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**AGREEMENT OF PURCHASE AND SALE**

            THISAGREEMENT OF PURCHASE AND SALE (this "Agreement") is made and enteredinto as of the 31st day of August, 2007 (the "Effective Date"), byand among RIVER FOREST PROPERTIES, LLC, a Virginia limited liability company("River Forest"), PRINCETON PROPERTIES, INC., a Virginia corpration("Princeton" and, together with River Forest, "Seller"),ASSOCIATED ESTATES REALTY CORPORATION, an Ohio corporation("Purchaser"), and FIRST AMERICAN TITLE INSURANCE COMPANY, an escrowagent ("Escrow Agent").

**PRELIMINARY STATEMENTS**

A.        River Forest is the owner of that certain apartment projectknown as "River Forest" consisting of 240 apartment units and allamenities which are a part thereof located on the southern line of BrandersCreek Drive in Chesterfield County, Virginia on that real property described inExhibit A attached hereto and by this reference made a part hereof,together with:  (i) all easements, appurtenances and hereditamentsappertaining thereto and including all of River Forest’s rights, if any, in andto any alleys, ways, easements and rights of way abutting or adjoining saidreal property; (ii) all the buildings, improvements, structures, plantsand appurtenances situated on said real property; (iii) all fixtures,furniture, equipment (including all maintenance equipment and all officeequipment located in the clubhouse building), appliances, signs, plumbing,machinery, personal property and facilities and supplies which are owned byRiver Forest and which are attached to or appurtenant to or used in connectionwith said real property (specifically excluding property owned by residentialtenants); (iv) all plans, specifications, guarantees and warranties; and(v) all leases including the rents, issues and profits thereof and allrefundable security deposits or escrow deposits held by River Forest thereunder(collectively, the "River Forest Property");

B.         River Forest obtained a loan (the "Loan") in theoriginal principal amount of $19,181,500.00 with respect to the River Forest Propertyfrom Highland Mortgage Company (now Capmark Bank) (the "Lender") andinsured by the United States Department of Housing and Urban Development ("HUD")under Section 221(d)(4) of the National Housing Act;

C.        The Loan is evidenced and secured by the documents and its setforth on Schedule 1 to this Agreement (collectively, the "LoanDocuments");

D.        Princeton, an affiliate of River Forest, is the owner of thatcertain parcel of land located adjacent to the River Forest Apartmentsdescribed as Parcel II in Exhibit A attached hereto and by thisreference made a part hereof, together with all easements, appurtenances andhereditaments appertaining thereto and including all of Princeton’s rights, ifany, in and to any alleys, ways, easements and rights of way abutting oradjoining said real property (the "River Forest Expansion Parcel"and, together with the River Forest Property, the "Property");

E.         Seller desires to sell the Property and River Forest desiresto assign the Loan to Purchaser and Purchaser desires to purchase the Propertyfrom Seller and assume the Loan from River Forest, on and subject to the termsand conditions of this Agreement;

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F.         Seller’s affiliate, Belvedere Properties, LLC, a Virginialimited liability company ("Seller Affiliate"), is the owner of thatcertain apartment project known as "The Belvedere" consisting of 296apartment units and all amenities which are a part thereof located at theintersection of Robious and Cranbeck Roads in Chesterfield County, Virginia(the "Other Property"); and

G.        Pursuant to that certain Agreement of Purchase and Sale (the "OtherAgreement"), dated as of the same date as this Agreement, among SellerAffiliate and Purchaser, Seller Affiliate has agreed to sell to Purchaser, andPurchaser has agreed to purchase from Seller Affiliate, the Other Property.

THEREFORE, in consideration of Ten and No/100 Dollars ($10.00) in handpaid, the mutual covenants herein contained, and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereby covenant and agree as follows:

1.         Agreement to Sell and to Purchase.

(a)        Seller agrees to sell and Purchaser agrees to purchase theProperty upon the terms and conditions hereinafter set forth.

(b)        Subject to Purchaser’s rights with respect to theInvestigation Period (as hereinafter defined), Purchaser acknowledges andunderstands that Seller is selling the Property and the Purchaser is buying theProperty in its "AS-IS, WHERE-IS, WITH ALL FAULTS" physicalcondition, including all existing environmental conditions, with no rights ofset-off or reduction in the Purchase Price (as hereinafter defined) unless andexcept as expressly provided herein to the contrary, and except for therepresentations and warranties set forth in this Agreement and the closingdocuments executed in connection with the consummation of the transactionscontemplated by this Agreement, the sale of the Property by Seller to Purchasershall be without representation or warranty of any nature or kind with respectto the physical condition of the Property, whether express, implied, statutoryor otherwise, including without limitation the warranties of use,merchantability or fitness for a particular purpose, and Seller does herebydisclaim and renounce any such representations or warranties.

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2.         Earnest Money. Purchaser shall deposit in escrow withthe Escrow Agent within two (2) business days of the execution hereof, SixHundred Fifty Thousand Dollars ($650,000) (such deposit together with anyinterest that may be earned these prior to Closing, being hereinafter calledthe "Initial Deposit").  If Purchaser does not elect to terminatethis Agreement during the Investigation Period (as hereinafter defined), priorto the expiration of the Investigation Period, Purchaser shall deliver toEscrow Agent an additional deposit in the amount of Three Hundred ThousandDollars ($300,000) (the "Additional Deposit").  The Initial Depositand the Additional Deposit are sometimes individually or collectively referredto as the "Earnest Money".  The Earnest Money shall be deposited inan interest bearing account using Purchaser’s tax identification number whichshall be provided to Escrow Agent.  The Earnest Money shall be applied againstthe cash portion of the purchase price at Closing (as hereinafter defined) orrefunded in full to Purchaser as hereinafter provided in Paragraph 15.  IfPurchaser does not notify Seller prior to the expiration of the InvestigationPeriod that Purchaser elects to terminate this Agreement, the Initial Depositshall be non-refundable for any reason other than (i) a default by Seller,(ii) in the event any condition to Purchaser’s obligations under thisAgreement is not satisfied as provided herein, or (iii) as otherwisespecifically provided herein.  If Purchaser does not notify Seller prior to theexpiration of the Investigation Period that Purchaser elects to terminate thisAgreement and Purchaser fails to make the Additional Deposit as required,Purchaser shall be in default of this Agreement and Seller shall have the rightto terminate this Agreement and retain the Initial Deposit as provided inParagraph 8.

3.         Purchase Price. The purchase price for the Property(the "Purchase Price") shall be Thirty Two Million Eight HundredThousand Dollars ($32,800,000), payable at Closing as follows:

(a)        Purchaser shall receive a credit against the Purchase Price inthe amount of the outstanding principal balance of the Loan, all accrued andunpaid interest on the Loan and all other fees, costs and expenses owing byRiver Forest under the Loan Documents for periods prior to the Closing Dateexcept for any fees, costs and expenses to be paid by Purchaser in connectionwith the assumption of the Loan;

(b)        Purchaser shall receive a credit against the Purchase Price inthe amount of the Earnest Money;

(c)        The balance of the Purchase Price as adjusted by the closingprorations hereinafter provided at Paragraph 4 shall be paid in cash at Closingby wire transfer of funds to Escrow Agent’s account for payment to Seller; and

(d)        Prior to Closing, Purchaser and Seller shall, acting in good faith,agree upon a reasonable allocation of the Purchase Price between the RiverForest Property and the River Forest Expansion Parcel.

4.         Closing Prorations.  All items described below shall beprorated as of the date of Closing (the "Closing Date") and, ashereinafter provided, shall increase or decrease the cash portion of thePurchase Price payable pursuant to Paragraph 3(c) of this Agreement.

