Document:

creditagreement62910.htm

Exhibit 10.11

 

 

 

 

CREDIT AGREEMENT

 

Dated as of June 29, 2010

 

Between

 

WATERMAN STEAMSHIP CORPORATION,

 

as Borrower

 

INTERNATIONAL SHIPHOLDING CORPORATION,

 

as Guarantor

 

and

 

REGIONS BANK, as Lender

 

Relating to a

 

$46,000,000 Term Loan

  

  

  

 

TABLE OF CONTENTS

 

ARTICLE 1 Rules of Construction and Definitions 

 

SECTION 1.1 General Rules of Construction 

 

SECTION 1.2 Definitions 

 

ARTICLE 2 Credit to be Extended Under this Agreement 

 

SECTION 2.1 Loan

 

SECTION 2.2 Note.

 

SECTION 2.3 Interest

 

SECTION 2.4 Prepayments

 

SECTION 2.5 Place and Time of Payments

 

SECTION 2.6 Auto Debit Provision 

 

SECTION 2.7 Security 

 

SECTION 2.8 Guaranty Agreement

 

SECTION 2.9 Origination Fee

 

 

ARTICLE 3 Representations and Warranties

 

SECTION 3.1 Organization, Powers, etc. 

 

SECTION 3.2 Authorization of Borrowing, etc. 

 

SECTION 3.3 Litigation

 

SECTION 3.4 Agreements. 

 

SECTION 3.5 Federal Reserve Board Regulations

 

SECTION 3.6 Investment Company Act.

 

SECTION 3.7 ERNA

 

SECTION 3.8 Enforceability 

 

SECTION 3.9 Consents, Registrations, Approvals, etc. 

 

SECTION 3.10 Financial Condition

 

SECTION 3.11 No Misleading Information

 

SECTION 3.12 Taxes

 

SECTION 3.13 Patents, Trademarks

 

SECTION 3.14 Hazardous Substances

 

SECTION 3.15 Solvency

 

SECTION 3.16  Foreign Trade Control Regulations 

 

 

ARTICLE 4 Conditions of Lending         

                                                                                                                     

  SECTION 4.1 Representations and Warranties

 

  SECTION 4.2 No Default 

 

  SECTION 4.3 Intentionally Deleted

 

  SECTION 4.4 Required Items

 

  SECTION 4.5 Authorized Representative Certificates

 

  SECTION 4.6  Other Supporting Documents

 

 

ARTICLE 5 Covenants                                                                                                                               

 

SECTION 5.1 Existence

 

SECTION 5.2 Continuation of Current Business, Offices, Name, etc

 

SECTION 5.3 Sale of Assets, Consolidation, Merger

 

SECTION 5.4 Accounting Records

 

SECTION 5.5 Reports to the Lender

 

SECTION 5.6 Maintenance   

 

SECTION 5.7 Insurance

 

SECTION 5.8 Payment of Indebtedness, Taxes, etc.

 

. SECTION 5.9 Litigation Notice. 

 

SECTION 5.10 Visitation 

 

SECTION 5.11 Notice of Default 

 

SECTION 5.12 Further Assurances

 

SECTION 5.13 Transactions with Related Persons

SECTION 5.14 Use of Credit Proceeds

 

SECTION 5.15 Financial Covenants

 

SECTION 5.16 Change in Management

 

SECTION 5.17 PATRIOT Act

 

ARTICLE 6 Events of Default 

 

SECTION 6.1 Events of Default

 

SECTION 6.2 Lender's Remedies on Default

 

ARTICLE 7 Miscellaneous

 

SECTION 7.1 Notices

 

SECTION 7.2 Expenses

 

SECTION 7.3 Independent Obligations

SECTION 7.4 Heirs, Successors and Assigns

 

SECTION 7.5 Governing Law

 

SECTION 7.6 Date of Agreement

 

SECTION 7.7 Separability Clause

 

SECTION 7.8 Counterparts

SECTION 7.9 No Oral Agreements

 

SECTION 7.10 Waiver and Election 

 

SECTION 7.11 No Obligations of Lender; Indemnification 

SECTION 7.12 Set-off

 

SECTION 7.13 Participation

 

SECTION 7.14 Submission to Jurisdiction

 

SECTION 7.15 Usury Laws

 

SECTION 7.16 WAIVER OF TRIAL BY JURY

 

  

  

  

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT ("this Agreement") dated as of June 29, 2010 is between WATERMAN STEAMSIHP CORPORATION, a New York. corporation (the "Borrower"), INTERNATIONAL SHIPHOLDING CORPORATION, a Delaware corporation (the "Guarantor") and REGIONS BANK, an Alabama banking corporation (the "Lender").

 

Recitals

 

Capitalized terms used in these Recitals have the meanings defined for them above or in Section 1.2. The Borrower has requested that the Lender extend Credit to the Borrower under this Agreement and the other Credit Documents as described herein. To induce the Lender to extend Credit to the Borrower, the Borrower has agreed to execute and deliver this Agreement to the Lender.

 

Agreement

 

NOW, THEREFORE, in consideration of the foregoing Recitals, and to induce the Lender to extend Credit to the Borrower under this Agreement and the other Credit Documents, the Borrower and the Lender hereby agree as follows:

 

ARTICLE 1

 

Rules of Construction and Definitions

 

SECTION 1.1 General Rules of Construction. For the purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

 

(a) Words of masculine, feminine or neuter gender include the correlative words of other genders. Singular terms include the plural as well as the singular, and vice versa.

 

(b) All references herein to designated "Articles," "Sections" and other subdivisions or to lettered Exhibits are to the designated Articles, Sections and subdivisions hereof and the Exhibits annexed hereto unless expressly otherwise designated in context. All Article, Section, other subdivision and Exhibit captions herein are used for reference only and do not limit or describe the scope or intent of, or in any way affect, this Agreement.

 

(c) The terms "include," "including," and similar terms shall be construed as if followed by the phrase "without being limited to."

(d) The terms "herein," "hereof' and "hereunder" and other words of similar import

refer to this Agreement as a whole and not to any particular Article, Section, other subdivision or Exhibit.

 

(e) All Recitals set forth in, and all Exhibits to, this Agreement are hereby

 

incorporated in this Agreement by reference.

 

(f) No inference in favor of or against any party shall be drawn from the fact that

 

such party or such party's counsel has drafted any portion hereof.

 

(g) All references in this Agreement to a separate instrument are to such separate

 

instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

 

SECTION 1.2 Definitions. As used in this Agreement, the following terms are defined as follows:

 

(a)            Actual/360 Day Basis means a method of computing interest and other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360.

 

(b)            Affiliate of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For purposes of this definition, "control" when used with respect to any specified person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

 

(c)            Applicable Margin means two and eight tenths percent (2.8%) per annum.

 

(d)            Appraisal means a report that (i) determines the Appraised Value of the Vessel, (ii) is issued by a nationally recognized maritime appraiser experienced in appraising vessels of the same type as the Vessel and selected by the Lender, (iii) is prepared annually at the cost and expense of the Borrower, and (iv) is obtained by the Lender within thirty (30) days before each annual anniversary of the Closing Date.

 

(e)            Appraised Value means the desktop value of the Vessel as determined by the Appraisal.

 

(f)            Authorized Representative means the director or directors, officer or officers or authorized representatives of the Borrower or Guarantor, as applicable, that are duly authorized to act for such entity in the specified capacity under the Governing Documents or duly adopted resolutions of such entity or applicable law.

 

 

(g)            Borrower shall have the meaning attributed to that term in the preamble to this Agreement.

 

(h)            Business Day means any day, excluding Saturday and Sunday, on which the Lender's main office in Mobile, Alabama, is open to the public for carrying on substantially all of its banking business.

 

(i)            Capital Expenditures means with respect to Guarantor and the Subsidiaries, on a consolidated basis, for any period (without duplication), any expenditure for fixed assets or that is properly chargeable to a capital account in accordance with GAAP.

 

(i)Change of Control means (a) any "person" (as such term is used in Sections

13(d) and 14(d) of the Exchange Act), other than the existing owners, that becomes the beneficial owner (as defmed in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 30% of the total voting power of Guarantor or (b) Guarantor ceases to own, directly or indirectly, 100% of the Borrower or (c) the Board of Directors of the Borrower ceases to consist of a majority of the directors existing on the date hereof or directors nominated by at least two-thirds (2/3) of the then existing directors.

 

(k) • Closing Date means June 29, 2010.

 

Consolidated EBITDA means, for any period, with respect to Guarantor and the Subsidiaries, the sum of (without duplication) (a) Consolidated Net Income; (b) all Interest Expense of Guarantor and the Subsidiaries; (c) income taxes of Guarantor and the Subsidiaries; and (d) depreciation and amortization of Guarantor and the Subsidiaries determined on a consolidated basis in accordance with GAAP for such period; provided that if any Subsidiary is not wholly-owned by Guarantor, Consolidated EBrIDA shall be reduced (to the extent not otherwise reduced in accordance with GAAP) by an amount equal to (i) the amount of Consolidated Net Income attributable to such Subsidiary multiplied by (ii) the percentage ownership interest in the income of such Subsidiary not owned by Guarantor on the last day of such period.

 

(m)            Consolidated Indebtedness means all Indebtedness of Guarantor and the Subsidiaries determined on a consolidated basis in accordance with GAAP.

 

(n)            Consolidated Net Income means, for any period, the consolidated net income of Guarantor and the Subsidiaries for such period, as shown on the consolidated financial statements of Guarantor and the Subsidiaries delivered in accordance with Section 5.5.

 

(o)            Consolidated Tangible Net Worth means, with respect to Guarantor and the Subsidiaries, at any date for which a determination is to be made (determined on a consolidated basis without duplication in accordance with GAAP) (a) the amount of capital stock; plus (b) the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit); plus (c) deferred charges to the extent amortized and acquired contract costs net of accumulated amortization as stated on the then most recent audited balance

 

  

  

  

sheet of Guarantor; minus (d) the sum of (i) the cost of treasury shares and (ii) the book value of all assets that should be classified as intangibles (without duplication of deductions in respect of items already deducted in arriving at surplus and retained earnings) but in any event including goodwill, minority interests, research and development costs, trademarks, trade names, copyrights, patents and franchises, unamortized debt discount and expense, all reserves and any write up in the book value of assets resulting from a revaluation thereof subsequent to December 31, 1996.

 

(p) Credit means, individually and collectively, all loans, forbearances, renewals, extensions, advances, disbursements and other extensions of credit now or hereafter made by the Lender to or for the account of the Borrower under this Agreement and the other Credit Documents, including the Loan.

 

(q)            Credit Documents means this Agreement and the documents described in Exhibit A and all other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby.

 

(r)            Default Rate means a rate of interest equal to two percentage points (200 basis points) in excess of the interest rate otherwise payable on the Loan as set forth in Section 2.3(a), or the maximum rate permitted by law, whichever is less.

 

(s)            EBITDAR means, with respect to Guarantor and the Subsidiaries, on a consolidated basis, for any period (without duplication) the sum of (i) Consolidated EBITDA; and (ii) Lease Expense; less maintenance Capital Expenditures (calculated at 30% of their depreciation expense).

 

(t)            ERISA means the Employee Retirement Income Security Act of 1974, as amended.

 

(u)            Events of Default is defined in Section 6.1. An Event of Default "exists" if an Event of Default has occurred and is continuing.

 

(v)            Fixed Charges means with respect to Guarantor and the Subsidiaries, on a consolidated basis, for any period (without duplication), the sum of (i) Interest Expense; (ii) Lease Expense; and (iii) required principal payments for any outstanding debt during the applicable reporting period.

 

(w) GA_AP means generally accepted accounting principles for the United States.

 

(x)            Governing Documents means, with respect to any person that is not a natural person, all organizational and governing documents applicable thereto.

 

(y)            Governmental Authority means any national, state, county, municipal or other government, domestic or foreign, and any agency, authority, department, commission, bureau, board, court or other instrumentality thereof.

 

(z)Governmental Requirements means all laws, rules, regulations, ordinances,

judgments, decrees, codes, orders, injunctions, notices and demand letters of any Governmental Authority.

 

(aa) Guarantor shall have the meaning attributed to that term in the preamble to this Agreement.

 

(bb) Guaranty Agreement means that certain Guaranty Agreement dated of even date herewith executed by the Guarantor in favor of the Lender.

 

(cc) Hazardous Substances means all pollutants, effluents, contaminants, emissions, toxic or hazardous wastes and other substances, the removal of which is required or the manufacture, use, maintenance, handling, discharge or release of which is regulated, restricted, prohibited or penalized by any Governmental Requirement, or even if not so regulated, restricted, prohibited or penalized, might pose a hazard to the health and safety of the public or the occupants of the property on which it is located or the occupants of the property adjacent thereto, including (1) asbestos or asbestos-containing materials, (2) urea formaldehyde foam insulation, (3) polychlorinated biphenyls (PCBs), (4) flammable explosives, (5) radon gas, (6) laboratory wastes, (7) experimental products, including genetically engineered microbes and other recombinant DNA products, (8) petroleum, crude oil, natural gas, natural gas liquid, liquefied natural gas, other petroleum products and synthetic gas usable as fuel, (9) radioactive materials, and (10) any substance or mixture listed, defined or otherwise determined by any Governmental Authority to be hazardous, toxic or dangerous, or otherwise regulated, affected, controlled or giving rise to liability under any Governmental Requirement.

 

(dd) Indebtedness means, with respect to any Person at any date of determination (without duplication), (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taldng delivery thereof or the completion of such services, except trade payables, (v) all obligations on account of principal of such Person as lessee under capitalized leases, (vi) all indebtedness of other Persons secured by a lien on any asset of such Person, whether or not such indebtedness is assumed by such Person; provided that the amount of such indebtedness shall be the lesser of (a) the fair market value of such asset at such date of determination and (b) the amount of such indebtedness, and (vii) all indebtedness of other Persons guaranteed by such Person to the extent guaranteed; the amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided that the amount outstanding at any time of any indebtedness issued with original issue discount is the face amount of such indebtedness less the remaining unamortized portion of the original issue discount of such indebtedness at such time as determined in conformity with GAAP; and

provided further that Indebtedness shall not include any liability for current or deferred federal, state, local or other taxes, or any trade payables.

 

(ee) Interest Determination Date means the first day of each month in each year.

 

(if)Interest Expense means, with respect to Guarantor and the Subsidiaries, on a

consolidated basis, for any period (without duplication), interest expense, whether paid or accrued (including the interest component of capitalized leases), on all Indebtedness of Guarantor and the Subsidiaries for such period, net of interest income, all determined in accordance with GAAP.

 

(gg) Lease Expense means with respect to Guarantor and the Subsidiaries, on a consolidated basis, for any period (without duplication), all amounts payable under any operating leases and time charter agreements which may be classified as operating lease expenses, charter hire expenses or rent as determined in accordance with GAAP during the period in question.

 

(hh) LIBOR-Based Rate means the per annum rate of interest most recently published in the Bloomberg reporting service or such other financial information reporting service used by the Lender as of the close of business on the Closing Date and on each Interest Determination Date (being the rate quoted for the immediately preceding Business Day) as the London Interbank Offered Rate for U.S. dollar deposits having a term of one month, plus the Applicable Margin. The Lender shall determine the LIBOR-Based Rate on the Closing Date and on each Interest Determination Date.

 

(ii) Lien means any mortgage, pledge, assignment, charge, encumbrance, lien,

security title, security interest or other preferential arrangement.

 

(jj)Loan is defined in Section 2.1.

 

(ldc) Loan to Collateral Value means at any time of determination, the outstanding principal balance of the Loan divided by the Appraised Value.

 

(II) Margin Stock is defined in Regulation U of the Federal Reserve Board, as

amended.

 

(mm) Maturity Date is defined in Section 2.2. (nn) Note is defined in Section 2.2.

 

(oo) Obligations means (1) the Loan and all other obligations and debts owing to the Lender and arising under the terms of this Agreement, the Note and the other Credit Documents, whether now or hereafter incurred, existing or arising, including the Loan; (2) any sums expended by the Lender in exercising the rights and remedies described in Section 6.2; (3) all accrued interest on the Loan, and all costs, fees, charges and expenses incurred and payable in connection therewith, including fees payable under the terms of, or in connection with, this

 

  

  

  

Agreement; (4) all other obligations and debts owing to the Lender arising in connection with, ancillary to, or in support of the Loan; (5) the payment and performance of all other indebtedness, obligations and liabilities of the Borrower to the Lender (including obligations of performance) of every ldnd whatsoever, arising directly between the Borrower and the Lender or acquired outright, as a participation or as collateral security from another person by the Lender, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred, contracted or arising, joint or several, liquidated or unliquidated, regardless of how they arise or by what agreement or instrument they may be evidenced or whether they are evidenced by agreement or instrument, and whether incurred as maker, endorser, surety, guarantor, general partner, drawer, tort-feasor, account party with respect to a letter of credit, indemnitor or otherwise; and (6) all renewals, extensions, modifications and amendments of any of the foregoing, whether or not any renewal, extension, modification or amendment agreement is executed in connection therewith.

 

(pp) Obligors means the Borrower, Guarantor and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the Obligations.

 

(qq) PATRIOT Act shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act of 2001), as amended from time to time, and any successor statute, and all rules and regulations from time to time promulgated thereunder.

 

(rr)Permitted Contest means any appropriate proceeding conducted in good faith by

the Borrower to contest any tax, assessment, charge, Lien or similar claim, during the pendency of which proceeding the enforcement of such tax, assessment, charge, Lien or claim is stayed; provided that the Borrower has set aside on its books or, if required by the Lender, deposited as cash collateral with the Lender, adequate cash reserves to assure the payment of any such tax, assessment, charge, Lien or claim.

 

(ss) Permitted Encumbrances means any Liens and other matters that are described on Schedule I attached hereto.

 

(ft)Person (whether or not capitalized) includes natural persons, sole proprietorships,

corporations, trusts, unincorporated organizations, associations, companies, institutions, entities, joint ventures, partnerships, limited liability companies and Governmental Authorities.

 

(uu) Prime Rate means that rate of interest designated by the Lender from time to time as its "prime rate," it being expressly understood and agreed that the "prime rate" is merely an index rate used by the Lender to establish lending rates and is not necessarily the Lender's most favorable lending rate, and that changes in the "prime rate" are discretionary with the Lender.

 

(vv) Property means all property, real and personal, including the Vessel, that is now or hereafter conveyed or assigned to the Lender, or in which the Lender is now or hereafter

granted a Lien, as security for any of the Obligations pursuant to the Credit Documents referenced in Exhibit A.

 

(ww) Resizing Amount is defined in Section 6.1(d).

 

(xx) Security Documents means all the Credit Documents that now or hereafter grant or purport to grant to Lender any guaranty, collateral or other security for any of the Obligations.

