Document:

EX-10.1

CONTRACT OF SALE 

THIS CONTRACT OF SALE (this “Contract”) is made and entered as of the Effective Date
(as hereinafter defined) by and between DUNCANVILLE VILLAGES MULTIFAMILY, LTD., a Texas limited
partnership (“Seller”), and GRUBB & ELLIS APARTMENT REIT HOLDINGS, LP, a Virginia limited
partnership (“Buyer”).

For and in consideration of the mutual covenants and agreements contained in this Contract and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller agree as follows:

	1.	 	PURCHASE AND SALE. Seller agrees to sell and convey to Buyer, and Buyer agrees to
buy from Seller, the Property (hereinafter defined) for the consideration and upon and subject
to the terms, provisions and conditions hereinafter set forth. The “Property” means:

	 	(a)	 	The land situated in Duncanville, Dallas County, Texas, more particularly
described in Exhibit A to this Contract (the “Land”), together with
(i) the improvements situated on the Land commonly known as Bella Ruscello Apartments
and all other structures, fixtures, buildings and improvements situated on the Land
(such buildings, structures, fixtures and improvements being herein called the
“Improvements”), (ii) any and all rights, titles, powers, privileges,
easements, licenses, rights-of-way and interests appurtenant to the Land and the
Improvements, (iii) all rights, titles, powers, privileges, licenses, easements,
rights-of-way and interests, if any, of Seller, either at law or in equity, in
possession or in expectancy, in and to any real estate lying in the streets, highways,
roads, alleys, rights-of-way or sidewalks, open or proposed; in front of, above, over,
under, through or adjoining the Land and in and to any strips or gores of real estate
adjoining and related exclusively to the Land, and Seller shall reserve all such rights
and interests relating to other property immediately adjacent to the Property owned by
Seller as are reasonably necessary to develop and maintain the adjacent tract as a
retail shopping center, and (iv) all rights, titles, powers, privileges, interests,
licenses, easements and rights-of-way appurtenant or incident to any of the foregoing,
as well as all development rights, land use entitlements, air rights, water, water
rights, riparian rights, and water stock relating to the Land;

	 	(b)	 	All equipment, fixtures, appliances, inventory, and other personal property of
whatever kind or character owned by Seller and attached to or installed or located on
or in the Land or the Improvements and to the extent assignable, all leasehold interest
of Seller in and to any equipment, fixtures, appliances, inventory, and other personal
property of whatever kind or character leased by Seller and attached to or installed or
located on or in the Land or the Improvements including, but not limited to, any
furniture, furnishings, drapes and floor coverings, office equipment and supplies,
heating, lighting, refrigeration, plumbing, ventilating, incinerating, cooking,
laundry, communication, electrical, dishwashing, and air conditioning equipment,
disposals, window screens, storm windows, recreational equipment, pool equipment, patio
furniture, sprinklers, hoses, tools and lawn equipment, including any personal property
owned or, to the extent assignable, leased by the current property manager (the
“Personal Property”);

	 	(c)	 	All of Seller’s right, title and interest in and to all agreements, leases and
other agreements that relate to or affect the Land, the Improvements, the Personal
Property or the operation thereof, including, without limitation, tenant leases
(collectively, “Tenant Leases”) and all security deposits actually paid to or
received by Seller in connection therewith (and not as of the Closing Date returned to
or forfeited by tenants under Tenant Leases), service and maintenance contracts
(“Service Contracts”), warranties, guaranties, bonds, licenses and permits, but
only to the extent that such Service Contracts, warranties, guaranties, bonds, licenses
and permits are assignable by Seller without any necessary third party consent, or to
the extent that all necessary third party consents to such assignments have been
obtained (provided that Seller shall not be obligated to obtain such third party
consents); and

	 	(d)	 	To the extent assignable at no cost to Seller, all intangible personal
property, if any, owned by Seller and related to the Land and the Improvements,
including, without limitation, all trademarks, trade names, service marks, building and
property names (and building signs located on the Land, the Improvements or elsewhere
on the Property, including the monument sign located on the Property adjacent to
Highway 67), including the name “Bella Ruscello Apartments” and all variations thereof,
and all telephone numbers, domain name and, e-mail addresses utilized in connection
with or otherwise associated with the Land and the Improvements.

	2.	 	CONTRACT SALES PRICE. The total purchase price for the Property (the “Sales
Price”) shall be SEVENTEEN MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS
($17,400,000.00), payable in cash at Closing. Payment in cash means payment by wire transfer
of immediately available federal funds (“Immediately Available Funds”).

	3.	 	EARNEST MONEY. Within five (5) days of the Effective Date, Buyer shall deliver to
Chicago Title Company, 5501 LBJ Freeway, Suite 200, Dallas, Texas, 75240, Attention: Debby S.
Moore Phone: (214) 987-6789, the “Title Company”), as escrow agent, ONE HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($150,000.00) (by Immediately Available Funds) as earnest money
(the  “Deposit” or the “Earnest Money”), which funds shall be deposited and
held by the Title Company in an interest bearing account, and Buyer shall provide such
information, including its federal identification number, as is necessary to establish such
account. If Buyer does not timely deliver the Deposit as provided in this Section 3,
this Contract shall be null and void, and neither party shall have any rights or obligations
hereunder. If this Contract has not been terminated on or prior to the expiration of the
Feasibility Period, the Deposit will become non-refundable except as otherwise provided in
this Contract. If the transaction contemplated by this Contract is closed, then the Deposit
will be applied in payment of the Sales Price to be paid at Closing. In the event the
transaction is not closed, then the Title Company, shall disburse the Deposit in accordance
with the provisions of this Contract.

	4.	 	CLOSING.

	 	(a)	 	The closing of the sale of the Property to Buyer (the “Closing”) shall
take place at the Title Company on the date (the “Closing Date”) which is
thirty (30) days after the expiration of the Feasibility Period (hereinafter defined).
Buyer shall have a one-time right to extend the Closing Date thirty (30) days by
(i) notifying Seller in writing of such extension at least five (5) days prior to the
then-scheduled Closing Date, and (ii) simultaneously with delivery of the written
notice of extension to Seller, delivering to Seller (by Immediately Available Funds)
the additional sum of ONE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($150,000.00) (the
“Extension Fee”). Except as expressly provided in this Contract (including as
a result of default by Seller or failure of a condition to Closing under this
Contract), the Extension Fee shall be non-refundable to Buyer and shall be
unconditionally earned by Seller, as compensation to Seller for granting the extension
of the Closing Date; provided, however, the Extension Fee shall constitute part of the
Deposit and shall be applied to the Sales Price at Closing. If Buyer does not deliver
the written notice and the Extension Fee to Seller in the manner and within the time
period required above, then Buyer shall have waived its right to extend the Closing
Date.

	 	(b)	 	At the Closing, Seller shall deliver or cause to be delivered to Buyer, at
Seller’s sole cost and expense (except as otherwise provided in this
Section 4(b)), the following:

	 	(i)	 	A Special Warranty Deed, in the form attached hereto as
Exhibit B, duly executed and acknowledged by Seller, conveying good and
indefeasible title in fee simple to the Land and Improvements, free and clear
of any and all liens, encumbrances, easements and assessments, except for
Permitted Exceptions (hereinafter defined) and any others approved by Buyer in
writing;

	 	(ii)	 	A Bill of Sale, Assignment and Assumption Agreement (the
“Bill of Sale”), in the form attached hereto as Exhibit C, duly
executed and acknowledged by Seller;

	 	(iii)	 	An Assignment of Leases and Assumption Agreement (the
“Assignment and Assumption Agreement”), in the form attached hereto as
Exhibit D, duly executed and acknowledged by Seller;

	 	(iv)	 	An Owner’s Policy of Title Insurance (the “Owner’s Title
Policy”), delivered in due course by the Title Company after Closing, to be
issued by the Title Company on the standard form in use in the State of Texas,
in the full amount of the Sales Price, dated as of the Closing Date, insuring
Buyer’s fee simple title to the Land and Improvements to be good and
indefeasible subject only to Permitted Exceptions and others approved by Buyer
in writing, and the standard printed exceptions, provided, however:

	 	(1)	 	the exception as to area and boundaries may, at
the option and expense of Buyer, be deleted except for “any shortages
in area”;

	 	(2)	 	the standard exception as to restrictive
covenants shall either be deleted or except only for any restrictive
covenants that are Permitted Exceptions;

	 	(3)	 	the exception as to standby fees and taxes
shall be reasonably acceptable to Buyer and customary for comparable
properties in the state of Texas.

Any endorsements to the Owner’s Title Policy (except any Seller’s Curative
Endorsements, as hereinafter defined) shall also be at the sole cost and
expense of Buyer.

	 	(v)	 	Possession of the Property, subject only to the Tenant Leases
and the Permitted Exceptions;

	 	(vi)	 	A non-foreign affidavit, in the form attached hereto as
Exhibit E, duly executed and acknowledged by Seller;

	 	(vii)	 	A form of notice to all tenants of the Property (“Tenant
Notice Letter”) duly executed by Seller, in the form attached as
Exhibit F;

	 	(viii)	 	Subject to the limitations of this Contract, a recertification of the
representations and warranties contained in Section 12; 

	 	(ix)	 	The most current Rent Roll (as hereinafter defined) available
to Seller;

	 	(x)	 	Evidence of its capacity and authority for the closing of this
transaction; and

	 	(xi)	 	Such other documents as may be reasonably required to close
this transaction, duly executed.

	 	(c)	 	At the Closing, Buyer shall perform and deliver, at Buyer’s sole cost and
expense, the following:

	 	(i)	 	The Sales Price in Immediately Available Funds (reduced by the
amount, if any, of the Deposit applied for that purpose);

	 	(ii)	 	The Assignment and Assumption Agreement duly executed and
acknowledged by Buyer;

	 	(iii)	 	The Tenant Notice Letters duly executed by Buyer;

	 	(iv)	 	Evidence of its capacity and authority for the closing of the
transaction contemplated herein; and

	 	(v)	 	Such other documents as may be reasonably required to close
this transaction, duly executed.

	 	(d)	 	Seller shall pay: the premium for the Owner’s Title Policy and the cost of any
Seller’s Curative Endorsements (except the premium of the area and boundary
modification (if any) and the cost of any other endorsements shall be paid entirely by
Buyer), 1/2 of any escrow fee; fees for preparation of the conveyance documentation;
Seller’s attorneys’ fees; any costs of preparing the New Survey (as hereinafter
defined) and other expenses stipulated to be paid by Seller under other provisions of
this Contract. Buyer shall pay: survey fees (excluding the costs of preparing the New
Survey but including any costs to update or recertify the New Survey including any
changes required by Purchaser’s lender), the costs of any endorsements related to the
Owner’s Title Policy (except the cost of any Seller’s Curative Endorsements), including
the modification of the survey exception, the cost of any mortgagee policy of title
insurance (including endorsements), 1/2 of any escrow fee; Buyer’s attorneys’ fees; and
other expenses stipulated to be paid by Buyer under other provisions of this Contract.

	 	(e)	 	Assessments, current taxes, collected rents and maintenance fees will be
prorated as of the Closing Date; provided, however, no prorations will be made for
delinquent rents existing as of the Closing. Proration of taxes will be made on the
basis of (i) the assessed value of the Land and Improvements for the year of Closing,
if known, or the assessed value of the Land and Improvements for the year before
Closing, if such value is not known, multiplied by (ii) the tax rates for the year of
Closing, if known, or the rates for the year before Closing, if not known, with a
subsequent cash adjustment of such proration to be made between Seller and Buyer, if
necessary, within 30 days of when actual tax figures are available. If any such
charges, expenses, and income other than taxes are unavailable at the Closing Date,
then a readjustment of these items shall be made within 30 days after the Closing.
With respect to any delinquent rentals, Buyer will make a reasonable attempt for 3
months following Closing (but shall not be obligated) to collect the same for Seller’s
benefit after the Closing in the usual course of the operation of the Property and such
collection, if any, will be remitted to Seller promptly upon receipt by Buyer in
accordance with the provisions for sums received by Buyer hereinbelow. Nothing
contained herein shall operate to require Buyer to institute any lawsuit or other
collection procedure to collect such delinquent rentals or to prohibit Seller from any
such collection. Any sums received by Buyer from any tenants owing delinquent rentals
will be applied first to the current portion of such tenant’s rent, then to any
delinquent rentals owed with respect to the period following Closing, and after payment
of any and all reasonable and customary costs of collection, then (and only then) to
delinquent rentals owed with respect to the period before Closing. Buyer additionally
agrees to pay or reimburse all usual and customary finder’s fees, commissions and the
like payable with respect to any Tenant Lease that (1) is executed after the Effective
Date and prior to the Closing Date; and (2) pursuant to which the tenant takes
occupancy of its unit on or after the expiration of the Feasibility Period. At the
Closing, Seller will pay to Buyer in cash the amount of any security deposits actually
paid to or received by Seller under the Tenant Leases (and not as of the Closing Date
returned to or forfeited by tenants under Tenant Leases) and any prepaid rentals
actually paid to or received by Seller for periods subsequent to the Closing; provided,
however, non-refundable payments, deposits, or fees (including pet fees/deposits)
collected by Seller shall not be prorated. In making the prorations required by this
Section 4, the economic burdens and benefits of ownership of the Property for
the Closing Date shall be allocated to Buyer. The provisions of this
Section 4(e) shall survive the Closing.

