Document:

Village of Pennbrook - Contract of Sale

 
Exhibit 10.15
 PURCHASE AND SALE CONTRACT

BETWEEN

NATIONAL PROPERTY INVESTORS 4,

a California limited partnership,
 AS SELLER

AND

PENNBROOK HATZLACH, L.P.,

a Pennsylvania limited partnership
 AS PURCHASER

Village of Pennbrook
9071 Mill Creek Road
Levittown, PA 19054

 
TABLE OF CONTENTS
 Page

	
 
	
ARTICLE I
	
DEFINED TERMS
	
1

	
 
	
ARTICLE II
	
PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT
	
1

	
 
	
2.1
	
Purchase and Sale
	
1

	
 
	
2.2
	
Purchase Price and Deposit
	
1

	
 
	
2.3
	
Escrow Provisions Regarding Deposit
	
2

	
 
	
ARTICLE III
	
FEASIBILITY PERIOD
	
3

	
 
	
3.1
	
Feasibility Period
	
3

	
 
	
3.2
	
Expiration of Feasibility Period
	
3

	
 
	
3.3
	
Conduct of Investigation
	
3

	
 
	
3.4
	
Purchaser Indemnification
	
3

	
 
	
3.5
	
Property Materials
	
4

	
 
	
3.6
	
Property Contracts
	
5

	
 
	
ARTICLE IV
	
TITLE
	
6

	
 
	
4.1
	
Title Documents
	
6

	
 
	
4.2
	
Survey
	
6

	
 
	
4.3
	
Intentionally Omitted
	
6

	
 
	
4.4
	
Permitted Exceptions
	
6

	
 
	
4.5
	
Purchaser’s Rights in Respect of Seller Inability to Remove
	
 

	
 
	
 
	
Title Exceptions
	
7

	
 
	
4.6
	
Subsequently Disclosed Exceptions
	
8

	
 
	
4.7
	
Assumed Encumbrances
	
8

	
 
	
4.8
	
Purchaser Financing
	
11

	
 
	
4.9
	
Collective Bargaining Agreement
	
11

	
 
	
ARTICLE V
	
CLOSING
	
12

	
 
	
5.1
	
Closing Date
	
12

	
 
	
5.2
	
Seller Closing Deliveries
	
13

	
 
	
5.3
	
Purchaser Closing Deliveries
	
14

	
 
	
5.4
	
Closing Prorations and Adjustments
	
15

	
 
	
5.5
	
Post Closing Adjustments
	
18

	
 
	
ARTICLE VI
	
REPRESENTATIONS AND WARRANTIES OF SELLER AND
	
 

	
 
	
 
	
PURCHASER
	
18

	
 
	
6.1
	
Seller’s Representations
	
18

	
 
	
6.2
	
AS-IS
	
21

	
 
	
6.3
	
Survival of Seller’s Representations
	
21

	
 
	
6.4
	
Definition of Seller’s Knowledge
	
22

	
 
	
6.5
	
Representations and Warranties of Purchaser
	
22

	
 
	
ARTICLE VII
	
OPERATION OF THE PROPERTY
	
23

	
 
	
7.1
	
Leases and Property Contracts
	
23

	
 
	
7.2
	
General Operation of Property
	
23

	
 
	
7.3
	
Liens
	
24

	
 
	
7.4
	
Rent-Ready Condition
	
24

	
 
	
7.5
	
Existing Loans
	
24

	
 
	
7.6
	
Violations and Certificate of Occupancy
	
24

	
 
	
ARTICLE VIII
	
CONDITIONS PRECEDENT TO CLOSING
	
24

	
 
	
8.1
	
Purchaser’s Conditions to Closing
	
24

	
 
	
8.2
	
Seller’s Conditions to Closing
	
25

	
 
	
ARTICLE IX
	
BROKERAGE
	
26

	
 
	
9.1
	
Indemnity
	
26

	
 
	
9.2
	
Broker Commission
	
27

	
 
	
9.3
	
Real Estate Recovery Fund
	
27

	
 
	
ARTICLE X
	
DEFAULTS AND REMEDIES
	
27

	
 
	
10.1
	
Purchaser Default
	
27

	
 
	
10.2
	
Seller Default
	
28

	
 
	
ARTICLE XI
	
RISK OF LOSS OR CASUALTY
	
29

	
 
	
11.1
	
Major Damage
	
29

	
 
	
11.2
	
Minor Damage
	
29

	
 
	
11.3
	
Closing
	
29

	
 
	
11.4
	
Repairs
	
29

	
 
	
ARTICLE XII
	
EMINENT DOMAIN
	
30

	
 
	
12.1
	
Eminent Domain
	
30

	
 
	
ARTICLE XIII
	
MISCELLANEOUS
	
30

	
 
	
13.1
	
Binding Effect of Contract
	
30

	
 
	
13.2
	
Exhibits and Schedules
	
30

	
 
	
13.3
	
Assignability
	
30

	
 
	
13.4
	
Captions
	
30

	
 
	
13.5
	
Number and Gender of Words
	
31

	
 
	
13.6
	
Notices
	
31

	
 
	
13.7
	
Governing Law and Venue
	
33

	
 
	
13.8
	
Entire Agreement
	
33

	
 
	
13.9
	
Amendments
	
33

	
 
	
13.10
	
Severability
	
33

	
 
	
13.11
	
Multiple Counterparts/Facsimile Signatures
	
33

	
 
	
13.12
	
Construction
	
33

	
 
	
13.13
	
Confidentiality
	
33

	
 
	
13.14
	
Time of the Essence
	
34

	
 
	
13.15
	
Waiver
	
34

	
 
	
13.16
	
Attorneys’ Fees
	
34

	
 
	
13.17
	
Time Zone/Time Periods
	
34

	
 
	
13.18
	
1031 Exchange
	
34

	
 
	
13.19
	
No Personal Liability of Officers, Trustees or Directors of
	
 

	
 
	
 
	
Seller’s Partners
	
35

	
 
	
13.20
	
No Exclusive Negotiations
	
35

	
 
	
13.21
	
ADA Disclosure
	
35

	
 
	
13.22
	
No Recording
	
35

	
 
	
13.23
	
Relationship of Parties
	
35

	
 
	
13.24
	
Dispute Resolution
	
36

	
 
	
13.25
	
AIMCO Marks
	
36

	
 
	
13.26
	
Non-Solicitation of Employees
	
36

	
 
	
13.27
	
Survival
	
36

	
 
	
13.28
	
Multiple Purchasers
	
37

	
 
	
13.29
	
Zoning Classification
	
37

	
ARTICLE XIV
	
LEAD-BASED PAINT DISCLOSURE
	
37

	
 
	
14.1
	
Disclosure
	
37

	
 
	
14.2
	
Consent Agreement
	
37

								

 

  

EXHIBITS AND SCHEDULES
  

EXHIBITS
  

	
Exhibit A
	
Description of Land

	
Exhibit B
	
Form of Special Warranty Deed

	
Exhibit C
	
Form of Bill of Sale

	
Exhibit D
	
Form of General Assignment

	
Exhibit E
	
Form of Lease Assignment

	
Exhibit F
	
Form of Vendor Termination Notice

	
Exhibit G
	
Form of Tenant Notice Letters 

	
Exhibit H
	
Lead Paint Disclosure

	
Exhibit I
	
Form of Assignment and Assumption of the Collective Bargaining Agreement

 
 SCHEDULES

 
 	
Schedule 1
	
Definitions

	
Schedule 2
	
List of Excluded Permits

	
Schedule 3
	
Excluded Fixtures and Tangible Personal Property

	
Schedule 4
	
List of Materials

	
Schedule 5
	
Certain Permitted Exceptions

	
Schedule 6
	
Specific AIMCO Provisions

	
Schedule 7
	
Violations

 

  
PURCHASE AND SALE CONTRACT
 
THIS PURCHASE AND SALE CONTRACT (this “Contract”) is entered into as of the 21
st day of July, 2009 (the “Effective Date”), by and between NATIONAL PROPERTY INVESTORS 4, a California limited partnership, having an address at 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237 (“
Seller”), and PENNBROOK HATZLACH, L.P., a Pennsylvania limited partnership, having a principal address at 1440 Cedarview Avenue, Lakewood, New Jersey 08701, Attention: Jeremy Y. Rieder (“
Purchaser”).
 NOW, THEREFORE, in consideration of mutual covenants set forth herein, intending to be legally bound, Seller and Purchaser hereby agree as follows:

RECITALS
 
A.                 Seller owns the real estate located in Bucks County, Pennsylvania, as more particularly described in
Exhibit A attached hereto and made a part hereof, and the improvements thereon, commonly known as Village of Pennbrook.

B.                 Purchaser desires to purchase, and Seller desires to sell, such land, improvements and certain associated property, on the terms and conditions set forth below.

ARTICLE I

DEFINED TERMS
 Unless otherwise defined herein, any term with its initial letter capitalized in this Contract shall have the meaning set forth in
Schedule 1 attached hereto and made a part hereof.
 
ARTICLE II

PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT
 
2.1       Purchase and Sale.

  Seller agrees to sell and convey the Property to Purchaser and Purchaser agrees to purchase the Property from Seller, all in accordance with the terms and conditions set forth in this Contract.

2.2       Purchase Price and Deposit.

  The total purchase price (“
Purchase Price”) for the Property shall be an amount equal to Sixty-Two Million Ten Thousand Dollars ($62,010,000.00) , payable by Purchaser, as follows:

2.2.1    Within one (1) Business Day after the execution of this Contract, Purchaser shall deliver to First American Title Insurance Company of New York, 633 Third Avenue, New York, New York 10017, Attention: Linda J. Isaacson, Telephone: 212-850-0664, Facsimile: 212-331-1467, lisaacson@firstam.com (“
Escrow Agent”) a deposit (the “Deposit”) of $1,200,000 by wire transfer of immediately available funds (“
Good Funds”).
 
2.2.2    At the Closing, subject to the occurrence of the Loan Assumption and Release, Purchaser shall receive a credit against the Purchase Price in the amount of the 
outstanding principal balance of the Note, together with all accrued but unpaid interest (if any) thereon, as of the Closing Date (the “
Loan Balance”).
 
2.2.3    The balance of the Purchase Price for the Property shall be paid to and received by Escrow Agent by wire transfer of Good Funds no later than 3:00 p.m. New York time on the Closing Date.

2.3       Escrow Provisions Regarding Deposit.

2.3.1    Escrow Agent shall hold the Deposit and make delivery of the Deposit to the party entitled thereto under the terms of this Contract.  Escrow Agent shall invest the Deposit in such short-term, high-grade securities, interest-bearing bank accounts, money market funds or accounts, bank certificates of deposit or bank repurchase contracts as Escrow Agent, in its discretion, deems suitable, and all interest and income thereon shall become part of the Deposit and shall be remitted to the party entitled to the Deposit pursuant to this Contract.

2.3.2    Escrow Agent shall hold the Deposit until the earlier occurrence of (i) the Closing Date, at which time the Deposit shall be applied against the Purchase Price, or released to Seller pursuant to
Section 10.1, or (ii) the date on which Escrow Agent shall be authorized to disburse the Deposit as set forth in
Section 2.3.3.  The tax identification numbers of the parties shall be furnished to Escrow Agent upon request.

2.3.3    If prior to the Closing Date either party makes a written demand upon Escrow Agent for payment of the Deposit, Escrow Agent shall give written notice to the other party of such demand.  If Escrow Agent does not receive a written objection from the other party to the proposed payment within 5 Business Days after the giving of such notice, Escrow Agent is hereby authorized to make such payment.  If Escrow Agent does receive such written objection within such 5-Business Day period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions from the parties to this Contract or a final judgment or arbitrator’s decision.  However, Escrow Agent shall have the right at any time to deliver the Deposit and interest thereon, if any, with a court of competent jurisdiction in the Commonwealth of Pennsylvania.  Escrow Agent shall give written notice of such deposit to Seller and Purchaser.  Upon such deposit, Escrow Agent shall be relieved and discharged of all further obligations and responsibilities hereunder.  Any return of the Deposit to Purchaser provided for in this Contract shall be subject to Purchaser’s obligations set forth in
Section 3.5.2.
 2.3.4    The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, and that Escrow Agent shall not be deemed to be the agent of either of the parties for any act or omission on its part unless taken or suffered in bad faith in willful disregard of this Contract or involving gross negligence.  Seller and Purchaser jointly and severally shall indemnify and hold Escrow Agent harmless from and against all costs, claims and expenses, including reasonable attorney’s fees, incurred in connection with the performance of Escrow Agent’s duties hereunder, except with respect to actions or omissions taken or suffered by Escrow Agent
in bad faith, in willful disregard of this Contract or involving gross negligence on the part of the Escrow Agent.

2.3.5    The parties shall deliver to Escrow Agent an executed copy of this Contract.  Escrow Agent shall execute the signature page for Escrow Agent attached hereto which shall confirm Escrow Agent’s agreement to comply with the terms of Seller’s closing instruction letter delivered at Closing and the provisions of this
Section 2.3.
 
2.3.6    Escrow Agent, as the person responsible for closing the transaction within the meaning of Section 6045(e)(2)(A) of the Internal Revenue Code of 1986, as amended (the “
Code”), shall file all necessary information, reports, returns, and statements regarding the transaction required by the Code including, but not limited to, the tax reports required pursuant to Section 6045 of the Code.  Further, Escrow Agent agrees to indemnify and hold Purchaser, Seller, and their respective attorneys and brokers harmless from and against any Losses resulting from Escrow Agent’s failure to file the reports Escrow Agent is required to file pursuant to this section.

ARTICLE III

FEASIBILITY PERIOD
 
3.1       Feasibility Period.

  Subject to the terms of
Sections 3.3 and 3.4 and the rights of Tenants under the Leases, from the Effective Date to and including August 10, 2009 (the “
Feasibility Period”), Purchaser, and its agents, contractors, engineers, surveyors, attorneys, and employees (collectively, “
Consultants”) shall, at no cost or expense to Seller, have the right from time to time to enter onto the Property to conduct and make any and all customary studies, tests, examinations, inquiries, inspections and investigations of or concerning the Property, review the Materials and otherwise confirm any and all matters which Purchaser may reasonably desire to confirm with respect to the Property and Purchaser’s intended use thereof (collectively, the “
Inspections”).
 
3.2       Expiration of Feasibility Period.

  If any of the matters in
Section 3.1 or any other title or survey matters are unsatisfactory to Purchaser for any reason, or for no reason whatsoever, in Purchaser’s sole and absolute discretion, then Purchaser shall have the right to terminate this Contract by giving written notice to that effect to Seller and Escrow Agent no later than 5:00 p.m. on or before the date of expiration of the Feasibility Period.  If Purchaser provides such notice, this Contract shall terminate and be of no further force and effect subject to and except for the Survival Provisions, and Escrow Agent shall return the Initial Deposit to Purchaser.  If Purchaser fails to provide Seller with written notice of termination prior to the expiration of the Feasibility Period, Purchaser’s right to terminate under this Section 
3.2 shall be permanently waived and this Contract shall remain in full force and effect, the Deposit shall be non-refundable, and Purchaser’s obligation to purchase the Property shall be conditional only as provided in
Section 8.1.
 
3.3       Conduct of Investigation.

  Purchaser shall not permit any mechanics’ or materialmen’s liens or any other liens to attach to the Property by reason of the performance of any work or the purchase of any materials by Purchaser or any other party in connection with
any Inspections conducted by or for Purchaser.  Purchaser shall give reasonable advance notice to Seller prior to any entry onto the Property and shall permit Seller to have a representative present during all Inspections conducted at the Property.  Purchaser shall take all reasonable actions and implement all protections necessary to ensure that all actions taken in connection with the Inspections, and all equipment, materials and substances generated, used or brought onto the Property pose no material threat to the safety of persons, property or the environment.

3.4       Purchaser Indemnification.

3.4.1    Purchaser shall indemnify, hold harmless and, if requested by Seller (in Seller’s sole discretion), defend (with counsel approved by Seller) Seller, together with Seller’s affiliates, parent and subsidiary entities, successors, assigns, partners, managers, members, employees, officers, directors, trustees, shareholders, counsel, representatives, agents, Property Manager, Designated Employees, and AIMCO (collectively, including Seller, “
Seller’s Indemnified Parties”), from and against any and all damages, mechanics’ liens, materialmen’s liens, liabilities, penalties, interest, losses, demands, actions, causes of action, claims, costs and expenses (including reasonable attorneys’ fees, including the cost of in-house counsel and appeals) (collectively, “
Losses”) arising from or related to Purchaser’s or its Consultants’ entry onto the Property, and any Inspections or other acts by Purchaser or Purchaser’s Consultants with respect to the Property during the Feasibility Period or otherwise.

3.4.2    Notwithstanding anything in this Contract to the contrary, Purchaser shall not be permitted to perform any invasive tests on the Property without Seller’s prior written consent, which consent may be withheld in Seller’s sole discretion.  Further, Seller shall have the right, without limitation, to disapprove any and all entries, surveys, tests (including, without limitation, a Phase II environmental study of the Property), investigations and other matters that in Seller’s reasonable judgment could result in any injury to the Property or breach of any contract, or expose Seller to any Losses or violation of applicable law, or otherwise adversely affect the Property or Seller’s interest therein.  Purchaser shall use reasonable efforts to minimize disruption to Tenants in connection with Purchaser’s or its Consultants’ activities pursuant to this Section.  No consent by Seller to any such activity shall be deemed to constitute a waiver by Seller or assumption of liability or risk by Seller.  Purchaser hereby agrees to restore, at Purchaser’s sole cost and expense, the Property to the same condition existing immediately prior to Purchaser’s exercise of its rights pursuant to this
Article III.  Purchaser agrees that its third party consultants shall maintain (a) casualty insurance and commercial general liability insurance with coverages of not less than $1,000,000.00 for injury or death to any one person and $3,000,000.00 for injury or death to more than one person and $1,000,000.00 with respect to property damage, and (b) worker’s compensation insurance for all of their respective employees in accordance with the law of the Commonwealth of Pennsylvania.  Purchaser shall deliver proof of the insurance coverage required pursuant to this
Section 3.4.2 to Seller (in the form of a certificate of insurance) prior to Purchaser’s Consultants’ entry onto the Property.