 

(yy) Solvent means, with respect to any person on a particular date, that as of such date (1) the fair value of the property of such person is greater than the total amount of liabilities (including contingent liabilities) of such person, (2) the present fair salable value of the assets of such person is not less than the amount that will be required to pay the probable liability of such person on its debts as they become absolute and matured, (3) such person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such person's property would constitute an unreasonably small capital, and (4) such person does not intend to, or believe or reasonably should have believed that it will, incur debts beyond its ability to repay as they become due.

 

(zz) subsidiary means, with respect to any Person, any business entity of which more than 50% of the outstanding voting stock or other equity interest is owned directly or indirectly by such Person and/or one or more other subsidiaries of such Person.

 

(aaa) Subsidiary(les) means all of the subsidiaries of Guarantor, including the Borrower hereunder.

 

(bbb) Vessel shall have the meaning attributed to the term "vessel" set forth in the First Preferred Ship Mortgage referenced in Exhibit A attached hereto.

 

 

 

  

  

  

 

ARTICLE 2

 

Credit to be Extended

 

Under this Agreement

 

SECTION 2.1 Loan. The Lender agrees, upon the terms and subject to the conditions of this Agreement, to make a term loan on the date hereof to the Borrower in the principal amount of $46,000,000 (the "Loan"). The Lender shall make the Loan by crediting the general deposit account of the Borrower with the Lender with the proceeds thereof against delivery to the Lender of the Note referred to in Section 2.2.

 

SECTION 2.2 Note. The Loan shall be evidenced by a certain promissory note (the "Note"), payable to the order of the Lender, duly executed on behalf of the Borrower, dated the date of this Agreement, in the principal amount of the Loan and satisfactory in form

and substance to the Lender. The Note shall be payable as to principal in eighty four (84) consecutive monthly installments, the first eighty three (83) of which shall be in the amount of $255,555.56 each and shall be payable on the first day of each month in each year, beginning August 1, 2010 and continuing to and including June 1, 2017. The final principal installment shall be in the amount of the entire outstanding principal balance and shall be due and payable on July 1, 201.7 (the "Maturity Date"). THE MONTHLY PRINCIPAL INSTALLMENTS WILL NOT FULLY AMORTIZE THE NOTE BY THE MATURITY DATE THEREOF, AND A SUBSTANTIAL "BALLOON PAYMENT" WILL BE DUE ON SAID MATURITY DATE.

 

SECTION 2.3 Interest

 

(a) The Note shall bear interest from the Closing Date until payment in full on the unpaid principal balance at the rate per annum equal to the LIBOR-Based Rate. Such interest shall be payable monthly on the first day of each month in each year, commencing on August 1, 2010, and upon payment in full. Interest will be computed on an Actual/360 Day Basis. Any change in the interest rate on the Note because of a change in the LIBOR-Based Rate shall take effect on the Interest Determination Date without notice to the Borrower and without any further action by the Lender. If it is impossible or impractical to obtain the LIBOR-Based Rate for a certain time period, the Loan shall bear interest at the Prime Rate.

 

(b) If an Event of Default exists, the Note shall bear interest at the Default Rate, until the earlier of (1) such time as all amounts due hereunder are paid in full or (2) no such Event of Default exists.

 

(c) The Borrower agrees to pay to the Lender, on demand, a late charge equal to five percent (5.0%) of any payment that is not paid within twelve (12) days after it is due. The late charge shall never be less than $10.00 on each payment. This provision shall not be deemed to excuse a late payment or be deemed a waiver of any other right the Lender may have, including the right to declare the entire unpaid principal and interest immediately due and payable and the right to collect interest on any late payment at the Default Rate.

 

SECTION 2.4 Prepayments. The Borrower may at any time prepay all or any part of the Loan, without premium or penalty, except that partial prepayments shall be in amounts not less than $50,000. Any prepayment shall be accompanied by the payment of accrued interest to the date of prepayment on the principal amount prepaid and shall be paid on any full prepayment of the Note in connection with the termination of this Agreement on the date of such prepayment.

 

SECTION 2.5 Place and Time of Payments.

 

(a)All payments by the Borrower to the Lender under this Agreement and the other Credit Documents shall be made in lawful currency of the United States and in immediately

available funds to the Lender at its main office in Mobile, Alabama at the hand delivery address set forth in Section 7.1 or at such other address within the continental United States as shall be specified by the Lender by notice to the Borrower. Any payment received by the Lender after 2:00 p.m. (Mobile, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Lender on the following Business Day.

 

(b) All amounts payable by the Borrower to the Lender under this Agreement or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Lender. All amounts payable by the Borrower to the Lender under this Agreement or the other Credit Documents for which no payment date is expressly set forth herein or therein shall be payable ten days after written demand by the Lender to the Borrower. The Lender may, at its option, send written notice or demand to the Borrower of amounts payable on a specified due date pursuant to this Agreement or the other Credit Documents, but the failure to send such notice shall not affect or excuse the Borrower's obligation to make payment of the amounts due on the specified due date.

 

(c) Payments that are due on a day that is not a Business Day shall be payable on the

 

next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate.

 

(d) Except as otherwise required by law, payments received by the Lender shall be

 

applied first to expenses, fees and charges, then to interest and finally to principal.

 

SECTION 2.6 Auto Debit Provision. The Borrower hereby authorizes the Lender to initiate entries to the checking or savings account of Borrower held with the Lender for the purpose of making the payments due hereunder. The Borrower further authorizes the Lender to withdraw these payments from said account. The Borrower acknowledges that this authorization may be revoked at any time by providing written notice thereof to the Lender in such time and manner as to afford the Lender a reasonable opportunity to act thereupon.

 

SECTION 2.7 Security. The security for the Obligations shall include the Property and other security granted to the Lender under the Security Documents described in Exhibit A. The Security Documents shall be valid and binding as security for the aggregate amount of the Obligations outstanding from time to time, whether or not the full amount of the Credit is actually advanced by the Lender to the Borrower.

 

SECTION 2.8 Guaranty Agreement. Concurrently with the execution of this Agreement, the Guarantor is executing and delivering to the Lender a Guaranty Agreement pursuant to which the Guarantor is unconditionally guaranteeing the payment to the Lender, when and as due and payable, of the Obligations.

 

SECTION 2.9 Origination Fee. The Borrower will pay the Lender an origination fee equal to $230,000 which fee shall be payable on the Closing Date and will be fully earned and non-refundable as of such date.

 

  

  

  

ARTICLE 3

 

Representations and Warranties

 

	
  

	
The Borrower represents and warrants to the Lender as follows: SECTION 3.1 Organization, Powers, etc.

 

(a) It is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation.

 

(b) It has the requisite power and authority to own its properties and to carry on its business as now being conducted and is duly qualified or registered to do business in every jurisdiction where the character of its properties or the nature of its activities makes such qualification or registration necessary.

 

(c) It has the requisite power to execute, deliver and perform any Credit Documents to which it is a party.

 

SECTION 3.2 Authorization of Borrowing, etc. The execution, delivery and performance of any Credit Documents to which it is a party (a) have been duly authorized by all requisite action (including any necessary shareholder action), and (b) will not violate any Governmental Requirement, its Governing Documents or any indenture, agreement or other instrument to which it is a party, or by which it or any of its properties are bound, or be in conflict with, result in a breach of or constitute a default under, any such indenture, agreement or other instrument, or result in the creation or imposition of any Lien, upon any of its properties except as contemplated by the Credit Documents.

 

SECTION 3.3 Litigation. There are no actions, suits or proceedings (whether or not purportedly on its behalf) pending or, to the best of its knowledge, threatened against or affecting it, by or before any Governmental Authority, that involve any of the transactions contemplated by the Credit Documents or the possibility of any judgment or liability that might reasonably be expected to result in any material adverse change in its business, operations, properties or condition, financial or otherwise; and it is not, to the best of its knowledge, in default with respect to any Governmental Requirement.

 

SECTION 3.4 Agreements. It is not a party to any agreement or instrument, or subject to any restriction in its Governing Documents that materially and adversely affects its business, operations, properties or condition, financial or otherwise, and it is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party, which default might reasonably be expected to have a material adverse effect upon its business, operations, properties or condition, financial or otherwise.

SECTION 3.5 Federal Reserve Board Regulations. It does not intend to use any part of the proceeds of the Credit, and has not incurred any indebtedness to be reduced, retired or purchased by it out of such proceeds, for the purpose of purchasing or carrying any Margin Stock, and it does not own and has no intention of acquiring any such Margin Stock.

 

SECTION 3.6 Investment Company Act. It is not an "investment company," or a company "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended.

 

SECTION 3.7 ERISA.

 

(a) The execution and delivery of this Agreement and the issuance and delivery of the Note as contemplated hereby will not involve any prohibited transaction within the meaning of ERISA or Section 4975 of the Internal Revenue Code, as amended.

 

(b) Based on ERISA and the regulations and published interpretations thereunder, it

 

is in compliance in all material respects with the applicable provisions of ERISA.

 

(c) No "Reportable Event," as defined in Section 4043(b) of Title IV of ERISA, has

 

occurred with respect to any plan maintained by it.

 

SECTION 3.8 Enforceability. Any Credit Documents to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights and remedies generally and by general principles of equity, whether considered in a proceeding at law or in equity.

 

SECTION 3.9 Consents, Registrations, Approvals, etc. No registration with or consent or approval of, or other action by, any Governmental Authority is required for the execution, delivery and performance of any Credit Documents to which it-is a party.

 

SECTION 3.10 Financial Condition.

 

(a) Guarantor's consolidated financial statements that have been furnished to the Lender were prepared in conformity with GAAP consistently applied throughout the periods involved, are in accordance with its books and records, are correct and complete and present fairly its financial condition as of the date or dates indicated and for the periods involved in accordance with GAAP applied on a consistent basis.

 

(b) Since the date of such financial statements no material adverse change in Guarantor's consolidated financial condition, business or operations has occurred.

 

(c) Guarantor has no liability, direct or contingent, that is material in amount and that is not reflected in its consolidated financial statements.

(d) It has good and marketable title to all its properties and assets reflected on the financial statements except for properties and assets disposed of since the date thereof as no longer used or useful in the conduct of its business or disposed of in the ordinary course of its business.

 

(e) All such properties and assets are free and clear of all Liens, except as otherwise permitted or required by the provisions of this Agreement and the other Credit Documents.

 

SECTION 3.11 No Misleading Information. To the best knowledge of the Borrower, neither this Agreement nor any of the other Credit Documents, nor any certificate, written statement or other document furnished to the Lender by or on behalf of the Borrower in connection with the transactions contemplated hereby contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not misleading; and there is no fact known to the Borrower that the Borrower has not disclosed to the Lender that materially adversely affects or, so far as the Borrower can now reasonably foresee, will materially adversely affect the properties, or financial or other condition of the Borrower or the ability of the Borrower to perform its obligations hereunder and under the other Credit Documents.

 

SECTION 3.12 Taxes.

 

(a) It has filed or caused to be filed all tax returns that, to the knowledge of its officers, are required to be filed with any Governmental Authority, and it has paid or has caused to be paid all taxes as shown as due on said returns or on any assessment received by it.

 

(b) It has reserves that are believed by its officers to be adequate for the payment of additional taxes for years that have not been audited by the respective tax authorities.

 

(c) All payments made or to be made by it under or pursuant to this Agreement and the Note shall be made free and clear of, and without deduction or withholding for an account of, any taxes.

 

SECTION 3.13 Patents, Trademarks. It owns, or possesses the right to use, all the patents, trademarks, service marks, trade names, copyrights, franchises, consents, authorizations and licenses and rights with respect to the foregoing, necessary for the conduct of its business as now conducted and proposed to be conducted, without any known conflict with the rights of others.

 

SECTION 3.14 Hazardous Substances.

 

(a)Except as otherwise disclosed in writing to the Lender, it has never caused or permitted any Hazardous Substance to be placed, held, located, released or disposed of in violation of any Governmental Requirement on, under or at any real property legally or beneficially owned, leased or operated by it, and such property has never been used by it or, to

the best of its knowledge, by any other person as a dump site or permanent or temporary storage site for any Hazardous Substance, in violation of any Governmental Requirement.

 

(b)To the best of its knowledge and except as otherwise disclosed in writing to the

Lender, it has no liabilities with respect to Hazardous Substances, and no facts or circumstances exist that could give rise to liabilities with respect to Hazardous Substances.

 

SECTION 3.15 Solvency. It is and will remain Solvent, taking into account the transactions contemplated by the Credit Documents.

 

SECTION 3.16 Foreign Trade Control Regulations. To the best of its knowledge, none of the transactions contemplated herein will violate the provisions of any statute or regulation enacted to prohibit or limit economic transactions with certain foreign Persons including any of the provisions of the Foreign Assets Control Regulations of the United States of America (Title 31, Code of Federal Regulations, Chapter V, Page 500, as amended).

 

  

  

  

ARTICLE 4

 

Conditions of Lending

 

The obligation of the Lender to lend hereunder is subject to the following conditions precedent:

 

SECTION 4.1 Representations and Warranties. On and as of the Closing Date, the representations and warranties set forth in Article 3 must be true and correct with the same effect as though they had been made on and as of such date, except to the extent that they expressly relate to an earlier date.

 

SECTION 4.2 No Default. On and as of the Closing Date, the Borrower must be in compliance with all the terms and provisions set forth in this Agreement on its part to be observed or performed, and no Event of Default, nor any event that upon notice or lapse of time or both would constitute an Event of Default, may exist.

 

SECTION 4.3 Intentionally Deleted.

 

SECTION 4.4 Required Items. On and as of the Closing Date, the Lender must have received all financial statements, reports and other items required as of that date under Article 2 and Article 5 of this Agreement.

 

.SECTION 4.5 Authorized Representative Certificates. On and as of the Closing Date the Borrower must have delivered to the Lender the following certificates executed by the appropriate Authorized Representatives of the Borrower, each of which certificates must be of a current date and must be satisfactory in form and substance to the Lender: (a) a certificate confirming compliance by the Borrower with the conditions precedent set forth in Sections 4.1 and 4.2; (b) a certificate certifying as in full force and effect resolutions of the directors, shareholders or other appropriate persons under the Governing Documents and applicable law authorizing the transactions contemplated by the Credit Documents and authorizing certain Authorized Representatives of the Borrower to execute the Credit Documents on behalf of the Borrower and to act on behalf of the Borrower with respect to the Credit Documents, including the authority to request disbursements of the proceeds of the Credit and to direct the disposition of such proceeds; and (c) a certificate certifying as true and correct attached copies of the Governing Documents of the Borrower and the incumbency and signature of each Authorized Representative of the Borrower specified in said resolutions. The Lender may conclusively rely on the certified resolutions described in Section 4.5(b) as to all actions on behalf of the Borrower by the Authorized Representatives specified therein until the Lender receives further duly adopted resolutions cancelling or amending the prior resolutions.

 

SECTION 4.6 Other Supporting Documents. The Lender must receive on or before the Closing Date the following, each of which must be satisfactory to the Lender in form and content, (a) such legal opinions, certificates, proceedings, instruments and other documents as the Lender or its counsel may reasonably request to evidence (1) compliance by the Borrower and all other parties to the Credit Documents with legal requirements, (2) the truth and accuracy as of the Closing Date of the respective representations thereof contained in the Credit Documents, and (3) the due performance or satisfaction by such parties at or prior to the Closing Date of all agreements then required to be performed and all conditions then required to be satisfied by them pursuant to the Credit Documents, and (b) such additional supporting documents as the Lender or its counsel may reasonably request.

 

 

 

ARTICLE 5

 

Covenants

 

Each of the Borrower and the Guarantor covenants and agrees that the Borrower and/or Guarantor, as applicable, shall:

 

SECTION 5.1 Existence. Do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights and franchises and comply with all applicable Governmental Requirements.

 

SECTION 5.2 Continuation of Current Business, Offices, Name, etc.  Not, without the prior written consent of the Lender, such consent not to be nnreasonably withheld, (a) engage in any business other than the business now being conducted by it and other businesses directly related thereto; (b) change its name or conduct its business in any name other than its current name; or (c) enter into (1) any agreement whereby the management, supervision or control of its business is delegated to or placed in any person other than its governing body and officers or (2) any contract or agreement whereby any of its principal functions are delegated to or placed in any agent or independent contractor.

 

SECTION 5.3 Sale of Assets, Consolidation, Merger. Not (a) other than as reasonably acceptable to the Lender, sell or otherwise dispose of all or a substantial part of its properties or assets to any person; or (b) consolidate with, merge into or participate in a statutory share exchange with any other person, or permit another person to merge into it, other than consolidations, mergers or statutory share exchanges with any other Subsidiary.

 

SECTION 5.4 Accounting Records. Keep proper books of record and account in which full, true and correct entries are made in accordance with GAAP applied on a consistent basis.

 

SECTION 5.5 Reports to the Lender. Furnish to the Lender:

 

(a) within 90 days after the end of each fiscal year, consolidated financial statements

 

(including a consolidated balance sheet and the related statements of income, cash flows and retained earnings) of Guarantor for such fiscal year, together with statements in comparative form for the preceding fiscal year, all in reasonable detail, prepared in accordance with GAAP consistently applied throughout the periods involved, and audited and certified by independent certified public accountants of recognized standing selected by Guarantor and satisfactory to the Lender (the form of such certification also to be satisfactory to the Lender);

 

(b) within 45 days after the end of each of the first three quarters of each fiscal year,

 

consolidated financial statements of Guarantor similar to those referred to in Section 5.5(a) for such quarter and for the period beginning on the first day of the fiscal year and ending on the last day of such quarter, unaudited but certified by an Authorized Representative of Guarantor;

 

(c) not later than 45 days after the end of each of the first three quarters of each fiscal

 

year (commencing with the quarter ending September 30, 2010) and 90 days after the end of each fiscal year, a compliance certificate duly executed by an Authorized Representative of Guarantor substantially in the form of Exhibit B attached hereto;

 

(d) with the financial statements submitted under Section 5.5(a) and 5.5(b), a

 

• certificate signed by the party certifying said statement to the effect that no Event of Default, nor any event that, upon notice or lapse of time or both, would constitute an Event of Default, exists or, if any such Event of Default or event exists, specifying the nature and extent thereof;

 

(e) promptly upon receipt thereof, copies of all other reports, management letters and

 

other documents submitted to it by independent accountants in connection with any annual or interim audit of its books made by such accountants; and

 

(f) as soon as practical, from time to time, such other information regarding its

 

operations, business affairs and financial condition as the Lender may reasonably request.

 

SECTION     5.6 Maintenance. Maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the

conduct of its business and keep the same in good repair, working order and condition, and from time to time make, or cause to be made, all needful and proper repairs, renewals, replacements,. betterments and improvements thereto, so that the business carried on in connection therewith may be properly and advantageously conducted at all times.

 

SECTION 5.7 Insurance. Maintain (a) adequate insurance on its properties and the Vessel to such extent and against such risks, including fire, as is customary with companies in the same or a similar business, (b) necessary worker's compensation insurance, and (c) such other insurance as may be required by law or as may reasonably be required in writing by the Lender.

