Document:

Exhibit 10.21

	 

 

 

 

 

PURCHASE AND SALE
CONTRACT

 

BETWEEN

 

 

 

THE TRAILS, L.P.,

 

a South Carolina limited
partnership

 

 

 

 

 

AS SELLER

 

 

 

 

AND

 

 

 

 

FREEMAN WEBB INVESTMENTS,
INC.,

 

a Tennessee
corporation

 

 

 

AS PURCHASER

 

 

THE TRAILS
APARTMENTS

 

 

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.....................................................................................................................
7

4.3......
Objection and Response
Process..............................................................................
7

4.4......
Permitted
Exceptions................................................................................................
7

4.5......
Assumed
Encumbrances...........................................................................................
8

4.6......
Subsequently Disclosed
Exceptions.........................................................................
10

4.7......
Purchaser
Financing................................................................................................
10

4.8......
Regulatory
Agreement............................................................................................
11

Article
V.........
CLOSING.......................................................................................................
12

5.1......
Closing
Date..........................................................................................................
12

5.2......
Seller Closing
Deliveries.........................................................................................
13

5.3......
Purchaser Closing
Deliveries...................................................................................
14

5.4......
Closing Prorations and
Adjustments........................................................................
14

5.5......
Post Closing
Adjustments.......................................................................................
18

Article
VI........ REPRESENTATIONS AND WARRANTIES OF SELLER AND
PURCHASER           
18

6.1......
Seller's
Representations..........................................................................................
18

6.2......
AS-IS....................................................................................................................
19

6.3......
Survival of Seller's
Representations.........................................................................
20

6.4...... Definition of Seller's
Knowledge.............................................................................
20

6.5......
Representations and Warranties of
Purchaser.......................................................... 20

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

Article
VIII...... CONDITIONS PRECEDENT TO
CLOSING................................................ 22

8.1......
Purchaser's Conditions to
Closing...........................................................................
22

8.2......
Seller's Conditions to
Closing..................................................................................
23

Article
IX........
BROKERAGE................................................................................................
24

9.1......
Indemnity...............................................................................................................
24

9.2......
Broker
Commission................................................................................................
24

Article
X......... DEFAULTS AND
REMEDIES.......................................................................
24

10.1....
Purchaser
Default...................................................................................................
24

10.2....
Seller
Default..........................................................................................................
25

Article
XI........ RISK OF LOSS OR
CASUALTY..................................................................
26

11.1....
Major
Damage.......................................................................................................
26

11.2....
Minor
Damage.......................................................................................................
26

11.3....
Closing...................................................................................................................
26

11.4....
Repairs..................................................................................................................
27

Article
XII....... EMINENT
DOMAIN.....................................................................................
27

12.1....
Eminent
Domain.....................................................................................................
27

Article
XIII......
MISCELLANEOUS.......................................................................................
27

13.1....
Binding Effect of
Contract.......................................................................................
27

13.2....
Exhibits and
Schedules...........................................................................................
27

13.3....
Assignability...........................................................................................................
28

13.4....
Captions................................................................................................................
28

13.5....
Number and Gender of
Words...............................................................................
28

13.6....
Notices..................................................................................................................
28

13.7....
Governing Law and
Venue.....................................................................................
30

13.8....
Entire
Agreement....................................................................................................
30

13.9....
Amendments..........................................................................................................
31

13.10..
Severability............................................................................................................
31

13.11.. Multiple Counterparts/Facsimile
Signatures............................................................. 31

13.12..
Construction...........................................................................................................
31

13.13..
Confidentiality........................................................................................................
31

13.14..
Time of the
Essence................................................................................................
31

13.15..
Waiver...................................................................................................................
32

13.16..
Attorneys'
Fees......................................................................................................
32

13.17..
Time Zone/Time
Periods.........................................................................................
32

13.18..
1031
Exchange......................................................................................................
32

13.19..
No Personal Liability of Officers, Trustees or Directors of Seller's
Partners.............. 32

13.20..
No Exclusive
Negotiations......................................................................................
32

13.21..
ADA
Disclosure.....................................................................................................
33

13.22..
No
Recording........................................................................................................
33

13.23..
Relationship of
Parties............................................................................................
33

13.24..
Dispute
Resolution..................................................................................................
33

13.25..
AIMCO
Marks......................................................................................................
34

13.26..
Non-Solicitation of
Employees................................................................................
34

13.27..
Survival..................................................................................................................
34

13.28..
Multiple
Purchasers................................................................................................
34

Article
XIV..... LEAD BASED PAINT
DISCLOSURE........................................................... 34

14.1....
Disclosure..............................................................................................................
34

PURCHASE AND SALE CONTRACT

 

THIS
PURCHASE AND SALE CONTRACT (this "Contract") is entered
into as of the 2nd day of April, 2009 (the "Effective
Date"), by and between THE TRAILS, L.P., a South Carolina limited
partnership, having an address at 4582 South Ulster Street Parkway, Suite 1100,
Denver, Colorado 80237 ("Seller"), and FREEMAN WEBB
INVESTMENTS, INC., a Tennessee corporation, having a principal address at
555 Great Circle Road, Suite 100, Nashville, Tennessee 37228
("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 Davidson County, Tennessee, as more
particularly described in Exhibit A attached hereto and made a part
hereof, and the improvements thereon, commonly known as The Trails
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
$12,300,000.00 payable by Purchaser, as follows:

