OR MISCONDUCT.  ALL AWARDS MAY BE FILED WITH THE CLERK OF ONE OR MORE COURTS,
STATE OR FEDERAL, HAVING JURISDICTION OVER THE PARTY AGAINST WHOM SUCH AN AWARD
IS RENDERED OR ITS PROPERTY AS A BASIS OF JUDGMENT AND OF THE ISSUANCE OF AN
ORDER AUTHORIZING EXECUTION FOR COLLECTION.  NOTHING IN THIS AGREEMENT AND/OR
THE EXHIBITS HERETO SHALL BE DEEMED TO PREVENT THE ARBITRATION PANEL FROM
EXERCISING AUTHORITY TO PERMIT EXERCISE BY A PARTY OF ITS LEGAL AND/OR EQUITABLE
REMEDIES INCLUDING THE RIGHT OF OFFSET.  IT IS UNDERSTOOD BY THE PARITIES THAT
THERE IS NOT INTENDED IN THIS AGREEMENT OR ANY EXHIBIT HERETO THAT THERE BE A
WAIVER OF A PARTY'S RIGHT TO ANY REMEDY WHICH MAY BE ENFORCED THROUGH
ARBITRATION, SPECIFICALLY INCLUDING, WITHOUT LIMITATION, THE RIGHT OF SETOFF AND
INJUNCTIVE RELIEF.  EACH PARTY SHALL PAY ITS OWN ATTORNEY FEES AND COSTS.
 
 
-34-

--------------------------------------------------------------------------------

 
 
NOTICE:  BY INITIALING IN THE SPACE BELOW THE PARTIES ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND THE
PARTIES ARE GIVING UP ANY RIGHTS THE PARTIES MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL.  BY INITIALING IN THE SPACE BELOW THE
PARTIES ARE GIVING UP THE PARTIES' JUDICIAL RIGHTS TO DISCOVERY AND APPEAL,
UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION.  IF A PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS
PROVISION, SUCH PARTY MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE.  THE PARTIES' AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY.  THE PARTIES HAVE READ AND UNDERSTAND THE FOREGOING AND
AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION
OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION.
 

 /s/ William J. Carden    /s/ William J. Carden    AMERICAN SPECTRUM REALTY  
 AMERICAN SPECTRUM        DUNHAM PROPERTIES            /s/ Jeffrey A. Dunham  
 /s/ Jeffrey A. Dunham    DAILY FUND     SEMI-ANNUAL FUND            /s/ Jeffrey
A. Dunham     /s/ Jeffrey A. Dunham    INTERMEDIATE FUND     AMI          

 
 
-35-

--------------------------------------------------------------------------------

 
 
ARTICLE 16

 
CONFIDENTIALITY
 
    16.1           Use of Confidential Information.  Prior to the Closing,
American Spectrum shall hold all Confidential Information in confidence and
shall not disclose or permit the disclosure of the Confidential Information to
any Person without Dunham' prior written consent.  American Spectrum further
agrees that, before the Closing, American Spectrum will use the Confidential
Information only for purposes of evaluating a Project in connection with its
acquisition in accordance with the terms of this Agreement.  Prior to the
Closing, neither Dunham nor American Spectrum shall disclose the transaction
contemplated hereby nor shall Dunham or American Spectrum disclose the
Confidential Information to any Person, other than to such of Dunham’s or
American Spectrum's employees, officers, directors, attorneys, accountants,
lenders, investors and clients who (i) have a need to review the Confidential
Information for the purpose of advising American Spectrum on the suitability of
the transaction or otherwise have a need to know the terms of the transaction
contemplated hereby, (ii) have been informed of the confidential nature of such
information and have agreed to be bound by the terms of this Agreement.
 
    16.2           Disclosure of Confidential Information.  Notwithstanding the
above terms, to the extent that a Party is required to disclose the Confidential
Information by law, regulation or stock exchange rule, or as part of its
required Securities and Exchange Commission filings or in connection with
soliciting the requisite member, shareholder and partner consents needed to
approve this Agreement and the transactions contemplated hereby, or pursuant to
a subpoena, court order or other legal proceeding, such Party shall notify the
other (both by telephone and in writing) within one (1) Business Day of its
knowledge of such legally required disclosure.  The disclosing Party shall
reasonably cooperate with the other Party's counsel (at no out-of-pocket cost or
expense to the non-disclosing Party) in any appeal or challenge to such
disclosure made by the disclosing Party.  If no protective order or similar
relief is obtained, the disclosing Party shall (i) disclose only that portion of
the Confidential Information that it is legally obligated to disclose,
(ii) exercise reasonable efforts to obtain reliable assurances that the
disclosed information will be kept confidential and (iii) exercise reasonable
efforts to provide the non-disclosing Party with a copy of the information to be
disclosed before the same is given to any third Party.  In addition, and
notwithstanding anything to the contrary in this Agreement, Dunham and American
Spectrum may each disclose any portion of the Confidential Information in
connection with any court filings with respect to any dispute between American
Spectrum and Dunham with respect to this Agreement or the Project.
 
    16.3           Breach and Remedies.  American Spectrum acknowledges that the
Confidential Information is of a special, unique, unusual, extraordinary and
intellectual character and that Dunham's interest in the Confidential
Information may be irreparably injured by American Spectrum's disclosure of such
Confidential Information in violation of this Agreement.  American Spectrum
further acknowledges and agrees that money damages would not be a sufficient
remedy for any breach of this section of this Agreement by it and that, in
addition to all other remedies available at law or in equity, Dunham shall be
entitled to specific performance or injunctive or other equitable relief as a
remedy for any breach or potential breach by American Spectrum of this section
and further agrees to waive any requirement for the securing or posting of any
bond in connection with such remedy.
 
 
-36-

--------------------------------------------------------------------------------

 
 
ARTICLE 17
 
MISCELLANEOUS
 
    17.1           Entire Agreement.  This Agreement (including all Exhibits
attached hereto) is the final expression of and contains the entire agreement
between the Parties with respect to the subject matter hereof and supersedes all
prior understandings with respect thereto.  This Agreement may not be modified,
changed, supplemented or terminated, nor may any obligations hereunder be
waived, except by written instrument signed by the Party to be charged or by its
agent duly authorized in writing or as otherwise expressly permitted herein.
 
    17.2           Agreement Binding on Parties.  This Agreement, and the terms,
covenants, and conditions herein contained, shall inure to the benefit of and be
binding upon the heirs, personal representatives, successors, and assigns of
American Spectrum and Dunham.  No assignment of this Agreement or American
Spectrum’s rights or obligations hereunder shall be made by American Spectrum
without first having obtained Dunham’s prior written consent.  No assignment of
this Agreement or Dunham’s rights or obligations hereunder shall be made by
Dunham without first having obtained American Spectrum’s prior written consent;
provided, however, that Dunham may, in connection with a transfer of all or any
portion of the Senior Preferred Stock, transfer its rights hereunder with
respect to such shares of Senior Preferred Stock to the applicable transferee
without the consent of American Spectrum (for the avoidance of doubt, the
Participation Payments payable hereunder are not a right attributable to the
Senior Preferred Stock).
 
    17.3           Notice.  Any notice, communication, request, reply or advice
(collectively, "Notice") provided for or permitted by this Agreement to be made
by Dunham or American Spectrum must be in writing.  Notice may, unless otherwise
provided herein, be given or served (a) by depositing the same in the United
States mail, postage paid, certified, and addressed to the Party to be notified,
with return receipt requested, (b) by delivering the same to such Party, or an
agent of such Party, in person or by commercial courier, (c) by facsimile
transmission, evidenced by confirmed receipt and concurrently followed by a
"hard" copy of same delivered to the Party by mail, personal delivery or
overnight delivery pursuant to clauses (a), (b) or (d) hereof, or (d) by
depositing the same into custody of a nationally recognized overnight delivery
service such as Federal Express, Overnight Express, Airborne Express, Emery or
Purolator.  Notice deposited in the mail in the manner hereinabove described
shall be effective on the third (3rd) Business Day after such deposit.  Notice
given in any other manner shall be effective only if and when received (or such
receipt is refused) by the Party to be notified between the hours of 8:00 A.M.
and 5:00 P.M. of any Business Day with delivery made after such hours to be
deemed received the following Business Day.  For the purposes of Notice, the
addresses of the Parties shall, until changed as hereinafter provided, be as set
forth in this Agreement.  American Spectrum and Dunham shall have the right from
time to time to change their respective addresses, and each shall have the right
to specify as its address any other address within the United States of America
by at least five (5) Business Days written Notice to the other Party.
 
 
-37-

--------------------------------------------------------------------------------

 
 
    17.4           Governing Law.  This Agreement and all documents executed and
delivered in connection herewith shall be construed in accordance with the
internal laws of the State of California without regard to the principles of
choice of law or conflicts of law.
 
    17.5           Partial Invalidity.  If any term or provision of this
Agreement or the application thereof to any Person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each such term and provision of this Agreement shall be valid and
be enforced to the fullest extent permitted by Law.
 
    17.6           No Implied Agreement.  Neither Dunham nor American Spectrum
shall have any obligations in connection with the transaction contemplated by
this Agreement unless both Dunham and American Spectrum, each acting in its sole
discretion, elects to execute and deliver this Agreement to the other.  No
correspondence, course of dealing or submission of drafts or final versions of
this Agreement between Dunham and American Spectrum shall be deemed to create
any binding obligations in connection with the transaction contemplated hereby,
and no contract or obligation on the part of Dunham or American Spectrum shall
arise unless and until this Agreement is fully executed by Dunham and American
Spectrum.  Once executed and delivered by Dunham and American Spectrum, this
Agreement shall be binding upon them notwithstanding the failure of Escrow
Holder or any broker or other Person to execute this Agreement.
 
    17.7           Facsimile or Electronic Mail Signatures.  Signatures to this
Agreement, any amendment hereof and any notice given hereunder, transmitted by
telecopy or electronic mail shall be valid and effective to bind the Party so
signing.  Each Party agrees to promptly deliver an execution original of this
Agreement (and any amendment hereto) with its actual signature to the other
Party, but a failure to do so shall not affect the enforceability of this
Agreement (or any amendment hereto), it being expressly agreed that each Party
to this Agreement shall be bound by its own signature delivered by telecopy or
electronic mail and shall accept such signature of the other Party to this
Agreement.
 
    17.8           Waivers.  No waiver of any breach of any covenant or
provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof, or of any other covenant or provision herein
contained.  No extension of time for performance of any obligation or act shall
be deemed an extension of the time for performance of any other obligation or
act.
 
    17.9           Time of Essence.  Dunham and American Spectrum hereby
acknowledge and agree that time is strictly of the essence with respect to each
and every term, condition, obligation and provision hereof and that failure to
timely perform any of the terms, conditions, obligations or provisions hereof by
either Party shall constitute a material breach of and a non-curable (but
waivable) default under this Agreement by the Party so failing to perform.
 
    17.10           Construction.  Headings at the beginning of each Section and
subsection are solely for the convenience of the parties and are not a part of
the Agreement.  Whenever required by the context of this Agreement, the singular
shall include the plural and the masculine shall include the feminine and vice
versa.  This Agreement shall not be construed as if it had been prepared by one
of the Parties, but rather as if both Parties had prepared the same.  Unless
otherwise indicated, all references to Sections and subsections are to this
Agreement.  The words "including", "include" and "includes" are used in this
Agreement in a nonexclusive manner.  All exhibits referred to in this Agreement
and the Glossary of Terms are attached and incorporated by this reference.
 
 
-38-

--------------------------------------------------------------------------------

 
 
    17.11           Business Day.  If any date or any period provided in this
Agreement shall end on other than a Business Day, the applicable date or period
shall be extended to the first day which is a Business Day following such date.
 
    17.12           Currency.  All dollar amounts are expressed in United States
currency.
 
    17.13           Multiple Counterparts.  This Agreement may be executed in
multiple counterparts (each of which is to be deemed original for all purposes).
 
[Signature Page Follows]

 
 
-39-

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
Effective Date.
 

          ASSET MANAGERS, INC.            
By:
/s/ Jeffrey A. Dunham  
     
Name:
Jeffrey A. Dunham
   
Title:
President and CEO
            D&A DAILY MORTGAGE FUND III, L.P.            
By:
/s/ Jeffrey A. Dunham                        
   
Name:
Jeffrey A. Dunham
   
Title:
President, CEO and AMI GP
           
D&A SEMI-ANNUAL MORTGAGE FUND III, L.P.
         
By:
/s/ Jeffrey A. Dunham                        
   
Name:
Jeffrey A. Dunham
   
Title:
President, CEO and AMI GP
           
D&A INTERMEDIATE-TERM MORTGAGE FUND III, L.P.
         
By:
/s/ Jeffrey A. Dunham                        
   
Name:
Jeffrey A. Dunham
   
Title:
President, CEO and AMI GP
           
AMERICAN SPECTRUM REALTY, INC.
         
By:
/s/ William J. Carden
   
Name:
William J. Carden
   
Title:
President
           
AMERICAN SPECTRUM DUNHAM PROPERTIES LLC
         
By:
/s/ William J. Carden
   
Name:
William J. Carden
   
Title:
President
 

 
 
-40-

--------------------------------------------------------------------------------

 
 

 
AMERICAN SPECTRUM REALTY OPERATING PARTNERSHIP, L.P.
       
By: American Spectrum Realty, Inc.
   
Its: General Partner
         
By:
/s/ William J. Carden
   
Name:
William J. Carden
   
Title:
President
 

 
 
-41-

--------------------------------------------------------------------------------

 
 
JOINDER BY ESCROW HOLDER
 
First American Title Insurance Company, referred to in this Agreement as the
"Escrow Holder," hereby acknowledges that it received this Agreement executed by
the Parties on the ______ day of December 2013, and accepts the obligations of
and instructions for the Escrow Holder as set forth herein.
 
Dated: December ___, 2013
FIRST AMERICAN TITLE INSURANCE COMPANY                     By: Name:  Patty
Beverly       Title:  Escrow Officer  

 

          Address
First American Title Insurance Company
    18500 Von Karman Avenue, Suite 600     Irvine, California 92612  

 
-42-

--------------------------------------------------------------------------------

 
 
GLOSSARY OF TERMS
 
 
( )           "American Spectrum's Affirmation Certificate" is defined in
Section 6.4.10.
 
( )           "Anti-Money Laundering and Anti-Terrorism Laws" is defined in
Section 8.1.7.
 
( )           "Articles Supplementary" is defined in Section 7.2.3.
 