	 	(f)	 	Utilities and other customarily prorated expenses, including, without
limitation, water, sewer, gas, electricity, trash removal, and fire protection service,
and any contracts or agreements for services to the Property to be transferred to and
assumed by Buyer, to the extent paid for by Seller or required to be paid for by Seller
for a period after Closing, shall be prorated as of the Closing Date. Other expenses
relating to the Property up to the Closing Date and all periods prior thereto including
those required by any contract or agreement for any services to the Property and those
incurred or ordered by Seller or Seller’s agents that are not to be transferred and
assumed by Buyer, including, without limitation, insurance and administrative expenses,
shall be paid for by Seller, and Buyer shall not be liable therefor. Seller shall not
assign to Buyer, and Buyer shall not be entitled to, any deposits held by any utility
company or other company servicing the Property; instead, such deposits shall be
returned to Seller, and Buyer shall arrange and bear all responsibility to arrange with
all utility companies to have accounts styled in Buyer’s name beginning on the Closing
Date. The provisions of this Section 4(f) shall survive the Closing.

	 	(g)	 	At the Closing, Seller shall deliver to Buyer (or make available at the
Property), to the extent in Seller’s or Seller’s Manager’s possession or control,
originals of the Tenant Leases, copies of the tenant correspondence files, keys, access
codes, and originals of any other items which Seller was required to furnish or make
available pursuant to Section 7, including all books and records related to the
Property (other than Seller’s internal books and records related to management of
Seller’s partnership), except for Seller’s general ledger which shall be retained by
Seller but shall be made available to Buyer for review and copying..

	 	(h)	 	If any apartment unit is vacated five (5) days or more prior to Closing, then,
prior to Closing, Seller shall use commercially reasonable diligence to return such
unit to rentable condition in accordance with Seller’s customary cleaning, painting,
and repair standards for vacant units, including causing all appliances to be cleaned
and in working order (the condition of such an apartment unit after cleaning is
referred to herein as a “Rent Ready Condition”). Buyer shall receive a credit
for each unit that became vacant on a date that is five or more days prior to Closing
and that is not in Rent Ready Condition at Closing in the amount of Seven Hundred Fifty
and No/100 Dollars ($750.00) per unit.

	5.	 	FEASIBILITY STUDY, INSPECTION AND FINANCING.

	 	(a)	 	Buyer is granted the right to conduct engineering and/or market and economic
feasibility studies of the Property and a physical inspection of the Property,
including studies or inspections to determine the existence of any environmental
hazards or conditions (collectively, the “Feasibility Study”) during the period
(the “Feasibility Period”) commencing on the Effective Date and ending at
5:00 p.m., Dallas, Texas time on the date that is thirty (30) days after the Effective
Date. With Seller’s permission, after Seller has received advance notice sufficient to
permit it to schedule in an orderly manner Buyer’s examination of the Property and to
provide at least twenty-four (24) hours advance written notice to any affected tenants,
Buyer or its designated agents may enter upon the Property for purposes of analysis or
other tests and inspections deemed necessary by Buyer for the Feasibility Study;
provided, however, Buyer is not permitted to perform any intrusive testing, including,
without limitation, a Phase II environmental assessment or boring, without (i)
submitting to Seller the scope and inspections for such testing; and (ii) obtaining the
prior written consent of Seller which may be withheld in Seller’s sole and absolute
discretion. Buyer shall not alter the physical condition of the Property without
notifying Seller of its requested tests, and obtaining the written consent of Seller to
any physical alteration of the Property. Buyer will exercise its best efforts to
conduct or cause to be conducted all inspections and tests in a manner and at times
which will not unreasonably interfere with any tenant’s use and occupancy of the
Property. If Buyer determines, in its sole judgment, that the Property is not suitable
for any reason for Buyer’s intended use or purpose, or is not in satisfactory
condition, then Buyer may terminate this Contract by written notice to Seller prior to
expiration of the Feasibility Period in which case the Deposit shall be returned to
Buyer, and neither party shall have any further right or obligation hereunder other
than as set forth herein with respect to rights or obligations that survive
termination. If the Contract is not terminated in the manner and within the time
provided in this Section 5, the conditions provided in this
Section 5(a) and any and all objections with respect to the Feasibility Study
shall be deemed to have been waived by Buyer for all purposes, and at such time the
Deposit shall (i) be non-refundable to Buyer except as provided in this Contract
(including, without limitation, as a result of a default by Seller or failure of a
condition to Closing under this Contract, in which case the Depsoit shall be refunded
to Buyer immediately upon Buyer’s written demand to the Title Company therefor); and
(ii) be applicable to the Sales Price at Closing. The Feasibility Study shall be at
Buyer’s sole cost and expense.

	 	(b)	 	Buyer shall promptly restore the Property to its original condition if damaged
or changed due to the tests and inspections performed by Buyer, free of any mechanic’s
or materialman’s liens or other encumbrances arising out of any of the inspections or
tests, and shall provide Seller, at no cost to Seller, with a copy of the results of
any tests and inspections made by Buyer, excluding any market and economic feasibility
studies. Buyer shall keep confidential the results of any tests and inspections made
by Buyer, and shall not disclose said results to any third parties; other than Buyer’s
officers, directors, employees, affiliates, counsel, investment advisors, potential
lenders, partners, investors and participants and their advisors and other
representatives (collectively “Buyer Group”), and the Buyer Group shall be
informed to treat such information confidentially and in accordance with the terms and
conditions of this Contract. Buyer hereby indemnifies and holds Seller harmless from
all claims, liabilities, damages, losses, costs, expenses (including, without
limitation, reasonable attorneys’ fees), actions and causes of action arising out of or
in any way relating to the Feasibility Study performed by Buyer, its agents,
independent contractors, servants and/or employees, other than those caused by or in
any way contributed to by the negligence of Seller, its agents, independent
contractors, servants and/or employees; and further provided such indemnity shall not
extend to the gross negligence or willful misconduct of the Seller, its agents,
independent contractors, servants and/or employees. Buyer further waives and releases
any claims, demands, damages, actions, causes of action or other remedies of any kind
whatsoever against Seller for property damages or bodily and/or personal injuries to
Buyer, its agents, independent contractors, servants and/or employees arising out of
the Feasibility Study or use in any manner of the Property. Buyer shall procure and
continue in force from and after the date Buyer first enters the Property, and
continuing throughout the term of this Contract, Comprehensive General Liability
Insurance with a combined single limit of not less than One Million Dollars
($1,000,000) per occurrence, or Commercial General Liability Insurance, with limits of
not less than One Million Dollars ($1,000,000) per occurrence and Two Million Dollars
($2,000,000) per event. Seller shall be included as an additional insured(s) under
such comprehensive general liability or commercial general liability coverage. Such
insurance shall include: (i) personal injury liability with employee and contractual
exclusions removed; and (ii) a waiver of subrogation in favor of Seller without
exception for the negligence of any additional insured. Buyer will not be permitted to
come onto the Property unless and until Buyer has provided to Seller a certificate of
insurance evidencing such coverage, the additional insured status of Seller, and such
waiver of subrogation. The provisions of this Section 5(b) shall survive the
Closing or any termination of this Contract and are not subject to any liquidated
damage limitation on remedies, notwithstanding anything to the contrary in this
Contract.

	 	(c)	 	Within two (2) Business Days after the Effective Date,, Seller shall provide to
Buyer for review all Service Contracts provided by Seller. Buyer shall notify Seller
prior to the expiration of the Feasibility Period of those Service Contracts that it
disapproves, and Seller shall, at Seller’s expense, terminate such disapproved Service
Contracts effective not later than the Closing Date. All Service Contracts not
disapproved by Buyer during the Feasibility Period shall be deemed to have been
approved by Buyer, and Buyer shall assume and be liable for any and all obligations
under the respective Service Contracts extending past the Closing Date.
Notwithstanding the foregoing, Buyer shall be deemed to have approved and shall have no
right to reject those Service Contracts that, by their terms, cannot be terminated by
Seller without the payment of a penalty, termination fee, or other charge.

	 	(d)	 	Financing. Buyer shall submit to Berkadia Commercial Mortgage,
LLC (“Berkadia”) or, if Berkadia is unable to refinance the Property, such other lender
as may be reasonably acceptable to Buyer and Seller within ten (10) days from the
Effective Date (i) a written application for financing; and (ii) such financial
statements, credit and personal or business information or references as may be
reasonably requested by the Lender. Buyer shall diligently pursue financing approval
from the Lender, provided, however, that in no event shall Buyer be in default under
this Contract for failure to obtain financing.

	6.	 	TITLE APPROVAL.

	 	(a)	 	On or before fifteen (15) days after the Effective Date, Seller, at Seller’s
sole cost and expense, shall deliver to Purchaser a Title Insurance Commitment
(“Title Commitment”), issued by the Title Company, showing Seller’s title to
the Property to be good and indefeasible, together with true, correct and legible
copies of all items and documents referred to therein, and Buyer acknowledges receipt
of a draft of that certain Easement, Access and Water Rights Agreement for review and
comment (the “Easement Agreement”) that Seller proposes to file against the
Property. Within fifteen (15) days of the Effective Date, Seller shall, at
Seller’s sole cost and expense, provide to Buyer a current “as-built” survey (“New
Survey”). The New Survey must: (1) be prepared by a Registered Professional Land
Surveyor; (2) be in a form reasonably acceptable to the Title Company and Buyer’s
lender; (3) set forth a legal description of the Lands by metes and bounds or by
reference to a platted lot or lots; (4) show that the New Survey was made on the ground
with corners marked with monuments either found or placed; (5) show any discrepancies
or conflicts in boundaries, and any visible encroachments; (6) contain the surveyor’s
certificate that the Survey is true and correct; and (7) show the location and size of
all of the following on or immediately adjacent to the Land, if any, if recorded or
visible and apparent: (a) buildings, (b) building set back lines (as shown on any
recorded plat, but not as may be described in any restrictive covenants or zoning
ordinances), (c) streets and roads, (d) 100-year flood plain (approximate location),
(e) improvements, (f) encroachments, (g) easements, (h) recording information of
recorded easements, (i) pavements, (j) protrusions, (k) fences, (1) rights-of-way, and
(m) any markers or other visible evidence of utilities. Any area of the Property
within the 100-year flood plain will be shown on the Survey as the approximate location
of the 100-year flood plain as defined by the Federal Emergency Management Agency or
other applicable governmental authority. If Buyer has an objection to items disclosed
in the Commitment, the Easement Agreement or the New Survey, then Buyer will be
entitled to give Seller written notice of its objections for a period of ten (10)
Business Days following the receipt of the later of the Title Commitment or the New
Survey (the “Title Review Period”). If Buyer gives timely written notice of its
objections, then Seller may, but shall not have any obligation to, cure such objections
for a period of five (5) days from the date Seller receives Buyer’s notice
(“Seller’s Cure Period”). Seller shall utilize reasonable diligence to cure
any errors in the Commitment, provided Seller shall not have any obligation to expend
any money, to incur any contractual or other obligations, or to institute any
litigation in pursuing such efforts other than to remove at Closing financing liens of
an ascertainable amount created by, through, or under Seller; further provided,
notwithstanding the foregoing, Seller is required to cure any objection that may be
cured by performance of the following acts: (A) satisfaction of any mortgages placed
upon the Property by Seller or expressly assumed or taken subject to by Seller as a
lien to secure indebtedness; or (B) causing the release of any mechanic’s liens placed
upon the Property by a third party in connection with work performed or alleged to have
been performed on the Property by, or at the request of, Seller (collectively
“Monetary Encumbrances”). If reasonably acceptable to Buyer and its lender,
Seller may elect to cure an objection made by Buyer by causing the Title Company to
issue an endorsement to “insure over” such objection (“Seller’s Curative
Endorsement”). If any objection is not satisfied during Seller’s Cure Period, then
Buyer shall elect, by written notice to Seller delivered not later then five (5) days
after the expiration of Seller’s Cure Period, but in any event on or before expiration
of the Feasibility Period, as its sole and exclusive remedy to either: (i) terminate
this Contract and neither party will have any further rights or obligations pursuant to
this Contract, other than as set forth herein with respect to rights or obligations
that survive termination; or (ii) waive the unsatisfied objection (which shall
thereupon become a Permitted Exception) and proceed to Closing. Any exception to title
not objected to by Buyer in the manner and within the time period specified in this
Section 6(a) shall be deemed accepted by Buyer. Buyer and Seller shall
cooperate to negotiate such reasonably acceptable Easement Agreement during the Title
Review Period, and if the parties are unable to negotiate a final Easement Agreement
that is reasonably acceptable to Buyer and its lender, Buyer shall be entitled to
terminate this Contract. Buyer may, at Buyer’s sole cost and expense, obtain an update
of the New Survey (“Updated Survey”). If the Updated Survey shows exceptions
not previously shown on the New Survey (individually a “New Exception” and
collectively the “New Exceptions”), Buyer may object to such New Exceptions in
accordance with the mechanism contained in this Section 6(a); provided Buyer
shall have no right to object to any New Exception if the New Exception (i) is a
utility service easement (“Service Easement”) whereby the public utility
provides utility service to any portion of the Improvements and the Improvements do not
encroach into the boundaries of the Service Easement; or (ii) reflects the addition of
paving, sidewalks, pool decking or landscaping and such additional of paving,
sidewalks, pool decking or landscaping does not cause the Property to violate
applicable law or applicable restrictions. The phrase “Permitted Exceptions”
means those exceptions to title set forth in the Commitment or the New Survey or the
Updated Survey and that have been accepted or deemed accepted by Buyer. Buyer shall
notify Seller in writing of any failure of the Commitment or New Survey to satisfy the
requirements of this Section 6(a) within ten (10) days after the Commitment and
New Survey are received by Buyer, and if Buyer fails to do so, then they shall be
deemed to satisfy such requirements.