2.2.1       
Within 2 Business Days following the Effective Date, Purchaser shall
deliver to Fidelity National Title Insurance Company, 8450 East Crescent
Parkway, Suite 410, Greenwood Village, Colorado 80111, c/o: Valena Bloomquist,
Phone: (303) 244-9198, Fax: (720) 489-7593, Email:
valena.bloomquist@fnf.com ("Escrow Agent" or
"Title Insurer") an initial deposit (the "Initial
Deposit") of $123,000.00 by wire transfer of immediately available funds
("Good Funds").  

2.2.2       
Within 2 Business Days following the day that the Feasibility Period
expires, Purchaser shall deliver to Escrow Agent an additional deposit (the
"Additional Deposit") of $123,000.00 by wire transfer of Good
Funds.  

2.2.3       
At the Closing, subject to the occurrence of the Loan Assumption and
Release, Purchaser shall receive a credit against the Purchase Price in the
amount of the outstanding principal balance of the Note, together with all
accrued but unpaid interest (if any) thereon, as of the Closing Date (the
"Loan Balance").

2.2.4       
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 noon
on the Closing Date.

2.3             
Escrow Provisions Regarding Deposit.  

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

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

2.3.3       
If prior to the Closing Date either party makes a written demand upon
Escrow Agent for payment of the Deposit, Escrow Agent shall give written notice
to the other party of such demand.  If Escrow Agent does not receive a
written objection from the other party to the proposed payment within 5 Business
Days after the giving of such notice, Escrow Agent is hereby authorized to make
such payment.  If Escrow Agent does receive such written objection within
such 5-Business Day period, Escrow Agent shall continue to hold such amount
until otherwise directed by written instructions from the parties to this
Contract or a final judgment or arbitrator's decision.  However, Escrow
Agent shall have the right at any time to deposit 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 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 the date which is 45 days after
the Effective Date (the "Feasibility Period"), Purchaser, and its
agents, contractors, engineers, surveyors, attorneys, and employees
(collectively, "Consultants") shall, at no cost or expense to
Seller, have the right from time to time to enter onto the Property to conduct
and make any and all customary studies, tests, examinations, inquiries,
inspections and investigations of or concerning the Property, review the
Materials and otherwise confirm any and all matters which Purchaser may
reasonably desire to confirm with respect to the Property and Purchaser's
intended use thereof (collectively, the "Inspections").  

3.2             
Expiration of Feasibility Period.  If any of the
matters in Section 3.1 or any
other title or survey matters are unsatisfactory to Purchaser for any reason, or
for no reason whatsoever, in Purchaser's sole and absolute discretion, or if for
any other reason, or for no reason whatsoever Purchaser, in its sole discretion,
determines not to purchase the Property, 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
provided herein 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 may be withheld in Seller's sole
discretion.  Further, Seller shall have the right, without limitation, to
disapprove any and all entries, surveys, tests (including, without limitation, a
Phase II environmental study of the Property), investigations and other matters
that in Seller's reasonable judgment could result in any injury to the Property
or breach of any contract, or expose Seller to any Losses or violation of
applicable law, or otherwise adversely affect the Property or Seller's interest
therein.  Purchaser shall use reasonable efforts to minimize disruption to
Tenants in connection with Purchaser's or its Consultants' activities pursuant
to this Section.  No consent by Seller to any such activity shall be deemed
to constitute a waiver by Seller or assumption of liability or risk by
Seller.  Purchaser hereby agrees to restore, at Purchaser's sole cost and
expense, the Property to the same condition existing immediately prior to
Purchaser's exercise of its rights pursuant to this Article III. 
Purchaser 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
$3,000,000.00 for injury or death to more than one person and $1,000,000.00 with
respect to property damage, and (b) worker's compensation insurance for all of
their respective employees in accordance with the law of the 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) at least two (2) Business Days prior to Purchaser's or
Purchaser's Consultants' entry onto the Property.

3.5             
Property Materials.  

3.5.1       
Within 5 Business Days after the Effective Date, and to the extent the
same exist and are in Seller's possession or reasonable control (subject to
Section 3.5.2), Seller
agrees to make the documents set forth on Schedule 3.5 (together with any other documents or
information provided by Seller or its agents to Purchaser with respect to the
Property, the "Materials") available at the Property for review
and copying by Purchaser at Purchaser's sole cost and expense.  In the
alternative, at Seller's option and within the foregoing time period, Seller may
deliver some or all of the Materials to Purchaser, or make the same available to
Purchaser on a secure web site (Purchaser agrees that any item to be delivered
by Seller under this Contract shall be deemed delivered to the extent available
to Purchaser on such secured web site).  To the extent that Purchaser
determines that any of the Materials have not been made available or delivered
to Purchaser pursuant to this Section 3.5.1, Purchaser shall notify Seller
and Seller shall use commercially reasonable efforts to deliver the same to
Purchaser within 5 Business Days after such notification is received by Seller;
provided, however, that under no circumstances will the Feasibility Period be
extended and Purchaser's sole remedy will be to terminate this Contract pursuant
to Section 3.2.