3.5       Property Materials.

3.5.1    Within 5 Business Days after the Effective Date, and to the extent the same exist and are in Seller’s possession or reasonable control (subject to
Section 3.5.2) and have not been heretofore provided by Seller to Purchaser, Seller agrees to make the documents set forth on
Schedule 4 (together with any other documents or information provided by Seller or its agents to Purchaser with respect to the Property, the “
Materials”) available at the Property for review and copying by Purchaser at Purchaser’s sole cost and expense.  In the alternative, at Seller’s option and within the foregoing time period, Seller may deliver some or all of the Materials to Purchaser, or make the same available to Purchaser on a secure web site (Purchaser agrees that any item to be delivered by Seller under this Contract shall be deemed delivered to the extent available to Purchaser on such secured web site).  To the extent that Purchaser determines that any of the Materials have not been made available or delivered to Purchaser pursuant to this
Section 3.5.1, Purchaser shall notify Seller and Seller shall use commercially reasonable efforts to deliver the same to Purchaser within 5 Business Days after such notification is received by Seller; provided, however, that under no circumstances will the Feasibility Period be extended and Purchaser’s sole remedy will be to terminate this Contract pursuant to
Section 3.2.  Additionally, Seller shall make available to Purchaser additional rent rolls or rent arrears information as Purchaser may reasonably request from time to time, to the extent reasonably available to Seller.

3.5.2    In providing the Materials to Purchaser, other than Seller’s Representations, Seller makes no representation or warranty, express, written, oral, statutory, or implied, and all such representations and warranties are hereby expressly excluded and disclaimed.  All Materials are provided for informational purposes only and, together with all Third-Party Reports, shall be returned by Purchaser to Seller (or the destruction thereof shall be certified in writing by Purchaser to Seller) as a condition to return of the Deposit to Purchaser if this Contract is terminated for any reason.  Recognizing that the Materials delivered or made available by Seller pursuant to this Contract may not be complete or constitute all of such documents which are in Seller’s possession or control, but are those that are readily and reasonably available to Seller, Purchaser shall not in any way be entitled to rely upon the completeness or accuracy of the Materials and will instead in all instances rely exclusively on its own Inspections and Consultants with respect to all matters which it deems relevant to its decision to acquire, own and operate the Property.

3.5.3    In addition to the items set forth on Schedule 4, no later than 5 Business Days after the Effective Date, Seller shall deliver to Purchaser (or otherwise make available to Purchaser as provided under
Section 3.5.1) the most recent rent roll for the Property, which rent roll is that which Seller uses in the ordinary course of operating the Property (the “
Rent Roll”).  Seller makes no representations or warranties regarding the Rent Roll other than the express representation set forth in
Section 6.1.5.
 
3.5.4    In addition to the items set forth on Schedule 4, no later than 5 Business Days after the Effective Date, and to the extent same have not been heretofore provided by Seller to Purchaser, Seller shall deliver to Purchaser (or otherwise make available to Purchaser as provided under
Section 3.5.1) a list of all current Property Contracts (the “
Property Contracts List”).  Seller makes no representations or warranties regarding the Property Contracts List other than the express representations set forth in
Section 6.1.6.
 
3.6       Property Contracts.

  On or before ten (10) days prior to the Closing Date, Purchaser may deliver written notice to Seller (the “
Property Contracts Notice”) specifying any Property Contracts which Purchaser desires to terminate at the Closing (the “
Terminated Contracts”); provided that (a) the effective date of such termination on or after Closing shall be subject to the express terms of such Terminated Contracts, (b) if any such Property Contract cannot by its terms be terminated at Closing, it shall be assumed by Purchaser and not be a Terminated Contract, and (c) to the extent that any such Terminated Contract requires payment of a penalty, premium, or damages, including liquidated damages, for cancellation, Purchaser shall be solely responsible for the payment of any such cancellation fees, penalties, or damages, including liquidated damages.  If Purchaser fails to deliver the Property Contracts Notice on or before ten (10) days prior to the Closing Date, then there shall be no Terminated Contracts and Purchaser shall assume all Property Contracts at the Closing.  If Purchaser delivers the Property Contracts Notice to Seller on or before ten (10) days prior to the Closing Date, then simultaneously therewith, Purchaser shall deliver to Seller a vendor termination notice (in the form attached hereto as Exhibit F) for each Terminated Contract informing the vendor(s) of the termination of such Terminated Contract as of the Closing Date (subject to any delay in the effectiveness of such termination pursuant to the express terms of each applicable Terminated Contract) (the “
Vendor Terminations”).  Seller shall sign the Vendor Terminations prepared by Purchaser, and deliver them to all applicable vendors.  To the extent that any Property Contract to be assigned to Purchaser requires vendor consent, then, prior to the Closing, Purchaser may attempt to obtain from each applicable vendor a consent (each a “
Required Assignment Consent”) to such assignment.  Purchaser shall indemnify, hold harmless and, if requested by Seller (in Seller’s sole discretion), defend (with counsel approved by Seller) Seller’s Indemnified Parties from and against any and all Losses arising from or related to Purchaser’s failure to obtain any Required Assignment Consent.

ARTICLE IV

TITLE
 
4.1       Title Documents.

  Purchaser acknowledges that, prior to the Effective Date, Purchaser has received from Escrow Agent a commitment for owner’s title insurance with regard to the Property and designated by the Title Insurer as file no. 3020-385501PA42 (“
Title Commitment”) to provide an American Land Title Association owner’s title insurance policy for the Property, using the current policy jacket customarily provided by the Title Insurer, in an amount equal to the Purchase Price (the “
Title Policy”), together with copies of all instruments identified as exceptions therein (together with the Title Commitment, referred to herein as the “
Title Documents”).  Purchaser shall have the right to elect by written notice to Seller, which written notice shall be received by Seller at least twenty (20) days prior to the Closing Date, to designate Madison Title Agency, LLC to provide title insurance, along with the Escrow Agent and on a co-insurance basis in an amount of up to 50% of the Purchase Price for the purposes of the Title Policy (collectively, the “
Co-Insurer”); provided however that Escrow Agent shall be the lead insurer.  The Escrow Agent and the Co-Insurer shall herein collectively be called the “
Title Insurer.”  Purchaser shall be solely responsible for payment of the base premium for the
Title Policy and for all other costs relating to procurement of the Title Commitment, the Title Policy, and any requested endorsements.  

4.2       Survey.

  Prior to the Effective Date, Seller has delivered to Purchaser a copy of the existing survey of the Property dated January 23, 2008 and prepared by Bock & Clark (the “
Existing Survey”).  Purchaser may, at its sole cost and expense, order a new or updated survey of the Property either before or after the Effective Date (such new or updated survey together with the Existing Survey, is referred to herein as the “
Survey”).
 
4.3       Intentionally Omitted. 

4.4       Permitted Exceptions.

  The Deed delivered pursuant to this Contract shall be subject to the following, all of which shall be deemed “
Permitted Exceptions”:
 4.4.1    (a) All matters set forth on
Schedule 5 to this Contract, (b) all matters shown on the Existing Survey and any additional exceptions that may be shown on an updated Survey, (c) except for mortgages (other than the Assumed Encumbrances), the title exceptions that Title Insurer shall be willing to omit as exceptions to coverage with respect to such Title Policy, and omit as exceptions to coverage with respect to any lender’s mortgage insurance policy, (d) the standard exception regarding the rights of parties in possession, which shall be limited to those parties in possession pursuant to the Leases, and (e) any exceptions and matters that are approved, waived or deemed to have been approved or waived by Purchaser under this Contract.

4.4.2    The standard exception pertaining to taxes, which shall be limited to taxes and assessments payable in the year in which the Closing occurs, for which adjustments are made, and subsequent taxes and assessments;

4.4.3    All Leases either existing as of the Effective Date or permitted under this Contract;

4.4.4    The Assumed Encumbrances;

4.4.5    Applicable zoning and governmental regulations and ordinances; and

4.4.6    Any defects in or objections to title to the Property, or title exceptions or encumbrances, arising by, through or under Purchaser.

Notwithstanding the foregoing, any exception in the Title Policy for unpaid water/sewer liens shall not be a Permitted Exception.

 
 

4.5       Purchaser’s Rights in Respect of Seller Inability to Remove Title Exceptions. 

4.5.1    If Seller shall be unable to cause title to the Property to be subject only to the Permitted Exceptions, and Purchaser shall not, prior to the Closing Date, give notice to Seller that Purchaser is willing to waive objection to each title exception which is not a Permitted Exception and close this transaction without abatement of the Purchase Price, credit or allowance of any kind or any claim or right of action against Seller for damages
or otherwise, then Seller shall have the right, at Seller’s sole election, to either (1) take such action as Seller shall deem advisable to discharge each such title exception which is not a Permitted Exception or (2) terminate this Contract.  If Seller shall elect to take action to discharge each such title exception which is not a Permitted Exception, including pursuant to Section 4.6 below, then Seller shall be entitled to one or more adjournments of the scheduled Closing Date set forth in Section 5.1 for a period not to exceed thirty (30) days in the aggregate, and the Closing shall be adjourned to a date specified by Seller on at least five (5) Business Days’ notice not beyond such thirty (30) day period.   If, for any reason whatsoever, excluding willful default, Seller shall not have succeeded in discharging each such title exception at the expiration of such adjournment(s) and if Purchaser shall not, prior to the expiration of the last of such adjournments, give notice to Seller that Purchaser is willing to waive objection to each such title exception and to close this transaction without abatement of the Purchase Price, credit or allowance of any kind or any claim or right of action against Seller for damages or otherwise, then this Contract shall be deemed to be terminated as of the last date to which the Closing Date was adjourned by Seller pursuant to this Section 4.5.  No action taken by Seller to discharge, or attempt to discharge, any purported title exception shall be an admission that any such purported title exception is not a Permitted Exception.  If Seller elects to proceed under (2) above, Purchaser shall have the further right, by notice to be given within three (3) Business Days after Seller elects to terminate, to cancel such termination, waive the objection, and close title subject thereto without any adjustment to the Purchase Price.  

4.5.2    Seller shall be obligated to cure all title defects which can be cured solely by the payment of a liquidated sum up to an aggregate sum of $1,200,000 (“
Liquidated Sum Title Exceptions”).  If the aggregate cost to cure such Liquidated Sum Title Exceptions exceeds $1,200,000 and Seller notifies Purchaser that Seller does not intend to cure such Liquidated Sum Title Exceptions (by bonding the lien or causing the Title Insurer to omit as an exception to title insurance coverage or otherwise insure against collection against the Property), then Purchaser may terminate this Contract by written notice delivered to Seller within 7 Business Days after Purchaser receives such notice from Seller.  If Purchaser timely so elects to terminate this Contract, then the Deposit shall be promptly returned to Purchaser, Purchaser may recover from Seller, as Purchaser’s sole remedy, its direct and actual out-of-pocket expenses and costs (documented by paid invoices to third parties) in connection with this transaction, which expenses and costs shall not exceed $200,000 in the aggregate and this Contract shall be of no further force or effect, except for those provisions which expressly survive termination of this Contract.

4.6       Subsequently Disclosed Exceptions.

  If at any time after the expiration of the Feasibility Period, any update to the Title Commitment discloses any additional item that affects title to the Property which was not disclosed on any version of or update to the Title Commitment delivered to Purchaser during the Feasibility Period (the “
New Exception”), Purchaser shall have a period of 5 days from the date of its receipt of such update (the “
New Exception Review Period”) to review and notify Seller in writing of Purchaser’s approval or disapproval of the New Exception.  If Purchaser disapproves of the New Exception, then Seller may, in Seller’s sole discretion, notify Purchaser as to whether it is willing to cure (or cause the
Title Insurer to omit as an exception to title insurance coverage or otherwise insure against collection against the Property) the New Exception.  If Seller elects to cure the New Exception (or to cause the Title Insurer to omit the New Exception as an exception to title insurance coverage as permitted hereunder, then Seller shall be entitled to reasonable adjournments of the Closing Date to cure the New Exception, such adjournments not to exceed thirty (30) days in the aggregate.  If Seller fails to deliver a notice to Purchaser within 3 days after the expiration of the New Exception Review Period, then Seller shall be deemed to have elected not to cure the New Exception.  If Purchaser is dissatisfied with Seller’s response, or lack thereof, then Purchaser may, as its exclusive remedy elect to either:  (i) terminate this Contract, in which event the Deposit shall be promptly returned to Purchaser or (ii) waive the New Exception and proceed with the transactions contemplated by this Contract, in which event Purchaser shall be deemed to have approved the New Exception.  If Purchaser fails to notify Seller of its election to terminate this Contract within 6 days after Seller has notified Purchaser that Seller has elected not to cure the New Exception, then Purchaser shall be deemed to have elected to approve and irrevocably waive any objections to the New Exception.

4.7       Assumed Encumbrances.

4.7.1    Purchaser recognizes and agrees that the Property is encumbered by three separate loans (the “
Loans”) made to Seller by (a) Federal Home Loan Mortgage Corporation and secured by an Amended and Restated Multifamily Mortgage, Assignment of Rents and Security Instrument dated June 30, 2006 and recorded July 17, 2006 in Book 5023 Page 2200 (the “
First Mortgage”) and evidenced by that certain Amended and Restated Promissory Note dated June 30, 2006 in the stated principal amount of $26,386,502 (the “
First Note”), (b) Capmark Finance Inc. and secured by a Multifamily Mortgage, Assignment of Rents and Security Instrument dated June 30, 2006 and recorded July 17, 2006 in Book 5023 Page 2273 (the “
Second Mortgage”) and evidenced by that certain Multifamily Note dated June 30, 2006 in the stated principal amount of $13,250,000 (the “
Second Note”) and (c) Capmark Bank and secured by a Multifamily Mortgage, Assignment of Rents and Security Instrument dated May 30, 2008 and recorded July 3, 2008 in Book 5846 Page 2344 (the “
Third Mortgage”) and evidenced by that certain Promissory Note dated June 30, 2006 in the stated principal amount of $10,000,000 (the “
Third Note”).  Within 5 days after the Effective Date, Seller agrees that it will make available to Purchaser (in the same manner in which Seller is permitted to make the Materials available to Purchaser under
Section 3.5.1) copies of the Assumed Loan Documents which are in Seller’s possession or reasonable control (subject to
Section 3.5.2).
 
4.7.2    Purchaser agrees that, at the Closing, (a) Purchaser shall assume Seller’s obligations under the Notes and all of the other Assumed Loan Documents and accept title to the Property subject to the Assumed Encumbrances,
and (b) each Lender shall release Seller, as well as any guarantors and other obligated parties under the Assumed Loan Documents, from all post-closing obligations under the Assumed Loan Documents (and any related guarantees or letters of credit), including, without limitation, any obligation to make payments of principal and interest under the Notes (collectively, the foregoing (a) and (b) referred to herein as the “
Loan Assumption and Release”).  
 
4.7.2.1 Purchaser acknowledges and agrees that (x) certain of the provisions of the Assumed Loan Documents may have been negotiated for the exclusive benefit of Seller, AIMCO or their respective affiliates (such provisions, which are referenced on
Schedule 6 hereto are herein called the “Specific AIMCO Provisions”), and (y) unless the Lenders otherwise agree in each Lender’s sole and arbitrary discretion, Purchaser will not be permitted to assume the benefit of the Specific AIMCO Provisions and the same shall be of no further force or effect from and after the Closing Date.

4.7.2.2 Notwithstanding anything contained in this Contract to the contrary, Purchaser shall not be obligated to assume Seller’s obligations under the Assumed Encumbrances if, as a condition to the issuance of the Loan Assumption and Release, (a) Lender requires any change to the interest rate, principal amount, maturity date and/or amortization period under any of the Loans or (b) Lender requires any other material modifications to the terms of the Assumed Loan Documents that are not acceptable to Purchaser,
other than (i) the deletion of one or more of the Specific AIMCO Provisions as provided above, (ii) imposing customary escrows for taxes and/or insurance in monthly amounts that do not exceed 1/12
th of the reasonably estimated annual taxes and insurance premiums for the Property ((ii) is herein called the “
Required Loan Fund Amounts”) or (iii) standard types of ministerial requirements, such as production of title reports.  The provisions of this
Section 4.7.2.2 shall survive the Closing.
 
4.7.3    Purchaser further acknowledges that the Assumed Loan Documents require the satisfaction by Purchaser of certain requirements as set forth therein to allow for the Loan Assumption and Release.  Accordingly, Purchaser, at its sole cost and expense and within 15 days after the Effective Date (the “
Loan Assumption Application Submittal Deadline”), shall satisfy the requirements set forth in the Assumed Loan Documents to allow for the Loan Assumption and Release, including, without limitation, submitting a substantially complete application to each of the Lenders for assumption of the Loans together with all documents and information required in connection therewith (collectively, the “
Loan Assumption Application”).  Purchaser agrees to notify Seller that the Loan Assumption Application has been submitted to Lender , promptly after such submission.  Purchaser acknowledges and agrees that Purchaser is solely responsible for the preparation and submittal of the Loan Assumption Application, including the collection of all materials, documents, certificates, financials, signatures, and other items required to be submitted to Lenders in connection with the Loan Assumption Application, except that, upon Purchaser’s or Lenders’ request to Seller, which request shall specify which Property-related documents are to be delivered to Lenders by Seller, Seller shall deliver any Property-related documents to Lenders, to the extent (a) not previously delivered to Purchaser, (b) that the same exist and (c) such Property-related documents are in Seller’s possession or reasonable control.