( )           "Assignment of Interest" is defined in Section 6.4.9.
 
( )           "Authorities" means any governmental or quasi-governmental body or
agency having jurisdiction over the Project and/or Dunham.
 
( )           "Bankruptcy Event" means (i) the making by a Person of a general
assignment for the benefit of such Person's creditors, (ii) the admission in
writing by a Person of its inability to pay its or their debts as they mature,
(iii) an attachment, execution or other judicial seizure of any property
interest which remains in effect, or (iv) the failure to have taken or
submission to any action indicating a general inability by a Person to meet its
financial obligations as they accrue.
 
( )           "Bill of Sale" is defined in Section 6.4.2.
 
( )           "Business Day" means any day of the week other than (i) Saturday
and Sunday, (ii) a day on which banking institutions in the State of California,
are obligated or authorized by law or executive action to be closed to the
transaction of normal banking business, or (iii) a day on which governmental
functions in the State of California are interrupted because of extraordinary
events such as hurricanes, power outages or acts of terrorism.
 
( )           "California Non-Foreign Certificate" is defined in Section 6.4.10.
 
( )           "Closing " means the recording of the Deed in the Official Records
and the consummation of the other acts to be undertaken by the Escrow Holder and
the Parties through the Escrow or the Closing Date.
 
( )           "Code" means the Internal Revenue Code of 1986, as the same may
from time to time have been or may be amended, or any successor Internal Revenue
Code.
 
( )           "Confidential Information" means all documents, studies, reports,
test results, brochures, offering materials, photographs, leases, lease
guarantees, rent rolls, lease schedules, surveys, title reports and commitments,
legal documents, financial information, computer output and other materials and
information relating to a Project, the Tenant Leases and/or the Tenants and all
analyses, compilations, forecasts, projections and other documents prepared
based upon such materials and information, any and all proposals made in
connection with a potential sale of the Project (including any proposals
involving a price for the Project), whether the same are in electronic,
pictorial, written or other form.  The term Confidential Information shall not
include information that is generally available to the public, other than any
portion of the Confidential Information that becomes available to the public as
a result of a previous disclosure by Dunham.
 
 
-i-

--------------------------------------------------------------------------------

 
 
( )           "Contracts" means any and all service contracts, operating
agreements, maintenance contracts, warranties, indemnities and like contracts
and agreements, if any, relating to the ownership, operation, management and
maintenance of the Project, together with all supplements, amendments and
modifications thereto.
 
( )           "Deed" is defined in Section 6.4.1.
 
( )           “Deficit Payment” is defined in Section 3.3.3.
 
 ( )           "Disclosure Report" is defined in Section 6.9.
 
( )           "Disclosure Statutes" means, collectively, California Government
Code Sections 8589.3, 8589.4 and 51183.5, California Public Resources Code
Sections 2621.9, 2694 and 4136 and any other California statutes that require
Dunham to make disclosures concerning the Property.
 
( )           “Dividend Payment” is defined in Section 3.2.2(a).
 
"Dollars" and the sign "$" mean the lawful money of the United States of
America.
 
( )           “Dunham Loans” shall mean those loans to American Spectrum Dunham
Properties which are advanced by or arranged for by Dunham & Associates
Holdings, Inc. in the aggregate amount of $6,000,000 and which are secured by
one or more of the Projects.
 
( )           "Dunham's Affirmation Certificate is defined in Section 6.4.2.
 
( )           "Dunham's Books and Records" is defined in Section 5.2.
 
( )           “Dunham Note” is defined in Section 3.2.2(a).
 
( )           "Effective Date" means the date of delivery to and acceptance by
Escrow Holder of a fully executed copy of this Agreement.
 
( )           "Environmental Law" means, without limitation, RCRA, CERCLA and
other federal laws covering the environment as in effect on the date of this
Agreement together with their implementing regulations and guidelines as of the
Effective Date, and all state, regional, county, municipal and other local laws,
regulations and ordinances that are equivalent or similar to the federal laws
recited above or that purport to regulate Hazardous Materials.
 
( )           "Escrow" means the above-referenced escrow opened with Escrow
Holder for the consummation of the transaction described in this Agreement.
 
( )           "Escrow Holder Joinder" means the Joinder by Escrow Holder
included with this Agreement following the signature of the Parties.
 
( )           “Exchange Act” means the Securities and Exchange Act of 1934, as
amended.
 
( )           "Executive Order" is defined in Section 8.1.7.
 
 
-ii-

--------------------------------------------------------------------------------

 
 
( )           "Existing Financing Documents" means the note, trust deed and any
other documents evidencing, securing payment of, or in any way connected with
the Existing Financing, including any security agreements, UCC financing
statements, loan applications and agreements and guaranties, which are secured
by a lien on a Project.
 
( )           "Federal Non-Foreign Certificate" is defined in Section 6.4.10.
 
( )           "Financial Statements"  means (A) all income and expense
schedules, statements, year-end financial and monthly operating statements
respecting the Project for the two (2) most recent calendar years prior to the
Closing Date and, to the extent available, the current fiscal year and (B) a
balance sheet for Nevada Treasure as of the date for which such balance sheet
has been most recently prepared, but not later than December 31, 2012, all of
which shall be prepared on a consistent basis in accordance with Dunham's
customary accounting practice in the ordinary course of business.
 
( )           "General Assignment" is defined in Section 6.4.4.
 
( )           "Government List" shall mean any of (i) the lists maintained by
the United States Department of Commerce (Denied Persons and Entities), (ii) the
list maintained by the United States Department of Treasury (Specially
Designated Nationals and Blocked Persons), and (iii) the lists maintained by the
United States Department of State (Terrorist Organizations and Debarred
Parties).
 
( )           "Governmental Regulations" means any laws, ordinances, rules,
requirements, resolutions, policy statements and regulations (including, without
limitation, those relating to land use, subdivision, zoning, environmental,
toxic or hazardous waste, occupational health and safety, water, earthquake
hazard reduction, and building and fire codes) of the Authorities bearing on the
construction, alteration, rehabilitation, maintenance, use, operation or sale of
a Project.
 
( )           “Initial Interest Period” is defined in Section 3.2.2(a).
 
( )           "Intangible Property" means all of Dunham's right, title and
interest, if any, in and to Contracts, Intellectual Property, Licenses and
Permits and Plans and Reports.
 
( )           "Intellectual Property" means all copyrights, trademarks, brand
names, service marks, domain names and rights to any related website and
business related thereto, trade names, data, telephone numbers, licenses,
labels, logos, marketing materials, designs, covenants by others not to compete,
rights, privileges and any registrations or applications for registrations of
the foregoing use in connection with the Project and any right to recovery for
infringement thereof (including past infringement) and any and all goodwill
associated therewith or connected with the use thereof and symbolized thereby.
 
( )           "JV Organizational Documents" is defined in Section 3.7.
 
( )           "JV Transaction" is defined in Section 3.7.
 
 
-iii-

--------------------------------------------------------------------------------

 
 
( )           "Lease Expenses" shall mean, collectively, any third party costs
and expenses arising out of or in connection with (a) any extensions, renewals
or expansions exercised by Tenants prior to the Effective Date in accordance
with the Tenant Leases, and (b) any new Tenant Lease or Tenant Lease
modification entered into prior to the Effective Date.  Lease Expenses shall
include:  (i) brokerage commissions and fees to effect a Lease Transaction
consummated prior to the Effective Date, (ii) tenant improvement allowances
provided for under a Lease Transaction consummated prior to the Effective Date,
(iii) legal fees incurred by Dunham prior to Closing for services in connection
with the preparation of documents and other services rendered in connection with
the effectuation of the Lease Transaction, (iv) any free rent periods covering
any period prior to the Closing, and (v) expenses that Dunham has agreed to pay
prior to the Closing for the purpose of satisfying or terminating the
obligations of a Tenant under a new Tenant Lease to the landlord under another
Tenant Lease (whether or not such other Tenant Lease covers space in the
Project).
 
( )           "Lease Transaction" shall mean any of the following actions by
Dunham with respect to any Tenant Lease (or proposed Tenant Lease):  (a) the
execution of any new Tenant Lease; (b) the renewal or material modification of
any Tenant Lease, or the consent to any assignment of or subletting under any
Tenant Lease, other than any renewal, expansion, assignment or subletting that
Dunham is obligated to enter into or approve under the terms of the Tenant
Leases; or (c) the termination of any Tenant Lease.
 
( )           "Licenses and Permits" means (A) all licenses, permits,
certificates of occupancy, approvals, dedications, subdivision maps and
entitlements issued, approved or granted by Authorities or otherwise in
connection with a Project and (B) all licenses, consents, easements, rights of
way and approvals required from private parties to make use of utilities and to
insure vehicular and pedestrian ingress and egress to a Project.
 
( )           "Notice" is defined in Article 15.
 
( )           "Official Records" means the Official Records of the County in
which the applicable Project is situated.
 
( )           "Opening of Escrow" means the date on which a fully executed copy
of this Agreement has been delivered to Escrow Holder by American Spectrum and
Dunham.
 
( )           “Participation Payment” is defined in Section 3.3.2(b).
 
( )           "Party" means American Spectrum, American Spectrum Realty, Asset
Managers, Inc. or Dunham, as the case may be, and "Parties" means, collectively,
American Spectrum, American Spectrum Realty, Asset Managers, Inc. and Dunham.
 
( )           "Permitted Exceptions" shall mean all matters shown on the
Preliminary Title Reports which have been approved by American Spectrum prior to
the expiration of the Inspection Period.  Permitted Exceptions shall exclude
Unacceptable Exceptions.
 
( )           "Person" shall mean any individual, country, territory, estate,
trust, partnership, limited liability company, limited liability partnership,
corporation, governmental agency or other legal entity and any unincorporated
association.
 
 
-iv-

--------------------------------------------------------------------------------

 
 
( )           "Personal Property" means all equipment, appliances, tools,
machinery, supplies, building materials and other personal property of every
kind and character owned by Dunham and attached to, appurtenant to, located in
or used in connection with the operation of the Improvements including, without
limitation, all attachments, appliances, fittings, gas and oil burners,
automatic stokers, lighting fixtures, doors, cabinets, partitions, mantles,
elevators, electric motors, pumps, screens, flag poles, waste disposal or
storage equipment, all sprinklers, plumbing, heating, air conditioning,
electrical, ventilating, lighting, incinerating, vacuum cleaning, refrigerating
and cooling systems, each with its respective furnaces, boilers, engines,
motors, dynamos, radiators, pipe, wiring and other apparatus, vaults, safes,
fire prevention and extinguishing equipment, carpets, floor covering, kitchen
appliances and antenna.
 
( )           "Plans and Reports" means (A) all financial and other books and
records maintained in connection with the operation of the Property, (B) all
preliminary, final and proposed building plans and specifications (including
"as-built" drawings), site plans, floor plans and landscape plans respecting the
Improvements, and (C) all structural reviews, architectural drawings and
engineering, soils, seismic, geologic and architectural reports, studies and
certificates and other documents pertaining to the Project which are within the
possession of, under the control of, or reasonably available to Dunham.
 
( )           "Senior Preferred Stock Certificate" is defined in Section 3.2.2.
 
( )           “Project Allocation Amount” is defined in Section 3.3.1.
 
( )           "Property" means, collectively, a Project and all of Dunham's
right, title and interest in the Personal Property, Tenant Leases, Tenant
Deposits and the Intangible Property pertaining to such Project.
 
( )           "Redemption Payment" is defined in Section 3.2.2(b).
 
( )           "Regulations" means the regulations (including any temporary
regulations) issued under the Code by the Department of the Treasury, as they
may be amended from time to time, or any applicable successor
regulations.  Reference herein to any particular section of the Regulations
shall be deemed to refer to the corresponding provision of the applicable
successor regulations.
 
( )           "Rent Roll" means a list setting forth the following information
regarding the Tenant Leases and/or Tenants (to the extent applicable) for each
Project:  (a) the number, name and nature of business of each Tenant and a
description of its Tenant Lease (including all riders, supplements and
amendments), (b) a description of the portion of the Improvements (e.g., suite
number), (c) where applicable, the proportion which the net rentable square
footage of the space covered by each Tenant Lease bears to the total net
rentable square footage of the Improvements, and the percentage used in
determining each Tenant's proportionate share of operating cost pass-throughs,
(d) the date, commencement date, and expiration date (including option periods)
of each Tenant Lease, (e) the current monthly rental payable under each Tenant
Lease (including base rent and where applicable, any percentage rent or expense
reimbursement) and other charges payable by such Tenant under its Tenant Lease,
(f) where applicable, the base year and the amount of expenses incurred during
such base year used for calculating each Tenant's cost pass-through under each
Tenant Lease, (g) the amount of all Tenant Deposits and prepaid rent paid by
each Tenant under each Tenant Lease, less amounts previously applied or returned
to such Tenant, (h) whether such Tenant is entitled to any assigned storage or
parking space, (i) whether any rents or other charges are in arrears or prepaid
and the period to which such arrearages or prepayments relate, and (j) any
incentives, concessions, abatements, allowances or inducements granted to such
Tenant.
 
 
-v-

--------------------------------------------------------------------------------

 
 
( )           "Revenues" means all fixed monthly rentals, additional rentals,
percentage rentals, escalation rentals, retroactive rentals, operating costs,
operating cost pass-throughs, reimbursements, income and other revenues and
charges payable by Tenants under the Tenant Leases.
 
( )           "Rules" is defined in Article 15.
 
( )           “Sale Payment” is defined in Section 3.3.2(a).
 
( )           “SEC” means the Securities and Exchange Commission of the United
States.
 
( )           “SEC Reports” is defined in Section 10.9.1.
 
( )           “Securities Act” means the Securities Act of 1933, as amended.
 
( )           “Substitute Property” is defined in Section 3.3.2(a).
 
( )           "Tenant" means any person who is named tenant or lessee under a
Tenant Lease.
 
( )           "Tenant Deposits" means all security deposits, and cleaning fees,
plus any interest accrued thereon to the extent applicable law requires that
such deposits bear interest, paid by Tenants to Dunham or any other person
relative to a Project.  Tenant Deposits shall exclude Utility Deposits.
 
( )           "Tenant Lease Assignment" is defined in Section 6.4.3.
 
( )           "Tenant Leases" means all leases, licenses, rental agreements or
occupancy agreements granting access rights in, on or over the Property together
with all amendments, supplements thereto (together with all rents, issues and
profits thereunder) and all guarantees thereof.
 
( )           "Tenant Notification Letter" is defined in Section 6.4.5.
 
( )           "Title Policy" is defined in Section 7.1.4.
 