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

3.5.3       
In addition to the items set forth on Schedule 3.5, no later than 5 Business Days after the
Effective Date, Seller shall deliver to Purchaser (or otherwise make available
to Purchaser as provided under Section 3.5.1) the most recent rent roll for
the Property listing the move-in date, monthly base rent payable, lease
expiration date and unapplied security deposit for each Lease (the "Rent
Roll").  Seller makes no representations or warranties regarding
the Rent Roll other than the express representation set forth in Section 6.1.6.   

3.5.4       
In addition to the items set forth on Schedule 3.5, no later than 5 Business Days after the
Effective Date, Seller shall deliver to Purchaser (or otherwise make available
to Purchaser as provided under Section 3.5.1) 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 6.1.7.  

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,
Purchaser shall be solely responsible for the payment of any such cancellation
fees, penalties, or damages, including liquidated damages.  If Purchaser
fails to deliver the Property Contracts Notice on or before the expiration of
the Feasibility Period, 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 simultaneously therewith, Purchaser shall deliver to
Seller a vendor termination notice (in the form attached hereto as
Exhibit F) for each Terminated Contract informing the vendor(s) of
the termination of such Terminated Contract as of the Closing Date (subject to
any delay in the effectiveness of such termination pursuant to the express terms
of each applicable Terminated Contract) (the "Vendor
Terminations").  Seller shall sign the Vendor Terminations prepared
by Purchaser, and deliver them to all applicable vendors.  To the extent
that any Property Contract to be assigned to Purchaser requires vendor consent,
then, prior to the Closing, Purchaser may attempt to obtain from each applicable
vendor a consent (each a "Required Assignment Consent") to such
assignment.  Purchaser shall indemnify, hold harmless and, if requested by
Seller (in Seller's sole discretion), defend (with counsel approved by Seller)
Seller's Indemnified Parties from and against any and all Losses arising from or
related to Purchaser's failure to obtain any Required Assignment
Consent.

Article IV
TITLE

4.1             
Title Documents.  Within 10 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 an
American Land Title Association owner's title insurance policy for the Property,
using the current policy jacket customarily provided by the Title Insurer, in an
amount equal to the Purchase Price (the "Title Policy"), together
with copies of all instruments identified as exceptions therein (together with
the Title Commitment, referred to herein as the "Title
Documents").  Seller shall be responsible only for payment of the
basic premium for the Title Policy and the costs of issuance of the Title
Commitment, if any.  Purchaser shall be solely responsible for payment of
all other costs relating to procurement of the Title Commitment, the Title
Policy, and any requested endorsements.

4.2             
Survey.  Subject to Section 3.5.2, within 3 Business Days after the
Effective Date, Seller shall deliver to Purchaser or make available at the
Property 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 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 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.  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 limited to those
parties in possession pursuant to the Leases, and (d) the standard exception
pertaining to taxes, which shall be limited to taxes and assessments payable in
the year in which the Closing occurs and subsequent taxes and assessments; 

4.4.2       
All Leases;

4.4.3       
The Assumed Encumbrances;

4.4.4       
Applicable zoning and governmental regulations and ordinances;

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

4.4.6       
The LURA; and

4.4.7       
The terms and conditions of this Contract.

4.5             
Assumed Encumbrances.

4.5.1       
Purchaser recognizes and agrees that, in connection with a loan (the
"Loan") made to Seller by Johnson Capital Group, Inc. (the
"Lender"), the Property presently is encumbered by a deed of trust
dated May 31, 2006 and recorded June 6, 2006 in instrument number
20060606-0067085, as assigned to Federal Home Loan Mortgage Corporation in
instrument number 20060606-0067087 (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 May 31, 2006 in the stated
principal amount of $8,700,000.00 (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 10 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, in the event that
Purchaser has not previously terminated this Contract under Section 3.2,
Purchaser, at its sole cost and expense and within 30 days after the Effective
Date (the "Loan Assumption Application Submittal Deadline"), shall
submit an 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 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       
[Intentionally deleted].

4.5.5       
Purchaser shall pay all fees and expenses (including, without limitation,
all servicing fees and charges, transfer fees, assumption fees, title fees,
endorsement fees, and other fees to release Seller of all liability under the
Loan) 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       
Additionally, Purchaser at the Closing shall be responsible for (a)
replacing (and increasing to the extent required by Lender) all reserves,
impounds and other accounts required to be maintained in connection with the
Loan, and (b) funding any additional reserves, impounds or accounts required by
Lender to be maintained by Purchaser in connection with the Loan after the Loan
Assumption and Release (the foregoing amounts in (a) and (b) collectively
referred to herein as the "Required Loan Fund Amounts").  Any
existing reserves, impounds and other accounts required to be replaced by
Purchaser pursuant to the foregoing sentence shall be released in Good Funds to
Seller at the Closing or as otherwise agreed between Lender and
Seller.  