4.7.4    Purchaser shall comply with each Lender’s assumption guidelines in connection with the Loan Assumption and Release and, if required by such Lender, Purchaser shall cause either (a) Jeremy Rieder or (b) such other person or entity reasonably acceptable to such Lender, which has been designated by Purchaser, to
execute and deliver a customary “non-recourse carve-out” guaranty and customary environmental indemnity, in substantially the same form as the existing “non-recourse carve-out” guaranty and environmental indemnity (excluding the Specific AIMCO Provisions), in favor of Lenders.  Purchaser shall be responsible at its sole cost and expense for correcting and re-submitting any deficiencies noted by Lenders in connection with the Loan Assumption Application within a reasonable amount of time after notification from a Lender of such deficiency.  Purchaser also shall provide Seller with a copy of any correspondence from a Lender with respect to the Loan Assumption Application no later than 3 Business Days after receipt of such correspondence from such Lender.

4.7.5    Purchaser shall pay all fees and expenses (including, without limitation, all servicing fees and charges, assumption fees up to 1% of the amount of the Loans, title fees, endorsement fees, and other fees to release Seller of all liability under the Loans) imposed or charged by any of the Lenders or their counsel (such fees and expenses collectively being referred to as the “
Lender Fees”), in connection with the Loan Assumption Application and the Loan Assumption and Release.
  If the Lender Fees exceed the sum of 1% of the aggregate outstanding principal balance of the Loans plus $59,000, and Seller does not agree to pay the excess, then Purchaser shall have the right to terminate this Contract.  In the event of such termination, the Deposit shall be promptly returned to Purchaser and this Contract shall be of no further force or effect, except for those provisions which expressly survive termination of this Contract.

4.7.6    Seller shall assign all of its right, title and interest in and to all reserves, impounds and other accounts held by Lenders in connection with the Loans, and at Closing, Purchaser shall pay to Seller an amount equal to the balance of such reserves, impounds and accounts so assigned.

4.7.7    Purchaser agrees promptly to deliver to each Lender all documents and information required by the Assumed Loan Documents, and such other information or documentation as a Lender reasonably may request, including, without limitation, financial statements, income tax returns and other financial information for Purchaser and any required guarantor.  Seller agrees that it will cooperate with Purchaser and Lenders, at no cost or expense to Seller, in connection with Purchaser’s application to each Lender for approval of the Loan Assumption and Release, including, upon Purchaser’s or Lenders’ specific request therefor to Seller, delivering any Property-related documents to Lenders, to the extent (a) not previously delivered to Purchaser, (b) that such Property-related documents exist and (c) that such Property-related documents are in Seller’s possession or reasonable control.

4.7.8    If required by Lender, Purchaser shall promptly order a Phase I Environmental study and/or a Property Condition Assessment Report (prepared by an environmental engineer/engineering company reasonably acceptable to the Lenders), and covenants that such Phase I Environmental study and Property Condition Assessment Report shall be delivered to Seller and Lenders prior to the Closing Date.

4.8       Purchaser Financing. 

  Except as otherwise provided in
Section 4.7 above with respect to the Loan Assumption and Release, Purchaser assumes full responsibility to obtain the funds required for settlement, and Purchaser’s acquisition of such funds shall not be a contingency to the Closing.

4.9       Collective Bargaining Agreement. 

4.9.1    Seller has informed Purchaser that Seller is a party to that certain Collective Bargaining Agreement between United Food and Commercial Workers Union, Local 1776 (the “
Union”) and Village of Pennbrook effective May 1, 2005, as amended by that certain Memorandum of Agreement between Village of Pennbrook and the United Food and Commercial Workers Union, Local 1776 dated December 4, 2008 (the “
Collective Bargaining Agreement”).  Purchaser acknowledges that certain of the employees of Seller and Seller’s manager are members of the Union.  Prior to the Closing, Seller shall provide a notice to the Union of the sale of the Property to Purchaser as required under the terms of the Collective Bargaining Agreement. At the Closing, Purchaser shall assume the Collective Bargaining Agreement.  Immediately after the Closing, Purchaser shall offer or cause to be offered employment opportunities at the Property to all employees who are covered by the Collective Bargaining Agreement.

4.9.2    The assignment of Seller’s rights and obligations under the Collective Bargaining Agreement, in connection with the conveyance of the Property to Purchaser, is intended to satisfy the requirements of Section 4204 of the Employee Retirement Income Security Act of 1974, as amended (“
ERISA”).  Solely for the purposes of Section 4204 of ERISA, Purchaser agrees that from and after the Closing Purchaser shall continue to contribute for substantially the same number of contribution base units to the pension plan described in (and pursuant to Section XXIV of) the Collective Bargaining Agreement (the “
Pension Plan”), which Pension Plan is subject to Title IV of ERISA.  At Closing, Seller shall assign and Purchaser shall assume the Collective Bargaining Agreement relating to such employees and all liabilities and obligations thereunder first arising from and after the Closing Date, including, without limitation, the obligation to contribute to the Pension Plan and employee benefit plans covered by the Collective Bargaining Agreement.  In furtherance thereof, at Closing Seller and Purchaser shall execute and deliver an assignment and assumption of the Collective Bargaining Agreement in the form of
Exhibit I hereto (the “Assignment and Assumption of Collective Bargaining Agreement”).  Purchaser shall bear all expenses relating to any bond, escrow or letter of credit arrangement required, if any, in connection with Purchaser’s assumption of the Collective Bargaining Agreement, relating to Purchaser’s obligation to contribute to the Pension Plan and which first arise after the Closing Date. Purchaser shall fully satisfy its obligations to pay any contributions or withdrawal liability to the Pension Plan.  If at any time beginning on the Closing Date and ending on the end of the fifth (5
th) plan year beginning after the Closing Date, Purchaser withdraws from, or fails to make a required contribution to, the Pension Plan covered by the Collective Bargaining Agreement, the bond, escrow or letter of credit, if any, obtained with respect to the Pension Plan, shall be paid to the Pension Plan, and Purchaser shall be liable to such Pension Plan for the withdrawal liability due and owing to the Pension Plan.

4.9.3    Seller agrees to indemnify, hold harmless and defend Purchaser and its officers, directors, employees, constituent partners, members, affiliates and agents (each, a “
Purchaser Party”), from and after the Closing Date, against and in respect of any and all Losses incurred by such persons arising from or relating to any and all liabilities arising under Title IV of ERISA with respect to the Pension Plan first accruing prior to the Closing, excluding any liability of Seller arising from (a) Purchaser’s failure to comply with the provisions of the Assignment and Assumption of Collective Bargaining Agreement or any other obligation of Purchaser under Section 4.9 hereof or (b) Purchaser’s withdrawal from the Pension Plan on or before the last day of the fifth (5
th) plan year beginning after the Closing Date and Purchaser’s failure to pay any withdrawal liability thereby due.  Purchaser and Onyx Partners, LLC hereby jointly and severally indemnify and hold harmless Seller and Seller’s Indemnified Parties at all times from and after the Closing Date, against and in respect of all Losses incurred by such persons arising from or relating to any and all liabilities arising under Title IV of ERISA with respect to the Pension Plan first accruing after the Closing, including, without limitation, any liability of any Seller’s Indemnified Parties arising from (a) Purchaser’s failure to comply with the provisions of the Assignment and Assumption of the Collective Bargaining Agreement or any other obligation of Purchaser under Section 4.9 hereof or (b) Purchaser’s withdrawal from the Pension Plan on or before the last day of the fifth (5
th) plan year beginning after the Closing Date and Purchaser’s failure to pay any withdrawal liability thereby due.

4.9.4    The provisions of this
Section 4.9 shall survive the Closing. 
 
ARTICLE V

CLOSING
 
5.1       Closing Date.  

5.1.1    The Closing shall occur 30 days after the Lenders’ approval of the Loan Assumption and Release, but no later than October 19, 2009 (“
Closing Date”) through an escrow with Escrow Agent, whereby Seller, Purchaser and their attorneys need not be physically present at the Closing and may deliver documents by overnight air courier or other means.

5.1.2    If Purchaser obtains the Lenders’ approval of the Loan Assumption and Release on or after September 18, 2009 but before October 19, 2009, then the Closing Date shall be extended to be the date which is thirty (30) days after the Purchaser’s receipt of the Lenders’ approval of the Loan Assumption and Release. 

5.1.3    If required in order to comply with the requirements of
Sections 8.1.8 or 8.2.6, then, upon notice given to Purchaser at least five (5) Business Days before the then scheduled Closing Date, Seller may extend the Closing Date to a date not later than thirty (30) days following the Closing Date specified in the first sentence of this Section 5.1.

5.2       Seller Closing Deliveries.

  No later than 1 Business Day prior to the Closing Date, Seller shall deliver to Escrow Agent, each of the following items:

5.2.1    Special Warranty Deed (the “
Deed”) in the form attached as Exhibit B to Purchaser, subject to the Permitted Exceptions.

5.2.2    A Bill of Sale in the form attached as
Exhibit C.
 
5.2.3    A General Assignment in the form attached as Exhibit D (the “
General Assignment”).
 
5.2.4    An Assignment of Leases and Security Deposits in the form attached as
Exhibit E (the “Leases Assignment”).
 5.2.5    Seller’s closing statement.

5.2.6    A customary title affidavit or an indemnity form reasonably acceptable to Seller, which is sufficient to enable Title Insurer to delete the standard pre-printed exceptions to the title insurance policy to be issued pursuant to the Title Commitment and other standard exceptions.

5.2.7    A certification of Seller’s non-foreign status pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended.

5.2.8    Resolutions, certificates of good standing, and such other organizational documents as Title Insurer shall reasonably require evidencing Seller’s authority to consummate this transaction.

5.2.9    An updated Rent Roll effective as of a date no more than 3 Business Days prior to the Closing Date; provided, however, that the content of such updated Rent Roll shall in no event expand or modify the conditions to Purchaser’s obligation to close as specified under
Section 8.1.
 
5.2.10  An updated Property Contracts List effective as of a date no more than 3 Business Days prior to the Closing Date; provided, however, that the content of such updated Property Contracts List shall in no event expand or modify the conditions to Purchaser’s obligation to close as specified under
Section 8.1.
 5.2.11  Notification letters to all Tenants prepared by Purchaser and executed by Seller in the form attached hereto as
Exhibit G, which shall be delivered to all Tenants by Purchaser immediately after the Closing.

5.2.12  A certificate of Seller indicating that the representations and warranties of Seller set forth in this Contract are true and correct as of the Closing Date in all material respects, provided that such certificate shall be subject to the limitations set forth in Section 6.3 hereof. 

5.2.13  Such other documents as are reasonably necessary to consummate the transactions herein contemplated in accordance with the terms of the Contract.

5.3       Purchaser Closing Deliveries.
   No later than 1 Business Day prior to the Closing Date (except for the balance of the Purchase Price which is to be delivered at the time specified in
Section 2.2.3), Purchaser shall deliver to the Escrow Agent (for disbursement to Seller upon the Closing) the following items:

5.3.1    The full Purchase Price (with credit for the Deposit and, if applicable, the Loan Balance), plus or minus the adjustments or prorations required by this Contract.

5.3.2    A title affidavit or an indemnity form (pertaining to Purchaser’s activity on the Property prior to Closing), reasonably acceptable to Purchaser, which is sufficient to enable Title Insurer to delete the standard pre-printed exceptions to the title insurance policy to be issued pursuant to the Title Commitment.

5.3.3    Any declaration or other statement which may be required to be submitted to the local assessor.

5.3.4    Purchaser’s closing statement.

5.3.5    A countersigned counterpart of the General Assignment.

5.3.6    A countersigned counterpart of the Leases Assignment.

5.3.7    Notification letters to all Tenants prepared and executed by Purchaser in the form attached hereto as
Exhibit G, which shall be delivered to all Tenants by Purchaser immediately after Closing.

5.3.8    Any cancellation fees or penalties due to any vendor under any Terminated Contract as a result of the termination thereof.

5.3.9    Resolutions, certificates of good standing, and such other organizational documents as Title Insurer shall reasonably require evidencing Purchaser’s authority to consummate this transaction.

5.3.10  All documents, instruments, guaranties, Lender Fees, Required Loan Fund Amounts, and other items or funds required by the Lenders to cause the Loan Assumption and Release, as required hereunder.

5.3.11  Subject to the satisfaction of the conditions set forth in
Section 8.1.8, such other documents as are reasonably necessary to consummate the transactions herein contemplated in accordance with the terms of the Contract.

5.4       Closing Prorations and Adjustments.

5.4.1    General.  All normal and customarily proratable items, including, without limitation, collected rents, operating expenses, personal property taxes, other operating expenses and fees, shall be prorated as of the Closing Date, Seller being charged or credited, as appropriate, for all of same attributable to the period up to the Closing Date (and credited for any amounts paid by Seller attributable to the period on or after the 
Closing Date, if assumed by Purchaser) and Purchaser being responsible for, and credited or charged, as the case may be, for all of the same attributable to the period on and after the Closing Date.  Seller shall prepare a proration schedule (the “
Proration Schedule”) of the adjustments described in this Section 5.4 prior to Closing.

5.4.2    Operating Expenses.  All of the operating, maintenance, taxes (other than real estate taxes), and other expenses incurred in operating the Property that Seller customarily pays, and any other costs incurred in the ordinary course of business for the management and operation of the Property, shall be prorated on an accrual basis.  Seller shall pay all such expenses that accrue prior to the Closing Date and Purchaser shall pay all such expenses that accrue from and after the Closing Date.

5.4.3    Utilities.  The final readings and final billings for utilities will be made if possible as of the Closing Date, in which case Seller shall pay all such bills as of the Closing Date and no proration shall be made at the Closing with respect to utility bills.  Otherwise, a proration shall be made based upon the parties’ reasonable good faith estimate.  Seller shall be entitled to the return of any deposit(s) posted by it with any utility company, and Seller shall notify each utility company serving the Property to terminate Seller’s account, effective as of noon on the Closing Date.

5.4.4    Real Estate Taxes.  Any real estate ad valorem or similar taxes for the Property, or any installment of assessments payable in installments which installment is payable in the calendar year of Closing, shall be prorated to the date of Closing, based upon actual days involved.  The proration of real property taxes or installments of assessments shall be based upon the assessed valuation and tax rate figures (assuming payment at the earliest time to allow for the maximum possible discount) for the year in which the Closing occurs to the extent the same are available; provided, however, that in the event that actual figures (whether for the assessed value of the Property or for the tax rate) for the year of Closing are not available at the Closing Date, the proration shall be made using figures from the preceding year (assuming payment at the earliest time to allow for the maximum possible discount).  The proration of real property taxes or installments of assessments shall be final and not subject to re-adjustment after Closing.

5.4.5    Property Contracts.  Purchaser shall assume at Closing the obligations under the Property Contracts assumed by Purchaser; however, operating expenses shall be prorated under
Section 5.4.2.
 
5.4.6    Leases.
 
5.4.6.1 All collected rent (whether fixed monthly rentals, additional rentals, escalation rentals, retroactive rentals, operating cost pass-throughs or other sums and charges payable by Tenants under the Leases), income and expenses from any portion of the Property shall be prorated as of the Closing Date.  Purchaser shall receive all collected rent and income attributable to dates from and after the Closing Date.  Seller shall receive all collected rent and income attributable to dates prior to the Closing Date.  Notwithstanding the foregoing, no prorations shall be made in relation to either (a) non-delinquent rents which have 
not been collected as of the Closing Date, or (b) delinquent rents existing, if any, as of the Closing Date (the foregoing (a) and (b) referred to herein as the “
Uncollected Rents”).  In adjusting for Uncollected Rents, no adjustments shall be made in Seller’s favor for rents which have accrued and are unpaid as of the Closing, but Purchaser shall pay Seller such accrued Uncollected Rents as and when collected by Purchaser.  Purchaser agrees to bill Tenants of the Property for all Uncollected Rents and to take reasonable actions to collect Uncollected Rents but shall not be obligated to commence or pursue any legal actions.  Notwithstanding the foregoing, Purchaser’s obligation to collect Uncollected Rents shall be limited to Uncollected Rents of not more than 90 days past due, and Purchaser’s collection of rents shall be applied, first, towards current rent due and owing under the Leases, and second, to Uncollected Rents.  After the Closing, Seller shall continue to have the right, but not the obligation, in its own name, to demand payment of and to collect Uncollected Rents owed to Seller by any Tenant, which right shall include, without limitation, the right to continue or commence legal actions or proceedings against any Tenant and the delivery of the Leases Assignment shall not constitute a waiver by Seller of such right; provided however, that the foregoing right of Seller shall be limited to actions seeking monetary damages and, in no event, shall Seller seek to evict any Tenants in any action to collect Uncollected Rents.  Purchaser agrees to cooperate with Seller in connection with all efforts by Seller to collect such Uncollected Rents and to take all steps, whether before or after the Closing Date, as may be necessary to carry out the intention of the foregoing, including, without limitation, the delivery to Seller, within 7 days after a written request, of any relevant books and records (including, without limitation, rent statements, receipted bills and copies of tenant checks used in payment of such rent), the execution of any and all consents or other documents, and the undertaking of any act reasonably necessary for the collection of such Uncollected Rents by Seller; provided, however, that Purchaser’s obligation to cooperate with Seller pursuant to this sentence shall not obligate Purchaser to terminate any Tenant lease with an existing Tenant or evict any existing Tenant from the Property.