(a)        Taxes.  All state, county and municipal ad valorem andother property taxes and similar charges with respect to the Property for theyear in which the Closing is consummated will be prorated based on the currentyear’s tax bill or, if such bill has not been issued as of the Closing Date, thentaxes shall be prorated at Closing based on the prior year’s tax bill and saidamount of taxes prorated shall be adjusted between the parties upon receipt ofthe tax bill for the year in which the Closing is consummated. Seller shall payat or prior to Closing all special assessments and charges against the Propertywhich are either due or declared prior to the Closing Date. Any refund orcredit attributable to the overpayment of taxes and assessments payable for theyear in which Closing occurs, less any attorneys’ fees or costs payable in withrespect of such taxes and assessments shall be allocated between Seller andPurchaser based upon their respective periods of ownership.

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(b)        Income.  All rental and other income from the Property,including but not limited to prepaid rent, late charges, and other charges totenants, shall be prorated based on rents actually collected.  All unpaid rentrelating to periods prior to the Closing Date shall be paid to Seller as andwhen received by Purchaser after Closing and shall not be prorated at Closing;provided, that any rent received after Closing shall be applied first to thecurrent rent due, then to past due rents accrued after Closing and then to pastdue rent accrued prior to Closing.  Purchaser shall include all such unpaidrent in its normal billing and shall use commercially reasonable, good faithefforts to collect such unpaid rent after the Closing Date.  Purchaser may notwaive any delinquent rents nor modify a Lease so as to reduce or otherwiseaffect amounts owed thereunder for any period in which Seller is entitled toreceive a share of charges or amounts without first obtaining Seller’s writtenconsent, which consent may be given or withheld in Seller’s sole and absolutediscretion.  If Purchaser fails to collect any unpaid rents accrued prior toClosing within ninety (90) days after Closing, Seller shall have the right toindependently pursue collection of amounts to which Seller is entitled;provided, that Seller shall be expressly prohibited from bringing any action toevict any tenant from its leased premises at the Property.

(c)        Deposits and Escrows.

(1)        Seller shall, at no expense to Purchaser, transfer toPurchaser by credit against the Purchase Price at Closing all refundablesecurity deposits and other escrow deposits relating to the Property, includingsuch deposits and fees as to leases that are in default but have not beenterminated as of the Closing Date, and all interest charges required by law tobe accrued thereon.

(2)        All real estate tax escrows, insurance escrows and otherescrows maintained by Lender under the Loan Documents shall be transferred toPurchaser, and Seller shall be given credit for the amount of such funds andany unearned mortgage insurance premiums at Closing.

(d)        Utilities. Utilities not payable by tenants of theProperty shall either be (i) prorated as of Closing, or(ii) transferred into Purchaser’s name as of Closing, with Seller to beresponsible for payment of all charges accrued prior to such transfer and Purchaserto be responsible for payment of all charges accruing after such transfer.

(e)        Service Contracts and Equipment Leases.  A list of allservice contracts and equipment leases relating to the operation and managementof the Property is attached hereto as Exhibit B as a part hereof(the "Contracts").  Except as noted in Exhibit B,Purchaser shall not be obligated to assume responsibility for or to pay anysums due at Closing attributable to the Contracts unless Purchaser electsduring the Investigation Period by written notice to Seller to assume suchContracts at Closing, in either of which events, such Contracts shall beassigned to and assumed by Purchaser at Closing.  Seller agrees, at Seller’sexpense, to cancel all Contracts which are not to be assumed by Purchaser as ofthe Closing Date.  All prepayments made or payments due under any of theContracts to be assigned to Purchaser shall be prorated as of the Closing Date.

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(f)         Adjustments.  In the event that accurate proration andother adjustments cannot be made at Closing because current bills are notobtainable (as, for example, in the case of utility bills), the parties shallprorate on the best available information, subject to adjustment upon receiptof the final bill.  Seller shall attempt to have utility meters read on theClosing Date so as to accurately determine the proration of current utilitybills.  Adjustments shall be made after Closing if any closing prorations arebased on inaccurate information.

5.         Title.

(a)        At Closing, Seller shall convey to Purchaser, good andmarketable fee simple title to the Property by one or more special warrantydeeds from River Forest and Princeton, as applicable (the "Deed") inform consistent with standard Virginia practice (and otherwise approved bySeller and Purchaser), subject only to the Permitted Encumbrances (definedbelow) and any other matters of record as of the date of Purchaser’sexaminations of title to the extent applicable to the Property and any matterswhich could be discovered by a survey of the Property other than such mattersto which Purchaser has objected and which Seller has agreement or is obligatedto correct as provided herein.  Purchaser agrees to accept title to theProperty subject to the Permitted Encumbrances and such additional matters asmay be approved by Purchaser, in its sole and absolute discretion, prior toClosing.

(b)        During the Investigation Period, Purchaser shall, at its cost,obtain (i) an owner’s title insurance commitment (the "TitleCommitment") in the full amount of the Purchase Price to be issued by theEscrow Agent (the "Title Insurer"), insuring the title to theProperty, and (ii) a current survey (references herein to the plat ofsurvey shall be deemed to refer to such plat) of the Property (the "Survey"). It shall be a condition to Purchaser’s obligations hereunder that Seller shallhave delivered all documents required to be delivered by Seller hereunder whichare required by the Title Insurer to issue an owner’s title insurance policypursuant to the Title Commitment (the "Title Policy").

(c)        During the Investigation Period, Purchaser shall review titleto the Property as disclosed by the Title Commitment and the Survey, andsatisfy itself as to the availability from the Title Insurer of the TitlePolicy and all requested endorsement to such Title Policy. Purchaser shallnotify Seller of any objections to matters disclosed by the Title Commitmentand the Survey within five (5) days after receipt of the Title Commitment andthe Survey.

(d)        Seller shall have no obligation to remove or cure titleobjections, except for (1) liens of an ascertainable amount (but expresslyexcluding the liens evidenced by the Loan Documents), which liens Seller shallcause to be released at the Closing or affirmatively insured over by the TitleCompany, and (2) any exceptions or encumbrances to title, other than thoseprovided for herein, which are created by Seller after the date of thisAgreement without Purchaser’s consent.  In addition, Seller shall provide theTitle Insurer with one or more customary ALTA statements, personal undertakingsor owner’s affidavits (each, an "Owner’s Affidavit"), in form andsubstance reasonably acceptable to Seller, which will permit the Title Insurerto remove the standard "mechanics lien" and "GAP" exceptionsfrom the Title Policy.

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(e)        Subject to Purchaser’s approval as described below, Sellershall have the right to grant, prior to Closing, or to except and reserve fromthe conveyance of the River Forest Apartments and the River Forest ExpansionParcel at Closing such easements as may be required to (i) construct astormwater basin within the portion of the River Forest Apartments propertydescribed on Exhibit E attached hereto as a part hereof, and(ii) extend sanitary sewer from the sanitary sewer line located on theRiver Forest Apartments to serve the properties located west and north of theRiver Forest Expansion Parcel (together, the "Easements").  Platsshowing the proposed locations of the Easements shall be provided to Purchaserduring the first fifteen (15) days of the Investigation Period.  Prior to theexpiration of the Investigation Period, Purchaser and Seller shall use goodfaith efforts to agree between themselves and any other parties to theEasements upon the terms and conditions of the Easements, it being acknowledgedby both Seller and Purchaser that the Easements must also be acceptable toChesterfield County and, to the extent they affect the River Forest Apartments,the Lender and HUD.  Seller agrees that Purchaser shall have the opportunity toparticipate in any negotiations with Chesterfield County,  the Lender and/orHUD, as applicable, with respect to the terms and conditions of the Easements. In the event Seller and Purchaser have not reached agreement on the Easementsprior to the expiration of the Investigation Period, Purchaser and Seller shallcontinue to use good faith efforts to agree upon the terms and conditions ofthe Easements, and it shall be a condition precedent to each party’sobligations to proceed to Closing pursuant to this Agreement that Purchaser andSeller have approved the final form of the Easements, such approval not to beunreasonably withheld, conditioned or delayed.