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       
[Intentionally deleted].

4.5.9       
Purchaser shall be in default hereunder if Purchaser fails to submit a
Loan Assumption Application by the Loan Assumption Application Submittal
Deadline, in which event Seller may terminate this Contract and the Deposit
shall be immediately released by the Escrow Agent to Seller.

4.5.10    Provided that (a)
Purchaser fully complies with its obligations to file the Loan Assumption
Application by the Loan Assumption Application Submittal Deadline under this
Contract and (b) Purchaser does not obtain the consent of the Lender to the Loan
Assumption and Release under terms and conditions satisfactory to Purchaser in
its sole discretion within 60 days after the Effective Date (the “Loan
Approval Period”), then Purchaser shall have the right to give Escrow
Agent notice terminating this Contract on or before the expiration of the Loan
Approval Period, in which event this Contract shall be of no further force and
effect, subject to and except for Purchaser’s liability pursuant to Section
3.4 and any other provision of this
Contract which survives such termination, and Escrow Agent shall forthwith
return the Deposit to Purchaser.  If Purchaser fails to provide Seller with
written notice of 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 expressly provided herein, 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 for that reason, 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 Purchaser’s
liability pursuant to Section 3.4 and any other provision of this
Contract which survives such termination.

4.6             
Subsequently Disclosed Exceptions.  If at any time
after delivery of the Title Commitment, any update to the Title Commitment
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 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.  If Seller fails to deliver a notice to Purchaser within
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 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 .  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             
Regulatory Agreement.  Purchaser recognizes and agrees
that (i) the Property is subject to that certain Declaration of Land Use
Restrictions, dated as of December 1, 1984, of record in Book 6461, Page 409, by
Trails of Nashville Associates, LTD, a Tennessee limited partnership, for the
benefit of The Industrial Development Board of the Metropolitan Government of
Nashville and Davidson County ("Issuer") relating to bonds
previously purchased by Capital Holding Corporation (“Bond
Purchaser”) (as may be amended, the "LURA").  The
LURA shall be deemed a Permitted Exception for all purposes hereunder.

4.8.1       
At the Closing, Purchaser shall assume in writing all obligations under
the LURA arising on or after the Closing Date in accordance with the terms
thereof and accept title to the Property subject to the same ("LURA
Assumption").  In the event the LURA
Assumption does not provide for a release of Seller from the obligations under
the LURA, Purchaser shall provide Seller with a written indemnity at Closing for
any breach of the obligations and covenants under the LURA arising after the
Closing Date in form acceptable to Seller.

4.8.2       
No later than 30 days after the Effective Date (the "LURA Submittal
Deadline"), Purchaser, at its sole cost and expense, shall submit all
applications, documents, information, materials and fees to Issuer and Bond
Purchaser (collectively, the "LURA Assumption Applications")
required by Issuer and Bond Purchaser in order for Issuer and Bond Purchaser to
review and approve Purchaser's request for the LURA Assumption (individually a
"LURA Approval" and collectively the "LURA
Approval").  The terms and conditions in connection with the LURA
Approval which impose additional obligations on Seller are subject to Seller’s
reasonable approval.

4.8.3       
Purchaser agrees to provide Seller with a copy of the LURA Assumption
Applications and shall provide evidence of its submission to Issuer and Bond
Purchaser on or before the LURA Submittal Deadline.  Purchaser acknowledges
and agrees that Purchaser is solely responsible for the preparation and
submittal of the LURA Assumption Applications, including the collection of all
materials, documents, certificates, financials, signatures, and other items
required to be submitted to Issuer and Bond Purchaser in connection therewith.

4.8.4       
[Intentionally deleted].

4.8.5       
All fees and expenses (including, without limitation, all charges,
transfer fees, assumption fees (including documentary stamp and non-recurring
intangible taxes), title fees, endorsement fees, legal fees and other fees)
imposed or charged by Issuer or Bond Purchaser or their counsel (such fees and
expenses collectively being referred to as the "LURA Assumption
Fees"), in connection with the LURA Assumption Applications and the LURA
Assumption and any bond counsel opinions required in connection therewith, if
any, shall be paid for solely by Purchaser.  The provisions of this
Section 4.8.5 shall survive
the termination of this Contract and the Closing.  

4.8.6       
Purchaser agrees to deliver to Issuer and Bond Purchaser such other
information or documentation as Issuer or Bond Purchaser 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 Issuer and Bond
Purchaser, at no material cost or expense to Seller, in connection with
Purchaser's application to Issuer and Bond Purchaser for approval of the LURA
Assumption.  Seller will provide the necessary contact information for
Issuer and the Bond Purchaser and will authorize Purchaser to contact Issuer and
the Bond Purchaser directly for purposes of processing the LURA
Assumption.

4.8.7       
Purchaser shall be in default hereunder if Purchaser fails to submit the
LURA Assumption Applications by the LURA Submittal Deadline, in which event this
Contract shall terminate, at the option of Seller, and Seller shall be entitled
to retain the Deposit and this Contract shall be of no
further force and effect subject to and except for the Survival Provisions.