( )           "Unacceptable Exceptions" means (i) any lien securing payment of
delinquent real estate taxes or assessments, (ii) any mortgage, deed of trust or
similar lien securing the repayment of money other than those identified as
Existing Financing; provided, however, that the Existing Financing with respect
to San Jacinto shall be released as of the Closing, and shall be an Unacceptable
Exception, (iii) any lien resulting from any work performed on a Project, and
(iv) any matter affecting title to the Project placed in the Official Records
without the approval of American Spectrum after the date of the applicable
Preliminary Title Report.
 
 
-vi-

--------------------------------------------------------------------------------

 
 
( )           "Utility Deposits" shall mean all deposits made by or on behalf of
Dunham with the Persons providing water, sewer, gas, electricity, telephone and
other utilities to the Property.  Utility Deposits shall exclude Tenant
Deposits.
 

-vii-
 
 
 

--------------------------------------------------------------------------------

 
 

 
EXISTING FINANCING

 
Fund
Property
Lender
Lender Address
Maturity
Date
 
Curr. Int. Rate
   
Principal
   
Deferred Interest
   
Total
 
Daily
Florida
Preferred Bank-Note A
325 East Valley Blvd., Alhambra, CA 91801
01/15/2016
    4.50 %   $ 5,905,139.79     $ -     $ 5,905,139.79    
Florida
Preferred Bank-Note B
 
01/15/2016
    5.75 %   $ 999,218.00     $ 58,891.41     $ 1,058,109.41                    
  $ 6,904,357.79     $ 58,891.41     $ 6,963,249.20                            
               
Semi-A
Murrieta Plaza
Cathay Bank
9650 Flair Dr., El Monte, CA 91731
06/01/2018
    4.50 %   $ 1,185,121.61     $ -     $ 1,185,121.61                          
                 
Interme
Verdugo
D&A Semi-Annual Mortgage Fund III, L.P.
10251 Vista Sorrento Pkwy #200, San Diego, CA 92121
11/01/2013
    4.50 %   $ 6,600,000.00     $ -     $ 6,600,000.00  
Interme
Verdugo
Bank of Southern California, N.A.
12265 El Camino Real, Suite 100, San Diego, CA 92130
05/22/2015
    4.00 %   $ 2,477,080.00     $ -     $ 2,477,080.00    
Verdugo
   
07/29/2014
    4.00 %   $ -     $ -     $ -                       $ 17,166,559.40     $
58,891.41     $ 17,225,450.81  

 
EXHIBIT 1.16
-1-
 

--------------------------------------------------------------------------------

 
 
List of Documents
 
Preferred Bank (for Florida property):
 

       
Loan Modification Agreement and Release
12/06/2012
Memorandum of Loan Modification Agreement
12/06/2012
Promissory Note (B Note)
12/06/2012
Absolute Assignment of Leases, Lease Guaranties, Rents, Issues and Profits
12/06/2012
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing
12/06/2012
Loan Agreement
03/10/2010
Promissory Note
03/10/2010
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing
03/10/2010
   
Included with such other documents as previously provided via Dropbox:
     
H:\Dropbox\American Spectrum Properties\Financing Documents - ADDED 12.4.2013
\Florida
     
H:\Dropbox\American Spectrum Properties\Financing Documents - ADDED
12.4.2013\Florida\Preferred Bank -Full Set loan documents
     
H:\Dropbox\American Spectrum Properties\Financing Documents - ADDED
12.4.2013\Florida\Preferred Bank - Full Set Loan Modification documents
 
H:\Dropbox\American Spectrum Properties\Financing Documents - ADDED
12.4.2013\Preferred Bank - D&A loan documents
     
Cathay Bank (for Murrieta Plaza property):
     
Key Documents:
 
Second Extension and Modification Agreement and Notice of Additional Advance
06/10/2013
Memo, of Second Extension and Modification Agreement and Notice of Additional
Advance
06/10/2013
Security Agreement (Assignment of Deposit Account)
06/10/2013
Loan Agreement
02/12/2019
Promissory Note
02/12/2010
Absolute Assignment of Leases, Lease Guaranties, Rents, Issues and Profits
02/12/2010
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing
02/12/2010
UCC Financing Statement
02/12/2010
   
Included with such other documents as previously provided via Dropbox:
     
H: \Dropbox\American Spectrum Properties\Financing Documents - ADDED 12.4.2013
Murrieta
     
H:\Dropbox\American Spectrum Properties\Financing Documents - ADDED
12.4.2013\Murrieta\Cathay extension and increase documents
 
H:\Dropbox\American Spectrum Properties\Financing Documents - ADDED
12.4.2013\Murrieta\cathay loan doc executed by d&a
 

 
EXHIBIT 1.16
-2- 
 

--------------------------------------------------------------------------------

 
 
D&A Semi-Annual Mortgage Fund III, L.P. (for Verdugo property:

   
Key Documents:
     
Promissory Note and Deed of Trust Modification Agreement
05/01/2012
Promissory Note and Deed of Trust Modification Agreement
02/02/2011
Promissory Note and Deed of Trust Modification Agreement
09/30/2010
Promissory Note and Deed of Trust Modification Agreement
03/24/2008
Promissory Note and Deed of Trust Modification Agreement
10/30/2006
Promissory Note and Deed of Trust Modification Agreement
08/01/2006
Promissory Note and Deed of Trust Modification Agreement
01/20/2006
Promissory Note and Deed of Trust Modification Agreement
11/17/2005
Note Secured by Deed of Trust
07/19/2005
   
Included with such other documents as previously provided via Dropbox:
     
H :\Dropbox1 American Spectrum Properties\Financing Documents - ADDED
12.4.2013\Verdugo\D&A Semi-Annual
     
Bank of Southern California (for Verdugo property):
     
Key Documents:
     
Modification of Deed of Trust
07/29/2013
Change in Terms Agreement
07/29/2013
Promissory Note #2 (Line of Credit)
07/29/2013
Business Loan Agreement (LOC)
07/29/2013
Subordination Agreement (LOC)
07/29/2013
Deed of Trust
05/22/2013
Promissory Note
05/22/2013
Business Loan Agreement
05/22/2013
Assignment of Rents
05/22/2013
Assignment of Lessor's Interest in Leases
05/22/2013
Subordination Agreement
05/22/2013
Subordination and Attornment Agreements (various)
05/22/2013

 
EXHIBIT 1.16
-3-
 

--------------------------------------------------------------------------------

 
 
PRELIMINARY TITLE REPORTS
AMERICAN SPECTRUM/DUNHAM PROPERTIES
 
PRELIMINARY TITLE REPORTS
12/13/13

 
Project
 
Address
 
PTR No.
PTR
Date
Perris
215 North A Street
Perris, CA
NCS-636862-08-SA1
10/28/13
Encinitas
461 Ocean View Avenue
Encinitas, CA
NCS-636862-10-SA1
10/18/13
Wilmington
400 North Marine Avenue
Wilmington, CA
NCS 63682-03
20/26/13
Florida/Imperial Beach
740-798 Florida St. and
1100-1114 Donax Avenue,
Imperial Beach, CA
NCS636862-11-SA1
10/18/13
San Ysidro
251-263 Cypress Drive
San Ysidro, CA
NCS-555498-SD
1/4/13
Quail Run
631 Quail Run Road
Aptos, CA
4307-4381143
10/2/13
Pierson
63900 Pierson Blvd.
Desert Hot Springs, CA
NCS-635592-SD
10/10/13
Club Royal/Kingsburg
39671 Road 28
Kingsburg, CA
UCS 63682-01-SA1
10/13/13
Verdugo/Glendale
3600 Verdugo Road
Glendale, CA
NCS-636862-02-SA1
10/11/13
Karen & Mission/Desert Hot Springs
Northeast Corner of Karen
Ave. and 11th Avenue
Desert Hot Springs, CA
NCS-635591-SD
10/10/13
IB Hotel
550 Highway 75
Imperial Beach, CA
NCS-636862-12-SA1
10/18/13
Nevada Treasure/Pahrump
301 West Leslie Street
Pahrump, Nevada
NCS-636862-15-SA1
11/5/13

 
EXHIBIT 1.25
-1-
 

--------------------------------------------------------------------------------

 
 
El Toro Road
28573 El Toro Cut Off Road
Perris, CA
NCS-636862-09-SA1
10/22/13
Murrieta Plaza
40516 Murrieta Hot Springs Rd.
Murrieta, CA
NCS-636862-07-SA1
10/23/13
Calimesa
On Calimesa Blvd. north of
Cherry Valley Blvd.
Calimesa, CA
NCS-636862-04-SA1
10/22/13
Castaic
Romero Canyon Rd. one
half mile north of Barringer Rd.
Castaic, CA
Shared
NCS-618004-SD
6/27/13
Varner Road
North of Varner Rd. and I-10 Freeway
Thousand Palms, CA
Shared
NCS-635587-SD
10/10/13
Salton/Salton Sea
Near Highway 111,
Multiple Locations on the
Shore of Salton Sea
Salton Sea area, CA
Shared
NCS-635588-SD
No SA PTR
10/15/13
Shelbourne (San Jacinto) Ramona Blvd.
Residential Land
NCS-655384-SD
No SA PTR
10/10/13

 
EXHIBIT 1.25
-2-
 
 

--------------------------------------------------------------------------------

 
 
IDENTIFICATION OF PROJECTS
 
 
Property Name
Property Information
Property Address
City/State
Perris
Land - Residential TTM; 13 acres/54 lots
215 North A Street
Perris, CA
Encinitas
Land - Residential; 3 acres
461 Ocean View Avenue
Encinitas, CA
Wilmington
Industrial Building
400 North Marine Avenue
Wilmington, CA
Florida
36 Unit Condominium Complex
740-798 Florida Street & 1100-1114 Donax Avenue
Imperial Beach, CA
San Ysidro
1 SFR & 3 Duplexes
251-263 Cypress Drive
San Ysidro, CA
Quail Run
SFR on 64 Acres
631 Quail Run Road
Aptos, CA
Pierson
Land - Commercial; 13 acres
63900 Pierson Boulevard
Desert Hot Springs, CA
Club Royal Oak
RV Resort
39700 Road 28
Kingsburg, CA
Verdugo
 Medical Office Building
3600 North Verdugo Road
Glendale, CA
IB Hotel
Land - Commercial; 1.18 acres
550 Highway 75
Imperial Beach, CA
Karen & Mission Lakes
Land - Res TTM; 160 acres/499 lots
Northeast Corner of Karen Avenue and 11th Avenue
Desert Hot Springs, CA
Nevada Treasure RV Resort LLC
RV Resort
301 West Leslie Street
Pahrump, NV
El Toro Road
Land - Commercial; 4.5 acres
28573 El Toro Cut Off Road
Perris, CA
Murrieta Plaza
Retail Space in Shopping Center
40516 Murrieta Hot Springs Road
Murrieta, CA
Calimesa
Land - Residential TTM; 53 acres/134 lots
On Calimesa Blvd. North of Cherry Valley Blvd.
Calimesa, CA
Castaic (75.00%)
Land - Residential; 320 acres (193 acres w/ final map
94 lots)
Romero Canyon Road, one-half mile North of Barringer
Road
Castaic, CA
Varner Road (53.125%)
Land - Res TTM; 41 acres/85 lots
North of Varner Road and I-10 Freeway
Thousand Palms, CA
Salton (71.429%)
Land - Residential
Near Highway 111, Multiple Locations on the Shore of Salton Sea
Salton Sea area, CA
Shelbran (San Jacinto SAMF LLC)
Land - Residential; 48.49 acres
1870 North Ramona Blvd.
San Jacinto, CA

 
EXHIBIT 1.26
-1-
 
 

--------------------------------------------------------------------------------

 
 
ALLOCATION OF SENIOR PREFERRED STOCK AMONG DUNHAM FUNDS

 

         
D&A Daily Mortgage Fund III, L.P.
24.79%
   
D&A Semi-Annual Mortgage Fund III, L.P.
40.17%
   
D&A Intermediate-Term Mortgage Fund III, L.P.
35.04%
   
TOTAL BY FUND
100.00%
 

 
These percentages are subject to change on or after the Closing Date pursuant to
credits and debits for prorations.
 
EXHIBIT 3.2.2
-1-
 
 

--------------------------------------------------------------------------------

 

ALLOCATION OF NET CONTRIBUTION VALUE AMONG PROJECTS
 
 
Project Name
 
Project Allocation Amount
   
Existing
Financing
   
Net Contribution Value
 
Perris
  $ 921,000           $ 921,000  
Encinitas
    1,251,000             1,251,000  
Wilmington
    2,186,000             2,186,000  
Florida
    9,883,000     $ 6,963,249     $ 2,919,751  
San Ysidro
    898,000               898,000  
Quail Run
    4,952,000               4,952,000  
Pierson
    654,000               654,000  
Club Royal Oak
    2,995,000               2,995,000  
Verdugo
    16,569,000       9,077,080       7,491,920  
IB Hotel
    3,601,000               3,601,000  
Karen & Mission Lakes
    3,594,000               3,594,000  
Nevada Treasure RV Resort LLC
    5,990,000               5,990,000  
El Toro Road
    359,000               359,000  
Murrieta Plaza
    4,311,000       1,185,122       3,125,878  
Calimesa
    2,861,000               2,861,000  
Castaic (75.00%)
    8,582,000               8,582,000  
Varner Road (53.125%)
    1,797,000               1,797,000  
Salton (71.429%)
    5,796,000               5,796,000  
Shelbran (San Jacinto SAMF LLC)
    7 ,620,000     $ -     $ 7,620,000  
TOTAL PROJECTS
  $ 84,820,000     $ 17,225,451     $ 67,594,549  

 
These allocations are as of December 10, 2013 and are subject to change on or
after Closing Date pursuant to credits and debits for prorations.
 
EXHIBIT 3.3.1
-1-
 
 

--------------------------------------------------------------------------------

 

 
EXAMPLES OF SALE PAYMENTS, PARTICIPATION PAYMENTS
AND DEFICIT PAYMENTS

Example 1:

Project Allocation Amount: $3,000,000

Indebtedness Secured by Project: $2,000,000

Gross Sales Price: $4,000,000

Sale Payment
In the above example, the Sale Payment will be calculated pursuant to Section
3.3.2(a)(i) and will equal $500,000 (i.e., 50% of the difference between the
Project Allocation Amount ($3,000,000) and the indebtedness secured by the
Project repaid at the closing of such sale ($2,000,000) (.5 x ($3,000,000 -
$2,000,000).