(f)         In connection with the development of other properties ownedby Princeton adjacent to the River Forest Apartments and the River ForestExpansion Parcel ("Seller’s Retained Property") and the developmentof the River Forest Expansion Parcel, each party agrees to consider the requestof any other party, in good faith and without charge, to grant easements forpublic utilities and storm drainage necessary for the development of therequesting party’s property, including, without limitation, easements forextension of water, sanitary sewer, storm drainage, gas, electricity, cable andtelephone service but excluding easements for drainage basins or "BMP"facilities. The exact location and terms shall be subject to the prior writtenapproval of the owner of the affected property, which approval shall not beunreasonably delayed or withheld provided such easement will not adverselyaffect the reasonable use of such party’s property or affect any building site ordriveway and the location of any such easements is approved by ChesterfieldCounty, as applicable, the party requesting such easements and the owner of theproperty to be burdened by such easements.

For purposes of this Agreement, the following terms shall have thefollowing meanings:

(1)        "Permitted Exceptions" shall mean: (i) anyexception arising out of an act of Purchaser or its representatives, agents,employees or independent contractors; (ii) zoning and subdivisionordinances and regulations; (iii) the specific exceptions in the TitleCommitment that the Title Insurer has not agreed to insure over or remove fromthe Title Commitment as of the end of the Investigation Period and that Selleris not required to remove as provided herein; (iv) items shown on theSurvey which have not been removed (or which Seller has not agreed to remove)as of the end of the Investigation Period; (v) real estate taxes not yetdue and payable; (vi) the Loan Documents; and (vii) the Easements andany easements mutually agreed upon by Purchaser and Seller pursuant tosubparagraph 5(f).

(2)        "Leases" shall mean the leases which are listed onthe rent roll attached hereto as Exhibit C, together with suchadditional leases or modifications as may be added and excluding any leaseswhich may be terminated in the ordinary course of Seller’s business between thedate of this Agreement and the date of Closing and the rights of tenants undersuch leases, as occupancy tenants only, and without any right of first refusalor purchase options.

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(3)        "Permitted Encumbrances" shall mean a collectivereference to the Leasesand Permitted Exceptions.

6.         Access. Upon reasonable prior notice, Seller shallprovide Purchaser and its agents, servants, employees and assigns reasonableaccess, during Seller’s normal business hours, to all documentation,agreements, books, records, and other information in the possession of Sellerpertaining to the ownership, use, rental or operations of the Property,including but not limited to, financial records, tax assessments, bills andleases, and Purchaser shall have the right to make copies of suchnon-confidential documents as Purchaser shall reasonably specify at Purchaser’ssole expense.  Furthermore, Seller hereby grants to Purchaser and its agents,servants, employees, assigns and independent contractors reasonable access toenter upon the Property, upon forty-eight (48) hours advance notice and at reasonabletimes during Seller’s normal business hours, for the purpose of inspecting thecondition of the Property, surveying the Property and undertaking any physicalinspections that Purchaser deems appropriate under this Agreement; provided,however, that such inspections shall be coordinated with Seller and Purchasershall minimize any disruptions to the operation of the Property and theoccupancy of the Property by tenants.  Purchaser shall be responsible for allcosts incurred by Purchaser in connection with its inspections and evaluationof the Property, shall repair any damage caused by Purchaser and its agents andshall indemnify and hold Seller harmless from and against any and all claims,demands, actions, losses, costs, damages, liabilities and expenses (includingwithout limitation reasonable attorneys’ fees) incurred or sustained by Sellerby reason of or arising from the exercise by Purchaser of the rights andprivileges granted in this Paragraph 6, but only to the extent incurred orsustained as a result of damage to the Property and injury to persons.  Theforegoing indemnity obligations shall expressly survive Closing or anytermination of this Agreement.

7.         Investigation Period.

(a)        For the period beginning with the Effective Date and extendingthrough 5:00 p.m. on the thirtieth (30th) day following the Effective Date (the"Investigation Period"), Purchaser shall have the right to terminatethis Agreement as provided in Paragraph 15 if Purchaser determines, in its soleand absolute discretion, not to purchase the Property. If no notice oftermination is given by Purchaser prior to the expiration of the InvestigationPeriod, Purchaser and Seller shall proceed toward Closing in accordance withthe other terms of this Agreement, including Purchaser’s delivery of theAdditional Deposit in accordance with Paragraph 2.

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(b)        Seller shall cooperate with Purchaser in connection with itsevaluation of the Property. Seller has provided Purchaser on or before theEffective Date with copies of the  documents and instruments set forth in Schedule 2(collectively, the "Property Information") to the extent in Seller’spossession or control.  In addition to the Property Information and the LoanDocuments, Seller shall provide Purchaser with copies of such other reports,studies, leases (other than copies of each individual tenant lease) and otherdocuments in Seller’s possession or control related to the Property asPurchaser shall reasonably request.  Purchaser shall have no obligation to paySeller for any of such reports, studies or other documents provided by Seller toPurchaser, all of which shall be provided at no cost to Purchaser.  Purchaseragrees that it will preserve the confidentiality of all such documents providedby Seller; that it will not divulge the existence or contents of any suchdocuments to any persons, except to its attorneys, advisors, consultants,lenders and others employed by Purchaser to assist it in the purchase of the Property,each of whom shall likewise observe and preserve such confidentiality, subjectto any obligation on the part of such person to disclose or deliver suchinformation pursuant to court order or as required pursuant to applicable laws.The foregoing confidentiality obligations shall survive any termination of thisAgreement but shall terminate at Closing in the event Closing occurs hereunder.

(c)        In the event that this Agreement is terminated withoutcompletion of the transaction contemplated herein, Purchaser shall return toSeller all documents provided to Purchaser pursuant to this Agreement, andshall additionally provide to Seller copies of all third party studies orreports obtained by Purchaser pertaining to the Property during the course ofits investigations and inspections, it being understood that Seller shall haveno right to rely on any such reports without the consent of the person orpersons preparing such studies and reports.  The foregoing obligations shallsurvive any termination of this Agreement, but shall terminate at Closing inthe event that Closing occurs hereunder.

8.         Purchaser’s Default; Liquidated Damages.  If, prior toClosing, Purchaser defaults in performing its obligations under this Agreement,Seller’s sole remedy for such default shall be to give the Escrow Agent andPurchaser prompt written notice of such default and the Escrow Agent shall,after giving the parties five (5) working days’ notice thereof (if Purchaserfails to cure such default within that time), pay over to Seller the EarnestMoney as full and complete liquidated damages hereunder.  Thereafter, Purchasershall have no further obligations hereunder to Seller or any others, includingbut not limited to the Escrow Agent, brokers, realtors and agents. Notwithstanding the foregoing, in the event of a dispute regarding Seller’sright to payment of the Earnest Money, Escrow Agent continues to hold theEarnest Money subject to the provisions of Paragraph 28.