5.4.6.2 At Closing, Purchaser shall receive a credit against the Purchase Price in an amount equal to the received and unapplied balance of all cash (or cash equivalent) Tenant Deposits, including, but not limited to, security, damage, pet or other refundable deposits paid by any of the Tenants to secure their respective obligations under the Leases, together, in all cases, with any interest payable to the Tenants thereunder as may be required by their respective Tenant Lease or state law (the “
Tenant Security Deposit Balance”).  Any cash (or cash equivalents) held by Seller which constitutes the Tenant Security Deposit Balance shall be retained by Seller in exchange for the foregoing credit against the Purchase Price and shall not be transferred by Seller pursuant to this Contract (or any of the documents delivered at Closing), but the obligation with respect to the Tenant Security Deposit Balance nonetheless shall be assumed by Purchaser.  The Tenant Security Deposit Balance shall not include any non-refundable deposits or fees paid by Tenants to Seller, either pursuant to the Leases or otherwise.

5.4.6.3 At Closing, Purchaser shall receive a credit against the Purchase Price in an amount equal to the sum of any rent concessions granted for periods after the Closing as a result of a settlement between Seller, as landlord, and a tenant at the Property for failure of Seller to perform any of its actions or obligations as landlord under a lease (as opposed to any rent concessions granted in connection with a new or renewed lease). 

5.4.7    Existing Loans.  Seller shall be responsible for all principal required to be paid under the terms of the Notes prior to Closing, together with all interest accrued under the Notes prior to Closing, all of which may be a credit against the Purchase Price as provided in
Section 2.2.3.  Subject to the limitation set forth in Section 4.7.5 above, Purchaser shall be responsible for all Lenders Fees and all other fees, penalties, interest and other amounts due and owing under the Assumed Loan Documents as a result of the Loan Assumption and Release.  As set forth in
Section 4.7.6, any existing reserves, impounds and other accounts maintained in connection with the Loans shall be assigned to Purchaser, and at Closing, Purchaser shall pay to Seller an amount equal to the balance of such reserves, impounds and accounts so assigned.

5.4.8    Insurance.  No proration shall be made in relation to insurance premiums and insurance policies will not be assigned to Purchaser.  Seller shall have the risk of loss of the Property until the Closing Date, after which time the risk of loss shall pass to Purchaser and Purchaser shall be responsible for obtaining its own insurance thereafter.

5.4.9    Employees.  All of Seller’s and Seller’s manager’s on-site employees (other than the employees employed under the Collective Bargaining Agreement) shall have their employment at the Property terminated by Seller or Seller’s manager, as the case may be, as of the Closing Date.  Wages, vacation pay, pension and welfare benefits and other fringe benefits for all persons employed pursuant to the Collective Bargaining Agreement at the Property shall be adjusted as of the Closing Date.

5.4.10  Closing Costs.  Purchaser shall pay any mortgage assumption (subject to
Section 4.7.5), gross receipts or similar taxes, any premiums or fees required to be paid by Purchaser with respect to the Title Policy pursuant to
Section 4.1, and one-half of the customary closing costs of the Escrow Agent.  Seller shall pay one-half of the customary closing costs of the Escrow Agent and the cost of recording any instruments required to discharge any liens or encumbrances against the Property.  Purchaser and Seller shall each be responsible for one-half of the applicable transfer fees or similar fees; Seller shall grant Purchaser a closing credit for Seller’s portion of such transfer or similar fees.

5.4.11  Utility Contracts.  Seller has entered into a contract for natural gas with UGI Energy Services  ("
UGI") which expires on April 30, 2010 (the “Utility Contract”).  Seller shall use commercially reasonable efforts to obtain the consent of UGI to the assignment of the Utility Contract from Seller to Purchaser (but Seller shall not have any obligation to take any legal action or to pay any sums of money, in order to obtain such consent).  If Seller obtains such consent from UGI, then at Closing, (x) Seller and Purchaser shall enter into an assignment and assumption agreement with respect to the Utility Contract (in a form reasonably satisfactory to Seller and Purchaser), whereby
Seller shall assign the Utility Contract to Purchaser and Purchaser shall assume the obligations of Seller under the Utility Contract applicable to the period from and after the Closing Date and (y) in connection with such assumption, Purchaser shall deliver a cash deposit or a surety bond to UGI, as may be required by UGI in order for Seller to be released from its obligations under the Utility Contract and for Seller to receive a return of its deposit or surety bond posted in connection with the Utility Contract.  If the consent of UGI is necessary for such assignment, and if Seller is unable to obtain the consent of UGI to the assignment of the Utility Contract to Purchaser, then Seller shall terminate the Utility Contract at Closing and shall, at its sole cost and expense, pay all termination fees and costs owed to UGI as a result of such termination.

5.4.12  Possession.  Possession of the Property, subject to the Leases, Property Contracts, other than Terminated Contracts, and Permitted Exceptions, shall be delivered to Purchaser at the Closing upon release from escrow of all items to be delivered by Purchaser pursuant to
Section 5.3.  To the extent reasonably available to Seller, originals or copies of the Leases and Property Contracts, lease files, warranties, guaranties, operating manuals, keys to the property, and Seller’s books and records (other than proprietary information) (collectively, “
Seller’s Property-Related Files and Records”) regarding the Property shall be made available to Purchaser at the Property after the Closing.  Purchaser agrees, for a period of three (3) years after the Closing (the “
Records Hold Period”), to (a) provide and allow Seller reasonable access to Seller’s Property-Related Files and Records for purposes of inspection and copying thereof, and (b) reasonably maintain and preserve Seller’s Property-Related Files and Records.

5.4.13  Brokerage Commissions.  Any outstanding commissions for the rental or lease of any apartments at the Property shall either be paid at Closing by Seller directly to the brokers entitled to such commissions or Seller shall grant Purchaser a credit for such commissions. 

5.5       Post Closing Adjustments.

  Purchaser or Seller may request that Purchaser and Seller undertake to re-adjust any item on the Proration Schedule (or any item omitted therefrom), with the exception of real property taxes which shall be final and not subject to readjustment, in accordance with the provisions of
Section 5.4 of this Contract; provided, however, that neither party shall have any obligation to re-adjust any items (a) after the expiration of 90 days after Closing, or (b) subject to such 90-day period, unless such items exceed $5,000.00 in magnitude (either individually or in the aggregate).  The foregoing limitations set forth in
Sections 5.5(a) and (b) above shall not apply to rent collected by Seller applicable to periods after the Closing or rent collected by Purchaser for periods prior to the Closing.  Nothing contained herein shall limit the mutual indemnities contained in the Leases Assignment.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER
 
6.1       Seller’s Representations.

  Except, in all cases, for any fact, information or condition disclosed in the Title Documents, the Permitted Exceptions, the Property Contracts, or the Materials, or which is otherwise known by Purchaser prior to the Closing, Seller represents and warrants to Purchaser the following (collectively, the “
Seller’s Representations”) as of the Effective Date and as of the Closing Date; provided that Purchaser’s remedies if any such Seller’s Representations are untrue as of the Closing Date are limited to those set forth in Section 
8.1:
 6.1.1    Seller is validly existing and in good standing under the laws of the state of its formation set forth in the initial paragraph of this Contract; and, subject to
Section 8.2.4 and any approvals required from Lenders for the Loan Assumption and Release, has or at the Closing shall have the entity power and authority to sell and convey the Property and to execute the documents to be executed by Seller and prior to the Closing will have taken as applicable, all corporate, partnership, limited liability company or equivalent entity actions required for the execution and delivery of this Contract, and the consummation of the transactions contemplated by this Contract.  The compliance with or fulfillment of the terms and conditions hereof will not conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, any contract to which Seller is a party or by which Seller is otherwise bound, which conflict, breach or default would have a material adverse affect on Seller’s ability to consummate the transaction contemplated by this Contract or on the Property.  Subject to
Section 8.2.4, this Contract is a valid and binding agreement against Seller in accordance with its terms;

6.1.2    Seller is not a “foreign person,” as that term is used and defined in the Internal Revenue Code, Section 1445, as amended;

6.1.3    Except for (a) any actions by Seller to evict Tenants under the Leases, or (b) any matter covered by Seller’s current insurance policy(ies), to Seller’s knowledge, there are no material actions, proceedings, litigation or governmental investigations or condemnation actions either pending or threatened in writing against the Property which will adversely impact Seller’s ability to convey the Property or which adversely affect or will adversely affect the operations of the Property;

6.1.4    To Seller’s knowledge, Seller has not received any written notice of any material default by Seller under any of the Property Contracts that will not be terminated on the Closing Date;

6.1.5    To Seller’s knowledge, the Rent Roll (as updated pursuant to
Section 5.2.9) is accurate in all material respects; 
 
6.1.6    To Seller’s knowledge, the Property Contracts List (as updated pursuant to
Section 5.2.10) is accurate in all material respects;
 6.1.7    To Seller’s knowledge, the Materials delivered to Purchaser and that have been prepared by Seller (as opposed to Materials prepared by any third parties) are true and correct in all material respects, and Seller has no knowledge that any Materials prepared by any third parties are substantially and materially erroneous or misleading;

6.1.8    To Seller’s knowledge, there are no current tax appeals pending concerning the Property and none will be filed prior to the Closing, without Purchaser’s consent;

6.1.9    To Seller’s knowledge, Seller has not received any written claims or complaints from any party that the Property is not in compliance with all zoning laws;

6.1.10  To Seller’s knowledge, Seller has performed its obligations under the Loan as of the Effective Date and has not received any written notice of any default by Seller under the Loan that remains uncured;

6.1.11  As of the Effective Date, the outstanding principal balance due under the Loans is as follows:  $25,532,265.60 under the First Note, $13,250,000.00 under the Second Note and $9,881,314.09 under the Third Note.

6.1.12  To Seller’s knowledge, there are no assessments, either threatened or pending against any part or all of the Property;

6.1.13  To Seller’s knowledge, Seller has not received any written notices of violations of law or municipal ordinances, codes, orders or requirements noted or issued by any authority having jurisdiction against or affecting the Property, which violations remain uncured, except for those violations listed on
Schedule 7.  The work necessary to cure these violations has been completed with the exception of the monitoring and ongoing work in connection with the birds nest and cleaning of the storage rooms, which Seller will continue to use diligent commercially reasonable efforts to cure.

6.1.14  To Seller’s knowledge, Seller has not received any written notices of complaints of any tenants regarding any violation of any rent control or similar law.  There is no concerted rent strike at the Property; 

6.1.15  Seller is the owner of the Fixtures and Tangible Personal Property free and clear of any liens or encumbrances, other than the Assumed Encumbrances; 

6.1.16  Seller has delivered a true, complete and correct copy of the Collective Bargaining Agreement to Purchaser.  The Collective Bargaining Agreement is in full force and effect.  Seller has not received any written notice of default from the Union with respect to the Collective Bargaining Agreement which remains uncured, and, to Seller’s knowledge, Seller is not in default under the Collective Bargaining Agreement; 

6.1.17  To Seller’s knowledge, there are no outstanding commissions for the rental or lease of any apartments at the Property, other than any such commissions to be paid by Seller at or prior to the Closing; and

6.1.18  Except as set forth in the Leases and/or the Rent Roll, no tenant is entitled to rental concessions or abatements for any period subsequent to the Closing Date.

6.1.19  Seller has delivered a true, complete and correct copy of each of the commercial leases in effect at the Property to Purchaser.  To Seller’s knowledge, none of the tenants under such commercial leases is in default and Seller has received no written notice from such commercial tenants that Seller is in default of its obligations under such commercial leases. 

6.2       AS-IS.

  Except for Seller’s Representations, the Property is expressly purchased and sold “AS IS,” “WHERE IS,” and “WITH ALL FAULTS.”  The Purchase Price and the terms and conditions set forth herein are the result of arm’s-length bargaining between entities familiar with transactions of this kind, and said price, terms and conditions reflect the fact that Purchaser shall have the benefit of, but is not relying upon, any information provided by Seller or Broker or statements, representations or warranties, express or implied, made by or enforceable directly against Seller or Broker, including, without limitation, any relating to the value of the Property, the physical or environmental condition of the Property, any state, federal, county or local law, ordinance, order or permit; or the suitability, compliance or lack of compliance of the Property with any regulation, or any other attribute or matter of or relating to the Property (other than any covenants of title contained in the Deed conveying the Property and Seller’s Representations).  Purchaser agrees that Seller shall not be responsible or liable to Purchaser for any defects, errors or omissions, or on account of any conditions affecting the Property.  Purchaser represents and warrants that, as of the date hereof and as of the Closing Date, it has and shall have reviewed and conducted such independent analyses, studies (including, without limitation, environmental studies and analyses concerning the presence of lead, asbestos, water intrusion and/or fungal growth and any resulting damage, PCBs and radon in and about the Property), reports, investigations and inspections as it deems appropriate in connection with the Property.  If Seller provides or has provided any documents, summaries, opinions or work product of consultants, surveyors, architects, engineers, title companies, governmental authorities or any other person or entity with respect to the Property, including, without limitation, the offering prepared by Broker, Purchaser and Seller agree that Seller has done so or shall do so only for the convenience of both parties, Purchaser shall not rely thereon and the reliance by Purchaser upon any such documents, summaries, opinions or work product shall not create or give rise to any liability of or against Seller’s Indemnified Parties.  Purchaser acknowledges and agrees that no representation has been made and no responsibility is assumed by Seller with respect to current and future applicable zoning or building code requirements or the compliance of the Property with any other laws, rules, ordinances or regulations, the financial earning capacity or expense history of the Property, the continuation of contracts, continued occupancy levels of the Property, or any part thereof, or the continued occupancy by tenants of any Leases or, without limiting any of the foregoing, occupancy at Closing.  Prior to Closing, Seller shall have the right, but not the obligation, to enforce its rights against any and all Property occupants, guests or tenants.  Purchaser agrees that the departure or removal, prior to Closing, of any of such guests, occupants or tenants shall not be the basis for, nor shall it give rise to, any claim on the part of Purchaser, nor shall it affect the obligations of Purchaser under this Contract in any manner whatsoever; and Purchaser shall close title and accept delivery of the Deed with or without such tenants in possession and without any allowance or reduction in the Purchase Price under this Contract.  Purchaser hereby releases Seller from any and all claims and liabilities relating to the foregoing matters.

6.3       Survival of Seller’s Representations.

  Seller and Purchaser agree that Seller’s Representations and every representation deemed made herein or by statute shall survive Closing for a period of 6 months (the “
Survival Period”).  Seller shall have no liability after the Survival Period with respect to Seller’s Representations contained herein except to the extent that Purchaser has requested arbitration against Seller during the Survival Period for breach of any of Seller’s Representations.  Under no circumstances shall Seller be liable to Purchaser for more than $1,000,000 in any individual instance or in the aggregate for all breaches of Seller’s
Representations, nor shall Purchaser be entitled to bring any claim for a breach of Seller’s Representations unless the claim for damages (either in the aggregate or as to any individual claim) by Purchaser exceeds $5,000.  In the event that Seller breaches any representation contained in
Section 6.1 and Purchaser had actual knowledge (or knowledge could have been ascertained from the Materials) of such breach prior to the Closing Date, and elected to close regardless, Purchaser shall be deemed to have waived any right of recovery, and Seller shall not have any liability in connection therewith.

6.4       Definition of Seller’s Knowledge.

  Any representations and warranties made “to the knowledge of Seller” shall not be deemed to imply any duty of inquiry.  For purposes of this Contract, the term Seller’s “
knowledge” shall mean and refer only to actual knowledge of the Designated Employees and shall not be construed to refer to the knowledge of any other partner, officer, director, agent, employee or representative of Seller, or any affiliate of Seller, or to impose upon such Designated Employees any duty to investigate the matter to which such actual knowledge or the absence thereof pertains, or to impose upon such Designated Employees any individual personal liability.  As used herein, the term “
Designated Employees” shall refer to Nora Meyers, who is the regional property manager handling this Property, and Ian Douglas, who is the community manager handling this Property.

6.5       Representations and Warranties of Purchaser.

  For the purpose of inducing Seller to enter into this Contract and to consummate the sale and purchase of the Property in accordance herewith, Purchaser represents and warrants to Seller the following as of the Effective Date and as of the Closing Date:

6.5.1    Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of Pennsylvania.

6.5.2    Purchaser, acting through any of its or their duly empowered and authorized officers or members, has all necessary entity power and authority to own and use its properties and to transact the business in which it is engaged, and has full power and authority to enter into this Contract, to execute and deliver the documents and instruments required of Purchaser herein, and to perform its obligations hereunder; and no consent of any of Purchaser’s partners, directors, officers or members are required to so empower or authorize Purchaser.  The compliance with or fulfillment of the terms and conditions hereof will not conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, any contract to which Purchaser is a party or by which Purchaser is otherwise bound, which conflict, breach or default would have a material adverse affect on Purchaser’s ability to consummate the transaction contemplated by this Contract.  This Contract is a valid, binding and enforceable agreement against Purchaser in accordance with its terms.

6.5.3    No pending or, to the knowledge of Purchaser, threatened litigation exists which if determined adversely would restrain the consummation of the transactions contemplated by this Contract or would declare illegal, invalid or non-binding any of Purchaser’s obligations or covenants to Seller.

6.5.4    Other than Seller’s Representations, Purchaser has not relied on any representation or warranty made by Seller or any representative of Seller (including, without limitation, Broker) in connection with this Contract and the acquisition of the Property.