	 	(b)	 	After the Effective Date, Seller shall not intentionally or deliberately place
on the Property any encumbrance (references to “encumbrance” include any lien,
encumbrance, or other exception to title) other than new Tenant Leases as permitted by
the terms of this Contract. If prior to the Closing Date title to the Property becomes
subject to any encumbrance other than a Permitted Exception, then Seller may (but shall
not be obligated to) attempt to cure such encumbrance; provided Seller shall be
obligated to remove any Monetary Encumbrance. If Seller is unable or unwilling to cure
any such encumbrance, then Buyer may, as its sole and exclusive remedy either:
(i) terminate this Contract by written notice to Seller whereupon the Deposit and any
Extension Fee shall be returned to Buyer, and neither party will have any right or
obligation hereunder other than as set forth herein with respect to rights or
obligations that survive termination; or (ii) proceed to Closing without receiving any
credit against or reduction of the Sales Price whereupon Buyer shall be deemed to have
accepted such encumbrance as an exception to title (which shall thereupon become a
Permitted Exception).

	7.	 	SUBMISSION MATTERS.

	 	(a)	 	To the extent that Seller has not already done so, Seller shall within five (5)
business days deliver to Buyer copies of the following (the “Submission
Matters”), to the extent (and only to the extent) that such items are available and
in Seller’s actual possession or in the possession of any of Seller’s manager,
consultants or agents:

	 	(i)	 	revenue and expense reports, or equivalent, in the form
prepared by the property manager for the most recent twenty-four (24) months
(“Operating Reports”);

	 	(ii)	 	copies of any Service Contracts which are currently in effect;

	 	(iii)	 	the aged delinquency report(s) for the previous twelve (12)
months, in the form prepared by the property manager;

	 	(iv)	 	Seller’s most current Owner’s Title Policy (with the amount of
the coverage removed);

	 	(v)	 	an inventory of the Personal Property, which inventory shall
identify which items are leased and which items are owned by, as appropriate,
the Seller or Seller’s property manager;

	 	(vi)	 	a rent roll, as of a recent date in the form provided to Seller
by its property manager (“Rent Roll”);

	 	(vii)	 	copies of all tax (real and personal property) bills for the
current year and the immediately preceding year together with the current tax
assessment information;

	 	(viii)	 	copies of all utility bills for the most recent two (2) months;

	 	(ix)	 	the Phase I Environmental Site Assessment prepared by Pinnacle
Sciences, Inc., dated October 5, 2002 (“Existing Environmental
Report”); and

	 	(x)	 	the insurance claim report for any insurance claims made with
regard to the Property in the most recent twelve (12) months.

	 	(b)	 	In addition, Seller has or will cause to be made available to Buyer for
inspection at the Property the following (the “Additional Submission Matters”),
to the extent (and only to the extent) that such items are available and in Seller’s
actual possession or control:

	 	(i)	 	copies of any plans and specifications;

	 	 	 
	(ii)

(iii)

(iv)

	 	maintenance records for the Property;

tenant correspondence files;

books and records for the Property;

	 	(v)	 	copies of Tenant Leases;

	 	(vi)	 	copies of any certificates of occupancy; and

	 	(vii)	 	copies of any warranties or guaranties applicable to the
Property.

	 	(c)	 	Seller has delivered to Buyer that certain termite contract (“Termite
Agreement”) issued by Chief Pest Control, Inc., dated April 27, 2008. Seller shall
assign to Buyer at Closing all of Seller’s rights under the Termite Agreement.

	 	(d)	 	Any failure of Seller to timely deliver any of the Submission Matters or make
available any of the Additional Submission Matters will not extend the Feasibility
Period beyond the period prescribed in Section 5(a) hereof, and Buyer’s sole
and exclusive remedy on account of any such failure will be to terminate this Contract
prior to the expiration of the Feasibility Period in accordance with the provisions of
such Section 5(a). Except as expressly provided in Section 12 hereof,
Seller makes no representation or warranty, express or implied, as to the accuracy or
completeness of the information contained in the Submission Matters or the Additional
Submission Matters.

	 	(e)	 	The non-public Submission Materials, the Additional Submission Matters and the
Termite Report (together with any other information regarding the Property made
available to Buyer) are confidential and shall not be distributed or disclosed by Buyer
to any person or entity, except as may be required by law, provided that Buyer may
disclose the Submission Materials to the Buyer Group provided such parties are made
aware of the confidential nature of such information. If the transaction evidenced
hereby fails to close for any reason whatsoever, upon Seller’s written request, Buyer
shall (i) return to Seller or destroy (with notice to Seller that Buyer has so
destroyed) all copies of the Submission Materials which Seller or its agents may have
delivered to Buyer (together with any other information regarding the Property made
available to Buyer by Seller), and (ii) make available to Seller copies of Buyer’s
environmental reports, structural reports and similar inspection reports relating to
the Property prepared for Buyer by third party consultants, to the extent Buyer is
contractually permitted to do so under its contracts with such third party consultants.

	8.	 	BROKER’S FEE. Buyer and Seller represent and warrant to each other that no real
estate commissions, finders’ fees, or brokers’ fees have been or will be incurred in
connection with the sale of the Property by Seller to Buyer. Buyer and Seller shall
indemnify, defend and hold each other harmless from any claim, liability, obligation, cost or
expense (including attorneys’ fees and expenses) for fees or commissions relating to Buyer’s
purchase of the Property asserted against either party by any broker or other person claiming
by, through or under the indemnifying party or whose claim is based on the indemnifying
party’s acts. The terms and provisions hereof supersede in their entirety any prior
agreements or understandings of any kind or character between Seller and Broker with respect
to the payment of a commission, finder’s fee or other sum in connection with the sale of the
Property. The provision of this Section 8 shall survive the Closing or any
termination of this Contract.

	9.	 	LIMITATION OF SELLER’S REPRESENTATIONS AND WARRANTIES.

	 	(a)	 	BUYER ACKNOWLEDGES THAT EXCEPT FOR ANY EXPRESS WARRANTIES AND REPRESENTATIONS
CONTAINED IN THIS CONTRACT OR ANY INSTRUMENT, DOCUMENT, OR AGREEMENT TO BE DELIVERED TO
BUYER AT CLOSING, BUYER IS NOT RELYING ON ANY WRITTEN, ORAL, IMPLIED, OR OTHER
REPRESENTATIONS, STATEMENTS, OR WARRANTIES BY SELLER OR ANY AGENT OF SELLER OR ANY REAL
ESTATE BROKER OR SALESMAN. ALL PREVIOUS WRITTEN, ORAL, IMPLIED, OR OTHER STATEMENTS,
REPRESENTATIONS, WARRANTIES, OR AGREEMENTS, IF ANY, ARE MERGED HEREIN. EXCEPT AS
EXPRESSLY SET FORTH HEREIN, SELLER SHALL NOT HAVE ANY LIABILITY TO BUYER, AND BUYER
SHALL RELEASE SELLER FROM ANY LIABILITY (INCLUDING, WITHOUT LIMITATION, CONTRACTUAL
AND/OR STATUTORY ACTIONS FOR CONTRIBUTION OR INDEMNITY), FOR, CONCERNING, OR REGARDING:
(A) THE NATURE AND CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE
SUITABILITY THEREOF FOR ANY ACTIVITY OR USE; (B) ANY IMPROVEMENTS OR SUBSTANCES LOCATED
THEREON; OR (C) THE COMPLIANCE OF THE PROPERTY WITH ANY LAWS, RULES, ORDINANCES, OR
REGULATIONS OF ANY GOVERNMENT OR OTHER BODY. EXCEPT AS EXPRESSLY PROVIDED IN
SECTION 12, SELLER HAS NOT MADE, DOES NOT MAKE, AND EXPRESSLY DISCLAIMS, ANY
WARRANTIES, REPRESENTATIONS, COVENANTS OR GUARANTEES, EXPRESSED OR IMPLIED, OR ARISING
BY OPERATION OF LAW, AS TO THE MERCHANTABILITY, HABITABILITY, QUANTITY, QUALITY, OR
ENVIRONMENTAL CONDITION OF THE PROPERTY OR ITS SUITABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE OR USE. BUYER AFFIRMS THAT IT: (I) HAS OR WILL HAVE HAD THE
OPPORTUNITY TO HAVE INVESTIGATED AND INSPECTED THE PROPERTY AND IS FAMILIAR AND
SATISFIED WITH THE PHYSICAL CONDITION OF THE PROPERTY; AND (II) HAS MADE OR WILL HAVE
AN OPPORTUNITY TO MAKE ITS OWN DETERMINATION AS TO THE MERCHANTABILITY, QUANTITY,
QUALITY, AND CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE POSSIBLE
PRESENCE OF TOXIC OR HAZARDOUS SUBSTANCES OR WASTE OR OTHER ENVIRONMENTAL CONTAMINATION
AND THE PROPERTY’S SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR USE. BUYER
HEREBY ACCEPTS THE PROPERTY IN ITS PRESENT CONDITION (INCLUDING ENVIRONMENTAL
CONDITIONS) ON AN “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” BASIS. BUYER FURTHER
ACKNOWLEDGES THAT WITHOUT THIS ACCEPTANCE, THIS SALE WOULD NOT BE MADE AND THAT EXCEPT
AS EXPRESSLY SET FORTH IN THIS CONTRACT, SELLER WILL NOT UNDER ANY CIRCUMSTANCES HAVE
ANY OBLIGATION WHATSOEVER TO UNDERTAKE ANY REPAIR, ALTERATION, REMEDIATION, OR OTHER
WORK OF ANY KIND WITH RESPECT TO ANY PORTION OF THE PROPERTY. AS BETWEEN BUYER AND
SELLER , BUYER AND ITS SUCCESSORS AND ASSIGNS HAVE, AND SHALL BE DEEMED TO HAVE,
ASSUMED ALL RISK AND LIABILITY WITH RESPECT TO THE PRESENCE OF TOXIC OR HAZARDOUS
SUBSTANCES OR WASTE OR OTHER ENVIRONMENTAL CONTAMINATION ON OR WITHIN OR UNDER THE
SURFACE OF THE PROPERTY, WHETHER KNOWN OR UNKNOWN, APPARENT, NON-APPARENT OR LATENT,
AND WHETHER EXISTING PRIOR TO, AT, OR SUBSEQUENT TO, TRANSFER OF THE PROPERTY. EXCEPT
AS EXPRESSLY SET FORTH IN THIS CONTRACT, BUYER AND ITS SUCCESSORS AND ASSIGNS HEREBY
RELEASE SELLER OF AND FROM ANY AND ALL RESPONSIBILITY, LIABILITY, OBLIGATIONS, AND
CLAIMS, KNOWN OR UNKNOWN, INCLUDING, WITHOUT LIMITATION, ANY OBLIGATION TO TAKE THE
PROPERTY BACK OR REDUCE THE PRICE, OR ACTIONS FOR CONTRIBUTION OR INDEMNITY, THAT BUYER
OR ITS SUCCESSORS AND ASSIGNS MAY HAVE AGAINST SELLER OR THAT MAY ARISE IN THE FUTURE,
BASED IN WHOLE OR IN PART, UPON THE PRESENCE OF TOXIC OR HAZARDOUS SUBSTANCES OR WASTE
OR OTHER ENVIRONMENTAL CONTAMINATION ON OR WITHIN OR UNDER THE SURFACE OF THE PROPERTY,
INCLUDING, WITHOUT LIMITATION, ALL RESPONSIBILITY, LIABILITY, OBLIGATIONS, AND CLAIMS
THAT MAY ARISE UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND
LIABILITY ACT, AS AMENDED 42 U.S.C. § 9601 ET SEQ. BUYER FURTHER ACKNOWLEDGES THAT THE
PROVISIONS OF THIS DISCLAIMER AND RELEASE HAVE BEEN FULLY EXPLAINED TO BUYER AND THAT
BUYER FULLY UNDERSTANDS AND ACCEPTS SAME. THE PROVISIONS OF THIS DISCLAIMER AND
RELEASE SURVIVE CLOSING. NOTWITHSTANDING ANYTHING IN THIS PARAGRAPH OR OTHERWISE SET
FORTH IN THIS CONTRACT TO THE CONTRARY, IN NO EVENT SHALL ANY RELEASE OR OTHER
AGREEMENTS SET FORTH IN THIS CONTRACT BE DEEMED TO RELEASE OR OTHERWISE LIMIT THE
LIABILITY OF THIRD PARTIES, AND THE PROVISIONS OF THIS CONTRACT SHALL INURE TO THE
BENEFIT SOLELY OF SELLER.