4.8.8       
Provided that (a) Purchaser fully complies with its obligations to file
the LURA Assumption Applications by the LURA Submittal Deadline under this
Contract, and (b) Purchaser does not obtain the consent of the Issuer and the
Bond Purchaser to the LURA Approval under the terms and conditions satisfactory
to Purchaser in its sole discretion within 60 days after the Effective Date (the
“LURA Approval Period”), then Purchaser shall have the right to
give Escrow Agent notice terminating this Contract on or before the expiration
of the LURA Approval Period, in which event this Contract shall be of no further
force and effect, subject to and except for Purchaser’s liability pursuant to
Section 3.4 and any other
provision of this Contract which survives such termination, and Escrow Agent
shall forthwith return the Deposit to Purchaser.  If Purchaser fails to
provide Seller with written notice of termination prior to the expiration of the
LURA Approval Period in strict accordance with the notice provisions of this
Contract, Purchaser’s right to terminate under this Section 4.8.8 shall be permanently waived, this
Contract shall remain in full force and effect, the Deposit shall be
non-refundable, except as otherwise expressly provided herein and Purchaser’s
obligation to obtain the Issuer’s and the Bond Purchaser’s approval of the LURA
Approval 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 LURA Approval Period expires and Purchaser does not terminate this
Contract, the LURA Assumption shall not be a condition to Purchaser’s obligation
to close, and, if the LURA Assumption is not obtained and the Closing has not
occurred on or before the Closing Date for that reason, 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 Purchaser’s liability pursuant to Section 3.4 and any other provision of this
Contract which survives such termination.  

Article V
CLOSING

5.1             
Closing Date.  The Closing shall occur 30 days
following the expiration of the Feasibility Period at the time set forth in
Section 2.2.4 (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, 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.    

5.2             
Seller Closing Deliveries.  No later than 1 Business
Day prior to the Closing Date, Seller shall deliver to Escrow Agent, each of the
following items:

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

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

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

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

5.2.5       
Seller's closing statement.

5.2.6       
A title affidavit or an indemnity form reasonably acceptable to Seller,
which is sufficient to enable Title Insurer to delete the standard pre-printed
exceptions to the title insurance policy to be issued pursuant to the Title
Commitment, other than taxes for the current year and matters of survey. 

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

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

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

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

5.3             
Purchaser Closing Deliveries.  No later than 1
Business Day prior to the Closing Date (except for the balance of the Purchase
Price which is to be delivered at the time specified in Section 2.2.4), Purchaser shall deliver to the
Escrow Agent (for disbursement to Seller upon the Closing) the following
items:

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

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

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

5.3.4       
Purchaser's closing statement.

5.3.5       
A countersigned counterpart of the General Assignment.

5.3.6       
A countersigned counterpart of the Leases Assignment.

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

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

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

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

5.3.11    All documents
required to be executed by Purchaser for the LURA Assumption as approved by
Seller including the indemnity to the extent required under Section
4.8.1.

5.4             
Closing Prorations and Adjustments.  

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

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

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

5.4.4       
Real Estate Taxes.  Any real estate ad valorem or
similar taxes for the Property, or any installment of assessments payable in
installments which installment is payable in the calendar year of Closing, shall
be prorated to the date of Closing, based upon actual days involved.  The
proration of real property taxes or installments of assessments shall be based
upon the assessed valuation and tax rate figures (assuming payment at the
earliest time to allow for the maximum possible discount) for the year in which
the Closing occurs to the extent the same are available; provided, however, that
in the event that actual figures (whether for the assessed value of the Property
or for the tax rate) for the year of Closing are not available at the Closing
Date, the proration shall be made using the lesser of (i) the appraised
value for 2009 as established for the Property by the Davidson County Trustee or
(ii) the Purchase Price, and applying the 2008 tax rate, provided, however, if
the proposed 2009 appraised value has not been made available to Seller by the
Davidson County Trustee prior to the Closing then the proration shall be made
using 103% of the figures from the preceding year (assuming payment at the
earliest time to allow for the maximum possible discount).  The proration
of real property taxes or installments of assessments shall be final and not
subject to re-adjustment after Closing.  

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

5.4.6       
Leases.  

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

5.4.6.2             
At Closing, Purchaser shall receive a credit against the Purchase Price
in an amount equal to the received and unapplied balance of all cash (or cash
equivalent) Tenant Deposits, including, but not limited to, security, damage 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 all Lender Fees and all other interest and other amounts due and owing under
the Assumed Loan Documents as a result of the Loan Assumption and Release. 
As set forth in Section 4.5.6, or
as otherwise agreed to by Lender and Purchaser, any existing reserves, impounds
and other accounts maintained in connection with the Loan and required to be
replaced by Purchaser, shall be released in Good Funds to Seller at Closing, or
as otherwise agreed to by Lender and Seller.  