6.5.5    The Broker and its affiliates do not, and will not at the Closing, have any direct or indirect legal, beneficial, economic or voting interest in Purchaser (or in an assignee of Purchaser, which pursuant to
Section 13.3, acquires the Property at the Closing), nor has Purchaser or any affiliate of Purchaser granted (as of the Effective Date or the Closing Date) the Broker or any of its affiliates any right or option to acquire any direct or indirect legal, beneficial, economic or voting interest in Purchaser.

6.5.6    Purchaser is not a Prohibited Person.

6.5.7    To Purchaser’s knowledge, none of its investors, affiliates or brokers or other agents (if any), acting or benefiting in any capacity in connection with this Contract is a Prohibited Person.

6.5.8    The funds or other assets Purchaser will transfer to Seller under this Contract are not the property of, or beneficially owned, directly or indirectly, by a Prohibited Person.

6.5.9    The funds or other assets Purchaser will transfer to Seller under this Contract are not the proceeds of specified unlawful activity as defined by 18 U.S.C. § 1956(c)(7).

ARTICLE VII

OPERATION OF THE PROPERTY
 
7.1       Leases and Property Contracts.

  During the period of time from the Effective Date to the Closing Date, in the ordinary course of business Seller may enter into new Property Contracts, new Leases, renew existing Leases or modify, terminate or accept the surrender or forfeiture of any of the Leases, modify any Property Contracts, or institute and prosecute any available remedies for default under any Lease or Property Contract without first obtaining the written consent of Purchaser; provided, however, Seller agrees that any such new Property Contracts shall be terminable on thirty (30) days’ prior written notice without payment or penalty or any new, renewed or modified Leases (a) shall not have a term in excess of 1 year, (b) shall be on Seller’s standard form without material deviation and entered into in the ordinary course of business and in accordance with Seller’s standard leasing practices for the Property and (c) shall not grant a rent concession which results in an aggregate rent concession amount over the term of the applicable lease equal to more than one and one-half (1.5) months of free rent after the Closing (unless Seller agrees to give Purchaser a credit at Closing for the amount of any rent concessions which exceed one and one-half (1.5) months of free rent), unless the prior written consent of Purchaser has been obtained, which consent shall not be unreasonably withheld, conditioned or delayed.  Seller hereby agrees not to change its standard leasing practices in a manner which would be adverse to Purchaser as a result of the execution of this Contract.

7.2       General Operation of Property.

  Except as specifically set forth in this
Article VII, Seller shall operate the Property after the Effective Date in the ordinary course of business, and except as necessary in Seller’s reasonable discretion to address (a) any life or safety issue at the Property or (b) any other matter which in Seller’s reasonable discretion materially adversely affects the use, operation or value of the Property, Seller will not make any material alterations to the Property or remove any material Fixtures and Tangible Personal Property without the prior written consent of Purchaser which consent shall not be unreasonably withheld, denied or delayed.  Seller shall not accept any prepayment of rent for more than one month beyond the Closing Date or apply any Tenant Deposits to any rents owed by Tenants who remain in possession of their Tenant Units on the Closing Date.  Seller shall maintain the Property in its current condition, subject only to ordinary wear and tear, casualty and condemnation excepted and subject to the provisions of
Article 11 and Article 12.
 
7.3       Liens.

  Other than utility easements and temporary construction easements granted by Seller in the ordinary course of business, Seller covenants that it will not voluntarily create or cause any lien or encumbrance to attach to the Property between the Effective Date and the Closing Date (other than Leases and Property Contracts as provided in Section 
7.1) unless Purchaser approves such lien or encumbrance, which approval shall not be unreasonably withheld, conditioned or delayed.  If Purchaser approves any such subsequent lien or encumbrance, the same shall be deemed a Permitted Encumbrance for all purposes hereunder.

7.4       Rent-Ready Condition.

  Seller agrees that (a) prior to Closing all vacant apartment units at the Property (which have been vacant for at least seven (7) days prior to the Closing Date) will be in Rent-Ready Condition, or (b) Purchaser shall receive a credit against the Purchase Price in an amount equal to the product of (i) the number of vacant apartment units which are not in Rent-Ready Condition on the Closing Date (and which have been vacant for at least seven (7) days prior to the Closing Date), and (ii) $1,000.00.

7.5       Existing Loans.
   Between the Effective Date and the Closing Date, Seller shall not voluntarily prepay any portion of the outstanding principal balance under the Existing Loans, other than the scheduled amortization payments as set forth in the Notes.

7.6       Violations and certificate of occupancy.

  Seller shall use diligent, commercially reasonable efforts to (a) cure all violations listed on
Schedule 7 and (b) deliver to Purchaser an Application for Certificate of Occupancy/Use signed by the Code Enforcement Officer, or other documentation required by the Township of Falls which is necessary to transfer title to the Property to Purchaser; provided, however, that Seller shall not be in default if, despite using diligent, commercially reasonable efforts, Seller is unable to satisfy the requirements of this
Section 7.6.
 
ARTICLE VIII

CONDITIONS PRECEDENT TO CLOSING
 
8.1       Purchaser’s Conditions to Closing.

  Purchaser’s obligation to close under this Contract shall be subject to and conditioned upon the fulfillment of the following conditions precedent:

8.1.1    All of the documents required to be delivered by Seller to Purchaser at the Closing pursuant to the terms and conditions hereof shall have been delivered;

8.1.2    Each of Seller’s Representations shall be true and complete in all material respects as of the Closing Date;

8.1.3    Seller shall have complied with, fulfilled and performed in all material respects each of the covenants, terms and conditions to be complied with, fulfilled or performed by Seller hereunder; 

8.1.4    Neither Seller nor Seller’s general partner shall be a debtor in any bankruptcy proceeding nor shall have been in the last 6 months a debtor in any bankruptcy proceeding;

8.1.5    The Loan Assumption and Release shall have occurred;

8.1.6    There shall not be any pending litigation or, to the knowledge of either Purchaser or Seller, any litigation threatened in writing, which, if adversely determined, would restrain the consummation of any of the transactions contemplated by this Contract or declare illegal, invalid or nonbinding any of the covenants or obligations of the Seller, except for litigation of which Purchaser has knowledge;

8.1.7    Subject to Purchaser’s payment of premiums, the Title Insurer shall be committed to the issuance of the Title Policy insuring title to the Property subject only to the Permitted Exceptions;

8.1.8    Seller shall have delivered to Purchaser an Application for Certificate of Occupancy/Use signed by the Code Enforcement Officer, or other documentation required by the Township of Falls which is necessary to transfer title to the Property to Purchaser; and

8.1.9    Seller shall have cured all violations listed on
Schedule 7 and all other violations, to the extent necessary to satisfy the condition set forth in
Section 8.1.8 above.
 If any condition set forth in
Sections 8.1.1, 8.1.3, 8.1.4, 8.1.5, 8.1.6, 8.1.7, 8.1.8 or 8.1.9 is not met, Purchaser may (a) waive any of the foregoing conditions and proceed to Closing on the Closing Date with no offset or deduction from the Purchase Price, or (b) if such failure constitutes a default by Seller, exercise any of its remedies pursuant to
Section 10.2.  If the condition set forth in Section 8.1.2 is not met, Seller shall not be in default pursuant to
Section 10.2, and Purchaser may, as its sole and exclusive remedy, (i) notify Seller of Purchaser’s election to terminate this Contract and receive a return of the Deposit from the Escrow Agent, or (ii) waive such condition and proceed to Closing on the Closing Date with no offset or deduction from the Purchase Price.

8.2       Seller’s Conditions to Closing.

  Without limiting any of the rights of Seller elsewhere provided for in this Contract, Seller’s obligation to close with respect to conveyance of the Property under this Contract shall be subject to and conditioned upon the fulfillment of the following conditions precedent:

8.2.1    All of the documents and funds required to be delivered by Purchaser to Seller at the Closing pursuant to the terms and conditions hereof shall have been delivered;

8.2.2    Each of the representations, warranties and covenants of Purchaser contained herein shall be true in all material respects as of the Closing Date;

8.2.3    Purchaser shall have complied with, fulfilled and performed in all material respects each of the covenants, terms and conditions to be complied with, fulfilled or performed by Purchaser hereunder;

8.2.4    There shall not be any pending litigation or, to the knowledge of either Purchaser or Seller, any litigation threatened in writing, which, if adversely determined, would restrain the consummation of any of the transactions contemplated by this Contract or declare illegal, invalid or nonbinding any of the covenants or obligations of the Purchaser, except for litigation of which Seller currently has knowledge;

8.2.5    The Loan Assumption and Release shall have occurred; and

8.2.6    Seller has informed Purchaser that in connection with the sale of the Property pursuant to this Contract, Seller is required to file an information statement with the United States Securities Exchange Commission (the “
SEC”) pursuant to Rule 14(c) of the Securities Exchange Act of 1934, as amended (the “
Information Statement”) and to distribute the Information Statement to Seller's limited partners.  Seller shall file the Information Statement with the SEC promptly after the Effective Date.  It shall be a condition to Seller’s closing obligations hereunder that (A) either (x) Seller has not received any comments on the Information Statement from SEC for a period of 10 business days after the Information Statement has been filed with the SEC or (y) if Seller has received comments from the SEC within such 10 business day period, such comments have been addressed to the satisfaction of the SEC and the SEC has confirmed that it has no further comments to the Information Statement and (B) thereafter the Information Statement has been delivered to each of the limited partners of Seller and a period of not less than 20 days has expired.  Seller shall advise Purchaser when the Information Statement is being mailed to the limited partners.

If any of the foregoing conditions to Seller’s obligation to close with respect to conveyance of the Property under this Contract are not met, Seller may (a) waive any of the foregoing conditions and proceed to Closing on the Closing Date, or (b) terminate this Contract, and, if such failure constitutes a default by Purchaser, exercise any of its remedies under
Section 10.1.  If the Closing does not occur because of a failure of Seller to comply with the provisions of
Section 8.2.6 and provided that Purchaser is not otherwise in default under this Contract, then, in addition to the return of the Deposit to Purchaser, and as Purchaser’s sole remedy, Purchaser shall be entitled to reimbursement of its direct and actual out-of-pocket expenses and costs (documented by paid invoices to third parties) in connection with this transaction, which reimbursement shall not exceed $200,000 in the aggregate.

ARTICLE IX

BROKERAGE
 
9.1       Indemnity.

  Seller represents and warrants to Purchaser that it has dealt only with Marcus & Millichap, 1628 JFK Boulevard, Suite 1200, Philadelphia, PA 19103, Attention:  Ridge MacLaren (“
Broker”) in connection with this Contract.  Seller and Purchaser each represents and warrants to the other that, other than Broker, it has not dealt with or utilized the services of any other real estate broker, sales person or finder in connection with this Contract, and each party
agrees to indemnify, hold harmless, and, if requested in the sole and absolute discretion of the indemnitee, defend (with counsel approved by the indemnitee) the other party from and against all Losses relating to brokerage commissions and finder’s fees arising from or attributable to the acts or omissions of the indemnifying party.

9.2       Broker Commission.

  If the Closing occurs, Seller agrees to pay Broker a commission according to the terms of a separate contract.  Broker shall not be deemed a party or third party beneficiary of this Contract.  As a condition to Seller’s obligation to pay the commission, Broker shall execute the signature page for Broker attached hereto solely for purposes of confirming the matters set forth therein. 

9.3       Real Estate Recovery Fund.
   A Real Estate Recovery Fund exists to reimburse any person who has obtained a final civil judgment against a Pennsylvania real estate licensee owing to fraud, misrepresentation, or deceit in a real estate transaction and who has been unable to collect the judgment after exhausting all legal and equitable remedies.  For complete details about the Fund, call (717) 783-3658 or (800) 822-2113 (within Pennsylvania) and (717) 783-4854 (outside Pennsylvania).

ARTICLE X

DEFAULTS AND REMEDIES
 

10.1     Purchaser Default.
   If Purchaser defaults in its obligations hereunder to (a) deliver the Initial Deposit or Additional Deposit (or any other deposit or payment required of Purchaser hereunder), (b) deliver to Seller the deliveries specified under
Section 5.3 on the date required thereunder, or (c) deliver the Purchase Price at the time required by
Section 2.2.3 and close on the purchase of the Property on the Closing Date, then, immediately and without the right to receive notice or to cure pursuant to
Section 2.2.3, Purchaser shall forfeit the Deposit, and the Escrow Agent shall deliver the Deposit to Seller, and neither party shall be obligated to proceed with the purchase and sale of the Property.  If, Purchaser defaults in any of its other representations, warranties or obligations under this Contract, and such default continues for more than 10 days after written notice from Seller, then Purchaser shall forfeit the Deposit, and the Escrow Agent shall deliver the Deposit to Seller, and neither party shall be obligated to proceed with the purchase and sale of the Property.  The Deposit is liquidated damages and recourse to the Deposit is, except for Purchaser’s indemnity and confidentiality obligations hereunder, Seller’s sole and exclusive remedy for Purchaser’s failure to perform its obligation to purchase the Property or breach of a representation or warranty.  Seller expressly waives the remedies of specific performance and additional damages for such default by Purchaser.  SELLER AND PURCHASER ACKNOWLEDGE THAT SELLER’S DAMAGES WOULD BE DIFFICULT TO DETERMINE, AND THAT THE DEPOSIT IS A REASONABLE
ESTIMATE OF SELLER’S DAMAGES RESULTING FROM A DEFAULT BY PURCHASER IN ITS OBLIGATION TO PURCHASE THE PROPERTY.  SELLER AND PURCHASER FURTHER AGREE THAT THIS SECTION
10.1 IS INTENDED TO AND DOES LIQUIDATE THE AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER’S EXCLUSIVE REMEDY AGAINST PURCHASER, BOTH AT LAW AND IN EQUITY, ARISING FROM OR RELATED TO A BREACH BY PURCHASER OF ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS CONTRACT, OTHER THAN WITH RESPECT TO PURCHASER’S INDEMNITY AND CONFIDENTIALITY OBLIGATIONS HEREUNDER.

10.2     Seller Default.

  If Seller defaults in its obligations hereunder to (a) deliver to Escrow Agent the deliveries specified under
Section 5.2 on the date required thereunder or (b) satisfy the conditions contained in Sections 8.1.1, 8.1.3 (with respect to the covenants of Seller to be performed on the Closing Date only),
8.1.4 or 8.1.6 and provided that Purchaser is, on the Closing Date, ready, willing and able to deliver all of Purchaser’s deliveries specified by
Section 5.3 and pay the Purchase Price to Seller, then Seller shall be deemed to immediately be in default and Purchaser may exercise Purchaser’s rights contained in this
Section 10.2 without any opportunity of Seller to cure such default.  If Seller, prior to the Closing, defaults in its covenants or obligations under this Contract which are to be performed prior to Closing and such default continues for more than 10 days after written notice from Purchaser, then, at Purchaser’s election and as Purchaser’s sole and exclusive remedy, either (a) this Contract shall terminate, and all payments and things of value, including the Deposit, provided by Purchaser hereunder shall be returned to Purchaser and Purchaser may recover, as its sole recoverable damages (but without limiting its right to receive a refund of the Deposit), its direct and actual out-of-pocket expenses and costs (documented by paid invoices to third parties) in connection with this transaction, which damages shall not exceed $200,000 in aggregate, or (b) subject to the conditions below, Purchaser may seek specific performance of Seller’s obligation to deliver the Deed pursuant to this Contract (but not damages).  Purchaser may seek specific performance of Seller’s obligation to deliver the Deed pursuant to this Contract only if, as a condition precedent to initiating such litigation for specific performance, Purchaser first shall (i) deliver all Purchaser Closing documents to Escrow Agent in accordance with the requirements of this Contract, including, without limitation, Sections 
2.2.3 and 5.3 (with the exception of Section 5.3.1); (ii) not otherwise be in default under this Contract; and (iii) file suit therefor with the court on or before the 120th day after the Closing Date; if Purchaser fails to file an action for specific performance within 120 days after the Closing Date, then Purchaser shall be deemed to have elected to terminate the Contract in accordance with subsection (a) above.  Purchaser agrees that it shall promptly deliver to Seller an assignment of all of Purchaser’s right, title and interest in and to (together with possession of) all plans, studies, surveys, reports, and other materials paid for with the out-of-pocket expenses reimbursed by Seller pursuant to the foregoing sentence.  SELLER AND PURCHASER FURTHER AGREE THAT THIS SECTION 10.2 IS INTENDED TO AND DOES LIMIT THE AMOUNT OF DAMAGES DUE PURCHASER AND THE REMEDIES AVAILABLE TO PURCHASER, AND SHALL BE PURCHASER’S EXCLUSIVE REMEDY AGAINST SELLER, BOTH AT LAW AND IN EQUITY ARISING FROM OR RELATED TO A BREACH BY SELLER OF ITS COVENANTS OR ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS CONTRACT.  UNDER NO CIRCUMSTANCES MAY PURCHASER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL, CONSEQUENTIAL, PUNITIVE, SPECULATIVE OR INDIRECT DAMAGES,
ALL OF WHICH PURCHASER SPECIFICALLY WAIVES, FROM SELLER FOR ANY BREACH BY SELLER, OF ITS COVENANTS OR ITS OBLIGATIONS UNDER THIS CONTRACT.  PURCHASER SPECIFICALLY WAIVES THE RIGHT TO FILE ANY LIS PENDENS OR ANY LIEN AGAINST THE PROPERTY UNLESS AND UNTIL IT HAS IRREVOCABLY ELECTED TO SEEK SPECIFIC PERFORMANCE OF THIS CONTRACT AND HAS FILED AND IS DILIGENTLY PURSUING AN ACTION SEEKING SUCH REMEDY.