	 	(b)	 	Except as otherwise specifically stated in this Contract, Buyer agrees that
Seller shall not be responsible or liable to Buyer for any construction defects,
errors, omissions, or on account of any other conditions affecting the Property, as
Buyer is purchasing the Property AS IS, WHERE IS, and
WITH ALL FAULTS. Buyer or anyone claiming by, through or under
Buyer, hereby fully releases Seller, its employees, officers, directors,
representatives, attorneys and agents from any claim, cost, loss, liability, damage,
expense, demand, action or cause of action arising from or related to any construction
defects, errors, omissions, or other conditions affecting the Property. Buyer further
acknowledges and agrees that this release shall be given full force and effect
according to each of its expressed terms and provisions, including, without limitation,
those relating to unknown and suspected claims, damages and causes of action. This
covenant releasing Seller shall be a covenant running with the Property and shall be
binding upon Buyer, its successors and assigns. As a material covenant and condition
of this Contract, Buyer agrees that in the event of any such construction defects,
errors, omissions or on account of any other conditions affecting the Property, Buyer
shall look solely to Seller’s predecessors in title or to such contractors and
consultants as may have contracted for work in connection with the Property for any
redress or relief. Seller shall assign all its claims to Buyer (other than claims
against Carbon Landmark Construction, Ltd.), without recourse, and upon the assignment
by Seller of its claims, Buyer releases Seller (but not any third parties) of all
rights, express or implied, Buyer may have against Seller arising out of or resulting
from any errors, omissions or defects in the Property. This waiver and release of
claims shall survive the Closing.

	10.	 	DEFAULT.

	 	(a)	 	Seller’s Remedies. If Buyer fails to perform its obligations pursuant
to this Contract at or prior to Closing for any reason except for failure by Seller to
perform hereunder, or if prior to Closing any one or more of Buyer’s representations or
warranties are breached in any material respect, then Seller shall be entitled, as its
SOLE and EXCLUSIVE remedy (except as provided in Sections 5(b) and 8), to
terminate this Contract, and retain the Deposit and any Extension Fee as liquidated
damages and not as a penalty, in full satisfaction of claims against Buyer hereunder.
Seller and Buyer agree that Seller’s damages resulting from Buyer’s default are
difficult, if not impossible, to determine, and the Deposit is a fair estimate of those
damages and has been agreed to in an effort to cause the amount of such damages to be
certain. Notwithstanding anything in this Section 10(a) to the contrary: (i)
in the event of Buyer’s default hereunder beyond any applicable cure period, or in the
event this Contract is properly terminated pursuant to the terms hereof, and in either
such event Buyer files a lis pendens or otherwise takes action to delay or prevent
Seller’s sale of the Property to a third party, Seller shall have all remedies
available at law or in equity, and (ii) Seller acknowledges and agrees that Buyer has
the right to terminate this Contract for any reason whatsoever on or before the
expiration of the Feasibility Period, and in no event shall such termination constitute
a default by Buyer nor shall any action or inaction by Buyer during the Feasibility
Period constitute a default if Buyer so terminates, provided that the provisions of
this clause (ii) shall not be in derogation of Buyer’s indemnification obligations
expressly set forth in Sections 5(b) and 8.

	 	(b)	 	Buyer’s Remedies. If Seller fails to perform its obligations pursuant
to this Contract for any reason except failure by Buyer to perform hereunder, or if
prior to Closing any one or more of Seller’s representations or warranties are breached
in any material respect, then Buyer shall elect, as its SOLE and EXCLUSIVE remedy, to
either: (i) terminate this Contract by giving Seller timely written notice of such
election prior to or at Closing and recover the Deposit and any Extension Fee, together
with Buyer’s actual, third party, out of pocket costs and expenses incurred in
connection with Buyer’s Feasibility Study, up to a maximum cumulative reimbursement not
to exceed $25,000.00; or (ii) enforce specific performance; provided, however, if —
and only if — the remedy of specific performance is not available to Buyer due to
Seller’s prior sale of the Property to a third party, then Buyer shall have the
additional remedy of terminating the Agreement and recovering from Seller an amount
equal to the sum of Buyer’s documented, out-of-pocket third party costs paid or
incurred in connection with the acquisition of the Property, or (iii) waive said
failure or breach and proceed to Closing. Notwithstanding anything herein to the
contrary, Buyer shall be deemed to have elected to terminate this Contract if Buyer
fails to deliver to Seller written notice of its intent to file a claim or assert a
cause of action for specific performance against Seller on or before fifteen (15)
business days following the scheduled Closing Date or, having given such notice, fails
to file a lawsuit asserting such claim or cause of action in Dallas County, Texas,
within two (2) months following the scheduled Closing Date. In no event or
circumstance shall Buyer be entitled to any consequential or punitive damages. Buyer’s
remedies shall be limited to those described in this Section 10(b).

	11.	 	ATTORNEYS’ FEES. Any party to this Contract who is the prevailing party in any legal
proceeding against the other party brought under or with respect to this Contract or
transaction shall be additionally entitled to recover court costs and reasonable attorneys’
fees from the non-prevailing party.

	12.	 	REPRESENTATIONS AND WARRANTIES OF SELLER.

	 	(a)	 	Seller hereby represents and warrants to Buyer, which representations and
warranties shall be deemed made by Seller to Buyer as of the Effective Date and also as
of the Closing Date:

	 	(i)	 	To Seller’s knowledge, there are no parties in possession of
any portion of the Property except Seller and tenants under Tenant Leases;

	 	(ii)	 	To Seller’s knowledge, except as provided in the Rent Rolls,
neither Seller nor any tenant is in default of any material obligation pursuant
to the terms of the Tenant Leases;

	 	(iii)	 	Seller has, or on the Closing Date will have, the partnership
power and authority to sell and convey the Property as provided in this
Contract and to carry out Seller’s obligations hereunder, and that all
requisite partnership action necessary to authorize Seller to enter into this
Contract and to carry out Seller’s obligations hereunder has been, or on the
Closing Date will have been, taken;

	 	(iv)	 	To Seller’s knowledge, the Operating Reports are true and
correct in all material respects;

	 	(v)	 	Seller has received no written notice from any government
agency having jurisdiction over the Land or Improvements that either considers
the construction of the Improvements or the operation or use of the Property to
be in violation of any law, ordinance, regulation or order;

	 	(vi)	 	Without any other investigation or inquiry of any kind, except
as may be lawfully located on the Property and except as disclosed in the
Existing Environmental Report, to Seller’s knowledge, there are no Hazardous
Materials in, attributable to or affecting the Land or Improvements. As used
herein, a “Hazardous Material” means any hazardous, toxic or dangerous
waste, substance or material, pollutant or contaminant, as defined for purposes
of any Environmental Laws or any other federal, state or local law, ordinance,
rule, regulation or other enforcement vehicle applicable to the Property, or
any substance which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous, or any substance
which contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenyls (PCBs), or radon gas, urea formaldehyde, asbestos or
lead. “Environmental Laws” means all federal, state and local laws,
ordinances, rules and regulations now or hereafter in force, as amended from
time to time, and all federal and state court decisions, consent decrees and
orders interpreting or enforcing any of the foregoing, in any way relating to
or regulating human health or safety, or industrial hygiene or environmental
conditions, or protection of the environment, or pollution or contamination of
the air, soil, surface water or groundwater, and includes the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §
9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et
seq., and the Clean Water Act, 33 U.S.C. § 1251, et seq.;

	 	(vii)	 	There are no actions, suits or proceedings pending for which
Seller has received service of process, before or by any judicial,
administrative or union body, any arbiter or any governmental authority,
against or affecting Seller or the Property. To Seller’s knowledge, Seller has
not received any written notice of a pending or threatened eminent domain or
similar proceeding that would affect the Land or Improvements;

	 	(viii)	 	Seller is not a “foreign person” as defined in Section 1445 of the Internal
Revenue Code of 1986, as amended, and the Income Tax Regulations thereunder;

	 	(ix)	 	Neither Seller, nor any of its affiliates, nor any of their
respective partners, members, shareholders or other equity owners, and none of
their respective employees, officers, directors, representatives or agents, is,
nor will they become, a person or entity with whom U.S. persons or entities are
restricted from doing business under regulations of the Office of Foreign Asset
Control (“OFAC”) of the Department of the Treasury (including those
named on OFAC’s Specially Designated and Blocked Persons List) or under any
statute, executive order (including the September 24, 2001, Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism), or other governmental action and is
not and will not engage in any dealings or transactions or be otherwise
associated with such persons or entities;

	 	(x)	 	To Seller’s knowledge, there are no lease brokerage agreements,
leasing commission agreements or other agreements providing for payments of any
amounts for leasing activities or procuring tenants with respect to the
Property other than as disclosed in the Submission Matters or as set forth in
the Tenant Leases;

	 	(xi)	 	To Seller’s knowledge, this Contract does not and the
transaction contemplated in this Contract will not violate any provision of any
agreement or judicial order to which Seller is a party or to which Seller or
the Property is subject; and

	 	(xii)	 	Seller does not currently have any employees.

	 	(b)	 	Whenever the phrases “to Seller’s actual knowledge,” “to Seller’s
knowledge,” or “to the best of Seller’s knowledge” or any similar phrase is
used herein, such phrases shall be deemed to mean the present, actual knowledge (as
opposed to the imputed knowledge), without inquiry or investigation, of such fact or
condition by Edmund Garahan (“Seller’s Representative”). The representations
and warranties contained in Section 12(a) are the representations and
warranties of Seller and in no event or circumstances will be construed as either the
individual representations and warranties of Seller’s Representative or to create any
individual liability for Seller’s Representative.

	 	(c)	 	It shall be a condition precedent to Buyer’s obligations hereunder that as of
the date of Closing, all of Seller’s representations and warranties shall be true and
correct in all material respects. If the representations and warranties of Seller
which to Sellers actual knowledge were true and correct when made are not true and
correct in all material respects on the date of Closing, then Buyer may, at its option,
(a) waive such condition and close this transaction in accordance with the terms and
provisions of this Contract or, (b) terminate this Contract by notice in writing to
Seller and receive back the Deposit and any Extension Fee, whereupon neither party
shall have any further rights or obligations pursuant to this Contract, other than as
set forth herein with respect to rights or obligations that survive termination.

	 	(d)	 	Subject to the provisions of Section 12(e), the representations and
warranties of Seller made in Section 12(a) shall survive the Closing for a
period of six (6) months (the “Survival Period”). Buyer shall have the right
to bring an action against the Seller on the breach of a representation or warranty
hereunder, but only on the following conditions: (i) the Buyer first learns of the
breach after Closing and files such action within the Survival Period, and (ii) Buyer
shall not have the right to bring a cause of action for a breach of a representation or
warranty unless the damage to such party on account of such breach (individually or
when combined with damages from other breaches) equals or exceeds Twenty-Five Thousand
and No/100 Dollars ($25,000.00). Furthermore, Buyer agrees that the maximum liability
of Seller for the alleged breach of any or all representations or warranties set forth
in this Contract is limited to Two Hundred Thousand and No/100 Dollars ($200,000.00).
The provisions of this Section 12(d) shall survive the Closing.

	 	(e)	 	If any representation or warranty above is known by Buyer prior to Closing to
be untrue and is not remedied by Seller prior to Closing, Buyer may as Buyer’s sole and
exclusive remedy, either (i) terminate this Contract whereupon the Deposit and any
Extension Fee shall be refunded to Buyer, and neither party shall have any further
rights or obligations pursuant to this Contract, other than as set forth herein with
respect to rights or obligations that survive termination, or (ii) waive its objections
and close the transaction without any reduction or credit against the Sales Price. The
foregoing representations and warranties known by Buyer to be untrue prior to Closing
shall not survive the Closing.

	13.	 	COVENANTS OF SELLER. From the Effective Date until Closing, Seller shall:

	 	(a)	 	Maintain and operate the Property in its current state and condition,
reasonable wear and tear and damage from casualty excepted.

	 	(b)	 	Continue all insurance policies relative to the Property in full force and
effect.

	 	(c)	 	Not remove any item of Personal Property from the Land or Improvements unless
replaced by a comparable item of Personal Property, except for any dead landscaping,
which Seller shall have no obligation to replace.

	 	(d)	 	Refrain from entering into any contracts, or other agreements (excluding
leases) regarding the Property (other than contracts in the ordinary and usual course
of business and which are cancelable by the owner of the Property within thirty (30)
days after giving notice thereof without penalty).

	 	(e)	 	Seller shall conduct its leasing activities in the normal course of business.
All new Tenant Leases shall be on the form of lease currently used by Seller or such
other form as may be approved by Buyer and Seller. All new leases shall be entered
into in conformity with the lease guidelines (“Lease Guidelines") attached
hereto as Exhibit G, including lease term, rental rates and leasing
concessions, or as otherwise proposed by Seller and approved by Buyer. Seller will not
grant any move-in incentive to tenants greater those provided in the Lease Guidelines.

	 	(f)	 	Perform Seller’s material obligations under the Tenant Leases, in accordance
with Seller’s prior operations.

	 	(g)	 	Provide to Buyer copies of current rent rolls in the same form as the Rent Roll
which will be deemed to supplement the Rent Roll promptly following receipt by Seller.

	 	(h)	 	Provide to Buyer copies of updated operating statements as received by Seller
in accordance with its current course of business.

	 	(i)	 	Not apply any tenant security or other deposits except in the ordinary course
of Seller’s business in accordance with Seller’s prior operations.