9.         Closing; Closing Deliveries and Closing Conditions. Theconsummation of the transaction described herein ("Closing") will beheld at the offices of the Title Insurer or such other location mutually agreedupon by Purchaser and Seller on the later of (i) ten (10) days afterPurchaser’s receipt of written a approval by the Lender and HUD of the transferof the Property to Purchaser and the assumption of the Loan by Purchaser, or(ii) fifteen (15) days after the expiration of the Investigation Period(the "Closing Date").  At Closing, Purchaser shall pay to Seller theoutstanding balance of the Purchase Price provided for in Paragraph 3(c)hereof, the Escrow Agent shall pay to Seller the Earnest Money, and Sellershall give Purchaser possession and occupancy of the Property subject only tothe Permitted Encumbrances. Any eminent domain awards, proceeds from sale underthreat or exercise of the power of eminent domain and insurance proceeds whichare to be paid or are payable to Purchaser pursuant to Paragraph 11 hereof, shallbe paid or assigned to Purchaser at Closing.

Seller agreesthat Purchaser is permitted to download lease, tenant and other propertyinformation from Seller’s on-site competes within seven (7) business days ofClosing, after which time Seller and its agents shall have the right to enterupon the Property to remove any of Seller’s confidential information not relatedto the operation of the Property, to remove Seller’s management software, andto disconnect or terminate any links to Seller’s server and/or database fromsuch on-site computers. The terms of the immediately preceding sentence shallsurvive Closing.

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Furthermore,Seller shall, at Seller’s sole cost and expense, transfer or deliver toPurchaser at Closing (or at such other time hereinafter set forth) thedeposits, escrows, affidavits, certificates, instruments and other mattershereinafter described, each instrument to be executed on behalf of Seller byits duly authorized officer and to be in form to be approved by counsel forSeller and Purchaser:

(a)        The Deed and the Easements (the Easements shall also beexecuted by Purchaser at Closing, as applicable).

(b)        An assignment and assumption agreement, in form and substanceacceptable to Seller and Purchaser, pursuant to which Seller shall transfer toPurchaser (i) all rights in, to and under the Leases, (ii) anyunexpired warranties and guaranties in effect with respect to such portions ofthe Property, (iii) the Contracts which are to be assigned by each suchparty to Purchaser as provided herein, and (vi) all prorated items andadjustments described in Paragraph 4 above which are to be paid, transferred, appliedor credited to Purchaser at or as of Closing, as applicable.  Such assignmentand assumption agreements shall also be executed by Purchaser at Closing toeffect Purchaser’s assumption of all applicable obligations.

(c)        A bill of sale from Seller, in form and substance acceptableto Seller and Purchaser conveying, with a warranty of title but withoutwarranties as to the condition thereof, all personal property, equipment,signage and fixtures owned by it and located at or used in connection with the Property,other than property owned by tenants under the Leases, subject only to theapplicable Permitted Encumbrances and conveying, without warranty of title, allof Seller’s right, title and interest to the name "River Forest Apartments".

(d)        An updated rent roll for the Property, dated not more thanthree (3) days prior to the Closing Date, certified by Seller to be true,accurate and complete as of such date.

(e)        The Owner’s Affidavit.

(f)         All documents required from Seller by the Lender or by HUDfor the transfer to Purchaser of the Property subject to the Loan Documents inaccordance with applicable HUD regulations and requirements and the LoanDocuments.  Purchaser shall also execute all documents required from Purchaserby the Lender or by HUD in accordance with applicable HUD regulations andrequirements and the Loan Documents.

(g)        Originals or copies (if originals are unavailable) of allplans, specifications, manuals, warranties, and guarantees in Seller’spossession relating to the Property.

(h)        An affidavit stating that all representations and warrantiesof Seller set forth in this Agreement remain true and correct, executed andsworn on behalf of Seller on and as of the Closing Date.

(i)         All deposits and escrows provided for in Paragraph 4(c) ofthis Agreement.

(j)         Certificates of non-foreign status, information required forPurchaser’s compliance with 1099S regulations, and such affidavits andcertifications required from or typically provided by sellers for real estatetransactions in the Commonwealth of Virginia from Seller.

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(k)        All other documents reasonably necessary or appropriate tocomplete the transaction contemplated by this Agreement.

(l)         Evidence that any property management agreement for theProperty has been terminated by Seller at no cost, liability or expense toPurchaser.

9A.      Conditions to Closing.

(a)        Purchaser’s obligation under this rent to acquire the Propertyis subject to the fulfillment at or prior to the Closing Date of the followingconditions:

(1)        Seller shall have performed in all material respects itsagreements contained in this Agreement required to be performed on or prior tothe Closing Date.

(2)        The Title Insurer is in a position to and will issue toPurchaser the Title Policy subject only to the Permitted Exceptions.

(3)        Each and every representation and warranty made by Seller inthis Agreement shall be true and correct in every material respect both as ofthe date when made and as of the Closing Date.

(4)        All other conditions to Purchaser’s obligation to close setforth in other provisions of this Agreement have been satisfied, includingwithout limitation those set forth in Paragraph 21 of this Agreement.

(5)        Purchaser shall have reasonably approved, in form andsubstance, the Easements pursuant to Paragraph 5(c) of this Agreement.

If any condition specified in this Paragraph 9A.(a) is not timelysatisfied or waived by Purchaser, Purchaser shall have the right to terminatethis Agreement, in which event, unless such condition has not been satisfied byreason of a default by Purchaser of its obligations hereunder, the EarnestMoney (or so much thereof as has been deposited) shall be returned to Purchaser and no party shall have any further rights, duties, obligations orliabilities under this Agreement except as specifically set forth herein; provided,that termination of this Agreement shall not be Purchaser’s sole remedy ifSeller defaults; it being specifically understood and agreed that nothing inthis Paragraph 9A.(a) shall relieve Seller from liability for any breachof this Agreement and that the provisions of Paragraph 15(b) of thisAgreement shall govern and control in the event of a default by Sellerhereunder.

(b)        Seller’s obligation under this Agreement to sell the Propertyis subject to the fulfillment at or prior to the Closing Date of the followingconditions:

(1)        Purchaser shall have performed in all material respects itsagreements contained in this Agreement required to be performed on or prior tothe Closing Date.

(2)        HUD and Lender shall have consented to the sale of theProperty to Purchaser and consented to the assumption of the Loan by Purchaser.

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(3)        Seller shall have reasonably approved, in form and substance,the Easements pursuant to Paragraph 5(e) of this Agreement.

If any condition specified in this Paragraph 9A.(b) is not timelysatisfied or waived by Seller, Seller shall have the right to terminate thisAgreement, in which event, unless such condition has not been satisfied byreason of default by Seller of its obligations hereunder, the Earnest Moneyshall be paid to Seller and no party shall have any further rights, duties,obligations or liabilities under this Agreement except as specifically setforth herein.

Purchaser acknowledges and agrees that the documentsto be delivered by Seller hereunder shall, where applicable, be executed anddelivered only by River Forest or Princeton, as applicable.

10.       Other Costs.  Seller agrees to pay at Closing theVirginia grantor’s tax required for recordation of the Deed, all costs incurredby Seller in connection with the Transfer Approval Application (as definedherein) and one-half (1/2) of any escrow fee for the Closing. Purchaser agreesto pay at Closing the Virginia grantee’s tax, the costs and premium for theTitle Commitment and the Title Policy, including any endorsements to the TitlePolicy, the cost of any updated survey obtained by Purchaser, all costsassociated with the transfer and assumption of the Loan and the Loan Documents(other than the costs to be paid by Seller as provided herein) including anyassumption fee required to be paid to Lender pursuant to the Loan Documents)and ones-half (1/2) of any escrow fee for the Closing.  Subject to Paragraph 30,each party shall pay its own attorney’s fees, regardless of whether Closingoccurs and all other costs incurred by such party in connection with thetransactions contemplated by this Agreement

11.       Damage or Condemnation.

(a)        Seller represents that to its knowledge there are nocondemnation or eminent domain proceedings pending or threatened against oraffecting the Property or any portion thereof.  Risk of loss to the Property(i) resulting from any such proceeding which is commenced prior to Closing, and(ii) due to any cause, including but not limited to fire, other casualty andacts of God, shall remain on Seller until Closing.