5.4.8       
Insurance.  No proration shall be made in relation to
insurance premiums and insurance policies will not be assigned to
Purchaser.  Seller shall have the risk of loss of the Property until the
Closing has occurred, 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 transfer, indebtedness, 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 and the cost of the issuance of the Title
Commitment, if any, to the extent required by Section 4.1, the cost of recording any instruments
required to discharge any liens or encumbrances against the Property required to
be discharged by Seller under this Contract, and one-half of the customary
closing costs of the Escrow Agent.

5.4.11    [Intentionally
deleted]

5.4.12   
Possession.  Possession of the Property, subject to
the Leases, Property Contracts, other than Terminated Contracts, and Permitted
Exceptions, shall be delivered to Purchaser at the Closing upon release from
escrow of all items to be delivered by Purchaser pursuant to Section
5.3.  To the extent reasonably
available to Seller, originals or copies of the Leases and Property Contracts,
lease files, warranties, guaranties, operating manuals, keys to the property,
and Seller's books and records (other than proprietary information)
(collectively, "Seller's Property-Related Files and Records")
regarding the Property shall be made available to Purchaser at the Property
after the Closing.  Purchaser agrees, for a period of 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.    

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 60 days after Closing, or (b) subject to such 60-day period,
unless such items exceed $5,000.00 in magnitude (either individually or 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 validly existing and in good standing under the laws of the
state of its formation set forth in the initial paragraph of this Contract; and,
subject to Section 8.2.4 and
any approvals required from 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.  Subject to Section 8.2.4, this Contract is a valid and
binding agreement against Seller in accordance with its terms;

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

6.1.3       
Except for (a) any actions by Seller to evict Tenants under the Leases,
or (b) any matter covered by Seller's current insurance policy(ies), to Seller's
knowledge, there are no material actions, proceedings, litigation or
governmental investigations or condemnation actions either pending or threatened
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 from a
governmental agency of any uncured material violations of any federal, state,
county or municipal law, ordinance, order, regulation or requirement affecting
the Property;

6.1.5       
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;

6.1.6       
To Seller's knowledge, the Rent Roll (as updated pursuant to
Section 5.2.9) is
accurate in all material respects;

6.1.7       
To Seller's knowledge, the Property Contracts List (as updated pursuant
to Section 5.2.10) is
accurate in all material respects; and 

6.1.8       
To Seller’s knowledge, all appliances the Seller provides in the ordinary
course of its business at the Property are in the tenant units. 

6.2             
AS-IS.  Except for Seller's Representations, the
Property is expressly purchased and sold "AS IS," "WHERE IS," and "WITH ALL
FAULTS."  The Purchase Price and the terms and conditions set forth herein
are the result of arm's-length bargaining between entities familiar with transactions of this kind, and said price, terms and
conditions reflect the fact that Purchaser shall have the benefit of, and is not
relying upon, any information provided by Seller or Broker or statements,
representations or warranties, express or implied, made by or enforceable
directly against Seller or Broker, including, without limitation, any relating
to the value of the Property, the physical or environmental condition of the
Property, any state, federal, county or local law, ordinance, order or permit;
or the suitability, compliance or lack of compliance of the Property with any
regulation, or any other attribute or matter of or relating to the Property
(other than any covenants of title contained in the Deed conveying the Property
and Seller's Representations).  Purchaser agrees that Seller shall not be
responsible or liable to Purchaser for any defects, errors or omissions, or on
account of any conditions affecting the Property.  Purchaser, 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 or other conditions affecting the Property.  Purchaser represents
and warrants that, as of the date hereof and as of the Closing Date, it has and
shall have reviewed and conducted such independent analyses, studies (including,
without limitation, environmental studies and analyses concerning the presence
of lead, asbestos, water intrusion and/or fungal growth and any resulting
damage, PCBs and radon in and about the Property), reports, investigations and
inspections as it deems appropriate in connection with the Property.  If
Seller  provides or has provided any documents, summaries, opinions or work
product of consultants, surveyors, architects, engineers, title companies,
governmental authorities or any other person or entity with respect to the
Property, including, without limitation, the offering prepared by Broker,
Purchaser and Seller agree that Seller has done so or shall do so only for the
convenience of both parties, Purchaser shall not rely thereon and the reliance
by Purchaser upon any such documents, summaries, opinions or work product shall
not create or give rise to any liability of or against Seller's Indemnified
Parties.  Purchaser acknowledges and agrees that no representation has been
made and no responsibility is assumed by Seller with respect to current and
future applicable zoning or building code requirements or the compliance of the
Property with any other laws, rules, ordinances or regulations, the financial
earning capacity or expense history of the Property, the continuation of
contracts, continued occupancy levels of the Property, or any part thereof, or
the continued occupancy by tenants of any Leases or, without limiting any of the
foregoing, occupancy at Closing.  Prior to Closing, Seller shall have the
right, but not the obligation, to enforce its rights against any and all
Property occupants, guests or tenants.  Purchaser agrees that the departure
or removal, prior to Closing, of any of such guests, occupants or tenants shall
not be the basis for, nor shall it give rise to, any claim on the part of
Purchaser, nor shall it affect the obligations of Purchaser under this Contract
in any manner whatsoever; and Purchaser shall close title and accept delivery of
the Deed with or without such tenants in possession and without any allowance or
reduction in the Purchase Price under this Contract.  Purchaser hereby
releases Seller from any and all claims and liabilities relating to the
foregoing matters.  