	14.	 	USE OF PROPERTY. Seller has not claimed the benefit of laws permitting a special use
valuation for the purposes of payment of ad valorem taxes on the Property. If a previous
owner claimed such benefit and, after the purchase is closed, Buyer changes the use of the
Property from its present use and the same results in the assessment of additional taxes, such
additional taxes will be the obligation of the Buyer, notwithstanding that some or all of such
additional taxes may relate back to the period prior to Closing.

	15.	 	CONDEMNATION. Seller agrees to give Buyer prompt notice of any condemnation action
affecting the Land, the Improvements or the Personal Property between the Effective Date and
the Closing Date. If prior to the Closing Date condemnation proceedings are commenced against
any material portion of the Property, then this Contract shall terminate and the Deposit and
any Extension Fee shall be refunded to Buyer. A “material portion of the Property” as used
herein shall mean at least ten percent (10%) of the square footage of the structural
Improvements or parking such that the Property does not comply with applicable law, or loss or
relocation of the primary entrance to the Property, or loss or relocation of the primary
entrance sign for the Property. If prior to the Closing Date condemnation proceedings are
commenced against less than a material portion of the Property, then this Contract shall not
terminate, but at Closing Seller shall assign to Buyer any condemnation award and the Sales
Price shall not be reduced.

	16.	 	DAMAGE TO PROPERTY. Seller agrees to give Buyer prompt notice of any fire or other
casualty affecting the Land, the Improvements or the Personal Property between the Effective
Date and the Closing.

	 	(a)	 	If prior to the Closing either (i) the Property is damaged by an uninsured
casualty costing TWO-HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00) or more to
repair and Seller is unwilling or unable to repair such damage on or prior to the
Closing; or (ii) the Property is damaged by fire or other casualty which is insured
that would cost TWO-HUNDRED FIFTY-THOUSAND AND NO/100 DOLLARS ($250,000.00) or more to
repair, then in any such event, either Buyer or Seller may, at its option, elect to
terminate this Contract by written notice to the other party within twenty (20) days
after the date of Seller’s notice to Buyer of the casualty or at the Closing, whichever
is earlier, in which case the Deposit and any Extension Fee shall be refunded to Buyer,
and neither party shall have any further rights or obligations hereunder, other than as
set forth herein with respect to rights and obligations that survive termination. If
neither Buyer nor Seller timely makes its election to terminate this Contract, then the
Closing shall take place as provided herein without reduction of the Sales Price
(except for (i) the amount equal to Seller’s deductible under its insurance policies
and (ii) the amount, but in no event more than TWO-HUNDRED THOUSAND AND NO/100 DOLLARS
($200,000.00) of the estimated cost to repair any uninsured casualty), and there shall
be assigned to Buyer at the Closing all interest of Seller in and to any casualty
insurance proceeds, including, to the extent assignable the proceeds of any business
interruption or loss of rental insurance.

	 	(b)	 	If prior to the Closing there shall occur damage to the Property caused by fire
or other casualty which is insured that would cost less TWO-HUNDRED FIFTY-THOUSAND AND
NO/100 DOLLARS ($250,000.00) to repair, then in any such event, Buyer shall have no
right to terminate this Contract, but there shall be assigned to Buyer at Closing all
interest of Seller in and to any casualty insurance proceeds that may be payable to
Seller on account of any such occurrence, including, to the extent assignable the
proceeds of any business interruption or loss of rental insurance and the Sales Price
shall be reduced by an amount equal to Seller’s deductible under its insurance
policies.

	 	(c)	 	Seller and Buyer both agree to use the Seller’s insurance adjuster’s assessment
to determine the amount of damages.

	17.	 	REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to Seller,
which representations and warranties shall be deemed made by Buyer to Seller as of the
Effective Date and also as of the Closing Date:

	 	(a)	 	Buyer has the full right, power and authority to purchase the Property as
provided in this Contract and to carry out Buyer’s obligations hereunder, and that all
requisite action necessary to authorize Buyer to enter into this Contract and to carry
out Buyer’s obligations hereunder has been taken.

	 	(b)	 	Buyer is not a person or entity with whom U.S. persons or entities are
restricted from doing business under regulations of OFAC (including those named on
OFAC’s Specially Designated and Blocked Persons List) or under the September 24, 2001,
Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism.

Notwithstanding anything herein to the contrary, any breach by Buyer of any of the foregoing
representations or warranties shall constitute a default by Buyer hereunder (but only after
the Feasibility Period has expired), and Seller may thereupon, at its option, terminate this
Contract by giving written notice thereof, in which event the Deposit and any Extension Fee
shall be paid to Seller as liquidated damages, and neither Buyer nor Seller shall have any
further rights or liabilities hereunder, except as otherwise provided herein.

	18.	 	MISCELLANEOUS.

	 	(a)	 	All notices, demands, and requests and other communications required or
permitted hereunder shall be in writing and shall be deemed to be delivered when
actually received by telecopy or personal delivery or, if earlier and regardless
whether actually received or not, (i) upon deposit with a nationally recognized
overnight courier for next business day delivery, charges prepaid, or (ii) upon three
(3) business days following deposit in a regularly maintained receptacle for the United
States mail, registered or certified, postage prepaid, in either such event to be
addressed to the addressee as follows:

If to Seller:

Duncanville Villages Multifamily, Ltd.

	 	1701	 	N. Collins Blvd.

	 	 	 	Suite 1200

	 	 	 	Richardson, Texas 75080

Attention: Edmund Garahan

Phone (972) 250-2990

Fax (972) 735-9976

with a copy to:

Glast, Phillips & Murray

13355 Noel Road

Suite 2200

Dallas, Texas 75240

Attention: Ronald D. Law

Phone: (972) 419-8398

Facsimile: (972) 419-8329

If to Buyer:

Grubb & Ellis Apartment REIT Holdings, LP

1606 Santa Rosa Drive, Suite 109

Richmond, Virginia 23229

Attention: Gus R. Remppies

Phone: (804) 225-1082

Facsimile: (804) 285-1376

with a copy to:

McGuireWoods LLP

901 E. Cary Street

Richmond, VA 23219

Attention: Nancy R. Little, Esq.

Phone: (804) 775-1010

Facsimile: (804) 698-2101

	 	(b)	 	This Contract shall be construed under and in accordance with the laws of the
State of Texas, and all obligations of the parties created hereunder are performable in
Dallas County, Texas.

	 	(c)	 	This Contract shall be binding upon and inure to the benefit of the parties
hereto, their respective heirs, executors, administrators, legal representatives,
successors, and permitted assigns.

	 	(d)	 	In case any one or more of the provisions contained in this Contract shall for
any reason be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
hereof, and this Contract shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein. Furthermore, in lieu of any
such invalid, illegal or unenforceable provision, there shall be automatically added to
this Contract a provision as similar to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.

	 	(e)	 	This Contract constitutes the sole and only agreement of the parties hereto
with respect to the subject matter hereof and supersedes any prior understandings or
written or oral agreements between the parties respecting the subject matter hereof and
cannot be changed except by their written consent.

	 	(f)	 	Time is of the essence with this Contract.

	 	(g)	 	Words of any gender used in this Contract shall be held and construed to
include any other gender, and words in the singular number shall be held to include the
plural, and vice versa, unless the context requires otherwise.

	 	(h)	 	In accordance with the requirements of the Texas Real Estate License Act, Buyer
is hereby advised by Broker that (i) Buyer should be furnished with or obtain a policy
of title insurance or have the abstract covering the Property examined by any attorney
of its own selection, and (ii) unless otherwise agreed to in writing by the parties
hereto, Broker is being paid by Seller and is representing Seller in this transaction.

	 	(i)	 	The covenants, indemnification obligations and the waiver and release by Buyer
set forth in Sections 5(b), 9(b) and 10, and the covenants and indemnification
obligations of Buyer and Seller set forth in Sections 4(e), 4(f) and 8, shall
survive consummation of Closing and any termination or cancellation of this Contract
(as applicable), notwithstanding any contrary provisions hereof.

	 	(j)	 	The parties may (i) execute this Contract in one or more identical
counterparts; and (ii) transmit the signature pages by facsimile, all of which when
taken together will constitute one and the same instrument.

	 	(k)	 	The parties hereto acknowledge that the parties and their respective counsel
have each reviewed and revised this Contract, and that 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 this Contract or any amendments or exhibits
hereto.

	 	(l)	 	"Business Day” shall mean a date which is not a Saturday, Sunday or
holiday observed by federally chartered banks in the State of Texas, whenever any
determination is to be made or action to be taken on a date specified in this Contract
if such date falls upon a date which is not a Business Day, the date for such
determination or action shall be extended to the first Business Day immediately
thereafter.

	19.	 	ASSIGNMENT. Seller shall not assign any of its right, title, claim or interest in,
to or under this Contract. Buyer may not assign this Contract without Seller’s prior written
consent, such consent to be given or denied in Seller’s sole and absolute discretion; provided
no consent of Seller shall be required in connection with the assignment of the Contract at
least five (5) Business Days prior to the Closing Date to any entity controlled by, managed by
or otherwise affiliated with Grubb & Ellis Apartment REIT Holdings, LP. In the event of any
assignment of this Contract, Buyer shall promptly provide a copy of such assignment to Seller.

	20.	 	NONREFUNDABLE CONSIDERATION. Contemporaneously with the execution and delivery of
this Contract, Buyer has delivered to Seller and Seller hereby acknowledges the receipt of a
check in the amount of One Hundred Dollars ($100.00) (“Independent Contract
Consideration”), which amount the parties bargained for and agreed to as consideration for
Buyer’s exclusive right to inspect and purchase the Property pursuant to this Contract and for
Seller’s execution, delivery and performance of this Contract. The Independent Contract
Consideration is in addition to and independent of any other consideration or payment provided
in this Contract, is nonrefundable, and it is fully earned and shall be retained by Seller
notwithstanding any other provision of this Contract.

	21.	 	WAIVER OF CONSUMER RIGHTS. Buyer, after consultation with an attorney of its own
selection (which counsel was not directly or indirectly identified, suggested or selected by
Seller or any agent of Seller) hereby voluntarily waives its rights under the Deceptive Trade
Practices — Consumer Protection Act (Section 17.41, et seq., Business and Commerce Code), a
law that gives consumers special rights and protections. Buyer hereby acknowledges to Seller
that Buyer and Seller are not in a significantly disparate bargaining position.

	22.	 	AUDIT. If Buyer, subject to the limitations of this Contract, assigns this Contract
to a Registered Company and the Registered Company acquires the Property pursuant to this
Contract, Seller acknowledges that the Registered Company is required to make certain filings
with the Securities and Exchange Commission (the “SEC Filings”) that relate to the
most recent pre-acquisition fiscal year (the “Audited Year”). To assist the
Registered Company in preparing the SEC Filings, Seller agrees to provide the Registered
Company with the following:

(i) Access to bank statements for the Audited Year;

(ii) Rent Roll as of the end of the Audited Year;

(iii) Operating statements for the Audited Year;

(iv) Access to the general ledger for the Audited Year;

(v) Cash receipts schedule for each month in the Audited Year;

(vi) Access to invoices for expenses and capital improvements in the Audited Year;

(vii) Accounts payable ledger and accrued expense reconciliations in the Audited Year;

(viii) Check register for the three (3) months following the Audited Year;

(ix) Copies of all insurance documentation for the Audited Year;

(x) Copies of accounts receivable aging as of the end of the Audited Year along with an
explanation for all accounts over thirty (30) days past due as of the end of the Audited
Year;

The provisions of this Section 22 shall survive Closing.

	23.	 	BUYER’S CONDITIONS PRECEDENT. If any of the following conditions precedent to
Buyer’s obligations under this Contract is not satisfied, then Buyer may, at its option, waive
such condition and close this transaction, or, as Buyer’s sole and exclusive remedy, terminate
this Contract, in which event the Deposit and any Extension Fee shall be returned to Buyer,
and neither party shall have any further rights or obligations hereunder except other than as
set forth herein with respect to rights or obligations which survive termination:

	 	(a)	 	Each of the representations and warranties made by Seller in Section 12
shall be true and correct in all material respects when made and as of the Closing
Date.

	 	(b)	 	Seller shall have performed or complied in all material respects with each
obligation and covenant required by applicable laws and by this Contract to be
performed or complied with by Seller on or before the Closing.

	 	(c)	 	Seller shall have performed or complied in all material respects with each
material obligation and covenant required to be performed by Seller pursuant to the
Tenant Leases and the Service Contracts; provided that if Seller is in default of any
such obligation, Seller shall be afforded an opportunity to either cure such default or
to escrow at Closing an amount reasonably necessary to effect such cure, provided
further that the cure period shall not exceed a period of time reasonably acceptable to
Buyer and its lender.

	 	(d)	 	Title to the Property and the other assets to be transferred hereunder shall be
delivered to Buyer in the manner required under Section 6.

	 	(e)	 	From the expiration of the Feasibility Period to the Closing Date, there has
been no unlawful introduction of Hazardous Materials that would materially and
adversely affect the environmental condition of the Property from that which existed at
the expiration of the Feasibility Period.

	24.	 	EFFECTIVE DATE. The “Effective Date” of this Contract shall be the date an
original of this Contract (or original counterparts of this Contract) are executed by both
Seller and Buyer

EXECUTED in multiple originals effective as of the Effective Date.