 

SECTION 5.8 Payment of Indebtedness, Taxes, etc. (a) Pay its indebtedness and obligations in accordance with normal terms; (b) pay all taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits or upon any of its properties before they become in default, except any such tax, assessment or governmental charge that is subject to a Permitted Contest; and (c) pay all lawful claims for labor, materials and supplies or otherwise, which, if unpaid, might become a Lien upon any of its properties, except any such claim that is subject to a Permitted Contest.

 

SECTION 5.9 Litigation Notice. Promptly notify the Lender of any action, suit or proceeding at law or in equity or by or before any Governmental Authority that, if adversely determined, might reasonably be expected to impair its ability to perform its obligations under any of the Credit Documents to which it is a party, might reasonably be expected to impair its right to carry on its business substantially as now conducted, or might reasonably be expected to materially and adversely affect its business, operations, properties or condition, financial or otherwise.

 

SECTION 5.10 Visitation. Permit representatives of the Lender from time to time to visit and inspect any of its offices and properties and to examine its assets and books of account and to discuss its affairs, finances and accounts with and be advised as to the same by its officers, all at such reasonable times and intervals as the Lender may desire.

 

SECTION 5.11 Notice of Default. Promptly notify the Lender of the existence of any Event of Default, or any event that upon notice or lapse of time or both would constitute an Event of Default.

 

SECTION 5.12 Further Assurances. At its cost and expense, upon request of the Lender, duly execute and deliver, or cause to be duly executed and delivered, to the Lender such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of the Lender or its counsel to carry out more effectively the provisions and purposes of the Credit Documents.

 

SECTION 5.13 Transactions with Related Persons. Not enter into any transaction with any Obligor or any officer, director, partner, member or Affiliate unless the terms of that transaction are no less favorable to it than those that would be obtained on an arms-length basis.

  

  

  

 

01977418.2

 

SECTION 5.14 Use of Credit Proceeds. Not, directly or indirectly use any part of the proceeds of the Credit (a) for any purpose other than the refinance of existing indebtedness, or (b) without limiting the generality of the foregoing, for the purpose of purchasing or carrying any Margin Stock, or of reducing, retiring or purchasing any indebtedness incurred for such purpose; or take any other action that would involve a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulation issued thereunder, including Regulation U or Regulation X of the Federal Reserve Board, in connection with the transactions contemplated hereby; provided, however, that nothing set forth in this Section 5.14 or elsewhere in this Agreement shall be construed as imposing any duty on the Lender to supervise the use or application of the Credit proceeds or any liability on the Lender to any person if the Credit proceeds are not used for the purposes set forth in this Agreement.

 

SECTION 5.15 Financial Covenants.

 

(a)            Dividends or Distributions. Not create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to pay dividends or make any other distributions on its capital stock or limited liability company interests, as the case may be.

 

(b)            Indebtedness. Not incur any new Indebtedness (excluding any Indebtedness pursuant to this Agreement) other than Indebtedness incurred to finance the acquisition and/or construction of any vessels, provided that the principal amount of such Indebtedness shall not exceed eighty percent (80%) of such acquisition and/or construction price, unless such Indebtedness is fully subordinated to all existing Indebtedness and the Obligations.

 

(c) Liens. Not incur, create, assume or permit to exist any Lien on any of its properties, now or hereafter owned, other than:

 

	
(1)  

	
Liens securing the payment of obligations permitted under Section 5.8(b);

 

	
(2)  

	
Liens securing the payment of Indebtedness incurred pursuant to Section 5.15(b);

 

	
(3)  

	
other Permitted Encumbrances;

 

	
(4)  

	
deposits under workmen's compensation, unemployment insurance and Social Security laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business;

 

	
(5)  

	
Liens imposed by law, such as carriers', warehousemen's or mechanics' liens, or liens for crew's wages or salvage, incurred in good faith in the ordinary course of business and that are not delinquent or that are subject

 

to Permitted Contests, and any Lien arising out of a judgment or award not exceeding $500,000 with respect to which an appeal is being prosecuted, a stay of execution pending such appeal having been secured;

 

	
(6)  

	
Liens in favor of the Lender;

 

	
(7)  

	
Liens for taxes, assessments or other governmental charges or levies that are not delinquent or that are subject to Permitted Contests;

 

	
(8)  

	
purchase money Liens on equipment (arising substantially contemporaneously with the purchase of such equipment) acquired in the ordinary course of business to secure the purchase price of such equipment or to secure indebtedness incurred solely for the purpose of financing the acquisition of such equipment, or any Lien existing on the equipment at the time of its acquisition, provided that (A) the indebtedness secured by such Lien does not exceed the purchase price or fair market value, whichever is less, of the equipment so acquired at the time of its acquisition, (B) the equipment is used or useful in the ordinary course of business of the acquiring person, and (C) the Lien does not cover any property other than the equipment so acquired; and

 

	
(9)  

	
Liens against the Property that are permitted to exist pursuant to the terms of the Credit Documents.

 

(d)            Guaranties. Not guarantee, endorse, become surety for or otherwise in any way become or be responsible for the indebtedness, liabilities or obligations of any third party.

 

(e)            Subordination of Inter-Company Indebtedness. With respect to the Borrower, ensure that, upon the occurrence and continuation of an Event of Default, no payments are made on any inter-company Indebtedness until such time as the Obligations have been paid in full.

 

(f)            Solvency. Continue to be Solvent.

 

(g)            Consolidated Indebtedness to Consolidated EBITDA Ratio. Maintain, on a consolidated basis, a ratio of Consolidated Indebtedness to Consolidated EBITDA of not more than 4.25 to 1.00 for Guarantor and the Subsidiaries through the Maturity Date, as measured at the end of each fiscal quarter based on the four most recent fiscal quarters for which financial infoimation is available.

 

(h)            Working Capital. Maintain on a consolidated basis for Guarantor and the Subsidiaries a ratio of current assets to current liabilities of not less than 1.00 to 1.00, as measured at the end of each fiscal quarter.

 

(i)            Consolidated Tangible Net Worth. Maintain a Consolidated Tangible Net Worth, as measured at the end of each fiscal quarter, in an amount of not less than the sum of

One Hundred Sixty Million Dollars ($160,000,000) and fifty percent (50%) of all net income of Guarantor and the Subsidiaries (on a consolidated basis) earned after July 1, 2005.

 

(j)           Consolidated EBITDA to Interest Expense. Maintain a ratio of Consolidated EBITDA to Interest Expense of not less than 2.50 to 1.00, measured at the end of each fiscal quarter based on the four most recent fiscal quarters for which financial information is available.

 

(k)           EBITDAR to Fixed Charges. Maintain a ratio of EBITDAR to Fixed Charges of not less than 1.40 to 1.00, for Guarantor and the Subsidiaries on a consolidated basis as measured at the end of each fiscal quarter based on the four most recent fiscal quarters for which financial information is available.

 

(I)Loan to Collateral Value. Maintain a Loan to Collateral Value ratio that is less

than or equal to seventy five percent (75%) as measured on each annual anniversary of the Closing Date.

 

(m)            Fiscal Year. Not change its fiscal year.

 

(n)            Change of Control. In the case of Guarantor, cause or permit a Change of Control.

 

SECTION 5.16 Change in Management. Promptly notify the Lender of any change in directors or the senior executive officers of the Borrower.

 

SECTION 5.17 PATRIOT Act.

 

(1) Neither the Borrower nor the Guarantor (i) is or will become a Person whose property or interests in property are blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages or will engage in any dealings or transactions prohibited by Section 2 of such Executive Order, or be otherwise associated with any such Person in any manner violative of Section 2, or (iii) will otherwise become a Person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other OFAC regulation or executive order.

 

(2) The Borrower and the Guarantor are in compliance in all material respects with the PATRIOT Act. No part of the proceeds of the Loan hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

  

  

  

 

ARTICLE 6

Events of Default

 

SECTION 6.1 Events of Default. The occurrence of any of the following events shall constitute an event of default (an "Event of Default") under this Agreement (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement):

 

(a) any representation or warranty made in this Agreement or in any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time made; or

 

(b) any report, certificate, financial statement or other instrument furnished in

 

connection with the Credit, this Agreement or any of the other Credit Documents, shall prove to be false or misleading in any material respect as of the time furnished; or

 

(c) default shall be made in the payment when due of any of the Obligations; or

 

(d) default shall be made in the due observance or performance of any covenant,

 

condition or agreement on the part of the Borrower or the Guarantor to be observed or performed pursuant to the terms of Sections 5.2, 5.3 and 5.15 hereof; except that in the event that the Borrower fails to satisfy the covenant set forth in Section 5.15(1), an Event of Default shall be deemed to have occurred only if within ten (10) days of receipt of written notice of such default from the Lender, the Borrower has not either (a) made a prepayment of the outstanding principal balance of the Loan in an amount sufficient to result in compliance with such covenant (the "Resizing Amount"), in which event the amount of the Loan shall automatically be reduced by the amount of the Resizing Amount, or (b) deposited cash in an amount equal to the Resizing Amount into an account (the "Deposit") to be pledged to and maintained with the Lender (which the Borrower hereby agrees shall serve as additional collateral for the Loan) until the Borrower complies with the covenant set forth in Section 5.15(1), at which time the Deposit shall be returned to the Borrower; or

 

(e) default shall be made in the due observance or performance of any covenant,

 

condition or agreement on the part of the Borrower or the Guarantor to be observed or performed pursuant to the terms of this Agreement (other than any covenant, condition or agreement, default in the observance or performance of which is elsewhere in this Section 6.1 specifically dealt with) and such default shall continue unremedied until the first to occur of (1) the date that is 30 days after written notice by the Lender to the Borrower or the Guarantor or (2) the date that is 30 days after the Borrower or Guarantor first obtains knowledge thereof; or

 

(f) failure of Borrower or Guarantor to timely perform any covenant in the Credit

 

Documents requiring the furnishing of notices, financial reports or other information to the Lender within ten (10) Business Days of when due; or

(g) any default or event of default, as therein defined, shall occur under any of the

other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein); or

 

(h) (1) default shall be made with respect to any Indebtedness (other than the

 

Obligations) of any Obligor, if the effect of such default is to accelerate the maturity of such Indebtedness or to permit the holder thereof to cause such Indebtedness to become due prior to its stated maturity, or (2) any such Indebtedness shall not be paid when due (after giving effect to any applicable notice, grace or cure periods); or

 

(i) any Obligor shall (1) apply for or consent to the appointment of a receiver,

 

trustee, liquidator or other custodian of such Obligor or any of such Obligor's properties or assets, (2) fail or admit in writing such Obligor's inability to pay such Obligor's debts generally as they become due, (3) make a general assignment for the benefit of creditors, (4) suffer or permit an order for relief to be entered against such Obligor in any proceeding under the federal Bankruptcy Code, or (5) file a voluntary petition in bankruptcy, or a petition or an answer seeking an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against such Obligor in any proceeding under any such law or statute, or if action shall be taken by any Obligor for the purpose of effecting any of the foregoing; or

 

a petition shall be filed, without the application, approval or consent of any Obligor in any court of competent jurisdiction, seeking bankruptcy, reorganization, rearrangement, dissolution or liquidation of such Obligor or of all or a substantial part of the properties or assets of such Obligor, or seeking any other relief under any law or statute of the type referred to in Section 6.1(i)(5) against such Obligor, or the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or of all or a substantial part of the properties or assets of such Obligor, and such petition shall not have been stayed or dismissed within 30 days after the filing thereof; or

 

(k)any Obligor shall be dissolved or liquidated or cease to be Solvent or suspend

business; or

 

(1)any writ of execution, attachment or garnishment shall be issued against the assets

of any Obligor and such writ of execution, attachment or garnishment shall not be dismissed, discharged or quashed within 30 days of issuance; or

 

(m) any final judgment for the payment of money (not paid or fully covered by insurance, subject to applicable deductibles) in excess of an aggregate of $2,500,000 shall be rendered against any Obligor and the same shall remain undischarged for a period of 30 days during which execution shall not be effectively stayed.

 

 

01977418.2

SECTION 6.2 Lender's Remedies on Default.

 

If an Event of Default exists, or any event exists that upon notice or lapse of time or both would constitute an Event of Default, the Lender shall have no obligation to extend any further Credit hereunder. If an Event of Default exists under Section 6.1(i) or 6.1(j), all of the Obligations shall automatically become immediately due and payable. If any other Event of Default exists, the Lender may, by written notice to the Borrower, declare any or all of the Obligations to be immediately due and payable, whereupon they shall become immediately due and payable. Any such acceleration (whether automatic or upon notice) shall be effective without presentment, demand, protest or other action of any kind, all of which are hereby expressly waived, anything contained herein or in any of the other Credit Documents to the contrary notwithstanding. If an Event of Default exists, the Lender may exercise any of its rights and remedies on default under the Credit Documents or applicable law.

 

 

  

  

  

 

 

 

ARTICLE 7          Miscellaneous SECTION 7.1 Notices.

 

(a) Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted by this Agreement or the other Credit Documents to be made upon, given or furnished to, or filed with, the Borrower or the Lender must (except as otherwise provided in this Agreement or the other Credit Documents) be in writing and be delivered by one of the following means: (1) by personal delivery at the hand delivery address specified below, (2) by first-class, registered or certified mail, postage prepaid and addressed as specified below, or (3) if facsimile transmission facilities for such party are identified below or pursuant to a separate notice from such party, sent by facsimile transmission to the number specified below or in such notice.

 

(b) The hand delivery address, mailing address and (if applicable) facsimile transmission number for receipt of notice or other documents by such parties are as follows:

 

Borrower

 

By hand and mail:

 

11 North Water Street

Suite 18290

Mobile, Alabama 36602

Attention: Chief Financial Officer

 

By facsimile: 251-706-0756

 

Lender

 

By hand and mail:

 

11 North Water Street

RSA Tower 26th Floor

Mobile, Alabama 36602 Attention:James Currie

 

By facsimile: (251) 690-1588 With a copy to:

 

J. Kris Lowry

Maynard, Cooper & Gale, P.C. 1901 Sixth Avenue North

2400 Regions/Harbert Plaza

Birmingham, Alabama 35203-2618

 

By facsimile: (205) 254-1999

 

Any of such parties may change the address or facsimile transmission notice for receiving any such notice or other document by giving notice of the change to the other parties named in this Section 7.1.

 

(c) Any such notice or other document shall be deemed delivered when actually received by the party to whom directed (or, if such party is not a natural person, to an officer, director, partner, member or other legal representative of the party) at the address or number specified pursuant to this Section 7.1, or, if sent by mail, three Business Days after such notice or document is deposited in the United States mail, addressed as provided above.

 

(d) Five Business Days' written notice to the Borrower as provided above shall constitute reasonable notification to the Borrower when notification is required by law; provided, however, that nothing contained in the foregoing shall be construed as requiring five Business Days' notice if, under applicable law and the circumstances then existing, a shorter period of time would constitute reasonable notice.

 

SECTION 7.2 Expenses.. The Borrower shall promptly on demand pay all costs and expenses, including the fees and disbursements of counsel to the Lender, incurred by the Lender in connection with (a) the extension of the Credit and the administration or collection of the Obligations, (b) the negotiation, preparation and review of the Credit Documents (whether or not the transactions contemplated by this Agreement shall be consummated), (c) the enforcement of any of the Credit Documents, (d) the custody and preservation of the Vessel, (e) the protection or perfection of the Lender's rights and interests under the Security Documents in the Property, (f) the filing or recording of the Security Documents or any related financing, continuation or termination statements, or similar documents (including any stamp, documentary, mortgage, recording and similar taxes and fees), (g) the exercise by or on behalf of the Lender of any of its rights, powers or remedies under the Credit Documents, (h) the compliance by the Lender with any Governmental Requirements with respect to any of the Credit Documents, and (i) the prosecution or defense of any action or proceeding by or against the Lender, the Borrower, any Obligor, or any one or more of them, concerning any matter related to this Agreement or any of the other Credit Documents, or any of the Obligations. All such amounts shall bear interest from the date demand is made at the Default Rate and shall be included in the Obligations. The Borrower's obligations under this Section 7.2 shall survive the payment in full of the Obligations and the termination of this Agreement.

 

SECTION 7.3 Independent Obligations. The Borrower agrees that each of the obligations of the Borrower to the Lender under this Agreement may be enforced against the Borrower without the necessity of joining any other Obligor or any other person, as a party.

 

SECTION 7.4 Heirs, Successors and Assigns. Whenever in this Agreement any party hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer this Agreement without the prior written consent of the Lender; and all covenants and agreements of the Borrower contained in this Agreement shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Lender.

 

SECTION 7.5 Governing Law. This Agreement and the other Credit Documents shall be construed in accordance with and governed by the internal laws of the State of Alabama (without regard to conflict of law principles) except as required by mandatory provisions of law, foreign or otherwise.

 

SECTION 7.6 Date of Agreement. The date of this Agreement is intended as a date for the convenient identification of this Agreement and is not intended to indicate that this Agreement was executed and delivered on that date.

 

SECTION 7.7 Separability Clause. If any provision of the Credit Documents shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

SECTION 7.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same agreement.

 

 

SECTION 7.9 No Oral Agreements. This Agreement is the final expression of the agreement between the parties hereto, and this Agreement may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Agreement and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence.

 

SECTION 7.10 Waiver and Election. The exercise by the Lender of any option given under this Agreement shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Lender in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of the Credit Documents, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized representative of the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

 

SECTION 7.11 No Obligations of Lender; Indemnification. The Lender does not by virtue of this Agreement or any of the transactions contemplated by the Credit Documents assume any duties, liabilities or obligations with respect to any property now or hereafter granted to it as collateral for any of the Obligations imless expressly assumed by the Lender under a separate agreement in writing, and the Credit Documents shall not be deemed to confer on the Lender any duties or obligations that would make the Lender directly or derivatively liable for any person's negligent, reckless or willful conduct. The Borrower agrees to indemnify and hold the Lender harmless against and with respect to any damage, claim, action, loss, cost, expense, liability, penalty or interest (including attorney's fees) and all costs and expenses of all actions, suits, proceedings, demands, assessments, claims and judgments directly or indirectly resulting from, occurring in connection with, or arising out of: (a) any inaccurate representation made by the Borrower or any Obligor in this Agreement or any other Credit Document; and (b) any breach of any of the warranties or obligations of the Borrower or any Obligor* under this Agreement or any other Credit Document. The provisions of this Section 7.11 shall survive the payment of the Obligations in full and the termination of this Agreement and the other Credit Documents.

 

SECTION 7.12 Set-off. While any Event of Default exists, the Lender is authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the Obligations, irrespective of whether or not the Lender shall have made any demand under this Agreement and although such Obligations may be unrnatured. The rights of the Lender under

  

  

  

this Section 7.12 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have.