Participation Payment
In the above example, and assuming the amounts calculated pursuant to Section
3.3.2(b)(ii) – (iv) equal $50,000 then the Profits shall equal $950,000 (i.e.,
the gross sales price ($4,000,000) less the Project Allocation Amount
($3,000,000), less the closing costs ($50,000)) and the Profit Participation to
Dunham Funds equals $237,500 (i.e., 25% of the Profits).

Example 2 (with Deficit):

Project Allocation Amount: $4,000,000

Indebtedness Secured by Project: $2,000,000

Gross Sales Price: $3,000,000

Sale Payment
In the above example, the Sale Payment will be calculated pursuant to Section
3.3.2(a)(ii) and will equal $500,000 (i.e., 50% of the difference between the
gross sales price ($3,000,000) less the indebtedness secured by the Project
repaid at closing of such sale ($2,000,000) (.5 x ($3,000,000 - $2,000,000).

Participation Payment
In the above example, there will be no Participation Payment because the gross
sales price ($3,000,000) does not exceed the Project Allocation Amount
($4,000,000).

This transaction creates a Deficit of $1,000,000 (amount by which the Gross
Sales Price is less than the Project Allocation Amount)

EXHIBIT 3.3.2
-1-
 
 

--------------------------------------------------------------------------------

 
 
Example 3: (Deficit & Deficit Payment)

Assume the example set forth in Example 2 which created a $1,000,000 deficit.

Assume also the following with respect to the next sale of a Project:

Project Allocation Amount: $3,000,000

Indebtedness Secured by Project: $2,000,000

Gross Sales Price: $4,500,000

Sale Payment
In the above example, the Sale Payment will be calculated pursuant to Section
3.3.2(a)(i) and will equal $500,000 (i.e., 50% of the difference between the
Project Allocation Amount ($3,000,000) and the indebtedness secured by the
Project repaid at the closing of such sale ($2,000,000) (.5 x ($3,000,000 -
$2,000,000).

Participation Payment
In the above example, and assuming the amounts calculated pursuant to Section
3.3.2(b)(ii) – (iv) equal $50,000 then the Profits shall equal $1,450,000 (i.e.,
the gross sales price ($4,500,000) less the Project Allocation Amount
($3,000,000), less the closing costs ($50,000)).

Because an outstanding Deficit exists, the first $1,000,000 of Profits
associated with the sale of this Project will be paid to the holders of the
Senior Preferred Stock in accordance with Section 3.3.3.  The remaining $450,000
will be paid in accordance with Section 3.3.2(b) and results in a Profit
Participation to Dunham Funds equal to $112,500 (i.e., 25% of the remaining
$450,000 of Profits).
 

EXHIBIT 3.3.2
-2-
 
 

--------------------------------------------------------------------------------

 
 
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL THIS GRANT
DEED AND ALL TAX STATEMENTS TO:
 
American Spectrum Dunham Properties LLC
19100 Von Karman Avenue, Suite 900
Irvine, CA 92612
Attn:  Jie Lee
 

--------------------------------------------------------------------------------

(Above Space For Recorder's Use Only)
 
GRANT DEED
 
The undersigned grantor declares:
 
Documentary Transfer Tax is shown by an unrecorded separate affidavit pursuant
to Section 11932 of the Revenue and Taxation Code.
(  )
computed on full value of property conveyed, or

(  )
computed on full value, less value of liens and encumbrances remaining at time
of sale.

 
City of ______________
 
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
______________________ hereby GRANTS to American Spectrum Dunham Properties LLC
a Delaware limited liability company the following described real property
("Property") located in the City of _______________, County of ________________,
State of ___________________.
 
See Exhibit "A" attached hereto and incorporated herein by this reference.
 
SUBJECT TO:
 
1.           Taxes and assessments.
 
EXHIBIT 6.4.1
-1-
 
 

--------------------------------------------------------------------------------

 
 
2.           All other covenants, conditions, restrictions, reservations,
rights, rights of way, easements, encumbrances, liens and title matters whether
or not of record or visible from an inspection of the Property and all matters
which an accurate survey of the Property would disclose.
 
DATED:  December __, 2013
 
 

        a            
 
By:
        Name        Title           

 

             
 
By:
        Name        Title           

 
EXHIBIT 6.4.1
-2-
 
 

--------------------------------------------------------------------------------

 

LEGAL DESCRIPTION
 
[To be attached prior to
execution of the Agreement]
 

EXHIBIT A
to EXHIBIT 6.4.1
 
 

--------------------------------------------------------------------------------

 
 
STATE OF                                                    )
                )  ss.
COUNTY OF                                                 )
 
On ___________ 2013 before me, the undersigned, a Notary Public in and for said
State, personally appeared ___________________ and ____________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be persons who executed the within instrument as the ____________________ and
______________________ respectively, of ___________________, the corporation
that executed the within Instrument, known to me to be the persons who executed
the within Instrument on behalf of said corporation, and acknowledged to me that
such corporation executed the within instrument pursuant to its bylaws or a
resolution of its board of directors.
 
WITNESS my hand and official seal.
 

  Notary Public in and for said State

 
EXHIBIT A TO
EXHIBIT 6.4.1
 
 

--------------------------------------------------------------------------------

 
 
BILL OF SALE
 
THIS BILL OF SALE ("Bill of Sale") is made this day of December, 2013 by D&A
Daily Mortgage Fund III, L.P., D&A Semi-Annual Mortgage Fund III, L.P. and D&A
Intermediate-Term Mortgage Fund III, L.P. (collectively "Dunham Funds"), in
favor of American Spectrum Dunham Properties LLC, a Delaware limited liability
company ("American Spectrum").
 
W I T N E S S E T H:
 
Dunham Funds, American Spectrum, American Spectrum Realty, Inc. and Asset
Managers, Inc. entered into that certain Contribution Agreement and Joint Escrow
Instructions dated as of December __, 2013 ("Agreement") respecting the
conveyance of certain Property (as defined in the Agreement).
 
Under the Agreement, Dunham is obligated to transfer to American Spectrum any
and all of its right, title and interest in and to all equipment, appliances,
tools, machinery, supplies, building materials and other personal property of
every kind and character owned by Dunham Trusts and attached to, appurtenant to,
located in or used in connection with the operation of the improvements
("Improvements") and located on the real property described in Exhibit "A"
attached hereto, including, without limitation, all attachments, appliances,
fittings, gas and oil burners, automatic stokers, lighting fixtures, doors,
cabinets, partitions, mantles, elevators, electric motors, pumps, screens, flag
poles, waste disposal or storage equipment, all sprinklers, plumbing, heating,
air conditioning, electrical, ventilating, lighting, incinerating, vacuum
cleaning, refrigerating and cooling systems, each with its respective furnaces,
boilers, engines, motors, dynamos, radiators, pipe, wiring and other apparatus,
vaults, safes, fire prevention and extinguishing equipment, carpets, floor
covering, kitchen appliances and antenna (collectively, "Personal Property").
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Dunham does hereby absolutely and
unconditionally give, grant, bargain, sell, transfer, set over, assign, convey,
release, confirm and deliver to American Spectrum all of the Personal Property,
without representation or warranty, except as may be provided in the Agreement.
 
This Bill of Sale shall be binding upon and inure to the benefit of the
successors, assigns, personal representatives, heirs and legatees of Dunham
Funds and American Spectrum.
 
This Bill of Sale shall be governed by, interpreted under, and construed and
enforceable in accordance with, the laws of the State of California.
 
EXHIBIT 6.4.2
-1-
 
 

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, Dunham Funds have executed and delivered this Bill of Sale
as of this day set forth above.
 

        a    

 
 
By:
       Name:        Title:             

 

             
 
By:
       Name:        Title:             

 
EXHIBIT 6.4.2
-2-
 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT "A"
 
DESCRIPTION OF REAL PROPERTY
 

EXHIBIT A TO
EXHIBIT 6.4.2
 
 

--------------------------------------------------------------------------------

 
 
TENANT LEASE ASSIGNMENT
 
THIS TENANT LEASE ASSIGNMENT ("Assignment") is made this ___ day of
_____________ 2013 by and between D&A Daily Mortgage Fund III, L.P., D&A
Semi-Annual Mortgage Fund III, L.P., D&A Intermediate-Term Mortgage Fund III,
L.P. and Asset Managers, Inc., d/b/a Dunham Mortgage Funds (collectively,
"Assignor"), and American Spectrum Dunham Properties LLC, a __________ limited
liability company ("Assignee").
 
W I T N E S S E T H:
 
Assignors, American Spectrum Realty, Inc. and Assignee entered into that certain
Contribution Agreement and Sale and Joint Escrow Instructions dated as of
November __, 2013 ("Agreement") respecting the sale of certain "Property" (as
defined in the Agreement).
 
Under the Agreement, Assignors are obligated to assign to Assignee any and all
of its right, title and interest in and to all leases, licenses, rental
agreements and occupancy agreements, and all amendments and supplements thereto
relative to the real property ("Real Property") described in Exhibit "A"
attached hereto, together with all rents, issues and profits thereunder
(collectively, "Tenant Leases") and all security deposits and cleaning fees,
plus any interest accrued thereon (but only to the extent applicable law
requires such deposits to bear interest), paid by tenants of the Property to
Assignor ("Tenant Deposits"), which Tenant Leases and Tenant Deposits are set
forth on Exhibit "B" attached hereto.
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Assignor hereby assigns, sells, transfers,
sets over and delivers unto Assignee all of Assignor's estate, right, title and
interest in and to the Tenant Leases and Tenant Deposits and Assignee hereby
accepts such assignment.  The assignment of the Tenant Deposits shall be
effected by a credit to Assignee at the Closing (as defined in the Agreement).
 
Assignee hereby assumes the performance of all of the terms, covenants and
conditions imposed upon Assignor as landlord under the Tenant Leases accruing or
arising on or after the date of this Assignment.
 
In the event of the bringing of any action or suit by a party hereto against
another party hereunder by reason of any breach of any of the covenants,
conditions, agreements or provisions on the part of the other party arising out
of this Assignment, then in that event the prevailing party shall be entitled to
have and recover of and from the other party all costs and expenses of the
action or suit, including reasonable attorneys' fees.
 
This Assignment may be executed in counterparts, each of which shall be deemed
an original, but all of which, together, shall constitute one and the same
instrument.
 
This Assignment shall be binding upon and inure to the benefit of the
successors, assignees, personal representatives, heirs and legatees of all the
respective parties hereto.
 
EXHIBIT 6.4.3
-1-
 
 

--------------------------------------------------------------------------------

 
 
This Assignment shall be governed by, interpreted under, and construed and
enforceable in accordance with, the laws of the State of California.
 
IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this
Assignment as of the day and year first written above.
 

             a          

 

By:      By:      Name     Name:
 
  Title
 
  Title:    

By:      By:      Name:     Name:
 
  Title:
 
  Title:       "Assignor"       "Assignor"   

 
EXHIBIT 6.4.3
-2-
 
 

--------------------------------------------------------------------------------

 

EXHIBIT "A"
 
DESCRIPTION OF REAL PROPERTY
 
EXHIBIT A TO
EXHIBIT 6.4.3
 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT "B"
 
TENANT LEASES AND TENANT DEPOSITS
 
EXHIBIT B TO
EXHIBIT 6.4.3
-1-
 
 

--------------------------------------------------------------------------------

 
 
GENERAL ASSIGNMENT
 
THIS GENERAL ASSIGNMENT ("Assignment") is made this _____ day of December, 2013
by and between D&A Daily Mortgage Fund III, L.P., D&A Semi-Annual Mortgage Fund
III, L.P. and D&A Intermediate-Term Mortgage Fund III, L.P. (collectively,
"Assignor"), and American Spectrum Dunham Properties LLC, a Delaware limited
liability company ("Assignee").
 
W I T N E S S E T H:
 
Assignors, Asset Managers, Inc., American Spectrum Realty, Inc. and Assignee
entered into that certain Contribution Agreement and Joint Escrow Instructions
dated as of December, 2013 ("Agreement") respecting the sale of certain
"Property", including the "Land" described in Exhibit "A" and the "Improvements"
located thereon (all as defined in the Agreement).  All capitalized terms used
but not defined herein shall have the meanings assigned to such terms in the
Agreement.
 
Under the Agreement, Assignor is obligated to assign to Assignee any and all of
its right, title and interest in and to these Contracts, the Licenses and
Permits; the Intellectual Property, the Plans and Reports.
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Assignor hereby assigns, sells, transfers,
sets over and delivers unto Assignee all of Assignor's estate, right, title and
interest in and to the Contracts, Licenses and Permits, Intellectual Property,
Plans and Reports (collectively the "Intangible Property") and Assignee hereby
accepts such assignment.
 
Assignee hereby assumes the performance of all of the terms, covenants and
conditions imposed upon Assignor under the Intangible Property accruing or
arising on or after the date of this Agreement.
 
In the event of the bringing of any action or suit by a party hereto against
another party hereunder by reason of any breach of any of the covenants,
conditions, agreements or provisions on the part of the other party arising out
of this Assignment, then in that event the prevailing party shall be entitled to
have and recover of and from the other party all costs and expenses of the
action or suit, including reasonable attorneys' fees.
 
This Assignment shall be binding upon and inure to the benefit of the
successors, assignees, personal representatives, heirs and legatees of all the
respective parties hereto.
 
EXHIBIT 6.4.4
-1-
 
 

--------------------------------------------------------------------------------

 
 
This Assignment shall be governed by, interpreted under, and construed and
enforceable in accordance with, the laws of the State of California.
 
IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this
Assignment as of the day and year first above written.
 

             a          

 

By:      By:      Name     Name:
 
  Title
 
  Title:    

By:      By:      Name:     Name:
 
  Title:
 
  Title:       "Assignor"       "Assignor"   

 
EXHIBIT 6.4.4
-2-
 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT "A"
 
DESCRIPTION OF THE LAND
 
EXHIBIT "A" TO
EXHIBIT 6.4.4
-1-
 
 

--------------------------------------------------------------------------------

 
 
FORM OF ASSIGNMENT OF INTEREST
 

ASSIGNMENT OF UNITS

(NEVADA TREASURE RV RESORT, LLC)
 
THIS ASSIGNMENT UNITS ("Assignment") is made and entered into effective as of
December ___, 2013 (the "Effective Date"), by D&A SEMI-ANNUAL MORTGAGE FUND III,
L.P. ("Assignor"), in favor of American Spectrum Dunham Properties, LLC, a
Delaware Limited Liability Company ("Assignee").  Except where otherwise
provided herein, the capitalized terms used in this Assignment shall have the
respective meanings assigned to such terms in, and all Article and Section
references contained herein shall refer to, the "LLC Agreement" (as such term is
defined in Recital B below).  This Assignment is made with reference to the
following facts and circumstances:
 
R E C I T A L S :
 
A.           The Articles of Organization Limited-Liability of the Company
(defined below) were filed with the Secretary of State of the State of Nevada on
November 22, 2010 as Document No. 20100874957-3 (the "Articles").
 