SELLER:

DUNCANVILLE VILLAGES

MULTIFAMILY, LTD., a Texas limited

partnership

By: DV-MF-GP, LTD., a Texas limited

partnership, General Partner

By: CarbParm, LLC, a Texas limited

liability company, General Partner

	 	 	 
	By:
	 	/s/ Edmund H Garahan

Edmund H. Garahan, Manager

Date signed: January 22, 2010

1

BUYER:

GRUBB & ELLIS APARTMENT REIT HOLDINGS, LP,

a Virginia limited partnership

By: Grubb & Ellis Apartment REIT, Inc.,

a Maryland corporation

By: /s/ Andrea Biller

Name: Andrea R. Biller

Title: Secretary

Date signed: January 22, 2010

2EX-4.1

EXHIBIT 4.1

CLASS A WARRANT AGREEMENT

THIS CLASS A WARRANT AGREEMENT (this “Agreement”), dated as of January 21, 2010, is entered
into by and between Aastrom Biosciences, Inc., a Michigan corporation (the “Company”), and
Continental Stock Transfer & Trust Company, a New York corporation (the “Warrant Agent”).

WHEREAS, the Company is engaged in a public offering (the “Public Offering”) of units (the
“Units”) and, in connection therewith, has determined to issue and deliver up to 53,077,100 Class A
Warrants (the “Warrants”), subject to adjustment as provided herein, to the public investors, each
of such Warrants evidencing the right of the holder thereof to purchase 0.75 of a share of the
Company’s common stock, no par value (the “Common Stock”);

WHEREAS, the Company has filed with the Securities and Exchange Commission a Registration
Statement on Form S-3, No. 333-155739 (the “Registration Statement”), for the registration, under
the Securities Act of 1933, as amended (the “Act”), of, among other securities, the Warrants and
the Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”);

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing to so act, in connection with the issuance, registration, transfer,
exchange, redemption and exercise of the Warrants;

WHEREAS, the Company desires to provide for the form and provisions of the Warrants, the terms
upon which they shall be issued and exercised, and the respective rights, limitation of rights, and
immunities of the Company, the Warrant Agent, and the holders of the Warrants; and

WHEREAS, all acts and things have been done and performed that are necessary to make the
Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Warrant
Agent, as provided herein, the valid, binding and legal obligations of the Company, and to
authorize the execution and delivery of this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto
agree as follows:

1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as
agent for the Company for the Warrants, and the Warrant Agent hereby accepts such appointment and
agrees to perform the same in accordance with the terms and conditions set forth in this Agreement.

2. Warrants.

2.1 Form of Warrant. Each Warrant shall be (a) issued in registered form only, (b) in
substantially the forms of Exhibit A, hereto, the provisions of which are incorporated
herein, and (c) signed by, or bear the facsimile signature of, the President and the Secretary of
the Company. In the event the person whose facsimile signature has been placed upon any Warrant
shall have ceased to serve in the capacity in which such person signed the Warrant before such
Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such
at the date of issuance.

2.2 Effect of Countersignature. Unless and until countersigned by the Warrant Agent
pursuant to this Agreement, a Warrant shall be invalid and of no effect and may not be exercised by
the holder thereof.

2.3 Registration.

2.3.1 Warrant Register. The Warrant Agent shall maintain books (the “Warrant
Register”) for the registration of the original issuance and transfers of the Warrants. Upon the
initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants in the
names of the respective holders thereof in such denominations and otherwise in accordance with
instructions delivered to the Warrant Agent by the Company.

2.3.2 Registered Holder. Prior to due presentment for registration of transfer of any
Warrant, the Company and the Warrant Agent may deem and treat the person in whose name such Warrant
shall be registered upon the Warrant Register (the “registered holder”), as the absolute owner of
such Warrant and of each Warrant represented thereby (notwithstanding any notation of ownership or
other writing on the warrant certificate made by anyone other than the Company or the Warrant
Agent), for the purpose of any exercise thereof, and for all other purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.

3. Terms and Exercise of Warrants.

3.1 Exercise Price. Each Warrant shall, when countersigned by the Warrant Agent,
entitle the registered holder thereof, subject to the provisions of such Warrant and of this
Warrant Agreement, to purchase from the Company the number of shares of Common Stock stated
therein, at the price of $0.3718 per whole share (the “Exercise Price”), subject to the adjustments
provided in Section 4 hereof .

3.2 Duration of Warrants. A Warrant may be exercised only during the period
(“Exercise Period”) commencing six months from issuance and terminating at 5:30 p.m., New York
City time five years from the start of the Exercise Period (the “Expiration Date”). Each Warrant
not exercised on or before the Expiration Date shall become void, and all rights thereunder and all
rights in respect thereof under this Agreement shall cease at the close of business on the
Expiration Date.

3.3 Exercise of Warrants.

(a) If an effective registration statement is then available for the issuance of the Warrant
Shares, a registered holder may exercise the Warrants through a cash exercise (a “Cash Exercise”)
or, if an effective registration statement is not then available for the issuance of the Warrant
Shares, through a cashless exercise (a “Cashless Exercise”) pursuant to Section 3.3(b) below.

(b) The registered holder may effect a Cashless Exercise by surrendering Warrant Certificates
to the Warrant Agent and noting on the Form of Election to Purchase that the registered holder
wishes to effect a Cashless Exercise, upon which the Company shall issue, or cause to be issued, to
the registered holder the number of Warrant Shares determined as follows:

 

	 	 	 	 	 
	 
	 	  
	 	X = Y x [(A-B)/A]

	where:
	 	  
	 	X = the number of Warrant

Shares to be issued to the

registered holder;

	 	 	  
	 	Y = the number of Warrant

Shares with respect to which the

Warrant Certificates are being

exercised;

	 	 	  
	 	A = the average of the

Closing Sale Prices of the shares

of Common stock (as reported by

Bloomberg Financial Markets) for

the five (5) consecutive trading

days ending on the date

immediately preceding the Date of

Exercise; and

	 	 	  
	 	B = the Exercise Price.

“Closing Sale Price” means, for any security as of any date, the last trade price for such
security on the principal securities exchange or trading market for such security, as reported by
Bloomberg Financial Markets, or, if such exchange or trading market begins to operate on an
extended hours basis and does not designate the last trade price, then the last trade price of such
security prior to 4:00 P.M., New York City time, as reported by Bloomberg Financial Markets, or if
the foregoing do not apply, the last trade price of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg Financial Markets, or, if
no last trade price is reported for such security by Bloomberg Financial Markets, the average of
the bid prices, or the ask prices, respectively, of any market makers for such security as reported
in the “pink sheets” by Pink Sheets LLC. If the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Sale Price of such
security on such date shall be the fair market value as mutually determined by the Company and the
registered holder. If the Company and the registered holder are unable to agree upon the fair
market value of such security, then the Board of Directors of the Company shall use its good faith
judgment to determine the fair market value. The Board of Directors’ determination shall be
binding upon all parties absent demonstrable error. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during
the applicable calculation period.

(c) At such times, and upon such representations and agreements, if applicable, upon surrender
of a Warrant Certificate and delivery of the Form of Election to Purchase (with the Warrant Shares
Exercise Log attached) to the Warrant Agent at its address for notice set forth in Section 9.2
hereof, and, in the case of a Cash Exercise, upon payment of the Exercise Price multiplied by the
number of Warrant Shares that the registered holder intends to purchase thereunder (which must be a
whole number) (the “Aggregate Exercise Price”), the Company shall promptly issue and deliver to the
registered holder a certificate for the Warrant Shares issuable upon such exercise. Any Person so
designated by the registered holder to receive Warrant Shares shall be deemed to have become holder
of record of such Warrant Shares as of the Date of Exercise of the relevant Warrant Certificate.
For so long as there is a then effective registration statement covering the issuance of the
Warrant Shares or if a registered holder effects a Cashless Exercise, the Warrant Shares shall be
issued free of all restrictive legends, and the Company shall, upon request of the registered
holder, if available, use commercially reasonable efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established clearing corporation
performing similar functions. If fewer than all Warrant Shares issuable upon exercise of the
relevant Warrant Certificate are purchased on such Date of Exercise, then the Company will execute
and deliver to the registered holder or its assigns a New Warrant Certificate (dated the date
thereof) evidencing the unexercised portion of the relevant Warrant Certificate.

3.3.1 Valid Issuance. All shares of Common Stock issued upon the proper exercise of a
Warrant in conformity with this Agreement shall be validly issued, fully paid and nonassessable.

3.3.2 Date of Issuance. Each person in whose name any such certificate for shares of
Common Stock is issued shall for all purposes be deemed to have become the holder of record of such
shares on the date on which the Warrant was surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of such certificate, except that, if the date of such
surrender and payment is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of such shares at the close of business on the
next succeeding date on which the stock transfer books are open.

4. Adjustments.

4.1 Stock Dividends and Splits. If the Company, (i) pays a stock dividend on its
Common Stock or otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides its outstanding shares of Common Stock into a larger number
of shares, (iii) combines its outstanding shares of Common Stock into a smaller number of shares or
(iv) issues by reclassification of shares of Common Stock any shares of capital stock of the
Company, then in each such case the Exercise Price shall be multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately before such event
and the denominator of which shall be the number of shares of Common Stock outstanding immediately
after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution, and any adjustment pursuant to clause (ii), (iii) or (iv) of
this paragraph shall become effective immediately after the effective date of such subdivision or
combination or reclassification.

4.2 Pro Rata Distributions. If the Company, at any time while the Warrants are
outstanding, distributes to all holders of Common Stock for no consideration (i) evidences of its
indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding
paragraph) or (iii) rights, options or warrants to subscribe for or purchase any security, or (iv)
any other asset (including cash or cash dividends) (in each case, “Distributed Property”), then,
upon any exercise of the Warrants that occurs after the record date fixed for determination of
stockholders entitled to receive such distribution, the registered holder shall be entitled to
receive, in addition to the Warrant Shares otherwise issuable upon such exercise (if applicable),
the Distributed Property that such registered holder would have been entitled to receive in respect
of such number of Warrant Shares had the registered holder been the record holder of such Warrant
Shares immediately prior to such record date without regard to any limitation on exercise contained
therein.

4.3 Fundamental Transactions. If (i) the Company effects any merger or consolidation
of the Company with or into another Person, in which the Company is not the survivor or the
stockholders of the Company immediately prior to such merger or consolidation do not own, directly
or indirectly, at least 50.1% of the voting securities of the surviving entity, (ii) the Company
effects any sale, lease, assignment, transfer, conveyance or other distribution of all or
substantially all of its assets is acquired by a third party, in each case, in one or a series of
related transactions, (iii) any direct or indirect purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which at least a majority of
the holders of Common Stock are permitted to tender or exchange their shares for other securities,
cash or property, (iv) the Company, directly or indirectly, in one or more related transactions,
effects any reorganization, recapitalization or reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (other than as a result of a subdivision or
combination of shares of Common Stock covered by Section 4.1 above), or (v) the Company, directly
or indirectly, in one or more related transactions consummates a stock or share purchase agreement
or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another person whereby such other person acquires more than
50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the
other person or other persons making or party to, or associated or affiliated with the other
persons making or party to, such stock or share purchase agreement or other business combination)
(in any such case, a “Fundamental Transaction”), then the registered holder shall have the right
thereafter to receive, upon exercise of the Warrant, the same amount and kind of securities, cash
or property as it would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the
number of Warrant Shares then issuable upon exercise in full of the Warrant without regard to any
limitations on exercise contained in the Warrant (the “Alternate Consideration”). The Company
shall not effect any such Fundamental Transaction unless prior to or simultaneously with the
consummation thereof, any successor to the Company, surviving entity or the corporation purchasing
or otherwise acquiring such assets or other appropriate corporation or Person shall assume the
obligation to deliver to the registered holder, such Alternate Consideration as, in accordance with
the foregoing provisions, the registered holder may be entitled to receive, and the other
obligations under the Warrant.

4.4 Subsequent Equity Sales. (i) Except as provided in Section 4.4(iii) below, if and
whenever the Company shall issue or sell, or is, in accordance with Section 4.4(ii)(l) through
4.4(ii)(7) below, deemed to have issued or sold, any shares of Common Stock or Common Stock
Equivalents entitling any Person to acquire shares of Common Stock for no consideration or for a
consideration per share less than the Exercise Price in effect immediately prior to the time of
such issue or sale, then and in each such case (a “Trigger Issuance”) the then-existing Exercise
Price shall be reduced as of the close of business on the effective date of the Trigger Issuance,
to a price determined as follows:

Adjusted Exercise Price = (A x B) + D

      

A+C

where

“A” equals the number of shares of Common Stock outstanding, including Additional Shares of
Common Stock (as defined below) deemed to be issued hereunder, immediately preceding such Trigger
Issuance;

“B” equals the Exercise Price in effect immediately preceding such Trigger Issuance;

“C” equals the number of Additional Shares of Common Stock issued or deemed issued hereunder
as a result of the Trigger Issuance; and

“D” equals the aggregate consideration, if any, received or deemed to be received by the
Company upon such Trigger Issuance;

provided, however, that in no event shall the Exercise Price after giving effect to such Trigger
Issuance be greater than the Exercise Price immediately prior to such Trigger Issuance.