 

SECTION 7.13 Participation. The Borrower understands that the Lender may from time to time enter into a participation agreement or agreements with one or more participants pursuant to which each such participant shall be given a participation in the Credit and that any such participant may from time to time similarly grant to one or more subparticipants subparticipations in the Credit. The Borrower agrees that any participant or subparticipant may exercise any and all rights of banker's lien or set-off with respect to the Borrower, as fully as if such participant or subparticipant had made a loan directly to the Borrower in the amount of the participation or subparticipation given to such participant or subparticipant in the Credit. For the purposes of this Section 7.13 only, the Borrower shall be deemed to be directly obligated to each participant or subparticipant in the amount of their participating interest in the amount of the Credit and any other Obligations. Nothing contained in this Section 7.13 shall affect the Lender's right of set-off (under Section 7.12 or applicable law) with respect to the entire amount of the Obligations, notwithstanding any such participation or subparticipation. The Lender may divulge to any participant or subparticipant all information, reports, financial statements, certificates and documents obtained by it from the Borrower or any other person under any provision of this Agreement or otherwise.

 

SECTION 7.14 Submission to Jurisdiction. The Borrower irrevocably (a) acknowledges that this Agreement will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Mobile County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Agreement or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated in or pursuant to Section 7.1; (f) agrees that service in accordance with Section 7.14(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS AGREEMENT MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN MOBILE COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN

THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 7.14 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided.

 

SECTION 7.15 Usury Laws. Any provision of this Agreement or any of the other Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Agreement and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Agreement or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of the Note so that the interest rate is uniform throughout the entire term of the Note.

 

SECTION 7.16 WAIVER OF TRIAL BY JURY. THE BORROWER AND THE LENDER HEREBY (1) IRREVOCABLY AND UNCONDITIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM OF ANY TYPE AS TO ANY MATTER ARISING DIRECTLY OR INDIRECTLY OUT OF OR WITH RESPECT TO THIS AGREEMENT, ANY OF THE OTHER FINANCING DOCUMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH AND (2) AGUE THAT EITHER PARTY MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED FOR AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY DISPUTE OR CONTROVERSY OF ANY KIND WHATSOEVER BETWEEN THEM SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

[Remainder of page intentionally left blank]

 

 

  

  

  

IN WITNESS WHEREOF, the Borrower, the Guarantor and the Lender have caused this Agreement to be dated as of June 29, 2010 and to be duly executed and delivered.

 

BORROWER:

 

WATERMAN STEAMSHIP CORPORATION, a New York corporation

 

GUARANTOR:

 

INTERNATIONAL SHIPHOLDING CORPORATION,  a Delaware corporation

 

 

 

 

LIST OF EXHIBITS AND SCHEDULES

 

Exhibit

 

A Credit Documents

 

Compliance Certificate

 

Schedules

 

Pemiitted Encumbrances

 

 

 

 

EXHIBIT A

 

Credit Documents

 

The "Credit Documents" referred to in this Agreement include this Agreement and the following:

 

(a) The Note.

 

(b) First Preferred Ship Mortgage dated of even date herewith and executed by Borrower in favor of the Lender.

 

(c) Guaranty Agreement dated of even date herewith and executed by Guarantor in favor of Lender.

 

 

 

EXHIBIT B

COMPLIANCE CERTIFICATE

 

Reference is made to that certain Credit Agreement between WATERMAN STEAMSHIP CORPORATION, a New York corporation (the "Borrower"), INTERNATIONAL SHIPHOLDING CORPORATION, a Delaware corporation ("Guarantor") and REGIONS BANK, an Alabama banking corporation (the "Lender") dated June 29, 2010 (the "Agreement"). Capitalized terms used in this certificate and the Schedule attached hereto, unless otherwise defined herein, have the meanings assigned to them in the Agreement.

 

The undersigned does hereby certify to the Lender on behalf of the Guarantor as follows:

 

1. He is the duly elected and serving [chief financial officer] [president] [chief

 

executive officer] of the Guarantor.

 

2. He has reviewed the terms of the Agreement and the other Credit Documents and

 

has made, or has caused to be made, a review of the transactions and conditions of the Guarantor and the Borrower through the date on which this certificate is delivered to the Lender. No Event of Default or event that upon notice or lapse of time or both would constitute an Event of Default under the Agreement has occurred and is continuing as of the date this certificate is delivered to the Lender except as follows: [Give detailed description or insert "none" if appropriate].

 

3. The computations relating to the Guarantor's financial condition set forth on

Schedule B-1 attached hereto were true and correct as of , 200(such date being the last day of the most recently ended quarter) and there has been no material adverse change in such amounts upon which such computations are based through the date on which this certificate is delivered to the Lender.

 

INTERNATIONAL SHIPHOLDING CORPORATION,

a Delaware corporation

SCHEDULE B-I

 

FINANCIAL 'COVENANTS COMPLIANCE

 

 

SCHEDULE I

 

PERMITTED ENCUMBRANCES

 

NonePURCHASE AND SALE CONTRACT

Exhibit 10.20

 

 

 

 

 

PURCHASE AND SALE
CONTRACT

 

BETWEEN

 

 

 

APARTMENT LODGE 17A
LLC,

 

a Colorado limited liability
company

 

 

 

AS SELLER

 

 

 

 

AND

 

 

 

 

REDHILL ACQUISITION COMPANY,
LLC,

 

a Delaware limited liability
company

 

 

 

AS PURCHASER

 

 

HAMPDEN HEIGHTS
APARTMENTS

 

Table of Contents

 

	
Article I
	
DEFINED TERMS
	
1

	
Article II
	
PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT
	
1

	
2.1
	
Purchase
and Sale
	
1

	
2.2
	
Purchase
Price and Deposit
	
1

	
2.3
	
Escrow
Provisions Regarding Deposit
	
2

	
Article III
	
FEASIBILITY PERIOD
	
3

	
3.1
	
Feasibility
Period
	
3

	
3.2
	
Expiration
of Feasibility Period
	
3

	
3.3
	
Conduct
of Investigation
	
4

	
3.4
	
Purchaser
Indemnification
	
4

	
3.5
	
Property
Materials
	
5

	
3.6
	
Property
Contracts
	
6

	
Article IV
	
TITLE
	
6

	
4.1
	
Title
Documents
	
6

	
4.2
	
Survey
	
6

	
4.3
	
Objection
and Response Process
	
7

	
4.4
	
Permitted
Exceptions
	
7

	
4.5
	
Assumed
Encumbrances
	
7

	
4.6
	
Subsequently
Disclosed Exceptions
	
10

	
4.7
	
Purchaser
Financing
	
11

	
4.8
	
Housing
Assistance Program Vouchers
	
11

	
Article V
	
CLOSING
	
12

	
5.1
	
Closing
Date
	
12

	
5.2
	
Seller
Closing Deliveries
	
12

	
5.3
	
Purchaser
Closing Deliveries
	
13

	
5.4
	
Closing
Prorations and Adjustments
	
14

	
5.5
	
Post
Closing Adjustments
	
17

	
Article VI
	
REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER
	
18

	
6.1
	
Seller's
Representations
	
18

	
6.2
	
AS-IS
	
19

	
6.3
	
Survival
of Seller's Representations
	
20

	
6.4
	
Definition
of Seller's Knowledge
	
20

	
6.5
	
Representations
and Warranties of Purchaser
	
21

	
6.6
	
Survival
of Purchaser's Representations
	
22

	
Article VII
	
OPERATION OF THE PROPERTY
	
22

	
7.1
	
Leases
and Property Contracts
	
22

	
7.2
	
General
Operation of Property
	
22

	
7.3
	
Liens
	
22

	
7.4
	
Tax
Appeals
	
22

	
Article VIII
	
CONDITIONS PRECEDENT TO CLOSING
	
23

	
8.1
	
Purchaser's
Conditions to Closing
	
23

	
8.2
	
Seller's
Conditions to Closing
	
24

	
Article IX
	
BROKERAGE
	
24

	
9.1
	
Indemnity
	
24

	
9.2
	
Broker
Commission
	
25

	
Article X
	
DEFAULTS AND REMEDIES
	
25

	
10.1
	
Purchaser
Default
	
25

	
10.2
	
Seller
Default
	
25

	
Article XI
	
RISK OF LOSS OR CASUALTY
	
26

	
11.1
	
Major
Damage
	
26

	
11.2
	
Roof
Repair
	
27

	
11.3
	
Minor
Damage
	
27

	
11.4
	
Closing
	
27

	
11.5
	
Repairs
	
28

	
Article XII
	
EMINENT DOMAIN
	
28

	
12.1
	
Eminent
Domain
	
28

	
Article XIII
	
MISCELLANEOUS
	
28

	
13.1
	
Binding
Effect of Contract
	
28

	
13.2
	
Exhibits
and Schedules
	
28

	
13.3
	
Assignability
	
29

	
13.4
	
Captions
	
29

	
13.5
	
Number
and Gender of Words
	
29

	
13.6
	
Notices
	
29

	
13.7
	
Governing
Law and Venue
	
32

	
13.8
	
Entire
Agreement
	
32

	
13.9
	
Amendments
	
32

	
13.10
	
Severability
	
32

	
13.11
	
Multiple
Counterparts/Facsimile Signatures
	
32

	
13.12
	
Construction
	
32

	
13.13
	
Confidentiality
	
33

	
13.14
	
Time
of the Essence
	
33

	
13.15
	
Waiver
	
33

	
13.16
	
Attorneys'
Fees
	
33

	
13.17
	
Time
Zone/Time Periods
	
33

	
13.18
	
1031
Exchange
	
33

	
13.19
	
No
Personal Liability of Officers, Trustees or Directors
	
34

	
13.20
	
ADA
Disclosure
	
34

	
13.21
	
No
Recording
	
34

	
13.22
	
Relationship
of Parties
	
34

	
13.23
	
AIMCO
Marks
	
35

	
13.24
	
Non-Solicitation
of Employees
	
35

	
13.25
	
Survival
	
35

	
13.26
	
Multiple
Purchasers
	
35

	
13.27
	
WAIVER
OF JURY TRIAL
	
35

	
Article XIV
	
LEAD–BASED PAINT DISCLOSURE
	
35

	
14.1
	
Disclosure
	
35

	
14.2
	
Consent
Agreement
	
35

 

EXHIBITS AND SCHEDULES

 

EXHIBITS

 

Exhibit
A          Legal Description

Exhibit
B          Form of Special Warranty
Deed

Exhibit
C          Form of Bill of Sale

Exhibit
D          Form of General
Assignment and Assumption

Exhibit
E           Form of Assignment
and Assumption of Leases and Security Deposits

Exhibit
F           Form of Notice to
Vendor regarding Termination of Contract

Exhibit
G          Form of Tenant
Notification

Exhibit
H          Form of Lead Paint
Disclosure

 

 

 

SCHEDULES

 

Schedule
1       Defined Terms

 

 

PURCHASE AND SALE CONTRACT

 

THIS
PURCHASE AND SALE CONTRACT (this "Contract") is entered
into as of the 23rd day of July, 2010 (the "Effective
Date"), by and between APARTMENT LODGE 17A LLC, a Colorado
limited liability company, having an address at 4582 South Ulster Street
Parkway, Suite 1100, Denver, Colorado 80237 ("Seller"), and
REDHILL ACQUISITION COMPANY, LLC, a Delaware limited liability company,
having a principal address at 12760 High Bluff Drive, Suite 160, San Diego,
California 92130 ("Purchaser").

NOW,
THEREFORE, in consideration of mutual covenants set forth herein, Seller and
Purchaser hereby agree as follows:

RECITALS

A.       
Seller owns the real estate located in the County of Denver, State of Colorado,
as more particularly described in Exhibit A attached hereto and made a
part hereof, and the improvements thereon, commonly known as Hampden Heights
Apartments.

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

Article I
DEFINED
TERMS

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

Article
II
PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT

2.1             
Purchase and Sale.  Seller agrees to
sell and convey the Property to Purchaser and Purchaser agrees to purchase the
Property from Seller, all in accordance with the terms and conditions set forth
in this Contract.

2.2             
Purchase Price and Deposit.  The total purchase price
("Purchase Price") for the Property shall be an amount equal to
$19,750,000.00, payable by Purchaser, as follows:

2.2.1       
Within two (2) Business Days from the Effective Date, Purchaser shall
deliver to Fidelity National Title Insurance Company, 4643 South Ulster Street,
Suite 500, Denver, Colorado 80237, Attention:  Valena Bloomquist, Vice
President, Telephone: 303-244-9198, Facsimile: 303-633-7632 ("Escrow
Agent" or "Title Insurer") an initial deposit (the
"Initial Deposit") of $200,000.00 by wire transfer of immediately
available funds ("Good Funds").  

2.2.2       
On or before the day that the Feasibility Period expires, Purchaser shall
deliver to Escrow Agent an additional deposit (the "Additional
Deposit") of $200,000.00 by wire transfer of Good Funds.  

2.2.3       
At the Closing, subject to Purchaser's obligations under Section
4.5, Purchaser shall receive a credit
against the Purchase Price in the amount of the outstanding principal balance of
the Note, together with all accrued but unpaid interest (if any) thereon, as of
the Closing Date (the "Loan Balance") to the extent that the Loan
Assumption and Release occurs at the Closing.

2.2.4       
The balance of the Purchase Price for the Property shall be paid to and
received by Escrow Agent by wire transfer of Good Funds no later than
12:00 p.m. (Mountain Time) on the Closing Date.

2.3             
Escrow Provisions Regarding Deposit.  

2.3.1       
Escrow Agent shall hold the Deposit and make delivery of the Deposit to
the party entitled thereto under the terms of this Contract.  Escrow Agent
shall invest the Deposit in an FDIC-insured, interest-bearing bank account or
FDIC-insured money market fund reasonably approved by Purchaser and Seller, and
all interest and income thereon shall become part of the Deposit and shall be
remitted to the party entitled to the Deposit pursuant to this Contract.

2.3.2       
Escrow Agent shall hold and apply the Deposit in strict accordance with
the terms of this Contract.  The tax identification numbers of the parties
shall be furnished to Escrow Agent upon request.

2.3.3       
Except for the return of the Deposit to Purchaser as a result of
Purchaser exercising its termination right under Section 3.2 below (in which event Escrow Agent shall
promptly release the Deposit to Purchaser on demand), if prior to the Closing
Date either party makes a written demand upon Escrow Agent for payment of the
Deposit, Escrow Agent shall give written notice to the other party of such
demand.  If Escrow Agent does not receive a written objection from the
other party to the proposed payment within five (5) Business Days after the
giving of such notice, Escrow Agent is hereby authorized to make such
payment.  If Escrow Agent does receive such written objection within such
five (5) Business Day period, Escrow Agent shall continue to hold such amount
until otherwise directed by written instructions from the parties to this
Contract or a final judgment or arbitrator's decision.  However, Escrow
Agent shall have the right at any time to deliver the Deposit and interest
thereon, if any, with a court of competent jurisdiction in the state in which
the Property is located.  Escrow Agent shall give written notice of such
deposit to Seller and Purchaser.  Upon such deposit, Escrow Agent shall be
relieved and discharged of all further obligations and responsibilities
hereunder.  Any return of the Deposit to Purchaser provided for in this
Contract shall be subject to Purchaser's obligations set forth in Section 3.5.2.  

2.3.4       
The parties acknowledge that Escrow Agent is acting solely as a
stakeholder at their request and for their convenience, and that Escrow Agent
shall not be deemed to be the agent of either of the
parties and shall not be liable for any act or omission on its part unless taken
or suffered in bad faith in willful disregard of this Contract or involving
gross negligence.  Seller and Purchaser jointly and severally shall
indemnify and hold Escrow Agent harmless from and against all costs, claims and
expenses, including reasonable attorney's fees, incurred in connection with the
performance of Escrow Agent's duties hereunder, except with respect to actions
or omissions taken or suffered by Escrow Agent in bad faith, in willful
disregard of this Contract or involving gross negligence on the part of the
Escrow Agent.

2.3.5       
The parties shall deliver to Escrow Agent an executed copy of this
Contract.  Escrow Agent shall execute the signature page for Escrow Agent
attached hereto which shall confirm Escrow Agent's agreement to comply with the
terms of Seller's closing instruction letter delivered at Closing and the
provisions of this Section 2.3.

2.3.6       
Escrow Agent, as the person responsible for closing the transaction
within the meaning of Section 6045(e)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code"), shall file all necessary
information, reports, returns, and statements regarding the transaction required
by the Code including, but not limited to, the tax reports required pursuant to
Section 6045 of the Code.  Further, Escrow Agent agrees to indemnify and
hold Purchaser, Seller, and their respective attorneys and brokers harmless from
and against any Losses resulting from Escrow Agent's failure to file the reports
Escrow Agent is required to file pursuant to this section.

Article
III
FEASIBILITY PERIOD

3.1             
Feasibility Period.  Subject to the terms of
Sections 3.3 and 3.4 and the rights of Tenants under the Leases,
from the Effective Date to and including August 23, 2010 (the "Feasibility
Period"), Purchaser, and its agents, contractors, engineers, surveyors,
attorneys, and employees (collectively, "Consultants") shall, at
no cost or expense to Seller, have the right from time to time to enter onto the
Property to conduct and make any and all customary studies, tests, examinations,
inquiries, inspections and investigations of or concerning the Property, review
the Materials and otherwise confirm any and all matters which Purchaser may
reasonably desire to confirm with respect to the Property and Purchaser's
intended use thereof (collectively, the "Inspections"). 
Purchaser and its Consultants shall continue to have the right to enter the
Property to perform Inspections from the expiration of the Feasibility Period up
to the Closing Date; provided, however, such right shall be: (a) expressly
subject to Sections 3.3 and 3.4 of this Contract; and (b) Purchaser
shall not have the right to terminate this Contract after expiration of the
Feasibility Period based on discovery of any new, additional or supplementary
information during such Inspections.

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

3.3             
Conduct of Investigation.  Purchaser shall not permit
any mechanics' or materialmen's liens or any other liens to attach to the
Property by reason of the performance of any work or the purchase of any
materials by Purchaser or any other party in connection with any Inspections
conducted by or for Purchaser.  Purchaser shall give reasonable advance
notice to Seller prior to any entry onto the Property and shall permit Seller to
have a representative present during all Inspections conducted at the
Property.  Purchaser shall take all reasonable actions and implement all
protections necessary to ensure that all actions taken in connection with the
Inspections, and all equipment, materials and substances generated, used or
brought onto the Property pose no material threat to the safety of persons,
property or the environment.