B.           Assignor is the sole member of Nevada Treasure RV Resort, LLC, a
Nevada limited liability company (the "Company"), which Company is governed by
that certain Limited Operating Agreement of Nevada Treasure RV Resort, LLC made
as of January [sic], 2011 (the "LLC Agreement").
 
C.           Assignor is the owner of one hundred Units in the Company (the
"Assignor Units").
 
D.           Pursuant to that certain Contribution Agreement and Joint Escrow
Instructions between Assignor, Assignee, et al. ("Contribution Agreement"),
Assignor has agreed to assign and transfer all of its interest in the Company to
Assignee, including the Assignor Units.
 
 
NOW, THEREFORE, with respect to the foregoing Recitals and in consideration of
the mutual covenants contained in the Contribution Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor agrees as follows:
 
A G R E E M E N T :
 
EXHIBIT 6.4.9
-1-
 
 

--------------------------------------------------------------------------------

 
 
1.           Assignment.  Assignor hereby unconditionally and irrevocably
assigns, transfers, conveys and delivers to Assignee all of the Assignor Units
and any and all other rights of Assignor in, to or with respect to the Company.
 
2.           Rights and Obligations.  From and after the Effective Date, (i)
Assignee shall be entitled to exercise all of the rights, powers, privileges and
benefits that are attributable to the Assignor Units, and (ii) Assignor shall
have no further rights, powers, privileges and/or benefits with respect to the
Assignor Units or the Company.
 
3.           Admission and Withdrawal.  By reason of the assignment effected
pursuant to Section 1 above, (i) Assignee is hereby admitted into the Company as
a substituted "Member", and (ii) Assignor hereby fully and completely withdraws
from the Company.  The Company shall not dissolve as a result of the foregoing
admission or withdrawal (or any other event described in this Assignment); on
the contrary, the business of the Company shall continue without any break or
interruption in continuity.
 
4.           Representations.  Assignor represents and warrants to Assignee
(a) that Assignor is not in breach or default of any of Assignor's covenants or
obligations under the LLC Agreement (nor are there any circumstances that with
notice or the passage of time would result in any such breach or default),
(b) Assignor has satisfied all demands for performance received prior to the
Effective Date with respect to the Assignor Units, (c) the LLC Agreement and
Articles are in full force and effect and there has been no modification,
amendment or supplement thereto, (d) the Assignor Units and Assignor's interest
in the Company are free and clear of any liens, encumbrances or adverse claims
(e) all managers heretofore appointed with respect to the Company have resigned
or are resigning concurrently herewith and there is no person who currently has
the right to act as a manager of the Company and (f) no other person owns any
Assignor Units or has any right to acquire any Units or become a Member of the
Company nor does any person have any rights to acquire the units by reason of
their assignment and transfer pursuant to this Agreement or otherwise..
 
5.           Miscellaneous
 
(a)           Further Acts.  Each party hereto agrees to perform any further
acts, and to execute and deliver (with acknowledgment, verification, and/or
affidavit, if required) any further documents and instruments, as may be
reasonably necessary or desirable to implement and/or accomplish the provisions
of this Assignment.
 
(b)           Counterparts.  This Assignment may be executed in multiple
counterparts, each of which shall be deemed an original Assignment, but all of
which, taken together, shall constitute one (1) and the same Assignment, binding
on the parties hereto.
 
(c)           Attorneys' Fees.  If any proceeding is commenced between or among
the parties or their representatives concerning any provision of this Assignment
or the rights and duties of any person or entity in relation thereto, then the
party prevailing in such proceeding shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum as and for attorneys' and expert
witness fees and costs reasonably incurred in such proceeding.
 
EXHIBIT 6.4.9
-2-
 
 

--------------------------------------------------------------------------------

 
 
(d)           Rules of Construction.  The provisions of this Assignment shall be
construed and enforced in accordance with the laws of the State of
California.  This Assignment contains and constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof, and supersedes all
prior understandings, if any, with respect thereto.
 
[SIGNATURES FOLLOW]
 
EXHIBIT 6.4.9
-3-
 
 

--------------------------------------------------------------------------------

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

"Assignor" D&A SEMI-ANNUAL MORTGAGE FUND III,     L.P., partnership a California
limited     Its:  Sole Member           By: Asset Managers, Inc.,      
a California corporation       General Manager  

 

               
 
By:
/s/        Name        Title           

 
EXHIBIT 6.4.9
-4-
 
 

--------------------------------------------------------------------------------

 
 
NON-FOREIGN CERTIFICATE
 
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
 
The undersigned ("Transferor") hereby certifies to __________________
("Transferee") that withholding of tax under Section 1445 of the Internal
Revenue Code of 1954, as amended ("Code") will not be required upon the transfer
of certain real property to the Transferee.
 
Transferor hereby certifies to Transferee as follows::
 
1.           Transferor is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate or foreign person (as those terms are defined
in the Code and the Income Tax Regulations promulgated thereunder).
 
2.           Transferor is not a disregarded entity as defined in
Section 1.1445-2(b)(2)(iii) of the Code.
 
3.           Transferor's U.S. employer identification/social security number is
_____________________________.
 
4.           The Transferor's business address is
__________________________________________________________________________.
 
Transferor understands that this Certification may be disclosed to the Internal
Revenue Service by the Transferee and that any false statement contained herein
could be punished by fine, imprisonment, or both.
 
Transferor understands that the Transferee is relying on this Certification in
determining whether withholding is required upon said transfer.
 
EXHIBIT 6.4.10A
-1-
 
 

--------------------------------------------------------------------------------

 
 
Under penalty of perjury, Transferor declares that Transferor has examined this
Certification and to the best of Transferor's knowledge and belief, it is true,
correct and complete, and Transferor further declares that it has authority to
sign this document on behalf of the Transferor.
 
Date:  ___________, 2013
 

        a    

 
 
By:
       Name:        Title:             

 

             
 
By:
       Name:        Title:             

 
EXHIBIT 6.4.10A
-2-
 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT 6.4.10B
 
Graphic [real1.jpg]

 
 

EXHIBIT 6.4.10B
-1-
 
 

--------------------------------------------------------------------------------

 
 
FORM OF DUNHAM'S AFFIRMATION CERTIFICATE
 
Asset Managers, Inc., D&A Daily Mortgage Fund III, L.P.., D&A Semi-Annual
Mortgage Fund III, L.P., D&A Intermediate-Term Mortgage Fund III, L.P.
(collectively, “Dunham”), do hereby certify, pursuant to Section 6.4.12 of the
Contribution Agreement and Joint Escrow Instructions by and between Dunham,
American Spectrum Realty, Inc., American Spectrum Realty Operating Partnership,
L.P., and American Spectrum Dunham Properties, L.L.C., dated as of December __,
2013 (the “Agreement”), as follows:
 
1.           The representations and warranties of Dunham contained in the
Agreement are true and correct as of the Closing Date in all material respects
as though made on the Closing Date (except to the extent any representations and
warranties address matters only as of a particular date or only with respect to
a specific period of time, in which case as of such date or with respect to such
period).
 
IN WITNESS WHEREOF, the undersigned has executed this Affirmation Certificate as
of December __, 2013.
 
 

 Asset Managers, Inc.    D&A Daily Mortgage Fund III, L.P.                  
 By:     Asset Managers, Inc., its General             Partner               By:
 
  By:
 
  Name:     Name:       Title:      Title:    

 
 
D&A Semi-Annual Mortgage
  D&A Intermediate-Term Mortgage   Fund III, L.P.   Fund III, L.P.              
By: Asset Managers, Inc., its General  By:     Asset Managers, Inc., its General
    Partner       Partner               By:
 
  By:
 
  Name:     Name:       Title:       Title:    

 
EXHIBIT 6.4.12
-1-
 
 

--------------------------------------------------------------------------------

 
 
FORM OF AMERICAN SPECTRUM'S AFFIRMATION CERTIFICATE
 
AFFIRMATION CERTIFICATE
 
American Spectrum Realty, Inc., American Spectrum Realty Operating Partnership,
L.P. and American Spectrum Dunham Properties LLC (collectively, “American
Spectrum”), do hereby certify, pursuant to Section 6.5.4 of the Contribution
Agreement and Joint Escrow Instructions among American Spectrum, Asset Managers,
Inc., D&A Daily Mortgage Fund III, L.P., D&A Semi-Annual Mortgage Fund III, L.P.
and D&A Intermediate-Term Mortgage Fund III, L.P. dated as of December __, 2013
(the “Agreement”), as follows:

1.           The representations and warranties of American Spectrum contained
in the Agreement are true and correct as of the Closing Date in all material
respects as though made on the Closing Date (except to the extent any
representations and warranties address matters only as of a particular date or
only with respect to a specific period of time, in which case as of such date or
with respect to such period).
 

IN WITNESS WHEREOF, the undersigned has executed this Affirmation Certificate as
of December __, 2013.
 

American Spectrum Realty, Inc.   American Spectrum Realty Operating      
Partnership, L.P.    By:            Name:    By:     American Spectrum Realty,
Inc., its    Title:         General Partner                
 
  By:
 
        Name:            Title:    

 
 
American Spectrum Dunham Properties
      LLC                   By: American Spectrum Realty Operating        
Partnership, L.P., its Sole Member                   By:
 
   
 
  Name:             Title:           

 
EXHIBIT 6.5.4
-1-
 
 

--------------------------------------------------------------------------------

 
 
FORM OF ARTICLES SUPPLEMENTARY
 
EXHIBIT 7.2.3
-1-
 
 

--------------------------------------------------------------------------------

 
 
ARTICLES SUPPLEMENTARY
FOR
8% CUMULATIVE PREFERRED STOCK, SERIES B
OF
AMERICAN SPECTRUM REALTY, INC.
 
AMERICAN SPECTRUM REALTY, INC., a corporation organized and existing under the
Maryland General Corporation Law (the “Corporation”), in accordance with the
provisions thereof, does hereby certify to the State Department of Assessments
and Taxation of Maryland that:
 
FIRST:  Under a power and authority contained in Section 2-208 of the Maryland
General Corporation Law and Article VI of the charter of the Corporation (the
“Charter”), the Board of Directors of the Corporation (the “Board of Directors”)
by a duly adopted resolution classified and designated 17,000,000 shares of
authorized but unissued Preferred Stock (as defined in the Charter) as shares of
8% Cumulative Preferred Stock, Series B, par value $0.01 per share, with the
following preferences, conversion and other rights, voting powers, restrictions,
limitations as o dividends and other distributions, qualifications, and terms
and conditions of redemption
 
Section 1.                      Designation.  The distinctive serial designation
of such series of Preferred Stock is “8% Cumulative Preferred Stock, Series B”
(“Series B”).  Each share of Series B shall be identical in all respects to
every other share of Series B.
 
Section 2.                      Number of Shares.  The authorized number of
shares of Series B shall be __________.  Shares of Series B that are redeemed,
purchased or otherwise acquired by the Corporation, or converted into another
series of Preferred Stock, shall revert to authorized but unissued shares of
Preferred Stock (provided that any such cancelled shares of Series B may be
reissued only as shares of any series other than Series B).
 
Section 3.                      Definitions.  As used herein with respect to
Series B:
 
(a)           “Affiliate” means, in respect of any Person, any other Person that
is directly or indirectly controlling, controlled by, or under common control
with such Person, and the term “control” (including the terms “controlled by”
and “under common control with”) means having, directly or indirectly, the power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities or by contract or otherwise.
 
(b)           “Articles Supplementary” means the Articles Supplementary relating
to the Series B, as they may be amended from time to time.
 
(c)           “Bankruptcy Law” means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
 
(d)           “Bylaws” means the amended and restated bylaws of the Corporation,
as they may be amended from time to time.
 
(e)           “Business Day” means each day, other than a Saturday or a Sunday,
which is not a day on which banking institutions in New York are authorized or
required by law, regulation or executive order to close.
 
(f)           “Change of Control” means the occurrence of any of the following
in one or a series of related transactions: (i) an acquisition after the
Original Issue Date by any Person or “group” (as described in Rule 13d-5(b)(1)
under the Exchange Act), of more than 19.9% of the voting rights or equity
interests in the Corporation in a transaction approved by the Corporation’s
Board of Directors; (ii) a transaction after the Original Issue Date resulting
in William J. Carden owning or controlling less than 19.9% of the voting rights
or equity interests of the Corporation; (iii) a merger or consolidation of the
Corporation or a sale of 19.9% or more of the assets of the Corporation in one
or a series of related transactions, unless following such transaction or series
of transactions, the holders of the Corporation’s securities prior to the first
such transaction continue to hold at least 80% of the voting rights and equity
interests in the surviving entity or acquirer of such assets, as applicable;
(iv) a recapitalization, reorganization or other transaction involving the
Corporation that constitutes or could result in a transfer of more than 19.9% of
the voting rights in the Corporation; (v) the sale, lease, exchange or other
transfer in one or a series of related transactions of all or substantially all
of the Corporation’s total assets on a consolidated basis, as reported in the
Corporation’s consolidated financial statements, other than a sale or
disposition by the Corporation of all or substantially all of the Company’s
assets to an entity at least 80% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same proportion as
their ownership of the Corporation immediately prior to such sale; or (vi) the
execution by the Corporation or its controlling stockholders of an agreement
providing for or that will, upon consummation of the transactions contemplated
thereby, result in any of the foregoing events. The issued and outstanding
Series B and the Warrant Shares shall not be included in calculating the above
percentages.
 
 
EXHIBIT 7.2.3
-2
 
 

--------------------------------------------------------------------------------

 
 
ARTICLES SUPPLEMENTARY
FOR
8% CUMULATIVE PREFERRED STOCK, SERIES B
OF
AMERICAN SPECTRUM REALTY, INC.
 
AMERICAN SPECTRUM REALTY, INC., a corporation organized and existing under the
Maryland General Corporation Law (the “Corporation”), in accordance with the
provisions thereof, does hereby certify to the State Department of Assessments
and Taxation of Maryland that:
 
FIRST:  Under a power contained in Article VI of the charter of the Corporation
(the “Charter”), the Board of Directors of the Corporation (the “Board of
Directors”) by a duly adopted resolution classified and designated __________
shares of authorized but unissued Preferred Stock (as defined in the Charter) as
shares of 8% Cumulative Preferred Stock, Series B, with the following
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, and terms
and conditions of redemption.
 