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(b)        Prior to Closing, if all or part of the Property shall bedestroyed or damaged by casualty, and there is more than $2,000,000 damage,destruction or loss, Seller shall so notify Purchaser, and Purchaser may electeither to (i) terminate this Agreement as provided in Paragraph 15 hereof,or (ii) not terminate this Agreement and proceed to Closing as provided inParagraphs 9 and 15 hereof.  If Purchaser elects to close pursuant to (ii)above, then at Closing Seller shall assign, transfer and set over to Purchaser,subject to all rights of the Lender and/or HUD therein under the LoanDocuments, all of such Seller’s right, title and interest in and to anyinsurance proceeds (including payment of any deductible) and claims that havebeen or may thereafter be made for any such damage.  If the damage or loss fromcasualty is less than $2,000,000, then Seller shall assign, transfer and conveyto Purchaser all of such Seller’s right, title and interest in and to all condemnationand insurance awards arising therefrom, subject to all rights of the Lenderand/or HUD therein under the Loan Documents.  Seller shall be responsible toobtain any consent required by the insurer in connection with any suchassignment and Purchaser’s obligation to close shall be conditioned upon suchconsent as well as Lender’s and HUD’s agreement to make such insurance proceedsor condemnation awards available to Purchaser for restoration of the Property. If this Agreement is not terminated as a result of any such casualty, Sellershall be entitled to utilize such insurance or condemnation awards (to theextent permitted by the Lender and/or HUD therein under the Loan Documents) tocommence repair of such damage prior to Closing with the unexpended proceeds tobe transferred to Purchaser at Closing, and in either event this Agreementshall be closed pursuant to the terms hereof.  Seller shall be responsible toobtain any consent required by the insurer in connection with any suchassignment and Purchaser’s obligation to close shall be conditioned upon suchconsent as well as Lender’s and HUD’s agreement to make such insurance proceedsor condemnation awards available to Purchaser for restoration of the Property.Seller shall be responsible for payment of any deductible under the applicableinsurance policy and if Seller does not provide Purchaser with written evidencethat any such deductible has been paid prior to the Closing, then Purchasershall receive a credit against the Purchase Price in the amount of any suchunpaid deductible.

(c)        Prior to Closing, if all or any part of the Propertymaterially affecting the use or operation thereof shall be taken under thepower of eminent domain or other proceeding, Seller shall so notify Purchaser,and Purser may elect either to (i) terminate this Agreement as provided inParagraph 15 hereof, or (ii) not terminate this Agreement and proceed toClosing as provided in Paragraphs 9 and 15 hereof.  If there is a taking of aportion of the Property which does not, in Purchaser’s sole discretion,materially affect the use or operation thereof, Purchaser shall be required toproceed to Closing. If Purchaser elects to close as provided above, then atClosing Seller shall assign, transfer and set over to Purchaser, subject to allrights of the Lender and/or HUD therein under the Loan Documents, all of suchSeller’s right, title and interest in and to any eminent domain awards.

12.       Representations and Warranties.  As a materialinducement to Purchaser’s entering into this Agreement, Seller, or the specificentities constituting Seller, as applicable, hereby represents, warrants andcovenants that the following matters are true as of the date of  thisAgreement, which shall survive Closing and remain in effect for a period one(1) year thereafter:

(a)        Laws.  Seller has received no notice from any applicablegovernmental authorities of any alleged violations by or at the Property of anyapplicable city, county, state and United State laws, ordinances, codes, rulesand regulations.

(b)        Contracts.  On or prior to the Effective Date, Sellershall provide Purchaser with copies of all of the Contracts, which copies shallbe true, complete and correct in all material respects. The Contracts are theonly Contracts in effect regarding the Property.

(c)        No Defaults.  Seller is in compliance with the LoanDocuments, the Leases and the Contracts.  Seller has not received any notice ofdefault under the Loan Documents which has not been cured or waived by Lender.

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(d)        Conflicts.  Except for the required consents of theLender and HUD, neither the execution of this Agreement by Seller nor theClosing of the transactions contemplated hereby by Seller will(i) conflict with, or result in a breach of, the terms, conditions orprovisions of, or constitute a default under, any agreement or instrument towhich Seller is a party, or by which it may be bound, or (ii) result inthe creation of any material lien, charge or encumbrance upon the Property,except as permitted hereby in respect of the Loan Documents.

(e)        Leases.  No tenant leases, other than the Leases listedin the rent roll attached as Exhibit C, affect the Property. ToSeller’s knowledge, all information contained in Exhibit C is true,correct and complete in all material respects as of the date hereof.  AllLeases are in substantially the form attached hereto as part of Exhibit Dexcept for the units at River Forest leased to the United States Government foroccupancy by employees of Fort Lee and except for addenda which provide forrent credits to managers of the Property, employees of Seller or Seller’smanagement company involved in the leasing or maintenance of the Property andpolice officers who provide limited off-duty services in connection with theirresidency, all of which is reflected in the attached rent roll. Purchaseragrees that Seller shall have the right to extend such rent credits to any suchmanagers and employees who will not become managers or employees of Purchaserfor a period through the end of the second full month after Closing.

(f)         Status of the Leases. To the knowledge of Seller all ofthe Leases are, as of the date of this Agreement, valid and in full force andeffect, and free of any known claims for reduction, deduction, or set-offagainst rent, or any other claims against Seller or any managing agent ofSeller, unless and except as otherwise indicted in the rent roll attachedhereto as Exhibit C.  No rents or Leases have been assigned,pledged or otherwise encumbered by Seller except as additional collateral forthe Loan. Seller has received no payments of rent under the Leases more thanthirty-one days prior to the due dates thereof.

(g)        Commissions. There are no broker’s or agent’scommissions or fees owed with respect to the Leases.

(h)        Litigation.  Seller knows of no litigation orgovernmental or other proceeding orinvestigation pending or threatened against or relating to the Property orSeller, including without limitation condemnation or eminent domainproceedings.

(i)         Property Information.  All operating statements and,to Seller’s knowledge, other Property Information provided or to be provided bySeller to Purchaser are or shall be correct and complete in all materialrespects and such operating statements present fairly the results of operationsof the Property for the periods indicated.

(j)         Authority of Seller.  River Forest is a limitedliability company, duly organized and validly existing under the laws of theCommonwealth of Virginia.  Princeton is a corporation duly formed and validlyexisting under the laws of the Commonwealth of Virginia.  Seller has full powerand authority to enter into this Agreement and to sell the Property inaccordance with the terms and conditions hereof.

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(k)        Environmental Conditions.  To Seller’s knowledge,(i) the Property does not contain any "Hazardous Materials" (asdefined below) in violation of applicable "Environmental Laws" (asdefined below), and (ii) the Property is not subject to federal, state orlocal regulations or liability because of the presence of stored, leaked,spilled or disposed petroleum products, waste materials or debris, undergroundstorage tanks, "PCB’s" or PCB items (as defined in 40 C.F.R. §761.3), "asbestos" (as defined in 40 C.F.R. § 763.63), or the past orpresent accumulation, treatment, storage, disposal, spillage or leakage of anyHazardous Materials.  As used in this Paragraph 12(k), the term "HazardousMaterials" shall mean any hazardous wastes, hazardous substances,hazardous materials, toxic substances, hazardous air pollutants or toxicpollutants, as those terms are defined in Environmental Laws; the term "EnvironmentalLaws" shall mean the Resource Conservation and Recovery Act (42 U.S.C.A.§§ 6901 *et seq.*) and the Comprehensive Environmental Response,Compensation and Liability Act of 1980 (42 U.S.C.A. §§ 9601 *et seq.*) anyamendments thereto and any regulations promulgated pursuant thereto.