3.4             
Purchaser Indemnification.  

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

3.4.2       
Notwithstanding anything in this Contract to the contrary, Purchaser
shall not be permitted to perform any invasive tests on the Property without
Seller's prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed.  If Purchaser desires to perform any
invasive tests, Purchaser shall give prior written notice thereof to Seller,
which notice shall be accompanied by a detailed description and plan of the
invasive tests Purchaser desires to perform.  Further, Seller shall have
the right, without limitation, to disapprove any and all entries, surveys, tests
(including, without limitation, a Phase II environmental study of the Property),
investigations and other matters that in Seller's reasonable judgment could
result in any injury to the Property or breach of any contract, or expose Seller
to any Losses or violation of applicable law, or otherwise adversely affect the
Property or Seller's interest therein.  Purchaser shall, at Purchaser's
sole cost and expense, and in accordance with all applicable environmental laws,
dispose of any hazardous materials which have been specifically removed from or
at the Property by Purchaser or its agents, representatives, employees or
designees in connection with Purchaser's environmental studies.  Purchaser
shall use reasonable efforts to minimize disruption to Tenants in connection
with Purchaser's or its Consultants' activities
pursuant to this Section.  No consent by Seller to any such activity shall
be deemed to constitute a waiver by Seller or assumption of liability or risk by
Seller.  Purchaser hereby agrees to restore, at Purchaser's sole cost and
expense, the Property to the same condition existing immediately prior to
Purchaser's exercise of its rights pursuant to this Article III. 
Purchaser shall maintain and cause its third party consultants to maintain (a)
casualty insurance and commercial general liability insurance with coverages of
not less than $1,000,000.00 for injury or death to any one person and
$2,000,000.00 for injury or death to more than one person and $1,000,000.00 with
respect to property damage, and (b) worker's compensation insurance for all of
their respective employees in accordance with the law of the state in which the
Property is located.  Purchaser shall deliver proof of the insurance
coverage required pursuant to this Section 3.4.2 to Seller (in the form of a
certificate of insurance) prior to the earlier to occur of (i) Purchaser's or
Purchaser's Consultants' entry onto the Property, or (ii) the expiration of five
(5) days after the Effective Date.

3.5             
Property Materials.  

3.5.1       
Within three (3) Business Days after the Effective Date, and to the
extent the same have not already been provided by Seller to Purchaser,
Seller agrees to use reasonable efforts to deliver to Purchaser, or at Seller's
option make available at the Property, copies of such documents and information
concerning the Property that are in Seller's possession or reasonable control,
other than such documents and information that Seller deems to be confidential
or proprietary (collectively, the "Materials").

3.5.2       
Except as expressly set forth in Seller's Representations, Seller makes
no representations or warranties, express, written, oral, statutory, or implied,
and all such representations and warranties are hereby expressly excluded and
disclaimed.  All Materials are provided for informational purposes only,
and Purchaser shall not in any way be entitled to rely upon the completeness or
accuracy of the Materials, and will instead in all instances rely exclusively on
its own Inspections and Consultants with respect to all matters which it deems
relevant to its decision to acquire, own and operate the Property.  All
Materials and Third-Party Reports shall be returned to Seller or destroyed by
Purchaser if this Contract is terminated for any reason.

3.5.3       
Not later than five (5) Business Days after the Effective Date, and to
the extent the same has not already been provided by Seller to Purchaser, Seller
shall deliver to Purchaser (or otherwise make available to Purchaser as provided
under Section 3.5.1) the most
recent rent roll for the Property, which is the rent roll Seller uses in the
ordinary course of operating the Property (the "Rent Roll"). 
Seller makes no representations or warranties regarding the Rent Roll other than
the express representation set forth in Section 6.1.5.   

3.5.4       
Not later than five (5) Business Days after the Effective Date, and to
the extent the same has not already been provided by Seller to Purchaser, Seller
shall deliver to Purchaser (or otherwise make available to Purchaser as provided
under Section 3.5.1) a list
of all current Property Contracts (the "Property Contracts
List").  Seller makes no representations or warranties regarding
the Property Contracts List other than the express representations set forth in
Section 6.1.6.  

3.6             
Property Contracts.  On or before the expiration of
the Feasibility Period, Purchaser may deliver written notice to Seller (the
"Property Contracts Notice") specifying any Property Contracts
which Purchaser desires to terminate at the Closing (the "Terminated
Contracts"); provided that (a) the effective date of such termination on
or after Closing shall be subject to the express terms of such Terminated
Contracts, (b) if any such Property Contract cannot by its terms be terminated
at Closing, it shall be assumed by Purchaser and not be a Terminated Contract,
and (c) to the extent that any such Terminated Contract requires payment of a
penalty, premium, or damages, including liquidated damages, for cancellation,
Seller shall be solely responsible for the payment of any such cancellation
fees, penalties, or damages, including liquidated damages.  If Purchaser
fails to deliver the Property Contracts Notice on or before the expiration of
the Feasibility Period, then there shall be no Terminated Contracts and
Purchaser shall assume all Property Contracts at the Closing.  If Purchaser
delivers the Property Contracts Notice to Seller on or before the expiration of
the Feasibility Period, then Seller shall execute and deliver, on or before
Closing, a vendor termination notice (in the form attached hereto as
Exhibit F) for each Terminated Contract informing the vendor(s) of
the termination of such Terminated Contract as of the Closing Date (subject to
any delay in the effectiveness of such termination pursuant to the express terms
of each applicable Terminated Contract) (the "Vendor
Terminations").  To the extent that any Property Contract to be
assigned to Purchaser requires vendor consent, then, prior to the Closing,
Purchaser and Seller shall attempt to obtain from each applicable vendor a
consent (each a "Required Assignment Consent") to such assignment.

Article
IV
TITLE

4.1             
Title Documents.  Within three (3) Business Days after
the Effective Date, Seller shall cause to be delivered to Purchaser a standard
form commitment or preliminary title report ("Title Commitment")
to provide a standard American Land Title Association owner's title insurance
policy for the Land and Improvements, using the current policy jacket
customarily provided by the Title Insurer, in an amount equal to the Purchase
Price (the "Title Policy"), together with copies of all
instruments identified as exceptions therein (together with the Title
Commitment, referred to herein as the "Title Documents"). 
Seller shall be responsible only for procurement of the title Commitment and
payment of the base premium for the Title Policy.  Purchaser shall be
solely responsible for payment of all other costs relating to procurement of the
Title Policy, and any requested endorsements.  

4.2             
Survey.  Subject to Section 3.5.2, within three (3) Business Days after
the Effective Date, Seller shall deliver to Purchaser any existing survey of the
Property (the "Existing Survey").  Purchaser may, at its sole
cost and expense, order a new or updated survey of the Property either before or
after the Effective Date (such new or updated survey together with the Existing
Survey, is referred to herein as the "Survey").  

4.3             
Objection and Response Process.  On or before the date
which is twenty (20) days after the Effective Date (the "Objection
Deadline"), Purchaser shall give written notice (the "Objection
Notice") to the attorneys for Seller of any matter set forth in the
Title Documents and the Survey to which Purchaser objects (the
"Objections").  If Purchaser fails to tender an Objection Notice on or before the Objection
Deadline, Purchaser shall be deemed to have approved and irrevocably waived any
objections to any matters covered by the Title Documents and the Survey. 
On or before twenty-five (25) days after the Effective Date (the "Response
Deadline"), Seller may, in Seller's sole discretion, give Purchaser
notice (the "Response Notice") of those Objections which Seller is
willing to cure, if any.  Seller shall be entitled to reasonable
adjournments of the Closing Date to cure the Objections, not to exceed thirty
(30) days in the aggregate.  If Seller fails to deliver a Response Notice
by the Response Deadline, Seller shall be deemed to have elected not to cure or
otherwise resolve any matter set forth in the Objection Notice.  If
Purchaser is dissatisfied with the Response Notice or the lack of Response
Notice, Purchaser may, as its exclusive remedy, exercise its right to terminate
this Contract prior to the expiration of the Feasibility Period in accordance
with the provisions of Section 3.2.  If Purchaser fails to timely
exercise such right, Purchaser shall be deemed to accept the Title Documents and
Survey with resolution, if any, of the Objections set forth in the Response
Notice (or if no Response Notice is tendered, without any resolution of the
Objections) and without any reduction or abatement of the Purchase Price. 

4.4             
Permitted Exceptions.  The Deed delivered pursuant to
this Contract shall be subject to the following, all of which shall be deemed
"Permitted Exceptions":

4.4.1       
All matters shown in the Title Documents and the Survey, other than (a)
those Objections, if any, which Seller has agreed to cure pursuant to the
Response Notice under Section 4.3, (b) mechanics' liens and taxes due and
payable with respect to the period preceding Closing, (c) the standard exception
regarding the rights of parties in possession, which shall be modified to be
limited to those parties in possession pursuant to the Leases, and (d) the
standard exception pertaining to taxes and assessments, which shall be limited
to taxes and assessments not yet due and payable as of the Closing Date; 

4.4.2       
All Leases;

4.4.3       
The Assumed Encumbrances;

4.4.4       
Applicable zoning and governmental regulations and ordinances;
and

4.4.5       
Any defects in or objections to title to the Property, or title
exceptions or encumbrances, arising by, through or under Purchaser.

4.5             
Assumed Encumbrances.

4.5.1       
Purchaser recognizes and agrees that, in connection with a loan (the
"Loan") made to Seller by Keycorp Real Estate Capital Markets,
Inc., as assigned to Federal Home Loan Mortgage Corporation (the
"Lender"), the Property presently is encumbered by a deed of
trust dated June 30, 2008 and recorded on July 1, 2008 at Reception No.
20081358, and re-recorded July 9, 2008 at reception No. 2008094512 (the
"Assumed Deed of Trust") and certain other security and related
documents in connection with the Loan (collectively, the "Assumed
Encumbrances").  The Loan is evidenced by that certain promissory
note dated June 30, 2008 in the stated principal amount of $14,082,000.00 (the
"Note," and together with the Assumed
Deed of Trust, the Assumed Encumbrances and any other documents executed by
Seller in connection with the Loan, the "Assumed Loan Documents"),
executed by Seller and payable to the order of the Lender.  Within five (5)
days after the Effective Date, Seller agrees that it will make available to
Purchaser (in the same manner in which Seller is permitted to make the Materials
available to Purchaser under Section 3.5.1) copies of the Assumed Loan
Documents which are in Seller's possession or reasonable control (subject to
Section 3.5.2).

4.5.2       
Purchaser agrees that, at the Closing, (a) Purchaser shall assume
Seller's obligations under the Note and all of the other Assumed Loan Documents
and accept title to the Property subject to the Deed of Trust and the Assumed
Encumbrances, and (b) the Lender shall release Seller, as well as any
guarantors and other obligated parties under the Assumed Loan Documents, from
all obligations under the Assumed Loan Documents (and any related guarantees or
letters of credit), including, without limitation, any obligation to make
payments of principal and interest under the Note (collectively, the foregoing
(a) and (b) referred to herein as the "Loan Assumption and
Release").  Purchaser acknowledges and agrees that (x) certain of
the provisions of the Assumed Loan Documents may have been negotiated for the
exclusive benefit of Seller, AIMCO or their respective affiliates (the
"Specific AIMCO Provisions"), and (y) unless Lender otherwise
agrees in Lender's sole and arbitrary discretion, Purchaser will not be
permitted to assume the benefit of the Specific AIMCO Provisions and the same
shall be of no further force or effect from and after the Closing Date.

4.5.3       
Purchaser further acknowledges that the Assumed Loan Documents require
the satisfaction by Purchaser of certain requirements as set forth therein to
allow for the Loan Assumption and Release.  Accordingly, Purchaser, at its
sole cost and expense and within ten (10) Business Days after the Effective Date
(the "Loan Assumption Application Submittal Deadline"), shall
satisfy the requirements set forth in the Assumed Loan Documents to allow for
the Loan Assumption and Release, including, without limitation, submitting a
complete application to Lender for assumption of the Loan together with all
documents and information required in connection therewith (the "Loan
Assumption Application").  Purchaser agrees to provide Seller with
a copy of the Loan Assumption Application (excluding all confidential
information) on or before the Loan Assumption Application Submittal Deadline and
shall provide evidence of its submission to Lender on or before the Loan
Assumption Application Submittal Deadline.  Purchaser acknowledges and
agrees that Purchaser is solely responsible for the preparation and submittal of
the Loan Assumption Application, including the collection of all materials,
documents, certificates, financials, signatures, and other items required to be
submitted to Lender in connection with the Loan Assumption Application.

4.5.4       
Purchaser shall comply with Lender's assumption guidelines in connection
with the Loan Assumption and Release, and, if required by the Lender, Purchaser
shall cause such other person or entity reasonably acceptable to the Lender, to
execute and deliver a customary "non-recourse carve-out" guaranty and such other
guaranty(s), if any, which are also customary standard Lender "non-recourse
carve-out" guaranties and are a part of the Assumed Loan Documents and a
customary environmental indemnity in favor of Lender.  Purchaser shall be
responsible at its sole cost and expense for correcting and re-submitting any
deficiencies noted by Lender in connection with the Loan Assumption Application
no later than three (3) Business Days after notification from Lender of such
deficiency.  Purchaser also shall provide Seller
with a copy of any correspondence from Lender with respect to the Loan
Assumption Application no later than three (3) Business Days after receipt of
such correspondence from Lender.  Purchaser acknowledges that Lender's
assumption guidelines may not be consistent with the provisions of the Assumed
Loan Documents concerning the Loan Assumption and Release.  Purchaser shall
coordinate with the Lender to comply with the appropriate provisions of both the
Assumed Loan Documents and Lender assumption guidelines in order to allow for
the Loan Assumption and Release.

4.5.5       
Purchaser shall pay all fees and expenses (including, without limitation,
all servicing fees and charges, transfer fees, assumption fees, title fees and
endorsement fees) imposed or charged by the Lender or its counsel (such fees and
expenses collectively being referred to as the "Lender Fees"), in
connection with the Loan Assumption Application and the Loan Assumption and
Release.

4.5.6       
Seller shall assign all of its right, title and interest in and to all
reserves, impounds and other accounts held by Lender in connection with the
Loan, and at Closing, Purchaser shall remit to Seller an amount equal to the
balance of such reserves, impounds and accounts so assigned.  Additionally,
Purchaser shall be responsible for funding any additional or increased reserves,
impounds or accounts required by Lender to be maintained by Purchaser in
connection with the Loan after the Loan Assumption and Release (the
"Required Loan Fund Amounts").

4.5.7       
Purchaser agrees promptly to deliver to the Lender all documents and
information required by the Assumed Loan Documents, and such other information
or documentation as the Lender reasonably may request, including, without
limitation, financial statements, income tax returns and other financial
information for Purchaser and any required guarantor.  Seller agrees that
it will cooperate with Purchaser and Lender, at no cost or expense to Seller, in
connection with Purchaser's application to Lender for approval of the Loan
Assumption and Release.

4.5.8       
To the extent required by Lender, no later than ten (10) days after the
Effective Date, Purchaser shall order a Phase I Environmental study and/or
property condition report (prepared by a consultant and engineer reasonably
acceptable to Seller and Lender), and covenants that such Phase I Environmental
study and/or property condition report shall be delivered to Seller and Lender
no later than ten (10) days prior to the Closing Date in connection with and as
a precondition to the Loan Assumption and Release.

4.5.9       
If Purchaser fails to submit a complete Loan Assumption Application by
the Loan Application Submittal Deadline, Seller may, as Seller's exclusive
remedy, terminate this Contract, and the Deposit shall be immediately released
by the Escrow Agent to Purchaser.

4.5.10    If Purchaser
complies with its obligations under this Contract (including this Section
4.5) and the requirements of the
Assumed Deed of Trust (including, without limitation, Section 21 of the Assumed
Deed of Trust), in connection with obtaining the Loan Assumption and Release,
and Purchaser uses diligent efforts to obtain the Loan Assumption and Release,
but prior to September 7, 2010 (the "Loan Approval Period")
Lender fails to provide its approval of the Loan
Assumption and Release then, on or before the expiration of the Loan Approval
Period, Purchaser shall have the right to give Seller and Escrow Agent written
notice terminating this Contract on or before the date which is one (1) day
after expiration of the Loan Approval Period (the "Loan Approval
Termination").  In such event, this Contract shall be of no further
force and effect, subject to and except for the Survival Provisions, and Escrow
Agent shall forthwith return the Deposit to Purchaser.  If Purchaser fails
to provide Seller with the Loan Approval Termination prior to the expiration of
the Loan Approval Period in strict accordance with the notice provisions of this
Contract, Purchaser's right to terminate under this Section 4.5.10 shall
be permanently waived, this Contract shall remain in full force and effect, the
Deposit shall be non-refundable, except as otherwise herein expressly provided,
and Purchaser's obligation to obtain the Lender's approval of the Loan
Assumption and Release and to purchase the Property shall be non-contingent and
unconditional except only for satisfaction of the conditions expressly stated in
Section 8.1.  Purchaser recognizes and agrees that, if the Loan
Approval Period expires and Purchaser does not terminate this Contract, the Loan
Assumption and Release shall not be a condition to Purchaser's obligation to
close, and, if the Loan Assumption and Release is not obtained and the Closing
has not occurred on or before the Closing Date, Purchaser shall be in default
under this Contract, entitling the Seller to terminate this Contract, in which
event the Deposit shall be immediately released to Seller by the Escrow Agent
and this Contract shall be of no further force and effect, subject to and except
for the Survival Provisions.

4.5.10.1       
Provided that Purchaser is not in default under the terms of this
Contract, Purchaser shall be permitted two (2) fifteen day (15-day) extensions
of the Loan Approval Period specified in Section 4.5.10 by (i) delivering written notice
to Seller no later than five (5) days prior to the then scheduled expiration of
the Loan Approval Period, and (ii) simultaneously with each such notice to
Seller, delivering to Escrow Agent the amount of $50,000.00, which amount when
received by Escrow Agent shall be added to the Deposit hereunder, and shall be
held, credited and disbursed in the same manner as provided hereunder with
respect to the Deposit.

4.6             
Subsequently Disclosed Exceptions.  If at any time
after the expiration of the Feasibility Period, any update to the Title
Commitment or Existing Survey discloses any additional item that materially
adversely affects title to the Property which was not disclosed on any version
of or update to the Title Commitment delivered to Purchaser during the
Feasibility Period (the "New Exception"), Purchaser shall have a
period of five (5) days from the date of its receipt of such update (the
"New Exception Review Period") to review and notify Seller in
writing of Purchaser's approval or disapproval of the New Exception.  If
Purchaser disapproves of the New Exception, Seller may, in Seller's sole
discretion, notify Purchaser as to whether it is willing to cure the New
Exception.  If Seller elects to cure the New Exception, Seller shall be
entitled to reasonable adjournments of the Closing Date to cure the New
Exception, not to exceed thirty (30) days in the aggregate.  If Seller
fails to deliver a notice to Purchaser within three (3) days after the
expiration of the New Exception Review Period, Seller shall be deemed to have
elected not to cure the New Exception.  If Purchaser is dissatisfied with
Seller's response, or lack thereof, Purchaser may, as its exclusive remedy elect
either:  (i) to terminate this Contract, in which event the Deposit shall
be promptly returned to Purchaser or (ii) to waive the New Exception and proceed with the transactions contemplated
by this Contract, in which event Purchaser shall be deemed to have approved the
New Exception.  If Purchaser fails to notify Seller of its election to
terminate this Contract in accordance with the foregoing sentence within six (6)
days after the expiration of the New Exception Review Period, Purchaser shall be
deemed to have elected to approve and irrevocably waive any objections to the
New Exception.  