ARTICLE XI

RISK OF LOSS OR CASUALTY
 
11.1     Major Damage.

  In the event that the Property is damaged or destroyed by fire or other casualty prior to Closing, and the cost for demolition, site cleaning, restoration, replacement, or other repairs (collectively, the “
Repairs”), is more than $2,000,000.00, then Seller shall have no obligation to make such Repairs, and shall notify Purchaser in writing of such damage or destruction (the “
Damage Notice”).  Within 10 Business Days after Purchaser’s receipt of the Damage Notice, Purchaser may elect at its option to terminate this Contract by delivering written notice to Seller in which event the Deposit shall be refunded to Purchaser.  In the event Purchaser fails to terminate this Contract within the foregoing 10 Business Day period, this transaction shall be closed in accordance with Section 
11.3 below.
 
11.2     Minor Damage.

  In the event that the Property is damaged or destroyed by fire or other casualty prior to the Closing, and the cost of Repairs is equal to or less than $2,000,000.00, this transaction shall be closed in accordance with Section 
11.3, notwithstanding such casualty.  In such event, Seller may at its election endeavor to make such Repairs to the extent of any recovery from insurance carried on the Property, if such Repairs can be reasonably effected before the Closing.  Regardless of Seller’s election to commence such Repairs, or Seller’s ability to complete such Repairs prior to Closing, this transaction shall be closed in accordance with Section 
11.3 below.
 
11.3     Closing.

  In the event Purchaser fails to terminate this Contract following a casualty as set forth in Section 
11.1, or in the event of a casualty as set forth in Section 11.2, then this transaction shall be closed in accordance with the terms of the Contract, at Seller’s election, either (i) for the full Purchase Price, notwithstanding any such casualty, in which case Purchaser shall, at Closing, execute and deliver an assignment and assumption (in a form reasonably required by Seller) of Seller’s rights and obligations with respect to the insurance claim related to such casualty, and thereafter Purchaser shall receive all insurance proceeds pertaining to such claim, less any amounts which may already have been spent by Seller for Repairs (plus a credit against the Purchase Price at Closing in the amount of any deductible payable by Seller in connection therewith, plus the amount of any uninsured loss for which coverage has been denied and plus the amount of any proceeds which are not assignable to Purchaser); or (ii) for the full Purchase Price less a credit to Purchaser in the amount necessary to complete such Repairs (less any amounts which may already have been spent by Seller for Repairs).

11.4     Repairs.

  To the extent that Seller elects to commence any Repairs prior to Closing, then Seller shall be entitled to receive and apply available insurance proceeds to any portion of such Repairs completed or installed prior to Closing, with Purchaser being responsible
for completion of such Repairs after Closing.  To the extent that any Repairs have been commenced prior to Closing, then the Property Contracts shall include, and Purchaser shall assume at Closing, all construction and other contracts entered into by Seller in connection with such Repairs. 

ARTICLE XII

EMINENT DOMAIN
 
12.1     Eminent Domain.
   In the event that, at the time of Closing, any material part of the Property is (or previously has been) acquired, or is about to be acquired, by any governmental agency by the powers of eminent domain or transfer in lieu thereof (or in the event that at such time there is any notice of any such acquisition or intent to acquire by any such governmental agency), Purchaser shall have the right, at Purchaser’s option, to terminate this Contract by giving written notice within 10 days after Purchaser’s receipt from Seller of notice of the occurrence of such event, and if Purchaser so terminates this Contract, Purchaser shall recover the Deposit hereunder.  If Purchaser fails to terminate this Contract within such 10-day period, this transaction shall be closed in accordance with the terms of this Contract for the full Purchase Price and Purchaser shall receive the full benefit of any condemnation award.  It is expressly agreed between the parties hereto that this section shall in no way apply to customary dedications for public purposes which may be necessary for the development of the Property.

ARTICLE XIII

MISCELLANEOUS
 
13.1     Binding Effect of Contract.

  This Contract shall not be binding on either party until executed by both Purchaser and Seller.  Neither the Escrow Agent’s nor the Broker’s execution of this Contract shall be a prerequisite to its effectiveness.  Subject to Section 
13.3, this Contract shall be binding upon and inure to the benefit of Seller and Purchaser, and their respective successors and permitted assigns.

13.2     Exhibits and Schedules.

  All Exhibits and Schedules, whether or not annexed hereto, are a part of this Contract for all purposes.

13.3     Assignability.

  Except to the extent required to comply with the provisions of Section 
13.18 related to a 1031 Exchange, this Contract is not assignable by Purchaser without first obtaining the prior written approval of Seller.  Notwithstanding the foregoing, Purchaser may assign this Contract, without first obtaining the prior written approval of Seller, to one or more entities so long as (a) Purchaser is an affiliate of the purchasing entity(ies), (b) Purchaser is not released from its liability hereunder, and (c) Purchaser provides written notice to Seller of any proposed assignment no later than 10 days prior to the Closing Date.  As used herein, an affiliate is a person or entity controlled by, under common control with, or controlling another person or entity.  Purchaser shall be solely responsible for the payment of transfer tax payable in connection with such an assignment and shall indemnify, hold harmless, and, if requested in the sole and absolute discretion of the Seller, defend (with counsel approved by the Seller) the other party from and against all Losses relating to any transfer taxes due in connection of an assignment of this Contract by Purchaser.

13.4     Captions.

  The captions, headings, and arrangements used in this Contract are for convenience only and do not in any way affect, limit, amplify, or modify the terms and provisions hereof.

13.5     Number and Gender of Words.

  Whenever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender shall include each other gender where appropriate.

13.6     Notices.
   All notices, demands, requests and other communications required or permitted hereunder shall be in writing, and shall be (a) personally delivered with a written receipt of delivery; (b) sent by a nationally-recognized overnight delivery service requiring a written acknowledgement of receipt or providing a certification of delivery or attempted delivery; (c) sent by certified or registered mail, return receipt requested; or (d) sent by confirmed facsimile transmission or electronic delivery with an original copy thereof transmitted to the recipient by one of the means described in subsections (a) through (c) no later than 3 Business Days thereafter.  All notices shall be deemed effective when actually delivered as documented in a delivery receipt; provided, however, that if the notice was sent by overnight courier or mail as aforesaid and is affirmatively refused or cannot be delivered during customary business hours by reason of the absence of a signatory to acknowledge receipt, or by reason of a change of address with respect to which the addressor did not have either knowledge or written notice delivered in accordance with this paragraph, then the first attempted delivery shall be deemed to constitute delivery.  Each party shall be entitled to change its address for notices from time to time by delivering to the other party notice thereof in the manner herein provided for the delivery of notices.  All notices shall be sent to the addressee at its address set forth following its name below:

To Purchaser:

Pennbrook Hatzlach, L.P.,

1440 Cedarview Avenue
Lakewood, New Jersey 08701
Attention:  Jeremy Y. Rieder
Telephone:  732-886-6787

Facsimile:  732-886-6797
jeremy@onyxp.com 
 With a copy to:

Feinstein Raiss Kelin & Booker

100 Executive Drive
Suite 360
West Orange, New Jersey 07052
Attention: Rich Kelin, Esq.
Telephone:  973-324-5400 extension 107

Facsimile:  973-731-4669
rkelin@frkblaw.com 
 
To Seller:

c/o AIMCO
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado  80237

Attention:  Mark Reoch and Brian Bornhorst
Telephone:  303-757-9101 (Mark Reoch) and 303-691-4472 (Brian Bornhorst)

Facsimile:  303-300-3261 (Mark Reoch and Brian Bornhorst)
mark.reoch@aimco.com and brian.bornhorst@aimco.com

And:

c/o AIMCO

4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado  80237
Attention:  Mr. Harry Alcock

Telephone:  303-691-4344
Facsimile:  303-300-3282
harry.alcock@aimco.com
 with copy to:

AIMCO
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado  80237
Attention:  John Spiegleman, Esq.

Telephone: 303-691-4303
Facsimile:  720-200-6882
john.spiegleman@aimco.com
 and a copy to:

Bryan Cave LLP
1290 Avenue of the Americas
New York, New York 10104
Attention:  Sandor A. Green, Esq.

Telephone: 212-541-2049
Facsimile:  212-541-1449
sagreen@bryancave.com
 Any notice required hereunder to be delivered to the Escrow Agent shall be delivered in accordance with above provisions as follows:

First American Title Insurance Company of New York

633 Third Avenue
New York, New York 10017
Attention: Linda J. Isaacson
Telephone: 212-850-0664

Facsimile: 212-331-1467
lisaacson@firstam.com
 Unless specifically required to be delivered to the Escrow Agent pursuant to the terms of this Contract, no notice hereunder must be delivered to the Escrow Agent in order to be effective so long as it is delivered to the other party in accordance with the above provisions.

13.7     Governing Law and Venue.

  The laws of the Commonwealth of Pennsylvania shall govern the validity, construction, enforcement, and interpretation of this Contract, unless otherwise specified herein except for the conflict of laws provisions thereof.  Subject to Section 
13.24, all claims, disputes and other matters in question arising out of or relating to this Contract, or the breach thereof, shall be decided by proceedings instituted and litigated in a court of competent jurisdiction in the Commonwealth of Pennsylvania, and the parties hereto expressly consent to the venue and jurisdiction of such court.

13.8     Entire Agreement.

  This Contract embodies the entire Contract between the parties hereto concerning the subject matter hereof and supersedes all prior conversations, proposals, negotiations, understandings and contracts, whether written or oral.

13.9     Amendments.
   This Contract shall not be amended, altered, changed, modified, supplemented or rescinded in any manner except by a written contract executed by all of the parties; provided, however, that, (a) the signature of the Escrow Agent shall not be required as to any amendment of this Contract other than an amendment of Section 
2.3, and (b) the signature of the Broker shall not be required as to any amendment of this Contract

13.10   Severability.
   In the event that any part of this Contract shall be held to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be reformed, and enforced to the maximum extent permitted by law.  If such provision cannot be reformed, it shall be severed from this Contract and the remaining portions of this Contract shall be valid and enforceable.

13.11   Multiple Counterparts/Facsimile Signatures.

  This Contract may be executed in a number of identical counterparts.  This Contract may be executed by facsimile signatures or electronic delivery of signatures which shall be binding on the parties hereto, with original signatures to be delivered as soon as reasonably practical thereafter.

13.12   Construction.
   No provision of this Contract shall be construed in favor of, or against, any particular party by reason of any presumption with respect to the drafting of this Contract; both parties, being represented by counsel, having fully participated in the negotiation of this instrument.

13.13   Confidentiality.
   Purchaser shall not disclose the terms and conditions contained in this Contract and shall keep the same confidential, provided that Purchaser may disclose the
terms and conditions of this Contract (a) as required by law, (b) to consummate the terms of this Contract, or any financing relating thereto, or (c) to Purchaser’s or Seller’s lenders, attorneys, accountants, advisors, consultants and potential investors.  Any information obtained by Purchaser in the course of its inspection of the Property, and any Materials provided by Seller to Purchaser hereunder, shall be confidential and Purchaser shall be prohibited from making such information public to any other person or entity other than its Consultants, without Seller’s prior written authorization, which may be granted or denied in Seller’s sole discretion.  In addition, Purchaser shall use its reasonable efforts to prevent its Consultants from divulging any such confidential information to any unrelated third parties except as reasonably necessary to third parties engaged by Purchaser for the limited purpose of analyzing and investigating such information for the purpose of consummating the transaction contemplated by this Contract.  Unless and until the Closing occurs, Purchaser shall not market the Property (or any portion thereof) to any prospective purchaser or lessee without the prior written consent of Seller, which consent may be withheld in Seller’s sole discretion.  Notwithstanding the provisions of Section 
13.8 Purchaser agrees that the covenants, restrictions and agreements of Purchaser contained in any confidentiality agreement executed by Purchaser prior to the Effective Date shall survive the execution of this Contract and shall not be superseded hereby.

13.14   Time of the Essence.
   It is expressly agreed by the parties hereto that time is of the essence with respect to this Contract and any aspect thereof.

13.15   Waiver.
   No delay or omission to exercise any right or power accruing upon any default, omission, or failure of performance hereunder shall impair any right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient.  No waiver, amendment, release, or modification of this Contract shall be established by conduct, custom, or course of dealing and all waivers must be in writing and signed by the waiving party.

13.16   Attorneys’ Fees.
   In the event either party hereto commences litigation or arbitration against the other to enforce its rights hereunder, the prevailing party in such litigation shall be entitled to recover from the other party its reasonable attorneys’ fees and expenses incidental to such litigation and arbitration, including the cost of in-house counsel and any appeals.

13.17   Time Zone/Time Periods.
   Any reference in this Contract to a specific time shall refer to the time in the time zone where the Property is located.  (For example, a reference to 3:00 p.m. refers to 3:00 p.m. MST if the Property is located in Denver, Colorado.)  Should the last day of a time period fall on a weekend or legal holiday, the next Business Day thereafter shall be considered the end of the time period.

13.18   1031 Exchange.
   Seller and Purchaser acknowledge and agree that the purchase and sale of the Property may be part of a tax-free exchange for either Purchaser or Seller pursuant to Section 1031 of the Code, the regulations promulgated thereunder, revenue procedures, pronouncements and other guidance issued by the Internal Revenue Service.  Each party hereby agrees to cooperate with each other and take all reasonable steps on or before the Closing Date to facilitate such exchange if requested by the other party, provided that (a) no party making such accommodation shall be required to acquire any substitute property, (b) such
exchange shall not affect the representations, warranties, liabilities and obligations of the parties to each other under this Contract, (c) no party making such accommodation shall incur any additional cost, expense or liability in connection with such exchange (other than expenses of reviewing and executing documents required in connection with such exchange), and (d) no dates in this Contract will be extended as a result thereof, except as specifically provided herein.  Notwithstanding anything in this Section 
13.18 to the contrary, Seller shall have the right to extend the Closing Date (as extended pursuant to the second or third sentences of Section 
5.1) for up to 30 days in order to facilitate a tax free exchange pursuant to this Section 13.18, and to obtain all documentation in connection therewith.

13.19   No Personal Liability of Officers, Trustees or Directors of Seller’s Partners.

  Purchaser acknowledges that this Contract is entered into by Seller which is a California limited partnership, and Purchaser agrees that none of Seller’s Indemnified Parties shall have any personal liability under this Contract or any document executed in connection with the transactions contemplated by this Contract.

13.20   No Exclusive Negotiations.

  Seller shall have the right, at all times prior to the expiration of the Feasibility Period, to solicit backup offers and enter into discussions, negotiations, or any other communications concerning or related to the sale of the Property with any third-party; provided, however, that such communications are subject to the terms of this Contract, and that Seller shall not enter into any binding contract with a third-party for the sale of the Property unless such contract is contingent on the termination of this Contract without the Property having been conveyed to Purchaser.

13.21   ADA Disclosure.

  Purchaser acknowledges that the Property may be subject to the federal Americans With Disabilities Act (the “
ADA”) and the federal Fair Housing Act (the “FHA”).  The ADA requires, among other matters, that tenants and/or owners of “public accommodations” remove barriers in order to make the Property accessible to disabled persons and provide auxiliary aids and services for hearing, vision or speech impaired persons.  Seller makes no warranty, representation or guarantee of any type or kind with respect to the Property’s compliance with the ADA or the FHA (or any similar state or local law), and Seller expressly disclaims any such representations.

13.22   No Recording.
   Purchaser shall not cause or allow this Contract or any contract or other document related hereto, nor any memorandum or other evidence hereof, to be recorded or become a public record without Seller’s prior written consent, which consent may be withheld at Seller’s sole discretion.  If Purchaser records this Contract or any other memorandum or evidence thereof, Purchaser shall be in default of its obligations under this Contract.  Purchaser hereby appoints Seller as Purchaser’s attorney-in-fact to prepare and record any documents necessary to effect the nullification and release of the Contract or other memorandum or evidence thereof from the public records.  This appointment shall be coupled with an interest and irrevocable.

13.23   Relationship of Parties.
   Purchaser and Seller acknowledge and agree that the relationship established between the parties pursuant to this Contract is only that of a seller and a purchaser of property.  Neither Purchaser nor Seller is, nor shall either hold itself out to be, the agent, employee, joint venturer or partner of the other party.

13.24   Dispute Resolution.

  Any controversy, dispute, or claim of any nature arising out of, in connection with, or in relation to the interpretation, performance, enforcement or breach of this Contract (and any closing document executed in connection herewith), including any claim based on contract, tort or statute, shall be resolved at the written request of any party to this Contract by binding arbitration.  The arbitration shall be administered in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association.  Any matter to be settled by arbitration shall be submitted to the American Arbitration Association in the Commonwealth of Pennsylvania.  The parties shall attempt to designate one arbitrator from the American Arbitration Association.  If they are unable to do so within 30 days after written demand therefor, then the American Arbitration Association shall designate an arbitrator.  The arbitration shall be final and binding, and enforceable in any court of competent jurisdiction.  The arbitrator shall award attorneys’ fees (including those of in-house counsel) and costs to the prevailing party and charge the cost of arbitration to the party which is not the prevailing party.  Notwithstanding anything herein to the contrary, this Section 
13.24 shall not prevent Purchaser or Seller from seeking and obtaining equitable relief on a temporary or permanent basis, including, without limitation, a temporary restraining order, a preliminary or permanent injunction or similar equitable relief, from a court of competent jurisdiction located in the Commonwealth of Pennsylvania (to which all parties hereto consent to venue and jurisdiction) by instituting a legal action or other court proceeding in order to protect or enforce the rights of such party under this Contract or to prevent irreparable harm and injury.  The court’s jurisdiction over any such equitable matter, however, shall be expressly limited only to the temporary, preliminary, or permanent equitable relief sought; all other claims initiated under this Contract between the parties hereto shall be determined through final and binding arbitration in accordance with this
Section 13.24.  Notwithstanding the foregoing, Purchaser may obtain restraining order from a court of competent jurisdiction.