(l)         Loan Documents. To Seller’s knowledge, the copies ofthe Loan Documents provided by Seller to Purchaser are true, correct andcomplete.  Purchaser acknowledges that the listing of the Loan Documents as setforth on Schedule 1 may not include documents relating to theconstruction of the improvements which Seller represents are no longer of anyforce or effect.

(m)       Condemnation. Seller has received no notices of anycondemnation or eminent domain proceedings pending or threatened against theProperty or any part thereof.

13.       Operation of the Property.  Between the date hereof andClosing:

(a)        Seller will not enter into any contract (other than newLeases) that will be an obligation affecting the Property subsequent to theClosing Date except for contacts entered into in the ordinary course ofbusiness that are terminable without cause and without payment of a penalty onnot more than 30 days’ notice.

(b)        Seller will not remove any personal property from the Propertyexcept as may be required for necessary repair or replacement, and in the eventof such replacement, the  replacement shall be of materially equal or betterquality and quantity as existed as of the time of its removal.

(c)        Seller will maintain casualty insurance of a level and typeconsistent with the insurance maintained by Seller prior to the execution ofthis Agreement with respect to the Property.

(d)        Seller shall not do anything, nor authorize anything to bedone, which would adversely affect the condition of title as shown on the TitleCommitment without the prior consent of Purchaser which consent shall not beunreasonably withheld, conditioned or delayed.

(e)        Seller will maintain and operate the Property in accordancewith first class apartment management practices for the Richmond, Virginiaarea.

(f)         Seller agrees that no new leases will be entered into withany new or existing tenants unless such leases (i) have a lease term (includingrenewals and extensions) of no longer than one year, (ii) provide for rentat rates consistent with the rents reflected in the current rent roll, and(iii) are pursuant to the form of lease attached hereto as part of Exhibit D.

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(g)        Seller shall make all payments due on the Loan or as otherwiserequired pursuant to the Loan Documents, pay all operating expenses through theClosing Date and otherwise duly observe and perform its obligations under theLoan Documents, the Leases and the Contracts. Upon request, Seller shall keepPurchaser reasonably informed as to the status of leasing prior to the ClosingDate and shall deliver to Purchaser copies of all new Leases.

(h)        Seller shall restore all units that become vacant at leastfive (5) days prior to the Closing to "rent-ready" condition inaccordance with Seller’s customary practice and procedure for the Property.Purchaser and Seller shall inspect each of such vacant units prior to theClosing to confirm that they are in "rent ready" condition. To the extentany of such units is not in "rent ready" condition as of the date ofClosing, Purchaser shall be entitled to a credit in the amount of the costs, asPurchaser and Seller agree, acting reasonably, are necessary in order to payfor the cost of restoring such vacant units to "rent ready"condition.

(i)         At Closing, Seller shall cause any property managementagreement for the Property to be terminated, at no cost, liability or expenseto Purchaser.

(j)         Seller and Purchaser shall each use its respective good faithefforts to negotiate mutually acceptable Easements pursuant to the terms andconditions of subparagraph 5(e) of this Agreement.

14.       Commission.  Each of Seller and Purchaser represents tothe other that there are no amounts due any realtor, broker, agent, finder orother person in connection with this transaction other than Cushman &Wakefield.  Seller shall be responsible for any commission which may be due andpayable to Cushman & Wakefield pursuant to separate agreement betweenSeller and Cushman & Wakefield. Each of Seller and Purchaser covenants thatit will indemnify and hold the other harmless from and against any and allliabilities and expenses in  connection with any claim or claims of any otherrealtor, broker, agent, finder or other person arising out of its participationin this transaction, including, without limitation, attorneys’ fees.

15.       Termination; Specific Performance.

(a)        If Purchaser elects to terminate this Agreement pursuant toParagraph 5, Paragraph 7, Paragraph 11 or Paragraph 21hereof, then, in any such event, the Escrow Agent forthwith shall return theEarnest Money in full to Purchaser and the parties hereto shall have no furtherobligations or liabilities hereunder except for the obligations of the partieswhich specifically survive the termination of this Agreement.  In addition, ifPurchaser does not elect to terminate this Agreement pursuant to Paragraph 7,but Purchaser does elect to terminate the Other Agreement pursuant to thecorresponding Paragraph 7 of such Other Agreement (an "Other AgreementTermination Notice"), then Seller shall have the one-time right, to beexercised within five (5) business days following Purchaser’s deliver of suchOther Agreement Termination Notice, to terminate this Agreement by writtennotice to Purchaser and, in such event, the Escrow Agent forthwith shall returnthe Earnest Money in full to Purchaser and the parties hereto shall have nofurther obligations or liabilities hereunder except for the obligations of theparties which specifically survive the termination of this Agreement.

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(b)        If Seller defaults in the performance of any of itsobligations hereunder, then, in such event, Purchaser shall have the right toexercise any one of the following remedies, as its sole and exclusive remedies: (a) to terminate this Agreement, after having given five (5) days writtennotice to Seller and Escrow Agent (and Seller has failed to cure such breach ordefault within that period of time), whereupon the Earnest Money shallimmediately be refunded/returned to Purchaser and neither Seller nor Purchasershall have any further rights or duties under this Agreement, except for theindemnities of the parties which specifically survive the termination of thisAgreement; or (b) seek to enforce specific performance of this Agreement(with the costs and expenses of any such action being paid to the prevailingparty by the non-prevailing party).  Notwithstanding the foregoing to thecontrary, in the event specific performance is not reasonably available becauseof any affirmative act or acts of Seller or any act or acts of any person orentity affiliated with Seller who colludes with Seller so as to render specificperformance not reasonably available, then Purchaser shall have the right toterminate this Agreement, whereupon it shall become entitled to receive (orseek, as the case may be): (i) the immediate return of the Earnest Money,and (ii) actual direct (but not indirect or consequential) damages againstSeller.

16.       Assignment. Purchaser may, without Seller’s consent,assign this Agreement and all of its rights hereunder to a single-purposeentity to be formed by Purchaser in compliance with applicable HUDrequirements, which entity shall acquire title to the Property at Closing andof which entity Purchaser or an affiliate of Purchaser shall be a principal.Otherwise, Purchaser shall have no right to assign this Agreement and itsrights hereunder to any other entity or individual unless approved by Seller inits sole discretion.  Notwithstanding any of the foregoing, however, in theevent of any assignment of this Agreement by Purchaser, whether with or withoutthe written consent of Seller, Purchaser shall remain jointly and severallyliable with such assignee for all obligations and liabilities hereundersubject, in all events, to the provisions of Paragraph 8.

17.       Waiver. The failure of either party to exercise anyright hereunder, or to insist upon strict compliance by the other party, shallnot constitute a waiver of that party’s right to demand strict compliance withthe terms and conditions of this Agreement.

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18.       Notices.  Any notices, requests, or other communicationsrequired or permitted to be given hereunder shall be in writing and shall be either(i) delivered by hand, (ii) mailed by United States certified orregistered mail, return receipt requested, postage prepaid, (iii) sent byovernight delivery service (e.g., Federal Express, Airborne, etc.), or(iv) sent by facsimile (with the original being sent by one of the otherpermitted means or by regular United States mail) and addressed to each partyat the applicable address set forth herein. Any such notice, request, or othercommunication shall be considered given or delivered, as the case may be, onthe date of hand delivery (if delivered by hand), on the third (3rd) dayfollowing deposit in the United States mail (if sent by United Statesregistered mail), on the next business day following deposit with an overnight deliveryservice with instructions to deliver on the next day or on the next business day(if sent by overnight delivery service), or on the day sent by facsimile (ifsent by facsimile, provided the original is sent by one of the other permittedmeans as provided herein in this Paragraph or by regular United States mail). However, the time period within which a response to any notice or request mustbe given, if any, shall commence to run from the date of actual receipt of suchnotice, request, or other communication by the addressee thereof. Rejection orother refusal to accept or inability to deliver because of a changed address ofwhich no notice was given shall be deemed to be receipt of the notice, request,or other communication. By giving at least ten (10) days prior written noticethereof, any party hereto may, from time to time and at any time, change itsmailing address hereunder.