4.7             
Purchaser Financing.  Except as otherwise provided in
Section 4.5 above with respect to the Loan
Assumption and Release, Purchaser assumes full responsibility to obtain the
funds required for settlement, and Purchaser's acquisition of such funds shall
not be a contingency to the Closing. 

4.8             
Housing Assistance Program Vouchers.  Purchaser
acknowledges that the HAP Tenant Based Voucher Contract(s) require(s) the
satisfaction by Purchaser of certain requirements as set forth therein and
established by the local housing authorities (collectively, the "Housing
Authority") to allow for the assumption of the HAP Tenant Based Voucher
Contract(s). Purchaser agrees that, at the Closing, either (a) Purchaser shall
assume all obligations under the HAP Tenant Based Voucher Contract(s) and accept
title to the applicable Property subject to the same, or (b) the existing HAP
Tenant Based Voucher Contract(s) shall be terminated, and Purchaser shall enter
into replacement HAP Tenant Based Voucher Contract(s) which are acceptable to
the Housing Authority (collectively, the foregoing (a) and (b) referred to
herein as the "HAP Tenant Based Voucher Assumption"). 
Purchaser shall indemnify and hold the Seller and the Seller's Indemnified
Parties harmless from and against any and all claims, losses, damages, and
expenses (including reasonable attorneys' fees) that may be incurred by Seller
and/or any of the Seller's Indemnified Parties from and after the Closing Date,
in connection with the HAP Tenant Based Voucher Assumption.

Article
V
CLOSING

5.1             
Closing Date.  The Closing shall occur on [ACTUAL
DATE WHICH IS 15 DAYS AFTER THE DATE THAT THE LOAN APPROVAL PERIOD EXPIRES TO BE
INSERTED UPON EXECUTION OF CONTRACT] (the "Closing Date")
through an escrow with Escrow Agent, whereby Seller, Purchaser and their
attorneys need not be physically present at the Closing and may deliver
documents by overnight air courier or other means.  Notwithstanding the
foregoing to the contrary, Seller shall have the option, by delivering written
notice to Purchaser at least five (5) days prior to the scheduled Closing Date,
to extend the Closing Date to the last Business Day of the month in which the
Closing Date otherwise would occur pursuant to the preceding sentence, in
connection with the Loan Assumption and Release.  

           
Provided that Purchaser is not in default under the terms of this Contract,
Purchaser shall be permitted one (1) fifteen day (15-day) extension of the
Closing Date specified in the first sentence of Section 5.1 (or as such Closing Date may have been
extended by Seller as described above) by (i) delivering written notice to
Seller no later than ten (10) days prior to the scheduled Closing Date, and (ii)
simultaneously with such notice to Seller, delivering to Escrow Agent the amount
of $25,000.00, which amount when received by Escrow Agent shall be added to the
Deposit hereunder, shall be non-refundable (except as otherwise expressly
provided herein with respect to the Deposit), and shall be
held, credited and disbursed in the same manner as provided hereunder with
respect to the Deposit.

5.2             
Seller Closing Deliveries.  Except for the closing
statement which shall be delivered on or before the Closing Date, Seller shall
deliver to Escrow Agent, each of the following items no later than one (1)
Business Day prior to the Closing Date:

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

5.2.2       
A Bill of Sale in the form attached as Exhibit C.

5.2.3       
A General Assignment in the form attached as Exhibit D (the
"General Assignment").

5.2.4       
An Assignment of Leases and Security Deposits in the form attached as
Exhibit E (the "Leases Assignment").

5.2.5       
Seller's counterpart signature to the closing statement prepared by Title
Insurer.

5.2.6       
A title affidavit or an indemnity form reasonably acceptable to Seller,
which is sufficient to enable Title Insurer to delete the standard pre-printed
exceptions, including the deletion of the standard pre-printed exception
relating to any lien, or right to a lien, for services, labor or materials
heretofore or hereafter furnished, imposed by law and not shown by public
records, to the title insurance policy to be issued pursuant to the Title
Commitment.  

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

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

5.2.9       
An updated Rent Roll effective as of a date no more than three (3)
Business Days prior to the Closing Date; provided, however, that the content of
such updated Rent Roll shall in no event expand or modify the conditions to
Purchaser's obligation to close as specified under Section 8.1.  

5.2.10    An updated
Property Contracts List effective as of a date no more than three (3) Business
Days prior to the Closing Date; provided, however, that the content of such
updated Property Contracts List shall in no event expand or modify the
conditions to Purchaser's obligation to close as specified under Section
8.1.

5.2.11    Such notices,
transfer disclosures, affidavits or other similar documents that are required by
applicable laws to be executed by Seller or otherwise reasonably necessary in
order to consummate the transactions contemplated under terms of the
Contract.

5.2.12    An assumption and
release agreement for the Assumed Loan Documents in a form required by Lender
and acceptable to Seller.

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

5.3             
Purchaser Closing Deliveries.  Except for: (i) the
closing statement which shall be delivered on or before the Closing Date, and
(ii) the balance of the Purchase Price which is to be delivered at the time
specified in Section 2.2.4,
Purchaser shall deliver to Escrow Agent, each of the following items no later
than one (1) Business Day prior to the Closing Date:

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

5.3.2       
Purchaser's counterpart signature to the closing statement prepared by
Title Insurer.

5.3.3       
A countersigned counterpart of the General Assignment.

5.3.4       
A countersigned counterpart of the Leases Assignment.

5.3.5       
Notification letters to all Tenants prepared and executed by Purchaser in
the form attached hereto as Exhibit G, which shall be delivered to all
Tenants by Purchaser immediately after Closing. 

5.3.6       
Intentionally Omitted.

5.3.7       
Resolutions, certificates of good standing, and such other organizational
documents as Title Insurer shall reasonably require evidencing Purchaser's
authority to consummate this transaction.

5.3.8       
If Purchaser elects to cause and the Lender has agreed to permit the Loan
Assumption and Release, all documents, instruments, guaranties, Lender Fees,
Required Loan Fund Amounts, and other items or funds required by the Lender to
cause the Loan Assumption and Release.

5.3.9       
Such notices, transfer disclosures, affidavits or other similar documents
that are required by applicable law to be executed by Purchaser or otherwise
reasonably necessary in order to consummate the transactions contemplated under
this Contract.

5.3.10    A countersigned
assumption and release agreement for the Assumed Loan Documents in a form
required by Lender and acceptable to Seller.

5.4             
Closing Prorations and Adjustments.  

5.4.1       
General.  All normal and customarily proratable items,
including, without limitation, collected rents, operating expenses, personal
property taxes, other operating expenses and fees,
shall be prorated as of the Closing Date, Seller being charged or credited, as
appropriate, for all of same attributable to the period up to the Closing Date
(and credited for any amounts paid by Seller attributable to the period on or
after the Closing Date, if assumed by Purchaser) and Purchaser being responsible
for, and credited or charged, as the case may be, for all of the same
attributable to the period on and after the Closing Date.  Seller shall
prepare a proration schedule (the "Proration Schedule") of the
adjustments described in this Section 5.4 prior to Closing and shall use good
faith efforts to deliver such Proration Schedule two (2) days prior to
Closing.  

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

5.4.3       
Utilities.  The final readings and final billings for
utilities will be made if possible as of the Closing Date, in which case Seller
shall pay all such bills as of the Closing Date and no proration shall be made
at the Closing with respect to utility bills.  Otherwise, a proration shall
be made based upon the parties' reasonable good faith estimate.  Seller
shall be entitled to the return of any deposit(s) posted by it with any utility
company, and Seller shall notify each utility company serving the Property to
terminate Seller's account, effective as of noon on the Closing Date. 
Seller shall have no responsibility or liability for Purchaser's failure to
arrange utility service for the Property as of the Closing Date.  Purchaser
shall indemnify, hold harmless and, if requested by Seller (in Seller's sole
discretion), defend (with counsel approved by Seller) Seller's Indemnified
Parties from and against any and all Losses arising from or related to
Purchaser's failure to arrange utility service as of the Closing Date.

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

5.4.5       
Property Contracts.  Purchaser shall assume at Closing
the obligations under the Property Contracts assumed by Purchaser; however,
operating expenses shall be prorated under Section 5.4.2.

5.4.6       
Leases.  

5.4.6.1           
All collected rent (whether fixed monthly rentals, additional rentals,
escalation rentals, retroactive rentals, operating cost pass-throughs or other
sums and charges payable by Tenants under the Leases), income and expenses from
any portion of the Property shall be prorated as of the Closing Date. 
Purchaser shall receive all collected rent and income attributable to dates from
and after the Closing Date.  Seller shall receive all collected rent and
income attributable to dates prior to the Closing Date.  With respect to
any utility rebilling contract associated with the Property, if Purchaser elects
to terminate such utility rebilling contract then Seller shall receive a credit
at Closing in an amount equal to the average of the amount of the monthly
utility bill associated with the Property for the preceding twelve (12) months,
multiplied by three (3), and Purchaser shall not be obligated to remit to Seller
any operating pass-throughs payable by Tenants pursuant to such utility
rebilling contract after Closing.  Seller shall remit to Purchaser any
amounts collected by Seller from such utility rebilling company if and when
collected by Seller related to the three-month period prior to Closing for which
Seller has already received credit as provided in the previous sentence of this
Section 5.4.6.1. 
Notwithstanding the foregoing, no prorations shall be made in relation to either
(a) non-delinquent rents which have not been collected as of the Closing Date,
or (b) delinquent rents existing, if any, as of the Closing Date (the foregoing
(a) and (b) referred to herein as the "Uncollected Rents"). 
In adjusting for Uncollected Rents, no adjustments shall be made in Seller's
favor for rents which have accrued and are unpaid as of the Closing, but
Purchaser shall pay Seller such accrued Uncollected Rents as and when collected
by Purchaser.  For a period of one hundred eighty (180) days following
Closing, Purchaser agrees to bill Tenants of the Property for all Uncollected
Rents and to take reasonable actions (which shall not include an obligation to
commence legal action) to collect Uncollected Rents.  Notwithstanding the
foregoing, Purchaser's obligation to collect Uncollected Rents shall be limited
to Uncollected Rents of not more than ninety (90) days past due, and Purchaser's
collection of rents shall be applied, first, towards current rent due and owing
under the Leases, second, to Purchaser's reasonable third-party costs of such
collection, and third to Uncollected Rents.  After the Closing, Seller
shall continue to have the right, but not the obligation, in its own name, to
demand payment of and to collect Uncollected Rents owed to Seller by any Tenant,
which right shall include, without limitation, the right to continue or commence
legal actions or proceedings against any Tenant and the delivery of the Leases
Assignment shall not constitute a waiver by Seller of such right; provided
however, that the foregoing right of Seller shall be limited to actions seeking
monetary damages and, in no event, shall Seller seek to evict any Tenants in any
action to collect Uncollected Rents.  Purchaser agrees to cooperate with
Seller, at no third-party cost or expense to Purchaser, in connection with all
efforts by Seller to collect such Uncollected Rents and to take all steps,
whether before or after the Closing Date, as may be necessary to carry out the
intention of the foregoing; provided, however, that Purchaser's obligation to
cooperate with Seller pursuant to this sentence shall not obligate Purchaser to
terminate any Tenant lease with an existing Tenant or evict any existing Tenant
from the Property.

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

5.4.7       
Existing Loan.  Seller shall be responsible for all
principal required to be paid under the terms of the Note prior to Closing,
together with all interest accrued under the Note prior to Closing, all of which
may be a credit against the Purchase Price as provided in Section 2.2.3.  Purchaser shall be responsible
for the payment of all principal required to be paid from and after Closing,
together with all interest accruing under the Note from and after Closing. 
Purchaser shall also be responsible for all Lender Fees and all other fees,
penalties, interest and other amounts due and owing from and after Closing under
the Assumed Loan Documents as a result of the Loan Assumption and Release. 
As set forth in Section 4.5.3,
any existing reserves, impounds and other accounts maintained in connection with
the Loan shall be assigned to Purchaser, and at Closing, Purchaser shall pay to
Seller an amount equal to the balance of such reserves, impounds and accounts so
assigned. 

5.4.8       
Insurance.  No proration shall be made in relation to
insurance premiums and insurance policies will not be assigned to
Purchaser.  Seller shall have the risk of loss of the Property until 11:59
p.m. the day prior to Closing Date ("Risk of Loss Transfer"),
after which time the risk of loss shall pass to Purchaser and Purchaser shall be
responsible for obtaining its own insurance thereafter.

5.4.9       
Employees.  All of Seller's and Seller's manager's
on-site employees shall have their employment at the Property terminated as of
the Closing Date.

5.4.10    Closing
Costs.  Purchaser shall pay any documentary fees, any transfer,
mortgage assumption, sales, use, gross receipts or similar taxes, any premiums
or fees required to be paid by Purchaser with respect to the Title Policy
pursuant to Section 4.1, and
one-half of the customary closing costs of the Escrow Agent.  Seller shall
pay the base premium for the Title Policy to the extent required by Section
4.1, the cost of recording any
instruments required to discharge any liens or encumbrances against the Property
not caused by Purchaser's actions, and one-half of the customary closing costs
of the Escrow Agent. 

5.4.11    Utility
Contracts.  If Seller has entered into an agreement for the
purchase of electricity, gas or other utility service for the Property or a
group of properties (including the Property) (a "Utility
Contract"), or an affiliate of Seller has entered into a Utility
Contract, then Seller shall assign and Purchaser shall assume the Utility
Contract with respect to the Property, and if required by the terms of such
Utility Contract, Purchaser shall attempt to obtain consent to such assignment
and assumption, and Purchaser shall hold harmless and, if requested by Seller
(in Seller's sole discretion), defend (with counsel approved by Seller) Seller's
Indemnified Parties from and against any and all Losses arising from or related
to Purchaser's failure to obtain such consent.  

5.4.12   
Possession.  Possession of the Property, subject to
the Leases, Property Contracts, other than Terminated Contracts, and Permitted
Exceptions, shall be delivered to Purchaser at the Closing upon release from
escrow of all items to be delivered by Purchaser pursuant to Section 5.2.11.  To the extent
reasonably available to Seller, originals or copies of the Leases and Property
Contracts, lease files, warranties, guaranties, operating manuals, keys to the
property, and Seller's books and records (other than proprietary information)
(collectively, "Seller's Property-Related Files and Records")
regarding the Property shall be made available to Purchaser at the Property
after the Closing.  Purchaser agrees, for a period of not less than three
(3) years after the Closing (the "Records Hold Period"), to (a)
provide and allow Seller reasonable access to Seller's Property-Related Files
and Records for purposes of inspection and copying thereof, and (b) reasonably
maintain and preserve Seller's Property-Related Files and Records.  If at
any time after the Records Hold Period, Purchaser desires to dispose of Seller's
Property-Related Files and Records, Purchaser must first provide Seller prior
written notice (the "Records Disposal Notice").  Seller shall
have a period of thirty (30) days after receipt of the Records Disposal Notice
to enter the Property (or such other location where such records are then
stored) and remove or copy those of Seller's Property-Related Files and Records
that Seller desires to retain. 

5.5             
Post Closing Adjustments.  Purchaser or Seller may
request that Purchaser and Seller undertake to re-adjust any item on the
Proration Schedule (or any item omitted therefrom), with the exception of real
property taxes which shall be final and not subject to readjustment, in
accordance with the provisions of Section 5.4 of this Contract; provided, however, that
neither party shall have any obligation to re-adjust any items (a) after the
expiration of sixty (60) days after Closing, or (b) subject to such sixty
(60)-day period, unless such items exceed $5,000.00 in the aggregate.  

Article
VI
REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER

6.1             
Seller's Representations.  Except, in all cases, for
any fact, information or condition disclosed in the Title Documents, the
Permitted Exceptions, the Property Contracts, or the Materials, or which is
otherwise known by Purchaser prior to the Closing, Seller represents and
warrants to Purchaser the following (collectively, the "Seller's
Representations") as of the Effective Date and as of the Closing Date;
provided that Purchaser's remedies if any such Seller's Representations are
untrue as of the Closing Date are limited to those set forth in
Section 8.1.

6.1.1       
Seller is a limited liability company validly existing and in good
standing under the laws of the state of its formation set forth in the initial
paragraph of this Contract; and, subject to Section 8.2.5 and any approvals required from
Lender for the Loan Assumption and Release, has or at the Closing shall have the
entity power and authority to sell and convey the Property and to execute the
documents to be executed by Seller and prior to the Closing will have taken as
applicable, all corporate, partnership, limited liability company or equivalent
entity actions required for the execution and delivery of this Contract, and the
consummation of the transactions contemplated by this Contract.  The
compliance with or fulfillment of the terms and conditions hereof will not
conflict with, or result in a breach of, the terms, conditions or provisions of,
or constitute a default under, any contract to which Seller is a party or by
which Seller is otherwise bound, which conflict, breach or
default would have a material adverse affect on Seller's ability to consummate
the transaction contemplated by this Contract or on the Property.  This
Contract is a valid, binding and enforceable agreement against Seller in
accordance with its terms;

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

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

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

6.1.5       
To Seller's knowledge, the Rent Roll (as updated pursuant to
Section 5.2.9) is
accurate in all material respects; and

6.1.6       
To Seller's knowledge, the Property Contracts List (as updated pursuant
to Section 5.2.10) is
accurate in all material respects.  

6.1.7       
To Seller's knowledge, Seller has received no written notice of any
material uncured violation that either the Property or the use thereof violates
any laws, rules, regulations or ordinances of any federal, state, city, or
county government or any agency, body, or subdivision thereof from any
governmental authority having any jurisdiction over the Property that have not
been resolved to the satisfaction of the issuer of the notice.

6.1.8       
To Seller's knowledge:  (A) no hazardous or toxic materials or other
substances regulated by applicable federal or state environmental laws are
stored by Seller on, in or under the Property in quantities which violate
applicable laws governing such materials or substances, and (B) the
Property is not used by Seller for the storage, treatment, generation or
manufacture of any hazardous or toxic materials or other substances in a manner
which would constitute a violation of applicable federal or state environmental
laws.

6.2             
AS-IS.  Except as otherwise expressly set forth in
Seller's Representations:

6.2.1       
The Property is expressly purchased and sold "AS IS," "WHERE IS," and
"WITH ALL FAULTS."  

6.2.2       
The Purchase Price and the terms and conditions set forth herein are the
result of arm's-length bargaining between entities familiar with transactions of
this kind, and said price, terms and conditions reflect the fact that Purchaser
shall have the benefit of, but is not relying upon, any information provided by
Seller or Broker or statements, representations or warranties, express or implied, made by or enforceable
directly against Seller or Broker, including, without limitation, any relating
to the value of the Property, the physical or environmental condition of the
Property, any state, federal, county or local law, ordinance, order or permit;
or the suitability, compliance or lack of compliance of the Property with any
regulation, or any other attribute or matter of or relating to the Property
(other than any covenants of title contained in the Deed conveying the Property
and Seller's Representations).  Purchaser agrees that Seller shall not be
responsible or liable to Purchaser for any defects, errors or omissions in the
Materials, or on account of any conditions affecting the Property.  