6.3             
Survival of Seller's Representations.  Seller and
Purchaser agree that Seller's Representations shall survive Closing for a period
of 6 months (the "Survival Period").  Seller shall have no
liability after the Survival Period with respect to Seller's Representations
contained herein except to the extent that Purchaser has requested arbitration
against Seller during the Survival Period for breach of any of Seller's
Representations.  Under no circumstances shall Seller be liable to
Purchaser for more than $500,000 in any individual instance or in the aggregate for all breaches of Seller's Representations, nor
shall Purchaser be entitled to bring any claim for a breach of Seller's
Representations unless the claim for damages (either in the aggregate or as to
any individual claim) by Purchaser exceeds $5,000.  In the event that
Seller breaches any representation contained in Section 6.1 and Purchaser had 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 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 any duty to investigate the matter to which such actual knowledge or the
absence thereof pertains, or to impose upon such Regional Property Manager any
individual personal liability.    

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

6.5.1       
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of Tennessee.

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

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

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

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

6.5.6       
Purchaser is not a Prohibited Person.

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

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

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

Article
VII
OPERATION OF THE PROPERTY

7.1             
Leases and Property Contracts.  During the period of
time from the Effective Date to the Closing Date, in the ordinary course of
business Seller may enter into new Property Contracts, new Leases, renew
existing Leases or modify, terminate or accept the surrender or forfeiture of
any of the Leases, modify any Property Contracts, or institute and prosecute any
available remedies for default under any Lease or Property Contract without
first obtaining the written consent of Purchaser; provided, however, Seller
agrees that any such new Property Contracts or any new or renewed Leases shall
not have a term in excess of 1 year and, in the case of any new or modified
Property Contract, shall be cancellable with no penalty on not more than thirty
(30) days prior notice, without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld, conditioned or delayed.

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.

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 nor shall have been in the last 6 months a debtor in any
bankruptcy proceeding. 

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
Sections 8.1.1, 8.1.3 or 8.1.4 is not met, Purchaser may (a)
waive any of the foregoing conditions and proceed to Closing on the Closing Date
with no offset or deduction from the Purchase Price, or (b) if such failure
constitutes a default by Seller, exercise any of its remedies pursuant to
Section 10.2.  If the
condition set forth in Section 8.1.2 is not met, Seller shall not be
in default pursuant to Section 10.2, and Purchaser may, as its sole and
exclusive remedy, (i) notify Seller of Purchaser's election to terminate this
Contract and receive a return of the Deposit from the Escrow Agent, or (ii)
waive such condition and proceed to Closing on the Closing Date with no offset
or deduction from the Purchase Price.  

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

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

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

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

8.2.4       
Seller shall have received all consents, documentation and approvals
necessary to consummate and facilitate the transactions contemplated hereby (a)
from Seller's partners, members, managers, shareholders or directors to the
extent required by Seller's (or Seller's affiliates') organizational documents,
and (b) as required by law; 

8.2.5       
There shall not be pending or, to the knowledge of either Purchaser or
Seller, any litigation or threatened litigation which, if determined adversely,
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;

8.2.6       
The Loan Assumption and Release shall have occurred; and

8.2.7       
All consents, approvals and agreements required for the LURA Assumption
shall have been obtained and any such consents, approvals and agreements
relating thereto which impose additional obligations on Seller shall be
reasonably acceptable to Seller and the LURA Assumption occurs.

If
any of the foregoing conditions to Seller's obligation to close with respect to
conveyance of the Property under this Contract are not met, Seller may (a) waive
any of the foregoing conditions and proceed to Closing on the Closing Date, or
(b) terminate this Contract, and, if such failure constitutes a default by
Purchaser, exercise any of its remedies under Section 10.1.  If Seller terminates this
Contract because of the failure of the condition set forth in Section 8.2.4 or if Seller terminates this
Contract because the terms and conditions of the LURA Assumption are not
acceptable to Seller as set forth in Section 8.2.7, then Seller shall reimburse
Purchaser for its actual out-of-pocket expenses incurred through the date of
such termination in connection with the transaction contemplated by this
Contract (in no event to exceed $50,000.00) plus any non-refundable deposits or
fees paid by Purchaser in connection with the Loan Assumption and Release or the
LURA Approval (in no event to exceed $100,000) and Purchaser shall deliver to
Seller copies of any and all third-party reports prepared for Purchaser in
connection therewith; provided, however, that if such failure constitutes a
default by Purchaser, Seller shall not be required to reimburse Purchaser.