As used in this Warrant, the term “Additional Shares of Common Stock” shall mean all shares of
Common Stock or Common Stock Equivalents issued by the Company or deemed to be issued pursuant to
this paragraph (e), other than Excluded Issuances (as defined in Section 4.4(iii) below).

As used in this Warrant, the term “Common Stock Equivalents” means any securities of the
Company or any Subsidiary 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 exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock or other securities that entitle the holder to receive,
directly or indirectly, Common Stock.

(ii) For purposes of this Section 4.4, the following Sections 4.4(ii)(l) to 4.4(ii)(7) shall
also be applicable:

(1) Issuance of Rights or Options. In case at any time the Company shall in any manner grant
(directly and not by assumption in a merger or otherwise) any warrants or other rights to subscribe
for or to purchase, or any options for the purchase of, Common Stock or any stock or security
convertible into or exchangeable for Common Stock (such warrants, rights or options being called
“Options” and such convertible or exchangeable stock or securities being called “Convertible
Securities”), whether or not such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which Common Stock is issuable
upon the exercise of such Options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the sum (which sum shall constitute the applicable consideration) of
(x) the total amount, if any, received or receivable by the Company as consideration for the
granting of such Options, plus (y) the aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus (z), in the case of such Options that relate to
Convertible Securities, the aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (ii)
the total maximum number of shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of
such Options) shall be less than the Exercise Price in effect immediately prior to the time of the
granting of such Options, then the total number of shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to have been issued for such
price per share as of the date of granting of such Options or the issuance of such Convertible
Securities and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise
Price. Except as otherwise provided in Section 4.4(ii)(3), no adjustment of the Exercise Price
shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon
exercise of such Options or upon the actual issue of such Common Stock upon conversion or exchange
of such Convertible Securities.

(2) Issuance of Convertible Securities. In case the Company shall in any manner issue
(directly and not by assumption in a merger or otherwise) or sell any Convertible Securities,
whether or not the rights to exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the sum (which sum shall constitute the applicable
consideration) of (x) the total amount received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus (y) the aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange thereof, by (ii) the
total number of shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Exercise Price in effect immediately prior to the
time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be deemed to have been issued for
such price per share as of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price, provided
that (a) except as otherwise provided in Section 4.4(ii)(3), no adjustment of the Exercise Price
shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such
Convertible Securities and (b) no further adjustment of the Exercise Price shall be made by reason
of the issue or sale of Convertible Securities upon exercise of any Options to purchase any such
Convertible Securities for which adjustments of the Exercise Price have been made pursuant to the
other provisions of Section 4.4. No adjustment pursuant to this Section 4.4 shall be made if such
adjustment would result in an increase of the Exercise Price then in effect.

(3) Change in Option Price or Conversion Rate. Upon the happening of any of the following
events, namely, if the purchase price provided for in any Option referred to in Section 4.4(ii)(l),
the additional consideration, if any, payable upon the conversion or exchange of any Convertible
Securities referred to in Sections 4.4(ii)(l) or 4.4(ii)(2), or the rate at which Convertible
Securities referred to in Sections 4.4(ii)(l) or 4.4(ii)(2) are convertible into or exchangeable
for Common Stock shall change at any time (including, but not limited to, changes under or by
reason of provisions designed to protect against dilution), the Exercise Price in effect at the
time of such event shall forthwith be reduced to the Exercise Price that would have been in effect
at such time had such Options or Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold.

(4) Stock Dividends. Subject to the provisions of this Section 4.4, in case the Company shall
declare a dividend or make any other distribution upon any stock of the Company (other than the
Common Stock) payable in Common Stock, Options or Convertible Securities, then any Common Stock,
Options or Convertible Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.

(5) Consideration for Stock. In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to
be the gross amount received by the Company therefor. In case any shares of Common Stock, Options
or Convertible Securities shall be issued or sold for a consideration other than cash, the amount
of the consideration other than cash received by the Company shall be deemed to be the fair value
of such consideration as determined in good faith by the Board of Directors of the Company. In
case any Options shall be issued in connection with the issue and sale of other securities of the
Company, together comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed to have been issued
for such consideration as determined in good faith by the Board of Directors of the Company. If
Common Stock, Options or Convertible Securities shall be issued or sold by the Company and, in
connection therewith, other Options or Convertible Securities (the “Additional Rights”) are issued,
then the consideration received or deemed to be received by the Company shall be reduced by the
fair market value of the Additional Rights (as determined using the Black Scholes Option Pricing
Model or another method mutually agreed to by the Company and the Holder). The Board of Directors
of the Company shall respond promptly, in writing, to an inquiry by the registered holder as to the
fair market value of the Additional Rights. In the event that the Board of Directors of the
Company and the registered holder are unable to agree upon the fair market value of the Additional
Rights, the Company and the registered holder shall jointly select an appraiser who is experienced
in such matters. The decision of such appraiser shall be final and conclusive, and the cost of
such appraiser shall be borne evenly by the Company and the registered holder.

(6) Record Date. In case the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them (i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities, or (ii) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.

(7) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall
not include shares owned or held by or for the account of the Company or any of its wholly-owned
subsidiaries, and the disposition of any such shares (other than the cancellation or retirement
thereof) shall be considered an issue or sale of Common Stock for the purpose of this Section 4.4.

(iii) Notwithstanding the foregoing, no adjustment will be made under this Section 4.4 in
respect of: (i) the issuance of securities upon the exercise or conversion of any Common Stock or
Common Stock Equivalents issued by the Company on or prior to the date hereof provided that the
terms of such Common Stock or Common Stock Equivalents are not amended, modified or changed on or
after the date hereof, (ii) the grant of options, warrants, Common Stock or other Common Stock
Equivalents (but not including any amendments to such instruments) under any duly authorized
Company stock option, restricted stock plan or stock purchase plan whether now existing or
hereafter approved by the Company and its stockholders in the future, and the issuance of Common
Stock in respect thereof, or as an inducement grant to new employees, consultants, directors or
officers, (iii) the issuance of securities in connection with a Strategic Transaction, (iv) the
issuance of securities to Fusion Capital Fund II, LLC under the Common Stock Purchase Agreement by
and between the Company and Fusion Capital Fund II, LLC dated June 12, 2009, or (v) the issuance of
securities in a transaction described in Section 4.1 or 4.2 (collectively, “Excluded Issuances”).
For purposes of this paragraph, a “Strategic Transaction” means a transaction or relationship in
which (1) the Company issues shares of Common Stock to a Person (or a shareholder, partner, member
or other owner thereof) that the Board of Directors of the Company determined in good faith is,
itself or through its Subsidiaries, an operating company in a business synergistic with the
business of the Company and (2) the Company expects to receive benefits in addition to the
investment of funds, but shall not include (x) a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to a Person whose primary business is
investing in securities or (y) issuances to lenders.

4.5 Notices of Changes in Warrant. Upon every adjustment of the Exercise Price or the
number of shares issuable upon exercise of a Warrant, the Company shall give written notice thereof
to the Warrant Agent, which notice shall state the Exercise Price resulting from such adjustment
and the increase or decrease, if any, in the number of shares purchasable at such price upon the
exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts
upon which such calculation is based. Upon the occurrence of any event specified in Sections 4.1,
4.2, 4.3 and 4.4, then, in any such event, the Company shall give written notice to each Warrant
holder, at the last address set forth for such holder in the Warrant Register, of the record date
or the effective date of the event, and, upon written request, provide such holder with a copy of
the notice provided to the Warrant Agent. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such event.

4.6 No Fractional Shares. Notwithstanding any provision contained in this Warrant
Agreement to the contrary, the Company shall not issue fractional shares upon exercise of Warrants.
If the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a
fractional interest in a share, the Company shall, upon such exercise, round down to the nearest
whole number the number of shares of Common Stock to be issued to the Warrant holder and shall pay
the holder in cash the fair market value (based on the Closing Sales Prices) for any such
fractional shares.

5. Transfer and Exchange of Warrants.

5.1 Registration of Transfer. The Warrant Agent shall register the transfer, from
time to time, of any outstanding Warrant in the Warrant Register, upon surrender of such Warrant
for transfer, properly endorsed with signatures properly guaranteed and accompanied by appropriate
instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate
number of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent.
The Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to time
upon request.

5.2 Charges, Taxes and Expenses. No charges shall be made for any issuance and
delivery of shares of Common Stock upon exercise of the Warrant for any issue or transfer tax,
transfer agent fee or other incidental tax or expense in respect of the issuance of such shares,
all of which taxes and expenses shall be paid by the Company; provided, however, that the Company
shall not be required to pay any tax that may be payable in respect of any transfer involved in the
registration of any Warrant Shares or the Warrants in a name other than that of the registered
holder or an affiliate thereof. The registered holder shall be responsible for all other tax
liability that may arise as a result of holding or transferring the Warrant or receiving Warrant
Shares upon exercise hereof.

5.3 Warrant Execution and Countersignature. The Warrant Agent is hereby authorized to
countersign and to deliver, in accordance with the terms of this Agreement, the Warrants required
to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by
the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the
Company for such purpose.

6. Other Provisions Relating to Rights of Holders of Warrants.

6.1 No Rights as Stockholder. A Warrant does not entitle the registered holder
thereof to any of the rights of a stockholder of the Company, including the right to receive
dividends, or other distributions, exercise any preemptive rights to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the election of
directors of the Company or any other matter.

6.2 Lost, Stolen, Mutilated, or Destroyed Warrants. If a Warrant is mutilated, lost,
stolen or destroyed, the Company and the Warrant Agent shall issue or cause to be issued in
exchange and substitution for and upon cancellation thereof, or in lieu of and substitution for the
Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction (in such case) and, in each case, a customary and reasonable
indemnity or surety bond, if requested by the Company.

6.3 Reservation of Common Stock. The Company shall at all times reserve and keep
available a number of its authorized but unissued shares of Common Stock that will be sufficient to
permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement.

7. Concerning the Warrant Agent and Other Matters.

7.1 Payment of Taxes. The Company will from time to time promptly pay all taxes and
charges that may be imposed upon the Company or the Warrant Agent in respect of the issuance or
delivery of shares of Common Stock upon the exercise of Warrants, but the Company shall not be
obligated to pay any transfer taxes in respect of the Warrants or such shares.

7.2 Resignation, Consolidation, or Merger of Warrant Agent.

7.2.1 Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to
it hereafter appointed, may resign its duties and be discharged from all further duties and
liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the
office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the
Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after it has been notified
in writing of such resignation or incapacity by the Warrant Agent or by the holder of the Warrant
(who shall, with such notice, submit his, her or its Warrant for inspection by the Company), then
the holder of any Warrant may apply to the Supreme Court of the State of New York for the County of
New York for the appointment of a successor Warrant Agent at the Company’s cost. Any successor
Warrant Agent, whether appointed by the Company or by such court, shall be a corporation organized
and existing under the laws of the State of New York, in good standing and having its principal
office in the Borough of Manhattan, City and State of New York, and authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by federal or state
authority. After appointment, any successor Warrant Agent shall be vested with all the authority,
powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like
effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if
for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and
deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent
all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request
of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and
all instruments in writing for more fully and effectually vesting in and confirming to such
successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.

7.2.2 Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall
be appointed, the Company shall give notice thereof to the predecessor Warrant Agent and the
transfer agent for the Common Stock not later than the effective date of any such appointment.

7.2.3 Merger or Consolidation of Warrant Agent. Any corporation into which the
Warrant Agent may be merged or with which it may be consolidated or any corporation resulting from
any merger or consolidation to which the Warrant Agent shall be a party shall be the successor
Warrant Agent under this Agreement without any further act.

7.3 Fees and Expenses of Warrant Agent.

7.3.1 Remuneration. The Company agrees to pay the Warrant Agent reasonable
remuneration for its services as such Warrant Agent hereunder and will reimburse the Warrant Agent
upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of
its duties hereunder.

7.3.2 Further Assurances. The Company agrees to perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by the Warrant Agent for the
carrying out or performing of the provisions of this Agreement.

7.4 Liability of Warrant Agent.

7.4.1 Reliance on Company Statement. Whenever in the performance of its duties under
this Warrant Agreement the Warrant Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a statement signed by the President or
Chairman of the Board of the Company and delivered to the Warrant Agent. The Warrant Agent may
rely upon such statement for any action taken or suffered in good faith by it pursuant to the
provisions of this Agreement.

7.4.2 Indemnity. The Warrant Agent shall be liable hereunder only for its own gross
negligence, willful misconduct or bad faith. The Company agrees to indemnify the Warrant Agent and
save it harmless against any and all liabilities, including judgments, costs and reasonable counsel
fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement, except
as a result of the Warrant Agent’s gross negligence, willful misconduct or bad faith.

7.4.3 Exclusions. The Warrant Agent shall have no responsibility with respect to the
validity of this Agreement or with respect to the validity or execution of any Warrant (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant; nor shall it be responsible to
make any adjustments required under the provisions of Section 4 hereof or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment; nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares of Common Stock to
be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock
will when issued be valid and fully paid and nonassessable.

7.5 Acceptance of Agency. The Warrant Agent hereby accepts the agency established by
this Agreement and agrees to perform the same upon the terms and conditions herein set forth and,
among other things, shall account promptly to the Company with respect to Warrants exercised and
concurrently account for, and pay to the Company, all moneys received by the Warrant Agent for the
purchase of shares of Common Stock through the exercise of Warrants.