6.2.3       
Purchaser, its successors and assigns, and anyone claiming by, through or
under Purchaser, hereby fully releases Seller's Indemnified Parties from, and
irrevocably waives its right to maintain, any and all claims and causes of
action that it or they may now have or hereafter acquire against Seller's
Indemnified Parties with respect to any and all Losses arising from or related
to any defects, errors, omissions in the Materials or other conditions affecting
the Property.  

6.2.4       
Purchaser represents and warrants that, as of the date hereof and as of
the Closing Date, it has and shall have reviewed and conducted such independent
analyses, studies (including, without limitation, environmental studies and
analyses concerning the presence of lead, asbestos, water intrusion and/or
fungal growth and any resulting damage, PCBs and radon in and about the
Property), reports, investigations and inspections as it deems appropriate in
connection with the Property.  If Seller  provides or has provided any
documents, summaries, opinions or work product of consultants, surveyors,
architects, engineers, title companies, governmental authorities or any other
person or entity with respect to the Property, including, without limitation,
the offering prepared by Broker, Purchaser and Seller agree that Seller has done
so or shall do so only for the convenience of both parties, Purchaser shall not
rely thereon and the reliance by Purchaser upon any such documents, summaries,
opinions or work product shall not create or give rise to any liability of or
against Seller's Indemnified Parties.  Purchaser acknowledges and agrees
that no representation has been made and no responsibility is assumed by Seller
with respect to current and future applicable zoning or building code
requirements or the compliance of the Property with any other laws, rules,
ordinances or regulations, the financial earning capacity or expense history of
the Property, the continuation of contracts, continued occupancy levels of the
Property, or any part thereof, or the continued occupancy by tenants of any
Leases or, without limiting any of the foregoing, occupancy at Closing. 

6.2.5       
Prior to Closing, Seller shall have the right, but not the obligation, to
enforce its rights against any and all Property occupants, guests or
tenants.  Purchaser agrees that the departure or removal, prior to Closing,
of any of such guests, occupants or tenants shall not be the basis for, nor
shall it give rise to, any claim on the part of Purchaser, nor shall it affect
the obligations of Purchaser under this Contract in any manner whatsoever; and
Purchaser shall close title and accept delivery of the Deed with or without such
tenants in possession and without any allowance or reduction in the Purchase
Price under this Contract.  

6.2.6       
Except for Seller's fraud, Purchaser hereby releases Seller from any and
all claims and liabilities relating to the matters set forth in this
Section.  

6.3             
Survival of Seller's Representations.  Seller and
Purchaser agree that Seller's Representations shall survive Closing for a period
of twelve (12) months (the "Survival Period").  Seller shall
have no liability after the Survival Period with respect to Seller's
Representations contained herein except to the extent that Purchaser has
requested arbitration against Seller during the Survival Period for breach of
any of Seller's Representations.  Under no circumstances shall Seller be
liable to Purchaser for more than $500,000.00 in any individual instance or in
the aggregate for all breaches of Seller's Representations, nor shall Purchaser
be entitled to bring any claim for a breach of Seller's Representations unless
the claim for damages (either in the aggregate or as to any individual claim) by
Purchaser exceeds $5,000.00.  In the event that Seller breaches any
representation contained in Section 6.1 and Purchaser had knowledge of such
breach prior to the Closing Date, and elected to close regardless, Purchaser
shall be deemed to have waived any right of recovery, and Seller shall not have
any liability in connection therewith.

6.4             
Definition of Seller's Knowledge.  Any representations
and warranties made "to the knowledge of Seller" shall not be deemed to imply
any duty of inquiry.  For purposes of this Contract, the term Seller's
"knowledge" shall mean and refer only to actual knowledge of the
Regional Property Manager and the Community Manager and shall not be construed
to refer to the knowledge of any other partner, officer, director, agent,
employee or representative of Seller, or any affiliate of Seller, or to impose
upon such Regional Property Manager and Community Manager any duty to
investigate the matter to which such actual knowledge or the absence thereof
pertains, or to impose upon such Regional Property Manager and Community Manager
any individual personal liability.  As used herein, the term
"Regional Property Manager" shall refer to Carlene DesJardin, who
is the regional property manager handling this Property, and the term
"Community Manager" shall refer to Shaya Johnston, who is the
community manager handling this Property.  

6.5             
Representations and Warranties of Purchaser.  For the
purpose of inducing Seller to enter into this Contract and to consummate the
sale and purchase of the Property in accordance herewith, Purchaser represents
and warrants to Seller the following (collectively, the "Purchaser's
Representations") as of the Effective Date and as of the Closing
Date:

6.5.1       
Purchaser is a limited partnership duly organized, validly existing and
in good standing under the laws of Delaware.

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

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

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

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

6.5.6       
Purchaser is not a Prohibited Person.

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

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

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

6.6             
Survival of Purchaser's Representations.  Seller and
Purchaser agree that Purchaser's Representations shall survive Closing for a
period of twelve (12) months (the "Purchaser's Survival
Period").  Purchaser shall have no liability after Purchaser's
Survival Period with respect to Purchaser's Representations contained
herein.  In the event that Purchaser breaches any Purchaser's
Representation and Seller had knowledge of such breach prior to the Closing
Date, and elected to close regardless, Seller shall be deemed to have waived any
right of recovery, and Purchaser shall not have any liability in connection
therewith.

Article VII
OPERATION OF THE PROPERTY

7.1             
Leases and Property Contracts.  During the period of
time from the Effective Date to the Closing Date, in the ordinary course of
business Seller may enter into new Property Contracts,
new Leases, renew existing Leases or modify, terminate or accept the surrender
or forfeiture of any of the Leases, modify any Property Contracts, or institute
and prosecute any available remedies for default under any Lease or Property
Contract without first obtaining the written consent of Purchaser; provided,
however, Seller agrees that, without the prior written consent of Purchaser,
which consent shall not be unreasonably withheld, conditioned or delayed, any
new or renewed Leases shall not have a term in excess of 1 year and any new
Property Contract shall be terminable upon thirty (30) days notice without
penalty.

7.2             
General Operation of Property.  Except as specifically
set forth in this Article VII,
Seller shall operate the Property after the Effective Date in the ordinary
course of business, and except as necessary in Seller's sole discretion to
address (a) any life or safety issue at the Property or (b) any other matter
which in Seller's reasonable discretion materially adversely affects the use,
operation or value of the Property, Seller will not make any material
alterations to the Property or remove any material Fixtures and Tangible
Personal Property without the prior written consent of Purchaser which consent
shall not be unreasonably withheld, denied or delayed.

7.3             
Liens.  Other than utility easements and temporary
construction easements granted by Seller in the ordinary course of business,
Seller covenants that it will not voluntarily create or cause any lien or
encumbrance to attach to the Property between the Effective Date and the Closing
Date (other than Leases and Property Contracts as provided in Section
7.1) unless Purchaser approves such
lien or encumbrance, which approval shall not be unreasonably withheld,
conditioned or delayed.  If Purchaser approves any such subsequent lien or
encumbrance, the same shall be deemed a Permitted Encumbrance for all purposes
hereunder.

7.4          
Tax Appeals.  If any tax reduction proceedings, tax
protest proceedings or tax assessment appeals for the Property, relating to any
fiscal years through and including fiscal year 2010, are pending at the time of
Closing, Seller reserves and shall have the right to continue to prosecute
and/or settle the same without the consent of Purchaser.  Seller hereby
reserves and shall have the exclusive right, at any time after the Closing Date,
to institute a tax reduction proceeding, tax protest proceeding or tax
assessment appeal for the Property with respect to real estate taxes
attributable to fiscal years 2009 and 2010 and Seller shall have the right to
prosecute and/or settle the same without the consent of Purchaser. 
Purchaser agrees that it shall not independently institute any tax reduction
proceedings, tax protest proceedings, or tax assessment appeals for the Property
with respect to the 2009 or 2010 tax years.  Purchaser shall cooperate with
Seller in connection with the prosecution and/or settlement of any such tax
reduction proceedings, tax protest proceedings or tax assessment appeals,
including executing such documents as Seller may reasonably request in order for
Seller to prosecute and/or settle any such proceedings.  Any refunds or
savings in the payment of taxes resulting from any tax reduction proceedings,
tax protest proceedings or tax assessment appeals applicable to the period prior
to the Closing Date shall belong to Seller and any refunds or savings in the
payment of taxes applicable to the period from and after the Closing Date shall
belong to Purchaser.  All reasonable attorneys' fees and other expenses
incurred in obtaining such refunds or savings shall be apportioned between
Seller and Purchaser in proportion to the gross amount of such refunds or
savings payable to Seller and Purchaser, respectively.

Article VIII
CONDITIONS PRECEDENT TO CLOSING

8.1             
Purchaser's Conditions to Closing.  Purchaser's
obligation to close under this Contract shall be subject to and conditioned upon
the fulfillment of the following conditions precedent:

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

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

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

8.1.4       
Neither Seller nor Seller's general partner shall be a debtor in any
bankruptcy proceeding. 

8.1.5       
Intentionally Omitted.

8.1.6       
Lender shall have approved the Loan Assumption and Release.

Notwithstanding
anything to the contrary, there are no other conditions to Purchaser's
obligation to Close except as expressly set forth in this Section 8.1.  If any condition set forth in
this Section 8.1 is not met,
Purchaser may (a) waive any of the foregoing conditions and proceed to Closing
on the Closing Date with no offset or deduction from the Purchase Price, (b)
terminate this Contract and receive a return of the Deposit from the Escrow
Agent, or (c) if such failure constitutes a default by Seller of its covenants
hereunder, exercise any of its remedies pursuant to Section 10.2.

8.2             
Seller's Conditions to Closing.  Without limiting any
of the rights of Seller elsewhere provided for in this Contract, Seller's
obligation to close with respect to conveyance of the Property under this
Contract shall be subject to and conditioned upon the fulfillment of the
following conditions precedent:

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

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

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

8.2.4       
Neither Purchaser nor Purchaser's general partner shall be a debtor in
any bankruptcy proceeding;

8.2.5       
Intentionally Omitted;

8.2.6       
There shall not be any pending litigation or, to the knowledge of either
Purchaser or Seller, any litigation threatened in writing, which, if adversely
determined, would restrain the consummation of any of the transactions
contemplated by this Contract or declare illegal, invalid or nonbinding any of
the covenants or obligations of the Purchaser; and

8.2.7       
The Loan Assumption and Release shall have occurred.

If
any of the foregoing conditions to Seller's obligations to close with respect to
the conveyance of the Property under this Contract are not met, Seller may (a)
waive any of the foregoing conditions and proceed to Closing on the Closing
Date, (b) terminate this Contract, or (c) if such failure constitutes a default
by Purchaser, exercise any of its remedies pursuant to Section 10.1.

Article
IX
BROKERAGE

9.1             
Indemnity.  Seller represents and warrants to
Purchaser that it has dealt only with Cushman & Wakefield of Colorado, Inc.,
1050 17th Street, Suite 1400, Denver, Colorado 80265,
Attention:  Pat Stucker, Telephone: 303-813-6407, Facsimile: 303-813-6499
("Broker") in connection with this Contract.  Seller and
Purchaser each represents and warrants to the other that, other than Broker, it
has not dealt with or utilized the services of any other real estate broker,
sales person or finder in connection with this Contract, and each party agrees
to indemnify, hold harmless, and, if requested in the sole and absolute
discretion of the indemnitee, defend (with counsel approved by the indemnitee)
the other party from and against all Losses relating to brokerage commissions
and finder's fees arising from or attributable to the acts or omissions of the
indemnifying party.  

9.2             
Broker Commission.  If Closing occurs, Seller agrees
to pay Broker a commission according to the terms of a separate contract. 
Broker shall not be deemed a party or third party beneficiary of this
Contract.  As a condition to Seller's obligation to pay the commission,
Broker shall execute the signature page for Broker attached hereto solely for
purposes of confirming the matters set forth therein.

Article
X
DEFAULTS AND REMEDIES

10.1         
Purchaser Default.  If Purchaser defaults on its
obligations hereunder to (a) deliver the Initial Deposit or Additional
Deposit (or any other deposit or payment required of Purchaser hereunder), (b)
deliver to Seller the deliveries specified under Section 5.2.11 on the date required thereunder,
or (c) deliver the Purchase Price in accordance with Article II and close on the
purchase of the Property on the Closing Date, then, immediately and without the
right to receive notice or to cure pursuant to Section
2.2.3, Purchaser shall forfeit the
Deposit, and the Escrow Agent shall deliver the Deposit to Seller, and neither
party shall be obligated to proceed with the purchase and sale of the
Property.  If Purchaser defaults on any of its other representations,
warranties or obligations under this Contract, and such default continues for
more than ten (10) days after written notice from Seller, then Purchaser shall
forfeit the Deposit, and the Escrow Agent shall deliver the Deposit to Seller,
and neither party shall be obligated to proceed with the purchase and sale of
the Property.  The Deposit is liquidated damages and recourse to the
Deposit is, except for Purchaser's indemnity and confidentiality obligations
hereunder, Seller's sole and exclusive remedy for Purchaser's failure to perform
its obligation to purchase the Property or breach of a representation or
warranty.  Seller expressly waives the remedies of specific performance and
additional damages for such default by Purchaser.  SELLER AND PURCHASER
ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD BE DIFFICULT TO DETERMINE, AND THAT THE
DEPOSIT IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES RESULTING FROM A DEFAULT BY
PURCHASER IN ITS OBLIGATION TO PURCHASE THE PROPERTY.  SELLER AND PURCHASER
FURTHER AGREE THAT THIS SECTION 10.1 IS INTENDED TO AND DOES LIQUIDATE
THE AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S EXCLUSIVE REMEDY AGAINST
PURCHASER, BOTH AT LAW AND IN EQUITY, ARISING FROM OR RELATED TO A BREACH BY
PURCHASER OF ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS
CONTRACT, OTHER THAN WITH RESPECT TO PURCHASER'S INDEMNITY AND CONFIDENTIALITY
OBLIGATIONS HEREUNDER.

10.2         
Seller Default.  If Seller (i) defaults on its
obligations hereunder to deliver to Escrow Agent the deliveries specified under
Section 5.2 on the date required
thereunder, or to close on the sale of the Property on the Closing Date, or (ii)
prior to the Closing defaults on its covenants or obligations under this
Contract and such default continues for more than ten (10) days after written
notice from Purchaser, then, at Purchaser's election and as Purchaser's
exclusive remedy, Purchaser may either (a) terminate this Contract, and all
payments and things of value, including the Deposit, provided by Purchaser
hereunder shall be returned to Purchaser and Purchaser may recover, as its sole
recoverable damages (but without limiting its right to receive a refund of the
Deposit), its direct and actual out-of-pocket expenses and costs (documented by
paid invoices to third parties) in connection with this transaction, which
damages shall not exceed $100,000.00 in the aggregate, or (b) subject to the
conditions below, seek specific performance of Seller's obligation to close on
the sale of the Property pursuant to this Contract (but not damages). 
Purchaser may seek specific performance of Seller's obligation to close on the
sale of the Property pursuant to this Contract only if, as a condition precedent
to initiating such litigation for specific performance, Purchaser shall (x) not
otherwise be in default under this Contract; and (y) file suit therefor with the
court on or before the 90th day after the Closing Date.  If Purchaser fails
to file an action for specific performance within ninety (90) days after the
Closing Date, then Purchaser shall be deemed to have elected to terminate the
Contract in accordance with subsection (a) above.  Purchaser agrees that it
shall promptly deliver to Seller an assignment of all of Purchaser's right,
title and interest in and to (together with possession of) all plans, studies,
surveys, reports, and other materials paid for with the out-of-pocket expenses
reimbursed by Seller pursuant to the foregoing sentence.  SELLER AND
PURCHASER FURTHER AGREE THAT THIS SECTION 10.2 IS INTENDED TO AND DOES LIMIT THE
AMOUNT OF DAMAGES DUE PURCHASER AND THE REMEDIES AVAILABLE TO PURCHASER, AND
SHALL BE PURCHASER'S EXCLUSIVE REMEDY AGAINST SELLER, BOTH AT LAW AND IN EQUITY
ARISING FROM OR RELATED TO A BREACH BY SELLER OF ITS COVENANTS OR ITS OBLIGATION
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS CONTRACT.  UNDER NO
CIRCUMSTANCES MAY PURCHASER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL,
CONSEQUENTIAL, PUNITIVE, SPECULATIVE OR INDIRECT DAMAGES, ALL OF WHICH PURCHASER
SPECIFICALLY WAIVES, FROM SELLER FOR ANY BREACH BY SELLER, OF ITS COVENANTS OR
ITS OBLIGATIONS UNDER THIS CONTRACT.  PURCHASER SPECIFICALLY WAIVES THE
RIGHT TO FILE ANY LIS PENDENS OR ANY LIEN AGAINST THE PROPERTY UNLESS AND UNTIL
IT HAS IRREVOCABLY ELECTED TO SEEK SPECIFIC PERFORMANCE OF THIS CONTRACT AND HAS
FILED AND IS DILIGENTLY PURSUING AN ACTION SEEKING SUCH REMEDY.

Article
XI
RISK OF LOSS OR CASUALTY

11.1         
Major Damage.  In the event that the Property is
damaged or destroyed by fire or other casualty prior to Risk of Loss Transfer,
and the cost for demolition, site cleaning, restoration, replacement, or other
repairs (collectively, the "Repairs") is more than $750,000.00 (a
"Major Damage"), then Seller shall have no obligation to make such
Repairs, and shall notify Purchaser in writing of such damage or destruction
(the "Damage Notice").  If there is a Major Damage, then
Purchaser may elect, by delivering written notice to Seller on or before the
earlier of (x) Closing and (y) the date which is ten (10) days after Purchaser's
receipt of the Damage Notice, to terminate this Contract, in which event the
Deposit shall be returned to Purchaser.  In the event Purchaser fails to
timely terminate this Contract pursuant to this Section 11.1, this transaction shall be closed in
accordance with Section 11.4
below.