13.25   AIMCO Marks.
   Purchaser agrees that Seller, the Property Manager or AIMCO, or their respective affiliates, are the sole owners of all right, title and interest in and to the AIMCO Marks (or have the right to use such AIMCO Marks pursuant to license agreements with third parties) and that no right, title or interest in or to the AIMCO Marks is granted, transferred, assigned or conveyed as a result of this Contract.  Purchaser further agrees that Purchaser will not use the AIMCO Marks for any purpose.

13.26   Non-Solicitation of Employees.

 Seller acknowledges and agrees that, without the express written consent of Purchaser, neither Seller or any of Seller’s employees, affiliates or agents shall solicit any of Seller’s employees or any employees located at the Property (or any of Seller’s affiliates’ employees located at any property owned by such affiliates) for potential employment by Seller for one (1) year after the Closing, unless such solicitation is for a property located outside of the Commonwealth of Pennsylvania and the State of New Jersey.  Notwithstanding the foregoing, such limitation shall not apply to any employees which are not employed by Purchaser within one week of the Closing Date or any employees who quit or are terminated by Purchaser after the Closing Date.

13.27   Survival.

  Except for (a) all of the provisions of this Article XIII (other than
Sections 13.18 and 13.20); (b) Sections 2.3, 3.3, 3.4, 3.5, 4.7.5, 4.7.6,
5.4, 5.5, 6.2, 6.5, 9.1, 11.4, 14.1, and 14.2; (c) any other provisions in this Contract, that by their express terms survive the termination or Closing; and (d) any payment obligation of Purchaser under this Contract (the
foregoing (a), (b), (c) and (d) referred to herein as the “Survival Provisions”), none of the terms and provisions of this Contract shall survive the termination of this Contract, and if the Contract is not so terminated, all of the terms and provisions of this Contract (other than the Survival Provisions, which shall survive the Closing) shall be merged into the Closing documents and shall not survive Closing.

13.28   Multiple Purchasers.
   As used in this Contract, the term “
Purchaser” means all entities acquiring any interest in the Property at the Closing, including, without limitation, any assignee(s) of the original Purchaser pursuant to
Section 13.3 of this Contract.  In the event that “Purchaser” has any obligations or makes any covenants, representations or warranties under this Contract, the same shall be made jointly and severally by all entities being a Purchaser hereunder.

13.29   Zoning Classification.
   Seller and Purchaser acknowledge that the zoning classification of the Property is HR (High Density Residential). 

ARTICLE XIV

LEAD–BASED PAINT DISCLOSURE
 
14.1     Disclosure.

  Seller and Purchaser hereby acknowledge delivery of the Lead Based Paint Disclosure attached as Exhibit H hereto.

14.2     Consent Agreement.

  Testing (the “
Testing”) has been performed at the Property with respect to lead-based paint.  Law Engineering and Environmental Services performed the Testing and reported its findings in the Lead-Based Paint Evaluation Report dated March 3, 2003 (the “
Report”).  The Report certifies the Property as lead-based paint free.  By execution hereof, Purchaser acknowledges receipt of a copy of the Report, the Lead-Based Paint Disclosure Statement attached hereto as
Exhibit H, and acknowledges receipt of that certain Consent Agreement (the “Consent Agreement”) by and among the United States Environmental Protection Agency (executed December 19, 2001), the United States Department of Housing and Urban Development (executed January 2, 2002), and AIMCO (executed December 18, 2001).  Because the Property has been certified as lead-based paint free, Seller is not required under the Consent Agreement to remediate or abate any lead-based paint condition at the Property prior to the Closing.  Purchaser acknowledges and agrees that (1) after Closing, Purchaser and the Property shall be subject to the Consent Agreement and the provisions contained herein related thereto and (2) that Purchaser shall not be deemed to be a third party beneficiary to the Consent Agreement.

[Remainder of Page Intentionally Left Blank]

NOW, THEREFORE, the parties hereto have executed this Contract as of the date first set forth above.

Seller:

NATIONAL PROPERTY INVESTORS 4, a California limited partnership

 
 By:    NPI EQUITY INVESTMENTS, INC., a Florida corporation, its general partner

 
 By: 
/s/Brian J. Bornhorst
 Name:  Brian J. Bornhorst

Title:  Vice President

 
 
Purchaser:

PENNBROOK HATZLACH, L.P., a Pennsylvania limited partnership

By:   PENNBROOK TOV MEOD CORP., a Pennsylvania corporation, its general partner

 
 By: 
/s/Jeremy Rieder
 Name:  Jeremy Rieder

Title:  President

  

Guarantor, as to Section 4.9.3 only:

ONYX PARTNERS LLC
, a New Jersey limited liability company
 By: 
/s/Jeremy Rieder
 Name:  Jeremy Rieder

Title:  President

 
SCHEDULE 1
 
1.DEFINED TERMS

1.1.            “
ADA” shall have the meaning set forth in Section 13.21.
 
1.2.            “
AIMCO” means Apartment Investment and Management Company.
 
1.3.            “
AIMCO Marks” means all words, phrases, slogans, materials, software, proprietary systems, trade secrets, proprietary information and lists, and other intellectual property owned or used by Seller, the Property Manager, or AIMCO in the marketing, operation or use of the Property (or in the marketing, operation or use of any other properties managed by the Property Manager or owned by AIMCO or an affiliate of either Property Manager or AIMCO).

1.4.            “
Assignment and Assumption of Collective Bargaining Agreement” shall have the meaning set forth in
Section 4.9.2.
 
1.5.            “
Assumed Mortgages” means, collectively, the First Mortgage, the Second Mortgage and the Third Mortgage.

1.6.            “
Assumed Encumbrances” means the Assumed Mortgages and certain other security and related documents in connection with the Loans.

1.7.            “
Assumed Loan Documents” means the Notes, the Assumed Encumbrances and any other documents executed by Seller in connection with the Loans.

1.8.            “
Broker” shall have the meaning set forth in Section 9.1.
 
1.9.            “
Business Day” means any day other than a Saturday or Sunday or Federal holiday or legal holiday in the States of Colorado, New York or Pennsylvania.

1.10.        “
Closing” means the consummation of the purchase and sale and related transactions contemplated by this Contract in accordance with the terms and conditions of this Contract.

1.11.        “
Closing Date” means the date on which date the Closing of the conveyance of the Property is required to be held pursuant to
Section 5.1.
 
1.12.        “
Code” shall have the meaning set forth in Section 2.3.6.
 
1.13.        “
Co-Insurer” shall have the meaning set forth in Section 4.1.
 
1.14.        “
Collective Bargaining Agreement” shall have the meaning set forth in Section 4.9.1.

1.15.        “
Consent Agreement” shall have the meaning set forth in Section 14.2.

1.16.        “
Consultants” shall have the meaning set forth in Section 3.1.

1.17.        “
Damage Notice” shall have the meaning set forth in Section 11.1.
 
1.18.        “
Deed” shall have the meaning set forth in Section 5.2.1.
 
1.19.        “
Deposit” shall have the meaning set forth in Section 2.2.1.
 
1.20.        “
Designated Employees” shall have the meaning set forth in Section 6.4.

1.21.        “
ERISA” shall the meaning set forth in Section 4.9.2.
 
1.22.        “
Escrow Agent” shall have the meaning set forth in Section 2.2.1.

1.23.        “
Excluded Permits” means those Permits which, under applicable law, are nontransferable and such other Permits, if any, as may be designated as Excluded Permits on
Schedule 2.
 
1.24.        “
Existing Survey” shall have the meaning set forth in Section 4.2.

1.25.        “
Feasibility Period” shall have the meaning set forth in Section 3.1.

1.26.        “
FHA” shall have the meaning set forth in Section 13.21.
 
1.27.        “
Fixtures and Tangible Personal Property” means all fixtures, furniture, furnishings, fittings, equipment, machinery, apparatus, appliances and other articles of tangible personal property located on the Land or in the Improvements as of the Effective Date and used or usable in connection with the occupation or operation of all or any part of the Property, but only to the extent transferable.  The term “Fixtures and Tangible Personal Property” does not include (a) equipment leased by Seller and the interest of Seller in any equipment provided to the Property for use, but not owned or leased by Seller, or (b) property owned or leased by any Tenant or guest, employee or other person furnishing goods or services to the Property, or (c) property and equipment owned by Seller, which in the ordinary course of business of the Property is not used exclusively for the business, operation or management of the Property, or (d) the property and equipment, if any, expressly identified in
Schedule 3.
 
1.28.        “
General Assignment” shall have the meaning set forth in Section 5.2.3.

1.29.        “
Good Funds” shall have the meaning set forth in Section 2.2.1.

1.30.        “
Improvements” means all buildings and improvements located on the Land taken “as is.”

1.31.        “
Information Statement” shall have the meaning set forth in Section 8.2.6.

1.32.        “
Inspections” shall have the meaning set forth in Section 3.1.

1.33.        “
Land” means all of those certain tracts of land located in the Commonwealth of Pennsylvania described on
Exhibit A, and all rights, privileges and appurtenances pertaining thereto, as more particularly described in the Deed.

1.34.        “
Lease(s)” means the interest of Seller in and to all leases, subleases and other occupancy contracts, whether or not of record, which provide for the use or occupancy of space or facilities on or relating to the Property and which are in force as of the Closing Date for the Property.

1.35.        “
Leases Assignment” shall have the meaning set forth in Section 5.2.4.

1.36.        “
Lenders” means collectively, the respective holders of the First Note and First Mortgage, the Second Note and the Second Mortgage and the Third Note and the Third Mortgage, namely, Federal Home Loan Mortgage Corporation, Capmark Finance Inc. and Capmark Bank.

1.37.        “
Liquidated Sum Title Exceptions” shall have the meaning set forth in Section 4.5.2.

1.38.        “
Loans” shall have the meaning set forth in Section 4.7.1.
 
1.39.        “
Lender Fees” shall have the meaning set forth in Section 4.7.5.

1.40.        “
Loan Assumption Application” shall have the meaning set forth in Section 4.7.3.

1.41.        “
Loan Assumption Application Submittal Deadline” shall have the meaning set forth in
Section 4.7.3.
 
1.42.        “
Loan Assumption and Release” shall have the meaning set forth in Section 4.7.2.

1.43.        “
Loan Balance” shall have the meaning set forth in Section 2.2.2.

1.44.        “
Losses” shall have the meaning set forth in Section 3.4.1.
 
1.45.        “
Materials” shall have the meaning set forth in Section 3.5.
 
1.46.        “
Miscellaneous Property Assets” means all contract rights, leases, concessions, warranties, plans, drawings and other items of intangible personal property relating to the ownership or operation of the Property and owned by Seller, excluding, however, (a) receivables, (b) Property Contracts, (c) Leases, (d) Permits, (e) cash or other funds, whether in petty cash or house “banks,” or on deposit in bank accounts or in transit for deposit, (f) refunds, rebates or other claims, or any interest thereon, for periods or events occurring prior to the Closing Date, (g) utility and similar deposits, (h) insurance or other prepaid items, (i) Seller’s proprietary books and records, or (j) any right, title or interest in or to the AIMCO Marks.  The term “Miscellaneous Property Assets” also shall include all of Seller’s rights, if any, in and to the name “
Village at Pennbrook” as it relates solely to use in connection with the Property (and not with respect to any other property owned or managed by Seller, Property Manager, AIMCO, or their respective affiliates).

1.47.        “
New Exception” shall have the meaning set forth in Section 4.6.

1.48.        “
New Exception Review Period” shall have the meaning set forth in Section 4.6.

1.49.        “
Notes” means, collectively, the First Note, the Second Note and the Third Note.

1.50.        “
Pension Plan” shall have the meaning set forth in Section 4.9.2.
 
1.51.        “
Permits” means all licenses and permits granted by any governmental authority having jurisdiction over the Property owned by Seller and required in order to own and operate the Property.

1.52.        “
Permitted Exceptions” shall have the meaning set forth in Section 4.4.

1.53.        “
Prohibited Person” means any of the following:  (a) a person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, Executive Order No. 13224 on Terrorist Financing (effective September 24, 2001) (the “
Executive Order”); (b) a person or entity owned or controlled by, or acting for or on behalf of any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (c) a person or entity that is named as a “specially designated national” or “blocked person” on the most current list published by the U.S. Treasury Department’s Office of Foreign Assets Control (“
OFAC”) at its official website, http://www.treas.gov/offices/enforcement/ofac; (d) a person or entity that is otherwise the target of any economic sanctions program currently administered by OFAC; or (e) a person or entity that is affiliated with any person or entity identified in clause (a), (b), (c) and/or (d) above.

1.54.        “
Property” means (a) the Land and Improvements and all rights of Seller, if any, in and to all of the easements, rights, privileges, and appurtenances belonging or in any way appertaining to the Land and Improvements, (b) the Property Contracts, Leases, Permits (other than Excluded Permits), and the right, if any, of Seller in and to the Fixtures and Tangible Personal Property, and (c) the Miscellaneous Property Assets owned by Seller which are located on the Property and used in its operation.

1.55.        “
Property Contracts” means all contracts, agreements, equipment leases, purchase orders, maintenance, service and similar contracts, excluding Leases, regardless of whether entered into by Seller, Property Manager, or an affiliate of either, which relate to the ownership, maintenance, construction or repair and/or operation of the Property, whether or not assignable by their terms, but not including (a) any national contracts entered into by Seller, Property Manager, or AIMCO with respect to the Property (i) which terminate automatically upon transfer of the Property by Seller, or (ii) which Seller, in Seller’s sole discretion, elects to terminate with respect to the Property effective as of the Closing Date, or (b) any cellular phone contract or property management contract for the Property.  Property Contracts shall not include forward or similar long-term contracts to purchase electricity, natural gas, or other utilities, which contracts shall be “
Utility Contracts” governed by the provisions of Section 5.4.11.

1.56.        “
Property Contracts List” shall have the meaning set forth in Section 3.5.4.

1.57.        “
Property Contracts Notice” shall have the meaning set forth in Section 3.6.

1.58.        “
Property Manager” means the current property manager of the Property.
 
1.59.        “
Proration Schedule” shall have the meaning set forth in Section 5.4.1.

1.60.        “
Purchase Price” means the consideration to be paid by Purchaser to Seller for the purchase of the Property pursuant to
Section 2.2.
 
1.61.        “
Purchaser Party” shall have the meaning set forth in Section 4.9.3.

1.62.        “
Records Disposal Notice” shall have the meaning set forth in Section 5.4.12.

1.63.        “
Records Hold Period” shall have the meaning set forth in Section 5.4.12.

1.64.        “
Rent-Ready Condition” means interior carpets have been shampooed and cleaned, interior walls have been freshly painted, kitchen appliances (and water heaters and HVAC to the extent such items serve only the individual tenant unit(s)) are in working order, and there is no material damage to the doors, walls, ceilings, floors and windows inside such tenant units. 

1.65.        “
Rent Roll” shall have the meaning set forth in Section 3.5.3.

1.66.        “
Repairs” shall have the meaning set forth in Section 11.1.
 
1.67.        “
Report” shall have the meaning set forth in Section 14.2.
 
1.68.        “
Required Assignment Consent” shall have the meaning set forth in Section 3.6.

1.69.        “
Required Loan Fund Amounts” shall have the meaning set forth in Section 4.7.2.2.

1.70.        “
SEC” shall have the meaning set forth in Section 8.2.6.
 
1.71.        “
Seller’s Indemnified Parties” shall have the meaning set forth in Section 
3.4.1.
 
1.72.        “
Seller’s Property-Related Files and Records” shall have the meaning set forth in
Section 5.4.12.
 
1.73.        “
Seller’s Representations” shall have the meaning set forth in Section 
6.1.
 
1.74.        “
Specific AIMCO Provisions “ shall have the meaning set forth in Section 4.7.2.

1.75.        “
Survey” shall have the meaning ascribed thereto in Section 4.2.

1.76.        “
Survival Period” shall have the meaning set forth in Section 6.3.

1.77.        “
Survival Provisions” shall have the meaning set forth in Section 13.27.

1.78.        “
Tenant” means any person or entity entitled to occupy any portion of the Property under a Lease.

1.79.        “
Tenant Deposits” means all security deposits, prepaid rentals, cleaning fees and other refundable deposits and fees collected from Tenants, plus any interest accrued thereon, paid by Tenants to Seller pursuant to the Leases.  Tenant Deposits shall not include any non-refundable deposits or fees paid by Tenants to Seller, either pursuant to the Leases or otherwise.

1.80.        “
Tenant Security Deposit Balance” shall have the meaning set forth in Section 
5.4.6.2.
 
1.81.        “
Terminated Contracts” shall have the meaning set forth in Section 3.6.

1.82.        “
Testing” shall have the meaning set forth in Section 14.2.
 
1.83.        “
Third-Party Reports” means any reports, studies or other information prepared or compiled for Purchaser by any Consultant or other third-party in connection with Purchaser’s investigation of the Property.

1.84.        “
Title Commitment” shall have the meaning set forth in Section 4.1.

1.85.        “
Title Documents” shall have the meaning set forth in Section 4.1.

1.86.        “
Title Insurer” shall have the meaning set forth in Section 2.2.1.

1.87.        “
Title Policy” shall have the meaning set forth in Section 4.1.

1.88.        “
UGI” shall have the meaning set forth in Section 5.4.11.
 
1.89.        “
Uncollected Rents” shall have the meaning set forth in Section 5.4.6.1.