If to Purchaser:

Associated Estates RealtyCorporation1 AEC ParkwayRichmond Heights, Ohio 44143Attention: Martin A. FishmanFax:  (216) 797-8719

With a copy to:

Greenberg Traurig LLP77 West Wacker Drive, Suite 2500Chicago, Illinois 60601Attention: Michael T. FishmanFax: (312) 456-8435

If to Seller:

Bogese, L.C.113 South 12th StreetRichmond, Virginia 23219Attention: Michael Bogese, Jr.Fax: (804) 644-4086

With a copy to:

Troutman Sanders LLP1001 Haxall PointRichmond, Virginia 23219Attention:  Edward B. KiddFax: (804) 698-6000

If to Escrow Agent:

FirstAmerican Title Insurance Company30 N.LaSalle Street, Suite 300Chicago,Illinois 60602Attention:Jim McIntoshFax: (312) 553-0480

19.       Survival. All of Seller’s and Purchaser’s covenants,agreements, representations and warranties contained in Paragraphs 4, 6, 7, 12,14, 20 and 21 of this Agreement shall survive Closing and not merge into theDeed or any other documents delivered hereunder. All other covenants,agreements, representations and warranties contained in this Agreement shallterminate upon Closing,

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20.       Indemnification. Seller hereby agrees to indemnify andhold harmless Purchaser and its successors and assigns from and against any andall claims, costs, penalties, damages, losses, liabilities and expenses(including reasonable attorneys’ fees) arising before or after Closing(i) as a result of any property damage or injuries to persons,. includingdeath, caused by any occurrence as to the Property prior to Closing, or(ii) as a direct and proximate consequence of any breach by Seller of anyof its representations, warranties or obligations set forth herein or in anyother document or instrument delivered by Seller pursuant hereto.  Purchaseragrees to indemnify and hold harmless Seller and its successors and assignsfrom and against any all claims, costs, penalties, damages, losses, liabilitiesand expenses (including reasonable attorneys’ fees) arising (i) afterClosing as a result of any property damage or injuries to persons, includingdeath, caused by any occurrence as to the Property after Closing, or(ii) before or after Closing as a direct and proximate consequence of anybreach by Purchaser of any of its obligations set forth herein or in any otherdocument or instrument delivered by Purchaser pursuant hereto.

21.       Approval of Transfers by HUD and Lender.

(a)        Purchaser’s obligation to purchase the Property and proceed tothe Closing is further subject to the condition precedent that the Lender andHUD shall have approved the sale of the River Forest Property to Purchaser andconsented to the assumption of the Loan by Purchaser (i) withoutmodification of the Loan Documents, (ii) without any requirement thatwould result in material increase in any replacement reserves or mortgageescrow accounts, and (iii) without any obligation to fund additionalrepairs or capital expenditures which exceed a normal expense to Purchaser andare materially different from or substantively in excess of those, if any,identified by Purchaser in connection with its due diligence examination of theProperty. Seller shall cause Lender to deliver to Purchaser no more than ten(10) days prior to Closing Lender’s written confirmation of the amount of outstandingprincipal, interest and any other amounts and deposits accrued and payableunder the Loan Documents together with written confirmation that the Loan is infull force and effect and that to its knowledge Seller is not in default of anyof the provisions of the Loan Documents. No transfer of any interest in theProperty under this Agreement shall be effective prior to such HUD approval. Purchaser will not take possession of the Property nor assume any benefits ofProperty ownership prior to such approval by HUD.

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(b)        Purchaser shall submit an application for approval of thetransfer and assumption to HUD (the "Transfer Approval Application"),using commercially reasonable efforts to insure that the Transfer ApprovalApplication is complete and in material compliance with all applicablerequirements, within two (2) business days after (i) approval of the draftTransfer Approval Application by Seller as provided herein, and(ii) Seller’s delivery of any documents required to be provided by Sellerand Lender as part of the Transfer Approval Applications (after completion ofany corrections required to conform to the applicable requirements afterPurchaser’s review thereof) and shall diligently pursue in good faith approvalof the Transfer Approval Application at Purchaser’s sole expense (except asotherwise expressly provided in Paragraphs 21(a) and 22(d) of thisAgreement and except for legal and other accounting fees incurred by Seller inproviding the information and documentation Seller is required to provide inconnection with the Transfer Approval Application). Purchaser shall promptlyforward to HUD and the Lender such documents required to correct anydeficiencies in the Transfer Approval Application as may be identified by HUDor the Lender. Seller shall cooperate with Purchaser in connection with suchapplications including providing all information and documents within Seller’s possessionor control as maybe reasonably required on a timely basis. Purchaser shall provideSeller with (i) an itemization of any information or documents required fromSeller for the Transfer Approval Application within ten (10) days after theEffective Date, and (ii) a copy of its proposed Transfer ApprovalApplication within ten (10) days after the expiration of the InvestigationPeriod and prior to its submittal to HUD and the Lender. If, notwithstandingPurchaser’s diligent and good faith efforts, the Transfer Approval Applicationis not approved within one hundred eighty (180) days after submittal of theTransfer Approval Application, either party may terminate this Agreement bywritten notice to the other party and the Escrow Agent, in which event theEarnest Money will be refunded to Purchaser.

(c)        In connection with Purchaser’s assumption of the Loan,Purchaser and Seller acknowledge that there are certain escrow deposits (i.e.tax, insurance, MIP, replacement reserves, etc.) being held by the Lender orHUD in connection with the Property. Purchaser and Seller acknowledge and agreethat, at Closing, all such escrows shall be transferred to Purchaser with theProperty, but that Seller shall be entitled to a credit for the amounts held insuch escrow deposits, subject to the other provisions of this Agreementregarding proration of real estate taxes and other expenses. Seller shall alsobe entitled to a credit for any paid MIP.

(d)        Within 45 working days after the Closing Date, Seller at itssole cost and expense, shall furnish to HUD audited financial statements forthe Property covering the period from the date of Seller’s last audited reportto the Closing Date in accordance with HUD’s final approval processrequirements.

(e)        Purchaser acknowledges that HUD requires completion of the "previousparticipation" requirement as part of the Transfer Approval Applicationand therefore agrees to initiate any applications, submittals and/orregistrations required to satisfy the "previous participation"requirements of the Transfer Approval Application in sufficient time to permitthe timely preparation and submittal of the Transfer Approval Applicationpursuant to the terms and timelines set forth in this Agreement.

22.       Miscellaneous. The section headings and captionscontained herein are for reference purposes only and shall not in any wayaffect the meaning and interpretation of the terms of this Agreement. Allquestions with respect to the construction of this Agreement and the rights andliabilities of the parties hereto shall be determined in accordance with theapplicable provisions of the laws of the Commonwealth of Virginia.  ThisAgreement may be executed in any number of duplicate originals or counterparts,all of which shall constitute a single agreement. Any duplicate original onwhich the signatures of both parties shall appear shall be deemed an originalof this Agreement.  Any number of counterparts on which the signatures of bothparties shall appear shall constitute a duplicate original. This Agreementconstitutes the entire agreement of the parties regarding the Property, and thereare no outstanding agreements between the parties hereto other than those setout in this Agreement.  This Agreement may not be modified, changed or amendedexcept by a written instrument executed by all of the parties hereto. In theabsence of a specific provision to the contrary, the party upon whom anobligation is imposed hereunder shall perform the obligation at its expense. Asused herein the singular shall include the plural, the plural the singular andthe use of any gender shall be applicable to all genders. Time shall be of theessence as to all matters provided for in this Agreement.