11.2         
Roof Repair.  Purchaser acknowledges that portions of
certain Improvements located on the Property have been damaged prior to the
Effective Date ("Roof Damage") and such Improvements require
Repairs as more particularly described in the Roof Repair Contract (defined
below) ("Roof Repairs").  Purchaser acknowledges that as of
the Effective Date, Seller has entered into (i) that certain General
Construction Services Contract with BluSky Restoration Contractors dated June
25, 2010 for the repair of the Roof Damage; and (ii) that certain Hazardous
Materials Abatement Agreement with BluSky Restoration Contractors, Inc. dated
June 25, 2010 for ACM roof abatement (collectively (i) and (ii) shall be defined
herein as the "Roof Repair Contract") and that notwithstanding
Section 11.5, such Roof Repair
Contract shall not be deemed a Property Contract.  The Roof Repair Contract
shall be delivered to Purchaser during the Feasibility Period pursuant to
Section 3.5.2.  Purchaser
acknowledges that the Roof Repairs may not be completed prior to the Closing
Date.  Purchaser acknowledges and agrees that it may not terminate the Roof
Repair Contract pursuant to this Article XI, that the Roof Damage shall
not be characterized as Major Damage or Minor Damage pursuant to this Article XI and that Purchaser may not
terminate this Contract based on the Roof Damage.  If
the Roof Repairs are not completed prior to the Closing Date, at Seller's option
and in Seller's sole discretion, either: (a) Purchaser
shall proceed to Closing in accordance with the Contract, Seller shall assign
and Purchaser shall assume all of Seller's rights, obligations and liabilities
under the Roof Repair Contract (provided that Seller shall be responsible for
payment of costs associated with that portion of the Roof Repairs completed
prior to the Closing Date), Purchaser shall be responsible for completing the
Roof Repairs, and Seller shall provide a credit against the Purchase Price to
Purchaser in an amount necessary to complete the Roof Repairs (including the
full amount of the Roof Repair Contract less any amounts which may already have
been spent by Seller toward such Roof Repairs); or (b) Closing shall be
postponed until the Roof Repairs are complete and the Roof Repair Contract is
fulfilled, as evidenced by (i) delivery to Purchaser of a copy of the document
from the City and County of Denver Building Department evidencing final
inspection and signing off on the applicable building permit issued for the Roof
Repairs; and (ii) delivery to Purchaser of copies of lien waivers evidencing
such completion (collectively, (i) and (ii) shall be referred to herein as the
"Roof Repair Completion").  If Closing is postponed pursuant
to subclause (b) above, the Closing Date shall be 3 Business Days after
Purchaser's receipt of a copy of the document from the City and County of Denver
Building Department evidencing final inspection and signing off on the
applicable building permit issued for the Roof Repairs and a copy of lien
waivers evidencing completion of the Roof Repairs.  At Closing, regardless
of whether Closing occurs in accordance with subclause (a) or subclause (b)
above, Purchaser shall irrevocably release Seller from any and all liability or
obligations related to the Roof Damage, Roof Repairs and Roof Repair
Contract.  Any and all warranties and guaranties provided under the Roof
Repair Contract shall be assigned to Purchaser, to the extent assignable, in the
General Assignment as a Miscellaneous Property Asset.  If the Roof Repair
Completion has not occurred by December 15, 2010, Purchaser may terminate this
Contract, in which event the Escrow Agent shall return the Deposit to Purchaser
and this Contract shall be of no further force and effect except for the
Survival Provisions.  If Purchaser elects to terminate this Contract
pursuant to the foregoing sentence, Purchaser may recover, as its sole
recoverable damages (but without limiting its right to receive a refund of the
Deposit), its direct and actual out-of-pocket expenses and costs (documented by
paid invoices to third parties) in connection with this transaction, which
damages shall not exceed $100,000.00 in the aggregate. 
      

11.3         
Minor Damage.  In the event that the Property is
damaged or destroyed by fire or other casualty prior to Risk of Loss Transfer,
and the cost of Repairs is equal to or less than $750,000.00, then this
transaction shall be closed in accordance with Section 11.4, notwithstanding such casualty.  In
such event, Seller may at its election endeavor to make such Repairs to the
extent of any recovery from insurance carried on the Property, if such Repairs
can be reasonably effected before the Closing.  Regardless of Seller's
election to commence such Repairs, or Seller's ability to complete such Repairs
prior to Closing, this transaction shall be closed in accordance with
Section 11.4 below. 

11.4         
Closing.  In the event Purchaser fails to terminate
this Contract following a casualty as set forth in Section 11.1, or in the event of a casualty as set
forth in Section 11.3
(excepting the Roof Damage which shall be governed by the provisions of
Section 11.2) then this transaction
shall be closed in accordance with the terms of the Contract, at Seller's
election, either (i) for the full Purchase Price, notwithstanding any such
casualty, in which case Purchaser shall, at Closing, execute and deliver an
assignment and assumption (in a form reasonably required
by Seller) of Seller's rights and obligations with respect to the insurance
claim related to such casualty, and thereafter Purchaser shall receive all
insurance proceeds pertaining to such claim, less any amounts which may already
have been spent by Seller for Repairs (plus a credit against the Purchase Price
at Closing in the amount of any deductible payable by Seller in connection
therewith); or (ii) for the full Purchase Price less a credit to Purchaser in
the amount necessary to complete such Repairs (less any amounts which may
already have been spent by Seller for Repairs). 

11.5         
Repairs.  To the extent that Seller elects to commence
any Repairs prior to Closing, then Seller shall be entitled to receive and apply
available insurance proceeds to any portion of such Repairs completed or
installed prior to Closing, with Purchaser being responsible for completion of
such Repairs after Closing.  To the extent that any Repairs have been
commenced prior to Closing, then the Property Contracts shall include, and
Purchaser shall assume at Closing, all construction and other contracts entered
into by Seller in connection with such Repairs; provided, however, that (except
in the event of emergency, as determined in Seller's sole discretion) Seller
will consult with Purchaser prior to entering into any such contract if
Purchaser will likely have to assume such Contract.  Notwithstanding the
foregoing to the contrary, Seller retains the sole right and authority to enter
into any such contract.

Article
XII
EMINENT DOMAIN

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

Article XIII
MISCELLANEOUS

13.1         
Binding Effect of Contract.  This Contract shall not
be binding on either party until executed by both Purchaser and Seller. 
Neither the Escrow Agent's nor the Broker's execution of this Contract shall be
a prerequisite to its effectiveness.  Subject to Section 13.3, this Contract shall be binding upon and
inure to the benefit of Seller and Purchaser, and their respective successors
and permitted assigns.

13.2         
Exhibits and Schedules.  All Exhibits and Schedules,
whether or not annexed hereto, are a part of this Contract for all
purposes.

13.3         
Assignability.  Except to the extent required to
comply with the provisions of Section 13.18 related to a 1031 Exchange, this
Contract is not assignable by Purchaser without first obtaining the prior
written approval of Seller.  Notwithstanding the foregoing, Purchaser may
assign this Contract, without first obtaining the prior written approval of
Seller, to one or more entities so long as (a) Purchaser is an affiliate of the
purchasing entity(ies), (b) Purchaser is not released from its liability
hereunder, and (c) Purchaser provides written notice to Seller of any proposed
assignment no later than five (5) days prior to the Closing Date.  As used
herein, an affiliate of an entity is any entity in which the managing member or
general partner controls, is controlled by, or is under common control with
Purchaser or Seller, as applicable.  The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, whether through the
ownership of voting securities or otherwise.

13.4         
Captions.  The captions, headings, and arrangements
used in this Contract are for convenience only and do not in any way affect,
limit, amplify, or modify the terms and provisions hereof.

13.5         
Number and Gender of Words.  Whenever herein the
singular number is used, the same shall include the plural where appropriate,
and words of any gender shall include each other gender where
appropriate.

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

To
Purchaser:

 

Redhill
Realty Investors, LP

12760
High Bluff Drive, Suite 160

San
Diego, California 92130

Attention: 
Andy Crews

Telephone: 
858-350-1804

Facsimile: 
858-350-1819

Email: 
acrews@redhill.com

 

And:

 

Redhill
Realty Investors, LP

12760
High Bluff Drive, Suite 160

San
Diego, California 92130

Attention: 
Travis Greenwood

Telephone: 
858-350-1802

Facsimile: 
858-350-1819

Email: 
tgreenwood@redhill.com

 

With
a copy to:

 

Procopio,
Cory, Hargreaves & Savitch LLP

1917
Palomar Oaks Way, Suite 300

Carlsbad,
California 92008

Attention: 
Mike Lyon

Telephone: 
760-496-0782 x 1782

Facsimile: 
619-398-0198

Email: 
mel@procopio.com

 

To Seller:

 

Apartment
Lodge 17A LLC

c/o
AIMCO

4582
South Ulster Street Parkway 

Suite
1100

Denver,
Colorado  80237

Attention: 
Mark Reoch

Telephone:
 303-691-4337

Facsimile: 
303-300-3261

Email: 
mark.reoch@aimco.com

 

And:

 

Apartment
Lodge 17A LLC

c/o
AIMCO

4582
South Ulster Street Parkway 

Suite
1100

Denver,
Colorado  80237

Attention: 
John Bezzant

Telephone: 
303-793-4774

Facsimile: 
720-493-6528

Email: 
john.bezzant@aimco.com

 

with
copy to:

 

AIMCO

4582
South Ulster Street Parkway 

Suite
1100

Denver,
Colorado  80237

Attention: 
John Spiegleman, Esq.

Telephone:
303-691-4303

Facsimile: 
720-200-6882

Email: 
john.spiegleman@aimco.com

 

and
a copy to:

 

Cushman
& Wakefield of Colorado, Inc.

1050
17th Street, Suite 1400

Denver,
Colorado 80265

Attention: 
Pat Stucker

Telephone: 
303-813-6407

Facsimile: 
303-813-6499

Email: 
pat.stucker@cushwake.com

 

and a copy to:

 

Brownstein
Hyatt Farber Schreck, LLP

410
Seventeenth Street, Suite 2200

Denver,
Colorado 80202

Attention: 
Catherine Gale, Esq.

Telephone: 
303-223-1100

Facsimile: 
303-223-1111

Email: 
cgale@bhfs.com

 

Any
notice required hereunder to be delivered to the Escrow Agent shall be delivered
in accordance with above provisions as follows:

Fidelity
National Title Insurance Company

4643
South Ulster Street, Suite 500

Denver,
Colorado 80237

Attention: 
Valena Bloomquist

Telephone: 
303-244-9198

Facsimile: 
303-633-7632

Email: 
valena.bloomquist@fnf.com

 

Unless
specifically required to be delivered to the Escrow Agent pursuant to the terms
of this Contract, no notice hereunder must be delivered to the Escrow Agent in
order to be effective so long as it is delivered to the other party in
accordance with the above provisions.

13.7         
Governing Law and Venue.  The laws of the State of
Colorado shall govern the validity, construction, enforcement, and
interpretation of this Contract, unless otherwise specified herein except for
the conflict of laws provisions thereof.  All claims, disputes and other
matters in question arising out of or relating to this Contract, or the breach
thereof, shall be decided by proceedings instituted and litigated in a court of
competent jurisdiction in the state in which the Property is situated, and the
parties hereto expressly consent to the venue and jurisdiction of such
court.

13.8         
Entire Agreement.  This Contract embodies the entire
Contract between the parties hereto concerning the subject matter hereof and
supersedes all prior conversations, proposals, negotiations, understandings and
contracts, whether written or oral.

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

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

13.11     
Multiple Counterparts/Facsimile Signatures.  This
Contract may be executed in a number of identical counterparts.  This
Contract may be executed by facsimile signatures or electronic delivery of
signatures which shall be binding on the parties hereto, with original
signatures to be delivered as soon as reasonably practical thereafter.

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

13.13     
Confidentiality.  Seller and Purchaser shall not
disclose the terms and conditions contained in this Contract and shall keep the
same confidential, provided that each may disclose the terms and conditions of
this Contract (a) as required by law, (b) to consummate the terms of this
Contract, or any financing relating thereto, or (c) to its lenders, potential
investors, attorneys and accountants.  Furthermore, Seller may disclose the
terms and conditions of this Contract as is necessary, in Seller's sole
discretion, in order for Seller to fulfill the conditions set forth in
Section 8.2.5, and to make
any public disclosures required under federal or state securities laws or
regulations.  Any information obtained by Purchaser in the course of its
inspection of the Property, and any Materials provided by Seller to Purchaser
hereunder, shall be confidential and Purchaser shall be prohibited from making
such information public to any other person or entity other than its
Consultants, without Seller's prior written authorization, which may be granted
or denied in Seller's sole discretion.  In addition, each party shall use
its reasonable efforts to prevent its Consultants, including, without
limitation, its potential investors, from divulging any such confidential
information to any unrelated third parties except for the limited purpose of
analyzing and investigating such information for the purpose of consummating the
transaction contemplated by this Contract.  Unless and until the Closing
occurs, Purchaser shall not market the Property (or any portion thereof) to any
prospective purchaser or lessee without the prior written consent of Seller,
which consent may be withheld in Seller's sole discretion.

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

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

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

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

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

13.19     
No Personal Liability of Officers, Trustees or
Directors.  Purchaser acknowledges that this Contract is entered
into by Seller which is a Colorado limited liability company, and Purchaser
agrees that none of Seller's Indemnified Parties shall have any personal
liability under this Contract or any document executed in connection with the
transactions contemplated by this Contract.  Seller acknowledges that this
Contract is entered into by Purchaser which is a Delaware limited partnership,
and Seller agrees that none of Purchaser, or Purchaser's partners, managers,
members, employees, officers, directors, trustees, shareholders, counsel,
representatives, or agents shall have any personal liability under this Contract
or any document executed in connection with the transactions contemplated by
this Contract.

13.20     
ADA Disclosure.  Purchaser
acknowledges that the Property may be subject to the federal Americans With
Disabilities Act (the "ADA") and the federal Fair Housing Act (the
"FHA").  The ADA requires, among other matters, that tenants
and/or owners of "public accommodations" remove barriers in order to make the
Property accessible to disabled persons and provide auxiliary aids and services
for hearing, vision or speech impaired persons.  Seller makes no warranty,
representation or guarantee of any type or kind with respect to the Property's
compliance with the ADA or the FHA (or any similar state or local law), and
Seller expressly disclaims any such representations.

13.21     
No Recording.  Purchaser shall not cause or allow this
Contract or any contract or other document related hereto, nor any memorandum or
other evidence hereof, to be recorded or become a public record without Seller's
prior written consent, which consent may be withheld at Seller's sole
discretion.  If Purchaser records this Contract or any other memorandum or
evidence thereof, Purchaser shall be in default of its obligations under this
Contract.  Purchaser hereby appoints Seller as Purchaser's attorney-in-fact
to prepare and record any documents necessary to effect the nullification and
release of the Contract or other memorandum or evidence thereof from the public
records.  This appointment shall be coupled with an interest and
irrevocable.

13.22     
Relationship of Parties.  Purchaser and Seller
acknowledge and agree that the relationship established between the parties
pursuant to this Contract is only that of a seller and a purchaser of
property.  Neither Purchaser nor Seller is, nor shall either hold itself
out to be, the agent, employee, joint venturer or partner of the other
party.

13.23     
AIMCO Marks.  Purchaser agrees that Seller, the
Property Manager or AIMCO, or their respective affiliates, are the sole owners
of all right, title and interest in and to the AIMCO Marks (or have the right to
use such AIMCO Marks pursuant to license agreements with third parties) and that
no right, title or interest in or to the AIMCO Marks is granted, transferred,
assigned or conveyed as a result of this Contract.  Purchaser further
agrees that Purchaser will not use the AIMCO Marks for any purpose.

13.24     
Non-Solicitation of Employees.  Prior to the
expiration of the Feasibility Period, Purchaser acknowledges and agrees that,
without the express written consent of Seller, neither Purchaser nor any of
Purchaser's employees, affiliates or agents shall solicit any of Seller's
employees or any employees located at the Property (or any of Seller's
affiliates' employees located at any property owned by such affiliates) for
potential employment.

13.25     
Survival.  Except for (a) all of the provisions of
this Article XIII (other than Section 13.18); (b) Sections 2.3, 3.3, 3.4,
3.5, 4.5.5, 4.5.6, 4.8, 5.4,
5.5, 6.2, 6.3,
6.5, 7.4, 9.1,
11.2, 11.5, and 14.2; (c) any other provisions in this
Contract, that by their express terms survive the termination of this Contract
or the Closing; and (d) any payment or indemnity obligation of Purchaser under
this Contract (the foregoing (a), (b), (c) and (d) referred to herein as the
"Survival Provisions"), none of the terms and provisions of this
Contract shall survive the termination of this Contract, and if the Contract is
not so terminated, all of the terms and provisions of this Contract (other than
the Survival Provisions, which shall survive the Closing) shall be merged into
the Closing documents and shall not survive Closing. 

13.26     
Multiple Purchasers.  As used in this Contract, the
term "Purchaser" includes all entities acquiring any interest in
the Property at the Closing, including, without limitation, any assignee(s) of
the original Purchaser pursuant to Section 13.3 of this Contract.  In the event
that "Purchaser" has any obligations or makes any covenants, representations or
warranties under this Contract, the same shall be made jointly and severally by
all entities being a Purchaser hereunder.  

13.27     
WAIVER OF JURY TRIAL.  THE PARTIES HERETO WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY ON ANY MATER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
CONTRACT.

Article
XIV
LEAD–BASED PAINT DISCLOSURE

14.1         
Disclosure.  Seller and Purchaser hereby acknowledge
delivery of the Lead Based Paint Disclosure attached as Exhibit H
hereto.  

14.2         
Consent Agreement.

           
Testing (the "Testing") has been performed at the Property with
respect to lead-based paint.  Law Engineering and Environmental Services,
Inc., performed the Testing and reported its findings in the Multifamily: 
Component Type Report dated May 14, 2001, a copy of which has been provided to
Purchaser (the "Report").  The Report certifies the Property
as lead-based paint free.  By execution hereof, Purchaser acknowledges
receipt of a copy of the Report, the Lead-Based Paint Disclosure Statement
attached hereto as Exhibit H, and acknowledges receipt of that certain
Consent Agreement (the "Consent Agreement") by and among the
United States Environmental Protection Agency (executed December 19, 2001), the
United States Department of Housing and Urban Development (executed January 2,
2002), and AIMCO (executed December 18, 2001).  Because the Property has
been certified as lead-based paint free, Seller is not required under the
Consent Agreement to remediate or abate any lead-based paint condition at the
Property prior to the Closing.  Purchaser acknowledges and agrees that (1)
after Closing, Purchaser and the Property shall be subject to the Consent
Agreement and the provisions contained herein related thereto and (2) that
Purchaser shall not be deemed to be a third party beneficiary to the Consent
Agreement.  

 

[Remainder of Page Intentionally Left Blank]

 

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

 

SELLER:

 

APARTMENT
LODGE 17A LLC,

a
Colorado limited liability company

 

By:      
FOX PARTNERS,

           
a California general partnership,

           
its manager

 

           
By:       FOX CAPITAL MANAGEMENT 

                       
CORPORATION,

                       
a California corporation,

                       
its managing general partner

 

 

                       
By:  /s/Trent A. Johnson

                       
Name:  Trent A. Johnson

                       
Title:  Vice President

 

 

PURCHASER:

 

REDHILL
ACQUISITION COMPANY, LLC,

a
Delaware limited liability company

 

 

By: 
/s/Russell L. Dixon

Name: 
Russell L. Dixon

Title: 
President and CEO, Redhill

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