Section 1.                      Designation.  The distinctive serial designation
of such series of Preferred Stock is “8% Cumulative Preferred Stock, Series B”
(“Series B”).  Each share of Series B shall be identical in all respects to
every other share of Series B.
 
Section 2.                      Number of Shares.  The authorized number of
shares of Series B shall be __________.  Shares of Series B that are redeemed,
purchased or otherwise acquired by the Corporation, or converted into another
series of Preferred Stock, shall revert to authorized but unissued shares of
Preferred Stock (provided that any such cancelled shares of Series B may be
reissued only as shares of any series other than Series B).
 
Section 3.                      Definitions.  As used herein with respect to
Series B:
 
(a)           “Affiliate” means, in respect of any Person, any other Person that
is directly or indirectly controlling, controlled by, or under common control
with such Person, and the term “control” (including the terms “controlled by”
and “under common control with”) means having, directly or indirectly, the power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities or by contract or otherwise.
 
(b)           “Articles Supplementary” means the Articles Supplementary relating
to the Series B, as they may be amended from time to time.
 
(c)           “Bankruptcy Law” means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
 
(d)           “Bylaws” means the amended and restated bylaws of the Corporation,
as they may be amended from time to time.
 
(e)           “Business Day” means each day, other than a Saturday or a Sunday,
which is not a day on which banking institutions in New York are authorized or
required by law, regulation or executive order to close.
 
(f)           “Change of Control” means the occurrence of any of the following
in one or a series of related transactions: (i) an acquisition after the
Original Issue Date by any Person or “group” (as described in Rule 13d-5(b)(1)
under the Exchange Act), of more than 19.9% of the voting rights or equity
interests in the Corporation in a transaction approved by the Corporation’s
Board of Directors; (ii) a transaction after the Original Issue Date resulting
in William J. Carden owning or controlling less than 19.9% of the voting rights
or equity interests of the Corporation; (iii) a merger or consolidation of the
Corporation or a sale of 19.9% or more of the assets of the Corporation in one
or a series of related transactions, unless following such transaction or series
of transactions, the holders of the Corporation’s securities prior to the first
such transaction continue to hold at least 80% of the voting rights and equity
interests in the surviving entity or acquirer of such assets, as applicable;
(iv) a recapitalization, reorganization or other transaction involving the
Corporation that constitutes or could result in a transfer of more than 19.9% of
the voting rights in the Corporation; (v) the sale, lease, exchange or other
transfer in one or a series of related transactions of all or substantially all
of the Corporation’s total assets on a consolidated basis, as reported in the
Corporation’s consolidated financial statements, other than a sale or
disposition by the Corporation of all or substantially all of the Company’s
assets to an entity at least 80% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same proportion as
their ownership of the Corporation immediately prior to such sale; or (vi) the
execution by the Corporation or its controlling stockholders of an agreement
providing for or that will, upon consummation of the transactions contemplated
thereby, result in any of the foregoing events. The issued and outstanding
Series B and the Warrant Shares shall not be included in calculating the above
percentages.
 
 
EXHIBIT 7.2.3
-3-
 
 

--------------------------------------------------------------------------------

 
 
(g)           “Charter” means the charter of the Corporation, as it may be
amended or restated from time to time, and shall include these Articles
Supplementary.
 
(h)           “Common Stock” means the common stock of the Corporation.
 
(i)           “Contribution Agreement” means that certain Contribution Agreement
dated as of December __, 2013 between the Corporation, Asset Managers, Inc.,
American Spectrum Realty Operating Partnership, L.P., American Spectrum Dunham
Properties, LLC and the initial holders of Series B.
 
(j)           “Default Rate” means 15% per annum, non-compounded.
 
(k)           “Dividend Payment Date” means the first day of each calendar month
commencing with January 1, 2014.
 
(l)           “Dividend Period” means each accrual period during which shares of
the Series B are issued and outstanding (beginning on the first day of each
calendar month and ending on the last day of such calendar month); provided,
however, that, with respect to each share of Series B, (i) the initial “Dividend
Period” shall commence on the Original Issue Date and end on [December 31,
2013]; and (ii) each other “Dividend Period” shall end on the first to occur of
(A) the next last succeeding day of a calendar month or (B) with respect to a
share of Series B that is redeemed, the date through and including the date on
which such share is redeemed.
 
(m)           “Dividend Record Date” means, with respect to any Dividend Payment
Date, the 15th calendar before such Dividend Payment Date.  Any such day that is
a Dividend Record Date shall be a Dividend Record Date whether or not such day
is a Business Day.
 
(n)           “Event of Default” shall mean that one or more of the following
events has occurred and is continuing:
 
(i)           the Corporation has failed to perform any covenant, obligation or
agreement under Section 3.3 of the Contribution Agreement and fails to cure such
breach within thirty (30) days of the date on which the applicable payments set
forth therein to the holders of the Series B Preferred are due and owing;
 
(ii)           the Corporation has failed to comply with the obligations under
Section 3.4 of the Contribution Agreement and fails to cure such breach, to the
extent it is capable of being cured, within ninety (90) days of the occurrence
of such breach;
 
(iii)           the lender with respect to any Project (as defined in the
Contribution Agreement) that is encumbered by a lien created by the Existing
Financing (as defined in the Contribution Agreement) forecloses upon or
otherwise acquires such Project;
 
(iv)           the Corporation has failed to redeem the required shares of
Series B at any Redemption Date and fails to cure such breach within ninety (90)
days of the applicable Redemption Date;
 
EXHIBIT 7.2.3
-4-
 
 

--------------------------------------------------------------------------------

 
 
(v)           the Corporation fails to pay in full in cash any dividend on any
applicable Dividend Payment Date at the Preferred Distribution Rate (regardless
of whether such dividend has been authorized by the Board of Directors and
declared by the Corporation or whether the Corporation has legally available
funds for the payment of such dividend) and fails to cure such breach within
thirty (30) days of the applicable Dividend Payment Date;
 
(vi)           the Corporation has failed to comply with the Series B Preferred
Terms (other than as set forth in subclause (iv) and (v) of this definition) and
fails to cure such breach, to the extent it is capable of being cured, within
seventy-five (75) days of the occurrence of such breach;
 
(vii)           any judgment or order for the payment of money individually or
in the aggregate in excess of $500,000 (exclusive of any amounts fully covered
by insurance (less any applicable deductible) and as to which the insurer has
acknowledged its responsibility to cover such judgment or order) shall be
rendered against the Corporation or any of its Affiliates and such judgment
shall not have been vacated or discharged or stayed or bonded pending appeal
within thirty (30) days after the entry thereof or enforcement proceedings shall
have been commenced by any creditor upon such judgment or order;
 
(viii)           any indebtedness secured by any property or asset which is
owned at least 25% by the Corporation or any of its Affiliates having a
principal or stated amount, individually or in the aggregate (with respect to
all indebtedness secured by such property or asset), in excess of $2,500,000
shall be subject to an event of default and/or is required to be repaid,
redeemed, purchased or defeased, or require an offer to purchase or defease such
indebtedness to be made, prior to its express maturity, and the Corporation
fails to cure such event of default or repayment, redemption or purchase
obligation, to the extent it is capable of being cured, within applicable cure
periods under such indebtedness;
 
(ix)           any unsecured indebtedness of the Corporation or any of its
Affiliates having a principal or stated amount, individually or in the
aggregate, in excess of $2,500,000 shall be subject to an event of default
and/or is required to be repaid, redeemed, purchased or defeased, or require an
offer to purchase or defease such indebtedness to be made, prior to its express
maturity, and the Corporation fails to cure such event of default or repayment,
redemption or purchase obligation, to the extent it is capable of being cured,
within applicable cure periods under such indebtedness;
 
(x)           the occurrence of any event or circumstance which could reasonably
be expected to have a material adverse effect on the financial condition of the
Corporation or the operation of the Corporation’s business, which the
Corporation, to the extent it is capable of being cured, has failed to cure
within ninety (90) days of becoming aware of the occurrence of such event or
occurrence (in either instance, a material adverse effect shall be deemed to
involve the payment by the Corporation of an amount in excess of $500,000);
provided, however, that no event of default under this clause (x) shall exist to
the extent such event or circumstance arises out of or results from an act of
God (i.e., hurricane, flooding, earthquake, etc.); or
 
(xi)           (A) the Corporation has filed a voluntary petition in bankruptcy;
(B) an involuntary petition in bankruptcy has been filed against the Corporation
and is not dismissed or removed within 60 days; (C) the Corporation applies for,
consents to, or acquiesces in the appointment of a trustee, receiver,
sequestrator or other custodian for any substantial part of the assets or other
property of any such Person, or makes an assignment for the benefit of
creditors; (D) the Corporation has filed a petition or an answer seeking any
reorganization, arrangement, dissolution, liquidation or similar relief under
any law, statute or regulation; or (E) the Corporation takes any action
authorizing, or in furtherance of, any of the foregoing.
 
(o)           “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
 
(p)           “Final Dividend Payment Date” means December 1, 2015.
 
(q)           “Final Redemption Date” means December 1, 2015.
 
(r)           “First Redemption Date” means December 1, 2014.
 
EXHIBIT 7.2.3
-5-
 
 

--------------------------------------------------------------------------------

 
 
(s)           “First Redemption Date Shares” means a number of shares of Series
B equal to the quotient of (i) the difference between (A) $17,000,000, less (B)
all Sale Payments and Debt Payments actually received by the holders of the
Series B on or prior to the First Redemption Date, divided by (ii) the
Liquidation Preference calculated as of the First Redemption Date.
 
(t)           “Junior Stock” means the Common Stock and any other class or
series of stock of the Corporation (other than Series B) that ranks junior to
Series B either or both as to the payment of dividends and/or as to the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
 
(u)           “Liquidation Preference” means (i) $4.00 per share of Series B
less (ii) all Per Share Sale Payments and Per Share Debt Payments actually
received by the holders of the Series B, in each case as adjusted for stock
splits, stock dividends, reclassification and the like.
 
(v)           “Original Issue Date” means December ___, 2013.
 
(w)           “Parity Stock” means the Series A and any other class or series of
stock of the Corporation (other than Series B) which have been approved by the
holders of the Series B that ranks equally with Series B both in the payment of
dividends and in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation (in each case without regard to whether dividends
accrue cumulatively or non-cumulatively).
 
(x)           “Per Share Debt Payments” shall mean all Debt Payments (as defined
below) calculated on a per share basis with respect to each share of Series B
held by such holder.
 
(y)           “Per Share Sale Payments” means all Sale Payments calculated on a
per share basis with respect to each share of Series B held by such holder.
 
(z)           “Person” means any individual, partnership, limited partnership,
corporation, limited liability company, association, joint stock company, trust,
joint venture, unincorporated organization or other entity.
 
(aa)           “PIK Interest” means interest accrued at the Preferred
Distribution Rate on PIK Dividends from the date such dividends would have
otherwise been payable but for part (ii) of Section 4(a) through the date on
which the PIK Dividends are paid in full.
 
(bb)           “Preferred Distribution Rate” means: (i) 8% per annum,
non-compounded, to, but excluding, the Rate Increase Date; and (ii) from and
after the Rate Increase Date, 12.0% per annum, non-compounded; provided,
however, that (A) in the event that the Corporation shall (i) fail to redeem any
shares of Series B on any Redemption Date, or (ii) fail to make a dividend
payment on any Dividend Payment Date, then from and after such date, until such
time that the Event of Default has been remedied in full, the Preferred
Distribution Rate then in effect shall be increased to the Default Rate; and (B)
upon the occurrence of an Event of Default (other than as described in clause
(A) above) which is not cured within 30 days, until such time that the Event of
Default has been remedied in full, the Preferred Distribution Rate then in
effect shall be increased to the Default Rate.
 
(cc)           “Preferred Stock” means any and all series of preferred stock of
the Corporation, including the Series B.
 
(dd)           “Rate Increase Date” means January 1, 2015.
 
(ee)           “Redemption Date” means each of the First Redemption Date, the
Second Redemption Date, the Final Redemption Date and the Optional Redemption
Date.
 
(ff)           “Redemption Price” means, with respect to each share of Series B,
as of any date of determination, an amount equal to (i) the Liquidation
Preference; (ii) plus an amount equal to all accrued and unpaid dividends (other
than PIK Dividends on the First Redemption Date and the Second Redemption Date)
with respect to such share.
 
EXHIBIT 7.2.3
-6-
 
 

--------------------------------------------------------------------------------

 
 
(gg)           “Sale Payments” means the aggregate “Sale Payments” (including,
for the avoidance of doubt, “Deficit Payments”) received by holders of Series B
pursuant to and as defined under the Contribution Agreement.
 
(hh)           “Second Redemption Date” means June 1, 2015.
 
(ii)           “Second Redemption Date Shares” means a number of shares of
Series B equal to the quotient of (i) the difference between (A) $17,000,000,
less (B) all Sale Payments and Debt Payments actually received by the holders of
the Series B subsequent to the First Redemption Date and on or before the Second
Redemption Date, divided by (ii) the Liquidation Preference calculated as of the
Second Redemption Date.
 
(jj)           “Senior Stock” means, as the case may be, (i) any class or series
of stock of the Corporation ranking senior to the Series B (and any Parity
Stock) in respect of the right to receive dividends, (ii) any class or series of
stock of the Corporation ranking senior to the Series B (and any Parity Stock)
in respect of the right to participate in any distribution upon liquidation,
dissolution or winding up of the affairs of the Corporation or (iii) any class
or series of stock of the Corporation ranking senior to the Series B (and any
Parity Stock) in respect of the right to redemption.
 
(kk)           “Series A” means the 15% Cumulative Preferred Stock, Series A of
the Corporation.
 
(ll)           “Series B Preferred Terms” means the terms of the Series B
Preferred as set forth herein.
 
(mm)           “Unredeemed Shares” means any shares of Series B that the
Corporation is obligated to redeem on any particular Redemption Date and in
respect of which the Corporation has failed to deliver the Redemption Price in
full on such Redemption Date.
 
(nn)           “Warrant Shares” means those shares of the Corporation’s Common
Stock subject to that certain Warrant to Purchase Common Stock of American
Spectrum Realty, Inc., dated December __, 2013, issued by the Corporation to
Dunham & Associates Holdings, Inc.
 
Section 4.                      Dividends.
 