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23.       Binding Effect. This Agreement shall be fully binding onand enforceable against, all parties hereto and their respective heirs,administrators, successors and permitted assigns.

24.       Entire Agreement. This Agreement contains the entireagreement between the parties relating to the Property and supersedes all priorand contemporaneous negotiations, understandings and agreements, written ororal, between the parties. This Agreement shall not be amended or modified, andno waiver of any provision hereof shall be effective, unless set forth in awritten instrument authorized and executed with the same formality as thisAgreement.

25.       Severability. The provisions of this Agreement areseverable, and if any term, clause, or provision of this Agreement or theapplication thereof to any person or circumstances is to any extent adjudicatedand declared to be illegal, invalid, or unenforceable under present or futurelaws in effect during the term hereof, it is the intention of the partieshereto that the remainder of this Agreement, and the application of such term,clause or provision to persons or  circumstances other than those to which it isheld illegal, invalid or unenforceable, shall not be affected thereby.

26.       Days. If the final day of any period of time set out inany provision of this Agreement or any action, is required to be performed, orif any notice, consent or other communication is to be given on a Saturday;Sunday or holiday recognized by the Commonwealth of Virginia or the State ofOhio for its employees, then in such case, such period shall be deemed extendedto the next day which is not a Saturday, Sunday or holiday recognized by theCommonwealth of Virginia or the State of Ohio. All references to any specifiednumber of days contained herein shall be deemed to refer to calendar daysunless a reference to business days is expressly provided.

27.       Presumptions. No presumption shall be created in favorof or against any of the parties to this Agreement with respect to theinterpretation of any term or provision of this Agreement due to the fact thatthis Agreement was prepared by or on behalf of one of the parties hereto.

28.       Escrow Agent.

(a)        Escrow Agent joins in this Agreement to agree to accept andhold the Initial Deposit and the Additional Deposit in accordance with theterms of this Agreement.

(b)        Purchaser and Seller agree that in performing any of itsduties under this Agreement, Escrow Agent shall not be liable for any loss,costs or damage which it may incur as a result of serving as Escrow Agenthereunder, except for any loss, costs or damage arising out of the willfulmisconduct of Escrow Agent. Accordingly, Escrow Agent shall not incur anyliability with respect to any action taken or omitted to be taken in good faithupon reliance upon any document, including any written notice of instructionprovided for in this Agreement, not only as to its due execution and validityand effectiveness of its provisions, but also to the truth and accuracy of anyinformation contained therein, which Escrow Agent shall in good faith believeto be genuine, to have been signed or presented by a proper person or personsand to conform with the provisions of this Agreement.

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(c)        In the event of a dispute between any of the parties hereto,sufficient in the discretion of Escrow Agent to justify its doing so, EscrowAgent shall be entitled to tender unto the registry or custody of any court ofcompetent jurisdiction all money held by it under the terms of this Agreement,together with such legal pleadings as it deems appropriate and thereupon bedischarged from further responsibility under this Agreement.

29.       Tax Deferred Exchange. Purchaser and Seller eachacknowledge that the other may desire that this transaction be a part of atax-deferred transaction under the Internal Revenue Code. Purchaser and Selleragree to cooperate with each other in order to permit this transaction toqualify for tax deferral under the Internal Revenue Code provided that suchcooperation shall not prejudice any of the rights of Purchaser or Seller underthis Agreement. Purchaser and Seller each specifically agrees that the rightsof either party to this Agreement may be assigned to a Qualified Intermediaryin connection with any such exchange without the consent of the other party.The cooperating party shall not be required to (i) incur any additionalcost or expense in connection with any such exchange, including, withoutlimitation, attorneys’ fees, (ii) enter into any agreement other than anagreement which is fully non-recourse to such party, or (iii) take titleto any property as a part of any such transaction; and the exchanging partyshall indemnify and hold the cooperating party harmless with respect to allcosts, expenses, losses or liabilities of any nature arising out of any suchtransaction including, without limitation, attorneys’ fees.

30.       Attorneys’ Fees.  In the event of any action orproceeding brought by either party against the other under this Agreement, theprevailing party shall be entitled to recover all costs and expenses including itsattorneys’ fees in such action or proceeding in such amount as the court mayadjudge reasonable. The prevailing party shall be determined by the court basedupon an assessment of which party’s major arguments made or positions taken inthe proceedings could fairly be said to have prevailed over the other party’smajor arguments or positions on major disputed issues in the court’s decision. If the party which shall have commenced or instituted the actions, suit orproceeding shall dismiss or discontinue it without the concurrence of the otherparty, such other party shall be deemed the prevailing party.

31.       Other Agreement.  Unless Purchaser elects to terminatethe Other Agreement pursuant to an Other Agreement Termination Notice andSeller does not timely elect to terminate this Agreement pursuant to therequirements of Paragraph 15 of this Agreement, Seller’s obligation to sell theProperty and proceed to the Closing is conditioned upon the concurrent closingof the transactions contemplated by the Other Agreement and a default byPurchaser in connection with closing under the Other Agreement shall be adefault by Purchaser under this Agreement; provided, that if the closing of thetransactions contemplated by the Other Agreement do not occur by reason of(i) a default by Seller Affiliate under the Other Agreement, (ii) thefailure of any condition precedent to Purchaser’s obligation to proceed to theclosing of the transactions contemplated by the Other Agreement, or(iii) termination of the Other Agreement in accordance with the termsthereof as a result of a casualty or condemnation, then the condition forconcurrent closings shall be waived and Seller shall be obligated to proceed withthe Closing of the transactions contemplated by this Agreement.

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IN WITNESS WHEREOF, the parties have caused thisinstrument to be executed for and in their respective names by their dulyauthorized officials and agree to be bound hereby as of the day and year firstabove stated.

SELLER:

RIVER FOREST PROPERTIES, LLC

By:       /s/ Michael J.Bogese, Jr.Name:  Michael J. Bogese, Jr.Title:     Manager

PRINCETON PROPERTIES, INC.

By:       /s/ Michael J.Bogese, Jr.          Name:  Michael J. Bogese, Jr.              Title:     President                                 

PURCHASER:

ASSOCIATED ESTATES REALTY CORPORATION

By:                                                      Name:  MartinA. FishmanTitle:  Vice President

ESCROW AGENT:

FIRST AMERICAN TITLE INSURANCE COMPANY

By:       /s/ James W. McIntoshName:  James W. McIntosh                 Title:     V.P.                                        

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IN WITNESS WHEREOF, the parties have caused thisinstrument to be executed for and in their respective names by their dulyauthorized officials and agree to be bound hereby as of the day and year firstabove stated.

 

SELLER:

RIVER FOREST PROPERTIES, LLC

By:                                                      Name:                                                 Title:                                                    

PRINCETON PROPERTIES, INC.

By:                                                      Name:                                                 Title:                                                    

PURCHASER:

ASSOCIATED ESTATES REALTY CORPORATION

By:       /s/Martin A. Fishman              Name:  MartinA. FishmanTitle:  Vice President

ESCROW AGENT:

FIRST AMERICAN TITLE INSURANCE COMPANY

By:                                                      Name:                                                 Title:                                                  

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