7.6 Waiver. The Warrant Agent hereby waives any and all right, title, interest or
claim of any kind (“Claim”) in or to any distribution of the Trust Account (as defined in that
certain Investment Management Trust Agreement, dated as of the date hereof, by and between the
Company and the Warrant Agent, as trustee thereunder), and hereby agrees not to seek recourse,
reimbursement, payment or satisfaction for any Claim against the Trust Account for any reason
whatsoever.

8. Limitations on Exercise.

8.1 Notwithstanding anything to the contrary contained herein, the number of Warrant Shares
that may be acquired by the registered holder upon any exercise of the Warrant (or otherwise in
respect hereof) shall be limited to the extent necessary to ensure that, following such exercise
(or other issuance), the total number of shares of Common Stock then beneficially owned by the
registered holder and its affiliates and any other persons whose beneficial ownership of Common
Stock would be aggregated with the registered holder’s for purposes of Section 13(d) of the
Exchange Act, does not exceed 4.99% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. For purposes of this Section 8.1, in
determining the number of outstanding shares of Common Stock, a registered holder may rely on the
number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic
or annual report filed with the Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by the Company or its transfer
agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral
request of a registered holder, the Company shall within two trading days confirm orally and in
writing to the registered holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant, by the registered
holder or its affiliates since the date as of which such number of outstanding shares of Common
Stock was reported. The Company’s obligation to issue shares of Common Stock in excess of the
limitation referred to in this Section shall be suspended (and, except as provided below, shall not
terminate or expire notwithstanding any contrary provisions hereof) until such time, if any, as
such shares of Common Stock may be issued in compliance with such limitation; provided that if, as
of 5:30 P.M., New York City time, on the Expiration Date, the Company has not received written
notice that the shares of Common Stock may be issued in compliance with such limitation, the
Company’s obligation to issue such shares shall terminate. This provision shall not restrict the
number of shares of Common Stock which a registered holder may receive or beneficially own in order
to determine the amount of securities or other consideration that such registered holder may
receive in the event of a Fundamental Transaction as contemplated in Section 4.3 of this Agreement.
By written notice to the Company, the registered holder may waive the provisions of this Section
but any such waiver will not be effective until the 61st day after such notice is delivered to the
Company, nor will any such waiver affect any other registered holder. It shall not be the
responsibility of the Warrant Agent to monitor the limitations on exercises imposed by this Section
8.1.

8.2 Notwithstanding anything to the contrary contained herein, the number of Warrant Shares
that may be acquired by the registered holder upon any exercise of this Warrant (or otherwise in
respect hereof) shall be limited to the extent necessary to ensure that, following such exercise
(or other issuance), the total number of shares of Common Stock then beneficially owned by such
registered holder and its affiliates and any other persons whose beneficial ownership of Common
Stock would be aggregated with the registered holder’s for purposes of Section 13(d) of the
Exchange Act, does not exceed 9.99% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such exercise). For
such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. The Company’s obligation to
issue shares of Common Stock in excess of the limitation referred to in this Section shall be
suspended (and, except as provided below, shall not terminate or expire notwithstanding any
contrary provisions hereof) until such time, if any, as such shares of Common Stock may be issued
in compliance with such limitation; provided that if, as of 5:30 P.M., New York City time, on the
Expiration Date, the Company has not received written notice that the shares of Common Stock may be
issued in compliance with such limitation, the Company’s obligation to issue such shares shall
terminate. This provision shall not restrict the number of shares of Common Stock which a
registered holder may receive or beneficially own in order to determine the amount of securities or
other consideration that such Holder may receive in the event of a Fundamental Transaction as
contemplated in Section 4.3 of this Agreement. This restriction may not be waived. It shall not
be the responsibility of the Warrant Agent to monitor the limitations on exercises imposed by this
Section 8.2.

9. Miscellaneous Provisions.

9.1 Successors. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective
successors and assigns.

9.2 Notices. Any notice, statement or demand authorized by this Warrant Agreement to
be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company shall be
delivered by hand or sent by registered or certified mail or overnight courier service, addressed
(until another address is filed in writing by the Company with the Warrant Agent) as follows:

Aastrom Biosciences, Inc.

24 Frank Lloyd Wright Drive

Ann Arbor, MI 48106

Attn: President

Any notice, statement or demand authorized by this Agreement to be given or made by the holder of
any Warrant or by the Company to or on the Warrant Agent shall be delivered by hand or sent by
registered or certified mail or overnight courier service, addressed (until another address is
filed in writing by the Company with the Warrant Agent) as follows:

	 	 	 
	Continental Stock Transfer & Trust Company

	17 Battery Place

	 	

	New York, New York 10004

	Attn:

	 	Compliance Department

Any notice, statement or demand authorized by this Agreement to be given or made by the Company or
by the Warrant Agent to or on the holder of any Warrant shall be delivered by hand or sent by
registered or certified mail or overnight courier service, addressed (until another address is
filed in writing by the holder with the Warrant Agent) as set forth on the Warrant Register

Any notice, sent pursuant to this Warrant Agreement shall be effective, if delivered by hand, upon
receipt thereof by the party to whom it is addressed, if sent by overnight courier, on the next
business day of the delivery to the courier, and if sent by registered or certified mail on the
third day after registration or certification thereof.

9.3 Applicable Law. The validity, interpretation and performance of this Agreement
and of the Warrants shall be governed in all respects by the laws of the State of New York, without
giving effect to conflicts of law principles that would result in the application of the
substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or
claim against it arising out of or relating in any way to this Agreement shall be brought and
enforced in the courts of the State of New York or the United States District Court for the
Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and
that such courts represent an inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by registered or certified mail, return
receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.2 hereof.
Such mailing shall be deemed personal service and shall be legal and binding upon the Company in
any action, proceeding or claim.

9.4 Persons Having Rights under this Agreement. Nothing in this Agreement expressed
and nothing that may be implied from any of the provisions hereof is intended, or shall be
construed, to confer upon, or give to, any person or corporation other than the parties hereto and
the registered holders of the Warrants any right, remedy, or claim under or by reason of this
Warrant Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All
covenants, conditions, stipulations, promises, and agreements contained in this Warrant Agreement
shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns
and of the registered holders of the Warrants.

9.5 Examination of the Warrant Agreement. A copy of this Agreement shall be available
at all reasonable times at the office of the Warrant Agent in the Borough of Manhattan, City and
State of New York, for inspection by the registered holder of any Warrant. The Warrant Agent may
require any such holder to submit his, her or its Warrant for inspection by it.

9.6 Counterparts. This Agreement may be executed in any number of original or
facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the same instrument.

9.7 Effect of Headings. The section headings herein are for convenience only and are
not part of this Warrant Agreement and shall not affect the interpretation thereof.

9.8 Amendments. This Agreement may be amended by the parties hereto without the
consent of any registered holder for the purpose of curing any ambiguity, or curing, correcting or
supplementing any defective provision contained herein or adding or changing any other provisions
with respect to matters or questions arising under this Agreement as the parties may deem necessary
or desirable and that the parties deem shall not adversely affect the interest of the registered
holders. All other modifications or amendments, including any amendment to increase the Exercise
Price or shorten the Exercise Period, shall require the written consent of the registered holders
of a majority of the then outstanding Warrants.

9.9 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.

[Signature page follows]IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above written.

AASTROM BIOSCIENCES, INC.

By: /s/ Timothy M. Mayleben

Name: Timothy M. Mayleben

Title: President and Chief Executive Officer

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

By: /s/ John W. Comer, Jr.

Name: John W. Comer, Jr.

Title: Vice President

Exhibit A

EXERCISABLE ON OR AFTER JULY 21, 2010

AND ON OR BEFORE JULY 21, 2015 (THE EXPIRATION DATE)

CLASS A WARRANTS

TO ACQUIRE _______ SHARES OF COMMON STOCK OF

AASTROM BIOSCIENCES, INC.

Warrant Certificate No.:        CUSIP: 00253U 149

This Warrant Certificate certifies that      , or registered assigns, is the
registered holder of a Class A Warrant (the “Warrant”) to acquire from Aastrom Biosciences, Inc., a
Michigan corporation (the “Company”), the number of fully paid and non-assessable shares of Common
Stock, no par value, of the Company (the “Common Stock”) specified above for consideration equal to
the Exercise Price (as defined in the Warrant Agreement) per share of Common Stock. The Exercise
Price and number of shares of Common Stock and/or type of securities or property issuable upon
exercise of the Warrant are subject to adjustment upon the occurrence of certain events as set
forth in the Warrant Agreement. The Warrant evidenced by this Warrant Certificate shall not be
exercisable after and shall terminate and become void as of 5:30 P.M., New York time, on the
Expiration Date.

The Warrant evidenced by this Warrant Certificate is part of a duly authorized issue of warrants
expiring on the Expiration Date entitling the registered holder hereof to receive shares of Common
Stock, and is issued or to be issued pursuant to a Warrant Agreement dated January 21, 2010 (the
“Warrant Agreement”), duly executed and delivered by the Company to Continental Stock Transfer &
Trust Company, as warrant agent (the “Warrant Agent”, which term includes any successor Warrant
Agent under the Warrant Agreement), which Warrant Agreement is hereby incorporated by reference in
and made a part of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the
Company and the registered holders (“Holders” meaning, from time to time, the registered holders of
the warrant issued thereunder). To the extent any provisions of this Warrant Certificate conflicts
with any provision of the Warrant Agreement, the provisions of the Warrant Agreement shall apply. A
copy of the Warrant Agreement may be obtained by the Holder hereof upon written request to the
Company at 24 Frank Lloyd Wright Drive, Ann Arbor, MI 48106. Capitalized terms not defined herein
have the meanings ascribed thereto in the Warrant Agreement.

This Warrant may be exercised, in whole or in part, at any time on or after July 21, 2010 and on or
before July 21, 2015 (the “Expiration Date”), subject to the terms of the Warrant Agreement
including, but not limited to, Section 3 thereof, by surrendering this Warrant Certificate, with
the Form of Election to Purchase set forth hereon properly completed and executed, together with
payment of the Aggregate Exercise Price in accordance with Section 3 of the Warrant Agreement. Each
exercise must be for a whole number of Warrant Shares. In the event that upon any exercise of the
Warrant evidenced hereby the number of shares of Common Stock acquired shall be less than the total
number of shares of Common Stock which may be purchased pursuant to this Warrant, there shall be
issued to the Holder hereof or such Holder’s assignee a new Warrant Certificate evidencing the
unexercised portion of this Warrant.

The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price set
forth on this Warrant Certificate may, subject to certain conditions, be adjusted, and that upon
the occurrence of certain events the number of shares of Common Stock and/or the type of securities
or other property issuable upon the exercise of this Warrant shall be adjusted. No fractions of a
share of Common Stock will be issued upon the exercise of this Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.

Warrant Certificates, when surrendered at the office of the Warrant Agent by the registered Holder
thereof in person or by such Holder’s legal representative or attorney duly appointed and
authorized in writing, may be exchanged, in the manner and subject to the limitations provided in
the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate
or Warrant Certificates of like tenor evidencing in the aggregate the right to purchase a like
number of Warrant Shares.

Each taker and holder of this Warrant Certificate, by taking or holding the same, consents and
agrees that the holder of this Warrant Certificate when duly endorsed in blank may be treated by
the Company, the Warrant Agent and all other persons dealing with this Warrant Certificate as the
absolute owner hereof for any purpose and as the person entitled to exercise the rights represented
hereby or the person entitled to the transfer hereof on the register of the Company maintained by
the Warrant Agent, any notice to the contrary notwithstanding, provided that until such transfer on
such register, the Company and the Warrant Agent may treat the registered Holder hereof as the
owner for all purposes.

This Warrant does not entitle any Holder to any of the rights of a shareholder of the Company.

This Warrant and the Warrant Agreement are subject to amendment as provided in the Warrant
Agreement.

This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been
countersigned by the Warrant Agent.

[The remainder of this page has been left intentionally blank.]

1

IN WITNESS WHEREOF, the undersigned have caused this Warrant Certificate to be executed as of the
date set forth below.

AASTROM BIOSCIENCES, INC.

By:

Name:

Title:

Countersigned:

CONTINENTAL STOCK TRANSFER &

TRUST COMPANY

By:

Name:

Title:

2

FORM OF ELECTION TO EXERCISE

To Aastrom Biosciences, Inc.:

In accordance with the Warrant Certificate enclosed with this Form of Election to Exercise, the
undersigned hereby irrevocably elects to exercise the Warrant with respect to      
Warrant Shares in accordance with the terms of the Warrant Agreement.

1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as:

       a Cash Exercise; or

       a Cashless Exercise.

2. Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise with
respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder shall pay the
Aggregate Exercise Price, in lawful money of the United States, by certified check or bank draft
payable to the order of the Company (or as otherwise agreed to by the Company) delivered to the
Warrant Agent, together with any applicable taxes payable by the undersigned pursuant to the
Warrant.

The undersigned requests that certificates for the shares of Common Stock issuable upon this
exercise be issued in the name of

	 	 	 
	Name:       

	Address:

	 	     

      

      

Social Security or Tax I.D. No.:       

3

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