(a)           The record holders of Series B shall be entitled to receive, when,
as and if authorized by the Board of Directors and declared by the Corporation,
out of funds legally available for the payment of dividends, on each outstanding
share of Series B, cumulative cash dividends calculated at the Preferred
Distribution Rate on the Liquidation Preference.  Except as otherwise set forth
below, dividends on each outstanding share of Series B shall accrue and be
cumulative from and including the issuance date of such share and shall be
payable monthly in arrears on each Dividend Payment Date.  For dividends
accruing during Dividend Periods ending before or on December 31, 2014, (i) 50%
of such dividends shall be payable monthly in arrears on each Dividend Payment
Date and (ii) 50% of such dividends (“PIK Dividends”) plus PIK Interest accrued
thereon shall be payable on the Final Dividend Payment Date.  If any Dividend
Payment Date is not a Business Day, then any dividend which would otherwise have
been payable on such Dividend Payment Date shall be paid on the next succeeding
Business Day.  Dividends payable on the Series B in respect of any Dividend
Period shall be computed on the basis of a 360-day year consisting of twelve
30-day months.  The amount of dividends payable on the Series B for any partial
period shall be computed on the basis of a 360-day year consisting of twelve
30-day months, and actual days elapsed over a 30-day month.  Dividends will be
payable to holders of record as they appear in the stockholder records of the
Corporation at the close of business on the applicable Dividend Record Date.
 
(b)           Holders of Series B shall not be entitled to any dividends,
whether payable in cash, securities or other property, other than dividends (if
any) declared and payable on the Series B as specified in this Section 4
(subject to the other provisions of these Articles Supplementary).
 
(c)           So long as any share of Series B remains outstanding, no dividend
shall be declared or paid on the Common Stock or any other shares of Junior
Stock (other than a dividend payable solely in Junior Stock), and no Common
Stock or any other shares of Junior Stock or Parity Stock shall be purchased,
redeemed or otherwise acquired for consideration by the Corporation, directly or
indirectly (other than as a result of a reclassification of Junior Stock for or
into other Junior Stock or of Parity Stock for or into other Parity Stock (with
the same or lesser aggregate liquidation amount) or Junior Stock, or the
exchange or conversion of one share of Junior Stock for or into another share of
Junior Stock or of one share of Parity Stock for or into another share of Parity
Stock (with the same or lesser per share liquidation amount) or Junior Stock)
during a Dividend Period, unless all accrued and unpaid dividends for all past
Dividend Periods, including the latest completed Dividend Period (including, if
applicable as provided in Section 4(a) above, dividends on such amount), on all
outstanding shares of Series B have been declared and paid in full (or declared
and a sum sufficient for the payment thereof has been set aside for the benefit
of the holders of shares of Series B on the applicable record date) and the
Corporation has established and funded a reserve for the projected dividends and
mandatory redemption payments required pursuant to Section 5 hereof for the
succeeding twelve (12) month period owing with respect to the Series B.
 
EXHIBIT 7.2.3
-7-
 
 

--------------------------------------------------------------------------------

 
 
(d)           All dividends declared and paid upon the Series B and each other
class or series of Parity Stock shall be declared pro rata so that the amount of
dividends declared and paid per share of Series B and such other class or series
of Parity Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Series B and such other class or series of
Parity Stock (which shall not include any accrual in respect of unpaid dividends
on such other class or series of Parity Stock for prior Dividend Periods if such
other class or series of Parity Stock does not have a cumulative dividend) bear
to each other.  All dividends declared and paid upon the Series B shall be
declared and paid in equal amounts on each such share outstanding at the close
of business on the Dividend Record Date with respect to such dividend.
 
(e)           Subject to the foregoing and the provisions of Section 8(c), such
dividends (payable in cash, securities or other property) as may be determined
by the Board of Directors may be declared and paid on any securities, including
Common Stock and other Junior Stock, from time to time out of any funds legally
available for such payment, and the Series B shall not be entitled to
participate in any such dividends.
 
Section 5.                Liquidation Rights.
 
(a)           In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, holders of Series
B shall be entitled to receive, for each share of Series B, out of the assets of
the Corporation or proceeds thereof (whether capital or surplus) available for
distribution to stockholders of the Corporation, and after satisfaction of all
liabilities and obligations to creditors of the Corporation (other than amounts
owing to the Corporation in connection with any loans or credit advances made to
the Corporation after the Original Issue Date by (i) any Affiliate of the
Corporation, or (ii) to any officer, director or shareholder of the Corporation
(or any of their respective Affiliates) which amounts shall be expressly
subordinate to the amounts payable to the Series B pursuant to this Section
5(a)), before any distribution of such assets or proceeds is made to or set
aside for the holders of Junior Stock as to such distribution, payment in full
in an amount equal to the sum of (A) the Liquidation Preference and (B) all
accrued and unpaid dividends thereon, whether or not declared, to the date of
payment.
 
(b)           In the event that, upon such voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the Corporation are
insufficient to pay the amount of the liquidating distributions on all
outstanding shares of Series B and the corresponding amounts payable on all
shares of other classes or series of Parity Stock, then the holders of the
Series B and each such other class or series of Parity Stock shall share ratably
in any such distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
 
(c)           If the liquidating distributions described in this Section 5 have
been paid in full to all holders of Series B, the holders of other stock of the
Corporation shall be entitled to receive all remaining assets of the Corporation
(or proceeds thereof) according to their respective rights and preferences.
 
(d)           For purposes of this Section 5, the merger or consolidation of the
Corporation with or into any other corporation or other entity, including a
merger or consolidation in which the holders of Series B receive cash,
securities or other property for their shares, or the sale, lease or exchange
(for cash, securities or other property) of all or substantially all of the
assets of the Corporation, shall not constitute a liquidation, dissolution or
winding up of the Corporation.
 
EXHIBIT 7.2.3
-8-
 
 

--------------------------------------------------------------------------------

 
 
(e)           In determining whether a distribution (other than upon voluntary
or involuntary liquidation), by dividend, redemption or other acquisition of
shares of stock of the Corporation or otherwise, is permitted under the Maryland
General Corporation Law, amounts that would be needed, if the Corporation were
to be dissolved at the time of distribution, to satisfy the preferential rights
upon dissolution of holders of shares of Series B shall not be added to the
Corporation’s total liabilities.
 
Section 6.               Redemption.
 
(a)           General. Series B shall not be redeemable except as set forth in
this Section 6.
 
(b)           Mandatory Redemption.
 
(i)           On the First Redemption Date, the Corporation shall redeem the
First Redemption Date Shares pro rata from the record holders thereof for cash
in an amount per share equal to the Redemption Price calculated as of the First
Redemption Date.
 
(ii)           On the Second Redemption Date, the Corporation shall redeem the
Second Redemption Date Shares pro rata from the record holders thereof for cash
in an amount per share equal to the Redemption Price calculated as of the Second
Redemption Date.
 
(iii)           On the Final Redemption Date, the Corporation shall redeem from
the record holders thereof, all remaining issued and outstanding Series B for
cash in an amount per share equal to the Redemption Price calculated as of the
Final Redemption Date.
 
(c)           Optional Redemption.  The holders of at least 75% of the then
issued and outstanding Series B (the “Majority Holders”) shall have the right
(the “Optional Redemption Right”), which right may be exercised by delivering to
the Corporation an Optional Redemption Notice during the pendency of an Event of
Default, to require the Corporation to redeem all (but not less than all) of the
outstanding shares of Series B.
 
(i)           Promptly, but in no event later than five (5) days following the
occurrence of an Event of Default, the Corporation shall deliver to the holders
of record of Series B at their addresses as they appear on the Corporation’s
stock transfer records a notice of occurrence of the Event of Default (the
“Event of Default Notice”).  Such notice shall state: (A) the events
constituting the Event of Default; (B) the date on which the Event of Default
occurred; (C) that, as a result of the Event of Default, the holders of Series B
may exercise the Optional Redemption Right; and (iv) the procedure set forth
below which the holders of Series B must follow in order to validly exercise the
Optional Redemption Right.
 
(ii)           The Optional Redemption Right may be exercised by the Majority
Holders delivering, at any time during the pendency of an Event of Default, to
the Corporation a notice in writing (an “Optional Redemption Notice”) stating
the holders’ election for the Corporation to redeem shares of Series B.  An
Optional Redemption Notice may not be withdrawn without the written consent of
the Corporation.  The Majority Holders may deliver the Optional Redemption
Notice at any time following the occurrence of the Event of Default and whether
or not the Corporation has delivered an Event of Default Notice pursuant to
Section 6(c)(i).
 
(iii)           Coordination with Parity Stock.
 
(A)           Promptly, and in any event no later than five days, following any
delivery by the Series B holders to the Corporation of an Optional Redemption
Notice, the Corporation shall deliver to the holders of record of each other
class or series of Parity Stock of which any shares are then outstanding a
notice of receipt of the Optional Redemption Notice, together with a copy of the
Optional Redemption Notice.
 
EXHIBIT 7.2.3
-9-
 
 

--------------------------------------------------------------------------------

 
 
(B)           Promptly, and in any event no later than five days, following any
exercise by the holder or holders of any other class or series of Parity Stock,
pursuant to the terms thereof, of the optional redemption right set forth
therein corresponding to the Optional Redemption Right set forth herein (such
right, a “Parity Optional Redemption Right” and such exercise, a “Parity
Optional Redemption Exercise”), the Corporation shall deliver to the holders of
record of Series B at their addresses as they appear on the Corporation’s stock
transfer records a notice of such Parity Optional Redemption Exercise, together
with a copy of the exercise notice received by the Corporation relating thereto.
 
(iv)           Optional Redemption Date.  If, during the pendency of an Event of
Default, the Majority Holders exercise the Optional Redemption Right in
accordance with this Section 6(c), the date of redemption of the Series B (the
“Optional Redemption Date”) shall be the date that is 30 days after the delivery
of the Optional Redemption Notice by such Series B holders to the Corporation;
provided, however, that, in the event of any Parity Optional Redemption Exercise
occurring prior to the delivery of the Optional Redemption Notice by the
Majority Holders to the Corporation, if the Majority Holders shall have
delivered the Optional Redemption Notice no later than 10 days following
delivery by the Corporation of the notice described in Section 6(c)(iii)(B) in
respect of the earliest such Parity Optional Redemption Exercise, then the
Optional Redemption Date shall be accelerated (but not deferred) to be the same
as the date of redemption of the Parity Stock to which such Parity Optional
Redemption Exercise relates; provided further, that, subject to the foregoing
proviso, the Corporation, by written notice to the Majority Holders, may in its
sole discretion elect to accelerate (but not to defer) the Optional Redemption
Date to coincide with the redemption date relating to any Parity Optional
Redemption Exercise.
 
(d)           Redemption Payment.  For each share of Series B which is to be
redeemed pursuant to this Section 6, the Corporation shall, on the applicable
Redemption Date therefor or, if such Redemption Date is not a Business Day, on
the first Business Day thereafter, pay to the holder thereof in full an amount
in cash equal to the Redemption Price calculated as of such Redemption Date, to
the same account or accounts that the Company pays dividends.  Upon payment in
full of the Redemption Price in accordance with this Section 6(d), such shares
of Series B shall be deemed to be no longer issued and outstanding.  In
connection with any redemption of Series B, each holder of shares of Series B to
be redeemed shall use reasonable efforts to surrender at the time of redemption
at the Corporation’s principal office a certificate representing the shares of
Series B such holder is redeeming; provided, however, that the holder’s right to
have its shares of Series B redeemed shall not be contingent upon such holder
returning its certificates to the Corporation.
 
(e)           Insufficient Redemption Proceeds.  In the event that, in
connection with any redemption obligation pursuant to this Section 6, on any
Redemption Date the Corporation is unable to satisfy in full (i) its obligations
with respect to all shares of Series B required to be redeemed pursuant to this
Section 6 on such Redemption Date, and (ii) the corresponding redemption
obligations with respect to all shares of other classes or series of Parity
Stock required to be redeemed on such Redemption Date pursuant to the terms
thereof, then, in each such case, on such Redemption Date, the Corporation shall
redeem only such number of shares of Series B and such number of shares of other
classes or series of Parity Stock that legally may be redeemed on such date, to
the fullest extent permitted by law, pro rata (as nearly as practical without
creating fractional shares), and the holders of the Series B and each such other
class or series of Parity Stock shall share ratably the proceeds available for
redemption in proportion to the aggregate Redemption Price payable on the shares
of Series B required to be redeemed on such Redemption Date pursuant to this
Section 6 and the aggregate redemption price payable on the shares of Parity
Stock required to be redeemed on such date pursuant to the terms of such Parity
Stock.  Thereafter, as soon as the Corporation is legally permitted to do so
under applicable law, the Corporation shall redeem the Unredeemed Shares and the
remaining unredeemed shares of such other classes or series of Parity Stock
required to be redeemed, to the fullest extent permitted by law, pro rata (as
nearly as practical without creating any fractional shares), calculated as set
forth in the immediately preceding sentence, until the Corporation satisfies in
full its redemption obligations with respect to all such Unredeemed Shares and
such remaining shares of Parity Stock required to be redeemed.  Unredeemed
Shares shall continue to accrue dividends in accordance with the terms hereof up
to but excluding the date on which the Corporation pays in full to the holders
of such Unredeemed Shares in cash the Redemption Price (re-calculated as of such
date).
 
Section 7.                      Conversion.  Holders of Series B shares shall
have no right to exchange or convert such shares into any other securities.
 
EXHIBIT 7.2.3
-10-
 
 

--------------------------------------------------------------------------------

 
 
Section 8.                      Voting Rights.
 
(a)           General.  The holders of Series B shall not have any voting rights
except as set forth below.
 
(b)           Voting as Separate Class.  On any matter in which the Series B may
vote as a separate class (as expressly provided herein), each outstanding share
of Series B shall be entitled to one vote.
 
(c)           Preferred Directors.
 
(i)           Whenever (a) dividends on any shares of Series B shall be in
arrears by more than thirty (30) days following the applicable Dividend Payment
Date for three or more consecutive or non-consecutive monthly periods (a
“Preferred Dividend Default”), or (b) any redemption payment owing with respect
to 6(b) or Section 6(c) shall be in arrears by more than ninety (90) days
following the applicable Redemption Date (a “Preferred Redemption Default” and
together with any Preferred Divided Default, a “Preferred Default”) the holders
of shares of the Series B (voting together as a single class) shall be entitled
to vote for the election of a number of directors of the Corporation
constituting a majority of the Board of Directors (the “Series B Directors”) and
the entire Board of Directors, as applicable, will be increased by the number of
the Series B Directors.
 