1.90.        “
Union” shall have the meaning set forth in Section 4.9.1.
 
1.91.        “
Utility Contract “ shall have the meaning set forth in Section 5.4.11.

1.92.        “
Vendor Terminations” shall have the meaning set forth in Section 3.6.ex4-1.htm

 

EXHIBIT 4.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of July 24, 2009, between CytRx Corporation, a Delaware corporation (the “Company”), and each purchaser identified on
the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

 

ARTICLE I.

 

DEFINITIONS

 

1.1            Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

 

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.5.

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, “controls” or is “controlled by” or is “under common control” with a Person as such terms are used in and construed under Rule 405
under the Securities Act.

 

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

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities, in each case, have been satisfied or waived.

 

“Commission” means the United States Securities and Exchange Commission.

 

  

  

  

 “Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Company Counsel” means TroyGould PC, with offices located at 1801 Century Park East, Suite 1600, Los Angeles, California 90067.

 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

 

“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors
or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange
price or conversion price of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds,
but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

“FDA” shall have the meaning ascribed to such term in Section 3.1(gg).

 

“FDCA” shall have the meaning ascribed to such term in Section 3.1(gg).

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(z).

 

  

  

  

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

 

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).

 

“Per Share Purchase Price” equals $1.3113, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement and on or prior to the Closing Date.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Pharmaceutical Product” shall have the meaning ascribed to such term in Section 3.1(gg).

 

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

“Prospectus” means the final prospectus included in the Registration Statement.

 

“Prospectus Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the Commission and delivered by the Company to each Purchaser at the Closing.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.

 

“Registration Statement” means the effective registration statement, as amended, filed with the Commission (File No. 333-147605), which registers the sale of the Shares, the Warrants and the Warrant Shares to the Purchasers.

 

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

  

  

  

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and
effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities” means the Shares, the Warrants and the Warrant Shares.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Shares” means the shares of Common Stock sold to each Purchaser pursuant to this Agreement.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include merely locating and/or reserving of borrowable shares of Common Stock).

 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Shares and Warrants purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.

 

“Subsidiary” means any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct
the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred), are held by the Company or one or more of its Subsidiaries, and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York
Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Warrants and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means American Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address of 59 Maiden Lane, New York,

 

  

  

  

New York 20038 and a facsimile number of (718) 236-4588, and any successor transfer agent of the Company.

 

 “Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.12(b).

 

“Warrants” means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be exercisable immediately and have a term of exercise equal to 5 years, in the form of Exhibit
A attached hereto.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

 

“WS” means Weinstein Smith LLP with offices located at 420 Lexington Avenue, Suite 2620, New York, New York 10170-0002.

 

ARTICLE II.

 

PURCHASE AND SALE

 

2.1           Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the
Company agrees to sell, and the Purchasers, severally and not jointly,  agree to purchase, up to an aggregate of $20,000,000 of Shares and Warrants.  Each Purchaser shall deliver to the Company, via wire transfer of immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliver to each Purchaser its respective Shares and a Warrant as determined pursuant to Section 2.2(a), and
the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing.  Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of WS or such other location as the parties shall mutually agree.

 

2.2           Deliveries.

 

(a)           On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i)           this Agreement duly executed by the Company;

 

(ii)           a legal opinion of Company Counsel, substantially in the form of Exhibit B attached hereto;

 

(iii)           a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver via the Depository Trust Company Deposit Withdrawal Agent Commission System (“DWAC”)
Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser;

 

  

  

  

(iv)           a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 25% of such Purchaser’s Shares with an exercise price equal to $1.70,
subject to adjustment therein (such Warrant certificate may be delivered within three Trading Days of the Closing Date); and

 

(v)           the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).

 

(b)           On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i)           this Agreement duly executed by such Purchaser; and

 

(ii)           such Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company.

 

2.3           Closing Conditions.

 

(a)           The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)           the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein);

 

(ii)           all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

 

(iii)           the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

(b)           The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)           the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein);

 

(ii)           all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

 

(iii)           the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

 

(iv)           there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

 

  

  

  

(v)           from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension
shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.

 

ARTICLE III.

 

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations and Warranties of the Company.  Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or
otherwise made herein to the extent of the disclosure, the Company hereby makes the following representations and warranties to each Purchaser:

 

(a)           Subsidiaries.  All of the direct and indirect Subsidiaries of the Company are set forth on Schedule 3.1(a).  The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.  If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

 

(b)           Organization and Qualification.  The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction
of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.

 

  

  

  

(c)           Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith other than in connection with the Required Approvals.  Each
Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(d)           No Conflicts.  The execution, delivery and performance by the Company of the Transaction Documents, the issuance and sale of the Securities and the consummation by it of the transactions contemplated
hereby and thereby to which it is a party do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights
of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

  

  

  

(e)           Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) application(s) to each applicable Trading Market for the listing of the Securities for trading thereon in the time and manner required thereby and (iv) such filings as are required to
be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(f)           Issuance of the Securities; Registration.  The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement and the Warrants. The Company has prepared and filed the Registration Statement in
conformity with the requirements of the Securities Act, which became effective on July 23, 2009 (the “Effective Date”), including the Prospectus, and such amendments and supplements thereto as may have been required to the date of this Agreement.  The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing
the use of the Prospectus has been issued by the Commission and no proceedings for that purpose have been instituted or, to the knowledge of the Company, are threatened by the Commission.  At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain
any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at time the Prospectus or any amendment or supplement thereto was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

  

  

  

(g)           Capitalization.  The capitalization of the Company is as set forth on Schedule 3.1(g).  The Company has not issued any
capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act.  No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as disclosed in the SEC Reports, and except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person
any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Securities.  There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(h)           SEC Reports; Financial Statements.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, together with the Prospectus and the Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a timely
basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and

 

  

  

  

regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

 (i)           Material Changes; Undisclosed Events, Liabilities or Developments.  Except as set forth on Schedule 3.1(i), since the date
of the latest financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option plans.  Except as set forth or reflected in the SEC Reports, the Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability, fact, circumstance, occurrence or development has occurred or exists
or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective business, properties, operations, assets or financial condition that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

 

(j)           Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary
or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result
in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.  The
Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

  

  

  

(k)           Labor Relations.  No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result
in a Material Adverse Effect.  None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good.  No executive officer, to the knowledge of the Company, is, or is now expected to be,
in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all U.S. federal, state,
local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(l)           Compliance.  Except as set forth on Schedule 3.1(l), neither the Company nor any Subsidiary: (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation
of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(m)           Regulatory Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary
to conduct their respective businesses as currently conducted as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(n)           Title to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned
by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

  

  

  

(o)           Patents and Trademarks.  Except as set forth on Schedule 3.1(o), the Company and the Subsidiaries have, or have rights to use,
all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as described, and subject to the relevant risks contained, in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”).  Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(p)           Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the
businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount.  Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without an increase in cost which would have a Material
Adverse Effect.

 

(q)           Transactions With Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees
of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

 

  

  

  

(r)           Sarbanes-Oxley; Internal Accounting Controls.  The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002, which are applicable to it as of the date hereof.  Except
as set forth in the SEC Reports, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented
in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control
over financial reporting.

 

(s)           Certain Fees.  Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.  The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(t)           Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

 

(u)           Registration Rights.  Except as set forth in the SEC Reports, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

 

  

  

  

(v)           Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  Except as set forth in the SEC Reports, the Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market.  Except as set forth in the SEC Reports, the Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

 

(w)           Application of Takeover Protections.  The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities
and the Purchasers’ ownership of the Securities.

 

(x)           Disclosure.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting
on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the Prospectus Supplement.   The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.  All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding
the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not 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 therein, in light of the circumstances under which they were made and when made, not misleading.  The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

  

  

  

(y)           No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its
or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

(z)           Solvency.  Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities
hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted
by the Company, and projected capital requirements and capital availability thereof, and (iii) the current cash and cash equivalents of the Company, together with the proceeds the Company would receive were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid.  The Company does not intend to incur debts beyond its ability to pay such debts as
they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).  The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.  Schedule 3.1(z) sets forth as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments.  For the purposes of this Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether
or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.  Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

 

(aa)           Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed
all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.

 

  

  

  

(bb)           Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(cc)           Accountants.  The Company’s accounting firm is set forth on Schedule 3.1(cc) of the Disclosure Schedules.  To
the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the year ending December 31, 2009.

 

(dd)            Acknowledgment Regarding Purchasers’ Purchase of Securities.  The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length
purchaser with respect to the Transaction Documents and the transactions contemplated thereby.  The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely
incidental to the Purchasers’ purchase of the Securities.  The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

 

(ee)           Acknowledgement Regarding Purchaser’s Trading Activity.  Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except
for Sections 3.2(e) and 4.14 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers have been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation,
Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) each Purchaser shall not be deemed to have any affiliation with or
control over any arm’s length counter-party in any “derivative” transaction.  The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value
of the existing stockholders' equity interests in the Company at and after the time that the hedging activities are being conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

 

  

  

  

(ff)           Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization
or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for,purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities.

 

(gg)           FDA.  As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under the Federal
Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical Product”), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed
by the Company in compliance with all applicable requirements under FDCA and similar laws, rules and regulations relating to registration, investigational use, premarket clearance, licensure, or application approval, good manufacturing practices, good laboratory practices, good clinical practices, product listing, quotas, labeling, advertising, record keeping and filing of reports, except where the failure to be in compliance would not have a Material Adverse Effect.  There is no pending, completed
or, to the Company's knowledge, threatened, action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint, or investigation) against the Company or any of its Subsidiaries, and, except as set forth in the SEC Reports, none of the Company or any of its Subsidiaries has received any notice, warning letter or other communication from the FDA or any other governmental entity, which (i) contests the premarket clearance, licensure, registration, or approval of, the
uses of, the distribution of, the manufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional materials relating to, any Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries, (iv) enjoins production at any facility of the Company
or any of its Subsidiaries, (v) enters or proposes to enter into a consent decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules or regulations by the Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have a Material Adverse Effect.  The properties, business and operations of the Company have been and are being conducted in all material respects in accordance with all applicable
laws, rules and regulations of the FDA, except where the failure to do so would not have a Material Adverse Effect. Except as set forth in the SEC Reports, the Company has not been informed by the FDA that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced or marketed by the Company nor has the FDA expressed any concern as to approving or clearing for marketing any product being developed or proposed to be developed by the Company.

 

  

  

  

3.2           Representations and Warranties of the Purchasers.  Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the
Company as follows (unless as of a specific date therein):

 

(a)           Organization; Authority.  Such Purchaser is either an individual or an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with
full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser.  Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b)           Own Account.  Such Purchaser is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation
of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities
in compliance with applicable federal and state securities laws).  Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)           Purchaser Status.  At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it will be either: (i) an
“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.  Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

 

(d)           Experience of Such Purchaser.  Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.  Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

  

  

  

(e)           Certain Transactions and Confidentiality.  Other than consummating the transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding
with such Purchaser, directly or indirectly, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.  Notwithstanding the foregoing, in the case of a Purchaser that
is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.  Other
than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar
transactions in the future.

 

The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document
or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

 

ARTICLE IV.

 

OTHER AGREEMENTS OF THE PARTIES

 

4.1           Warrant Shares.  If all or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the issuance or resale of the Warrant Shares or if the Warrant
is exercised via cashless exercise, the Warrant Shares issued pursuant to any such exercise shall be issued free of all legends.  If at any time following the date hereof the Registration Statement is not effective or is not otherwise available for the sale or resale of the Warrant Shares, the Company shall immediately notify the holders of the Warrants in writing that such registration statement is not then effective and thereafter shall promptly notify such holders when the registration statement
is effective again and available for the sale or resale of the Warrant Shares (it being understood and agreed that the foregoing shall not limit the ability of the Company to issue, or any Purchaser to sell, any of the Warrant Shares in compliance with applicable federal and state securities laws).  The Company shall use best efforts to keep a registration statement (including the Registration Statement) registering the issuance or resale of the Warrant Shares effective during the term of the Warrants.

 

  

  

  

4.2           Furnishing of Information.  As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers
and make publicly available in accordance with Rule 144(c) such information, if any, as is required for the Purchasers to sell the Securities, including without limitation, under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act, including without limitation, within the requirements of the exemption
provided by Rule 144.

 

4.3           Integration.  The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

4.4           Securities Laws Disclosure; Publicity.  The Company shall, by 8:30 a.m. (New York City time) on the Trading Day immediately following the date hereof, file with the Commission a Current Report
on Form 8-K, including this Agreement as an exhibit thereto, and issue a press release disclosing the material terms of the transactions contemplated hereby.  From and after the issuance of such press release, the Company shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents.  The
Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed,
except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.  Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (a) as required by federal securities law in connection
with the filing of final Transaction Documents (including signature pages thereto) with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

4.5           Shareholder Rights Plan.  No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any
control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

 

  

  

  

4.6           Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it,
nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement with the Company regarding the confidentiality and use of such information.  The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

4.7           Use of Proceeds.  Except as set forth on Schedule 4.7, the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital purposes and shall not use such proceeds for: (a) the satisfaction of any portion of the Company’s Indebtedness, (b) the redemption of any Common Stock or Common Stock Equivalents or (c) the settlement of any outstanding litigation.

 

4.8           Indemnification of Purchasers.   Subject to the provisions of this Section 4.8, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or
any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser may have with any such stockholder or any violations by such Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have
the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable written opinion of counsel to the Purchasers furnished to the Company, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company

 

  

  

  

shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed;
or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.

 

4.9           Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares
of Common Stock for the purpose of enabling the Company to issue the Shares pursuant to this Agreement and the Warrant Shares pursuant to any exercise of the Warrants.

 

4.10           Listing of Common Stock. The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on the Trading
Market on which it is currently listed, and concurrently with the Closing, the Company shall apply to list or quote all of the Shares and Warrant Shares on such Trading Market and promptly secure the listing of all of the Shares and Warrant Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will then include in such application all of the Shares and Warrant Shares, and will take such other action as is necessary to
cause all of the Shares and Warrant Shares to be listed or quoted on such other Trading Market as promptly as possible.  The Company will then take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

 

4.11           [RESERVED].

 

4.12           Subsequent Equity Sales.

 

(a)           From the date hereof until 30 days after the Closing Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents for an effective price
per share of Common Stock equal to or less than the Per Share Purchase Price.

 

  

  

  

(b)           From the date hereof until such time as no Purchaser holds any of the Securities, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents
for cash consideration (or a combination of units hereof) involving a Variable Rate Transaction.  “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any
agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price.  Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.

 

(c)           Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.

 

4.13           Equal Treatment of Purchasers.  No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification
of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents.  For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition
or voting of Securities or otherwise.

 

  

  

  

4.14           Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding
with it will execute any purchases or sales, including Short Sales of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4.  Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company pursuant to the initial press release as described in Section 4.4, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Disclosure Schedules.  Notwithstanding the foregoing and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting
transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release
as described in Section 4.4 and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.4.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

 

4.15            Delivery of Warrants After Closing.  The Company shall deliver, or cause to be delivered, the respective Warrant certificates purchased by each Purchaser to such Purchaser within 3 Trading Days
of the Closing Date.

 

  

  

  

ARTICLE V.

 

MISCELLANEOUS

 

5.1           Termination.  This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and
the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before July 31, 2009; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties).

 

5.2           Fees and Expenses.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 

5.3           Entire Agreement.  The Transaction Documents, together with the exhibits and schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.4           Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of:
(a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the
second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.5           Amendments; Waivers.  No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the
Purchasers holding at least 67% of the Shares then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder
in any manner impair the exercise of any such right.

 

  

  

  

5.6           Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

5.7           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement
or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger).  Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

5.8           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8.

 

5.9           Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with
the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City
of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.8, the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

  

  

  

5.10           Survival.  The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

 

5.11           Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

 

5.12           Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13           Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company within two Business Days of the Company’s failure to perform, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however,
that in the case of a rescission of an exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

 

  

  

  

5.14           Replacement of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution
for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

5.15           Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific
performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

5.16           Payment Set Aside.  To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder,
and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation
or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

5.17           Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser,
and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document.  Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect
to such obligations or the transactions contemplated by the Transaction Documents.  Each Purchaser shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  Each Purchaser has been represented by its own separate legal counsel in their review and
negotiation of the Transaction Documents.  For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through WS.  WS does not represent any of the Purchasers and only represents Rodman & Renshaw LLC.  The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.

 

  

  

  

5.18           Liquidated Damages.  The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and
shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

 

5.19           Saturdays, Sundays, Holidays, etc.                                                                If
the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

5.20           Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

5.21           WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT,
OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

 

(Signature Pages Follow)

 

  

  

  

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

	
CYTRX CORPORATION

 

 
	
Address for Notice:

11726 San Vicente Boulevard

Suite 650

Los Angeles, California 90049

Fax: 310-826-5449

	
By: /s/ STEVEN A. KRIEGSMAN

     Name: Steven A. Kreigsman

     Title: President and Chief Executive Officer

 
	  
	
With a copy to (which shall not constitute notice):

Sanford J. Hillsberg and Dale E. Short

TroyGould PC

1801 Century Park East, 16th Floor

Los Angeles, California 90067

Fax: 310-201-4746
	  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

  

  

  

[PURCHASER SIGNATURE PAGES TO CYTR SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: ________________________________________________________

Signature of Authorized Signatory of Purchaser: _________________________________

Name of Authorized Signatory: _______________________________________________

Title of Authorized Signatory: ________________________________________________

Email Address of Authorized Signatory:_________________________________________

Facsimile Number of Authorized Signatory: __________________________________________

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for notice):

Subscription Amount: $_________________

Shares: _________________

Warrant Shares: __________________

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

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