(ii)           In connection with the appointment of the Series B Directors, the
independence requirements established under the Company’s Charter and the rules
of the principal national securities exchange on which the Company’s securities
are listed or admitted to trading must be satisfied.  The Series B Director will
be elected by a plurality of the votes cast in the election for a one-year term
and each Preferred Director will serve until his or her successor is duly
elected and qualified or until such Preferred Director’s right to hold the
office terminates, whichever occurs earlier, subject to such Preferred
Director’s earlier death, disqualification, resignation or removal.  The
election will take place at (A) either (I) a special meeting called in
accordance with Section 8(c)(iii) below if the request is received more than 60
days before the date fixed for the Corporation’s next annual or special meeting
of stockholders or (II) the next annual or special meeting of stockholders if
the request is received within 60 days of the date fixed for the Corporation’s
next annual or special meeting of stockholders, and (B) at each subsequent
annual meeting of stockholders, or special meeting held in place thereof, until
all dividends with respect to the Series B for all past Dividend Periods that
have ended and all past redemption payments owing with respect to the Series B
have been paid in full.
 
(iii)           At any time when such voting rights shall have vested, a proper
officer of the Corporation shall call or cause to be called, upon written
request of holders of record of at least 10% of the outstanding shares of Series
B, a special meeting of the holders of Series B by mailing or causing to be
mailed to such holders a notice of such special meeting to be held not fewer
than ten or more than 20 days after the date such notice is given.  At any such
annual or special meeting, all of the holders of the Series B, by plurality
vote, voting together as a single class will be entitled to elect a number of
directors constituting a majority of the Board of Directors on the basis of one
vote per share of Series B. The holder or holders of one-third of the Series B
then outstanding, present in person or by proxy, will constitute a quorum for
the election of the Preferred Directors. Notice of all meetings at which holders
of the Series B shall be entitled to vote will be given to such holders at their
addresses as they appear in the stock transfer records.  At any such meeting or
adjournment thereof in the absence of a quorum, subject to the provisions of any
applicable law, a majority of the holders of the Series B present in person or
by proxy shall have the power to adjourn the meeting for the election of the
Preferred Directors, without notice other than an announcement at the meeting,
until a quorum is present. If a Preferred Default shall terminate after the
notice of a special meeting has been given but before such special meeting has
been held, the Corporation shall, as soon as practicable after such termination,
mail or cause to be mailed notice of such termination to holders of the Series B
that would have been entitled to vote at such special meeting.
 
(iv)           If and when all accumulated dividends on the Series B for the
past Dividend Periods and all redemption payments not paid in full on a past
Redemption Date shall have been fully paid or declared and a sum sufficient for
the payment thereof is set apart for payment, the right of the holders of Series
B to elect the Preferred Directors shall immediately cease (subject to
re-vesting in the event of each and every Preferred Default), and the term of
office of each Preferred Director so elected shall terminate and the entire
Board of Directors shall be reduced accordingly.  Any Preferred Director may be
removed at any time with or without cause by the vote of, and shall not be
removed otherwise than by the vote of, the holders of record of a majority of
the outstanding shares of Series B. So long as a Preferred Default shall
continue, any vacancy in the office of a Preferred Director may be filled by
written consent of a majority of the Preferred Directors remaining in office, or
if none remains in office, by a vote of the holders of record of a majority of
the outstanding shares of Series B when they have the voting rights described
above.  Each of the Preferred Directors shall be entitled to one vote on any
matter.
 
EXHIBIT 7.2.3
-11-
 
 

--------------------------------------------------------------------------------

 
 
(v)           The procedures in this Section 8(c) for the calling of meetings
and the election of the Preferred Directors will, to the extent permitted by
law, supersede anything inconsistent contained in the Bylaws of the Corporation
(including any provision calling for a classified board) and, without limitation
to foregoing, the Bylaws of the Corporation will not be applicable to the
election of directors by holders of Series B pursuant to this Section
8(c).  Notwithstanding the Bylaws of the Corporation, the number of directors
constituting the entire Board of Directors will be automatically increased to
include the directors to be elected pursuant to this Section 8(c).  The
Corporation agrees to diligently and promptly cooperate in good faith with the
holders of the Series B and to perform any and all actions requested by the
holders of the Series B that are necessary in connection with the election of
the Preferred Directors, including (A) executing and delivering any and all
agreements, documents, resolutions or other instruments that may be required for
the election of the Series B Directors, and (b) refraining from taking any
action that would in any way restrict, limit or interfere with the election of
the Preferred Directors.
 
(d)           Protective Provisions.  So long as any shares of Series B are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter, the vote or consent of the holders of at least a
majority of the then outstanding shares of Series B given in person or by proxy,
either in writing or by electronic transmission without a meeting or by vote at
any meeting called for the purpose, shall be necessary to:
 
(i)           (A) authorize, create or issue, or increase the number of
authorized or issued shares of, any class or series of Senior Stock or Parity
Stock, or reclassify any authorized shares of capital stock into Senior Stock or
Parity Stock, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any Senior Stock or Parity
Stock; (B) issue shares of Series B and Parity Stock to any Person; or (C)
authorize, create or issue any class of Junior Stock that gives the holders
thereof the right to participate in, interfere with or restrict the management
or operations of the Corporation or prohibits the holders of the Series B from
exercising their rights and remedies hereunder;
 
(ii)           amend, alter or repeal any provisions of the Series B Preferred
Terms as set forth herein, whether by merger, consolidation, transfer or
conveyance of all or substantially all of its assets or otherwise;
 
(iii)           amend, alter or repeal the provisions of these Articles
Supplementary;
 
(iv)           amend, alter or repeal the provision of the Articles
Supplementary with respect to the Series A;
 
(v)           amend, alter or repeal the provisions of the Charter (other than
these Articles Supplementary or the Articles Supplementary of the Series A) or
the Bylaws, whether by merger, consolidation, transfer or conveyance of all or
substantially all of its assets or otherwise, so as to adversely affect any
right, preference, privilege, obligation or voting power of the Series B or
holders thereof;
 
(vi)           incur any indebtedness or other obligations, or refinance any
existing indebtedness, that would prohibit the Corporation from making the
dividend or redemption payments attributable to the Series B and/or performing
the terms and conditions of the Contribution Agreement;
 
(vii)           except as expressly set forth in the Contribution Agreement,
exceed the Indebtedness Limit (as defined in the Contribution Agreement) with
respect to any indebtedness securing or encumbering any of the properties
contributed to the Corporation and its Affiliates pursuant to the Contribution
Agreement (the “Contributed Properties”);
 
EXHIBIT 7.2.3
-12-
 
 

--------------------------------------------------------------------------------

 
 
(viii)           increase (A) the aggregate outstanding principal amount of any
individual indebtedness of the Corporation and its Affiliates existing as of the
Original Issue Date that is secured by real property by greater than $250,000
(excluding for purposes of this Section 8(d)(viii)(A) indebtedness authorized
pursuant to the Contribution Agreement with respect to the Contributed
Properties), such $250,000 being inclusive of any and all expenses, prepayment
fees, defeasances, etc. associated with such increase; and (B) the aggregate
outstanding principal amount of all unsecured indebtedness of the Corporation
and its Affiliates existing as of the Original Issue Date by greater than
$250,000, such $250,000 shall be inclusive of any and all expenses, prepayment
fees, defeasances, etc. associated with such increase; provided, however, that
in either instance, the Corporation may exceed such $250,000 limit if any and
all amounts borrowed in excess of such $250,000 are paid to the holders of
outstanding Series B and reduce the Liquidation Preference (“Debt
Payments”).  All Debt Payments shall be paid to the holders of the Series B, pro
rata, as promptly as practicable (but in no event later than five (5) Business
Days) following the closing of the applicable financing;
 
(ix)           redeem, repurchase or otherwise acquire for value any Junior
Stock;
 
(x)           declare and make any dividends to any Junior Stock unless the
Corporation is current on all dividend and redemption payments owing to the
Series B and has adequately funded a reserve in an amount necessary to make all
dividend and redemption payments owing with respect to the Series B for the
following 12 month period;
 
(xi)           incur any indebtedness after the Original Issue Date from (A) any
Affiliate of the Corporation, or (B) any officer, director or shareholder of the
Corporation (or any of their respective Affiliates);
 
(xii)           engage in any transaction (other than those described in
subclause (xi) above) outside the ordinary course of business consistent with
past practice between the Corporation and (A) any Affiliate of the Corporation,
or (B) any officer, director or shareholder of the Corporation (or any of their
respective Affiliates), in either case that would reasonably be expected to
adversely affect the rights of the Series B;
 
(xiii)           take any corporate action in the furtherance of, or suffer to
exist, any of the following:
 
(A)           the commencement by the Corporation of a voluntary case or
proceeding under any applicable Bankruptcy Law or any other case or proceeding
to be adjudicated bankrupt or insolvent;
 
(B)           the consent by the Corporation to the entry of a decree or order
for relief in respect of the Corporation in an involuntary case or proceeding
under any applicable Bankruptcy Law or to the commencement of any bankruptcy or
insolvency case or proceeding against it;
 
(C)           the filing of a petition or answer or consent by the Corporation
seeking reorganization or relief under any applicable federal or state law;
 
(D)           the Corporation:
 
(1)           consenting to the filing of such petition or the appointment of,
or taking possession by, a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Corporation or of any substantial part
of its property;
 
(2)           making an assignment for the benefit of creditors; or
 
(3)           admitting in writing its inability to pay its debts generally as
they become due.
 
(xiv)           enter into any transaction or take any corporate action which
could reasonably be expected to result in, or suffer to exist, a Change of
Control;
 
EXHIBIT 7.2.3
-13-
 
 

--------------------------------------------------------------------------------

 
 
  (xv)           declare or pay any distributions on the Junior Stock;
 
  (xvi)           increase the size of the Corporation’s Board of Directors
(other than in connection with the exercise of the rights set forth in Section
8(c) hereof);
 
  (xvii)           amend, alter or repeal, directly or indirectly through
American Spectrum Operating Partnership L.P., the provisions of the Limited
Liability Company Agreement of American Spectrum Dunham Properties, LLC, so as
to adversely affect any right, preference, privilege, obligation or voting power
of the Series B or holders thereof; or
 
  (xviii)           undertake any liquidation, dissolution or winding up of the
Corporation.
 
Section 9.                      Record Holders.  To the fullest extent permitted
by applicable law, the Corporation and the transfer agent for the Series B may
deem and treat the record holder of any share of Series B as the true and lawful
owner thereof for all purposes, and neither the Corporation nor such transfer
agent shall be affected by any notice to the contrary.
 
Section 10.                      No Sinking Fund.  No sinking fund has been
established for the retirement or redemption of Series B.
 
Section 11.                      Headings of Subdivisions.  The headings of the
various subdivisions hereof are for convenience of reference only and shall not
affect the interpretation of any of the provisions hereof.
 
Section 12.                      Severability of Provisions.  If any preferences
or other rights, voting powers, restrictions, limitations as to dividends or
other distributions, qualifications or terms or conditions of redemption of the
Series B set forth in the Charter, including the Series B Preferred Terms, are
invalid, unlawful or incapable of being enforced by reason of any rule of law or
public policy, all other preferences or other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption of the Series B set forth in the Charter
which can be given effect without the invalid, unlawful or unenforceable
provision thereof shall, nevertheless, remain in full force and effect and no
preferences or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications or terms or conditions of
redemption of the Series B herein set forth shall be deemed dependent upon any
other provision thereof unless so expressed therein.
 
Section 13.                      Notices.  All notices or communications in
respect of Series B shall be sufficiently given if given in writing and
delivered in person or by first class mail, postage prepaid, or if given in such
other manner as may be permitted in these Articles Supplementary, in the Charter
or Bylaws or by applicable law.
 
Section 14.                      No Preemptive Rights.  No share of Series B
shall have any rights of preemption whatsoever as to any securities of the
Corporation, or any warrants, rights or options issued or granted with respect
thereto, regardless of how such securities, or such warrants, rights or options,
may be designated, issued or granted.
 
Section 15.                      Replacement Certificates.  The Corporation
shall replace any mutilated certificate at the holder’s expense upon surrender
of that certificate to the Corporation.  The Corporation shall replace
certificates that become destroyed, stolen or lost at the holder’s expense upon
delivery to the Corporation of reasonably satisfactory evidence that the
certificate has been destroyed, stolen or lost, together with any indemnity that
may be reasonably required by the Corporation.
 
Section 16.                      Other Rights.  The shares of Series B shall not
have any rights, preferences, privileges or voting powers or relative,
participating, optional or other special rights, or qualifications, limitations
or restrictions thereof, other than as set forth herein or in the Charter or as
provided by applicable law.
 
SECOND:  The shares of Series B have been classified and designated by the Board
of Directors under the authority contained in the Charter.
 
EXHIBIT 7.2.3
-14-
 
 

--------------------------------------------------------------------------------

 
 
THIRD:  These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
 
FOURTH:  The undersigned acknowledges these Articles Supplementary to be the
corporate act of the Corporation and, as to all matters or facts required to be
verified under oath, the undersigned acknowledges that, to the best of his
knowledge, information and belief, these matters and facts are true in all
material respects and that this statement is made under the penalties of
perjury.
 
IN WITNESS WHEREOF, AMERICAN SPECTRUM REALTY, INC. has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
attested by its Secretary, this ____ day of December, 2013.
 

  AMERICAN SPECTRUM REALTY, INC.                  
 
By:
        Name: William J. Carden       Title: President          

 

ATTEST:                  
 
   
 
 
Name:
   
 
 
Title: Secretary
   
 
 

 
EXHIBIT 7.2.3
-15-
 
 

--------------------------------------------------------------------------------

 

 
RENT ROLLS
 
[To be provided]
 
EXHIBIT 8.3.2
-1-
 
 

--------------------------------------------------------------------------------

 
 
Graphic [roll1.jpg]
EXHIBIT 8.3.2
-2.-
 
 

--------------------------------------------------------------------------------

 
 
Graphic [roll2.jpg]
EXHIBIT 8.3.2
-2-
 
 

--------------------------------------------------------------------------------

 
 
Graphic [roll3.jpg]
EXHIBIT 8.3.2
-3-
 
 

--------------------------------------------------------------------------------

 
 
Graphic [roll4.jpg]
EXHIBIT 8.3.2
-4-
 
 

--------------------------------------------------------------------------------

 
 
Graphic [roll5.jpg]
EXHIBIT 8.3.2
-5-