Article
IX
BROKERAGE

9.1             
Indemnity.  Seller represents and warrants to
Purchaser that it has dealt only with Holliday Fenoglio Fowler, L.P., 3414
Peachtree Road, NE, Suite 736, Atlanta, Georgia 30326 ("Broker")
in connection with this Contract.  Seller and Purchaser each represents and
warrants to the other that, other than Broker, it has not dealt with or utilized
the services of any other real estate broker, sales person or finder in
connection with this Contract, and each party agrees to indemnify, hold
harmless, and, if requested in the sole and absolute discretion of the
indemnitee, defend (with counsel approved by the
indemnitee) the other party from and against all Losses relating to brokerage
commissions and finder's fees arising from or attributable to the acts or
omissions of the indemnifying party.  

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

Article X
DEFAULTS AND
REMEDIES

10.1         
Purchaser Default.  If Purchaser defaults in its
obligations hereunder to (a) deliver the Initial Deposit or Additional Deposit
(or any other deposit or payment required of Purchaser hereunder), (b) deliver
to Seller the deliveries specified under Section 5.3 on the date required thereunder, or (c)
deliver the Purchase Price at the time required by Section 2.2.4 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 2.3.3, Purchaser shall forfeit the
Deposit, and the Escrow Agent shall deliver the Deposit to Seller, and neither
party shall be obligated to proceed with the purchase and sale of the
Property.  If, Purchaser defaults in any of its other representations,
warranties or obligations under this Contract, and such default continues for
more than 10 days after written notice from Seller, then Purchaser shall forfeit
the Deposit, and the Escrow Agent shall deliver the Deposit to Seller, and
neither party shall be obligated to proceed with the purchase and sale of the
Property.  The Deposit is liquidated damages and recourse to the Deposit
is, except for Purchaser's indemnity and confidentiality obligations hereunder,
Seller's sole and exclusive remedy for Purchaser's failure to perform its
obligation to purchase the Property or breach of a representation or
warranty.  Seller expressly waives the remedies of specific performance and
additional damages for such default by Purchaser.  SELLER AND PURCHASER
ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD BE DIFFICULT TO DETERMINE, AND THAT THE
DEPOSIT IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES RESULTING FROM A DEFAULT BY
PURCHASER IN ITS OBLIGATION TO PURCHASE THE PROPERTY.  SELLER AND PURCHASER
FURTHER AGREE THAT THIS SECTION 10.1 IS INTENDED TO AND DOES LIQUIDATE
THE AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S EXCLUSIVE REMEDY AGAINST
PURCHASER, BOTH AT LAW AND IN EQUITY, ARISING FROM OR RELATED TO A BREACH BY
PURCHASER OF ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS
CONTRACT, OTHER THAN WITH RESPECT TO PURCHASER'S INDEMNITY AND CONFIDENTIALITY
OBLIGATIONS HEREUNDER.

10.2         
Seller Default.  If Seller, prior to the Closing,
defaults in its covenants or obligations under this Contract, including to sell
the Property as required by this Contract and such default continues for more
than 10 days after written notice from Purchaser, then, at Purchaser's election
and as Purchaser's sole and exclusive remedy, either (a) this Contract shall
terminate, and all payments and things of value, including the Deposit, provided
by Purchaser hereunder shall be returned to Purchaser and Purchaser may recover,
as its sole recoverable damages (but without limiting
its right to receive a refund of the Deposit), its direct and actual
out-of-pocket expenses and costs (documented by paid invoices to third parties)
in connection with this transaction, which damages shall not exceed $50,000 in
aggregate, plus any non-refundable deposits or fees paid to Lender in connection
with the Loan Assumption and Release and any non-refundable deposits or fees
paid in connection with the LURA Approval, which deposits and fees shall not
exceed $100,000 in aggregate, or (b) subject to the conditions below, Purchaser
may seek specific performance of Seller's obligation to deliver the Deed
pursuant to this Contract (but not damages, but Purchaser, if successful, will
be entitled to recover its reasonable actual costs of such action, including
actual fees as provided in Section 13.16).  Purchaser may seek
specific performance of Seller's obligation to deliver the Deed pursuant to this
Contract only if, as a condition precedent to initiating such litigation for
specific performance, Purchaser first shall (i) deliver all Purchaser Closing
documents to Escrow Agent in accordance with the requirements of this Contract,
including, without limitation, Section 5.3 (with the exception of
Section 5.3.1); (ii) not
otherwise be in default under this Contract; and (iii) file suit therefor with
the court on or before the 90th day after the Closing Date; if Purchaser fails
to file an action for specific performance within 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 Closing, and the cost
for demolition, site cleaning, restoration, replacement, or other repairs
(collectively, the "Repairs"), is more than $500,000.00, then
Seller shall have no obligation to make such Repairs, and shall notify Purchaser
in writing of such damage or destruction (the "Damage
Notice").  Within 10 days after Purchaser's receipt of the Damage
Notice, Purchaser may elect at its option to terminate this Contract by
delivering written notice to Seller in which event the Deposit shall be refunded
to Purchaser.  In the event Purchaser fails to
terminate this Contract within the foregoing 10-day period, this transaction
shall be closed in accordance with Section 11.3 below.

11.2         
Minor Damage.  In the event that the Property is
damaged or destroyed by fire or other casualty prior to the Closing, and the
cost of Repairs is equal to or less than $500,000.00, this transaction shall be
closed in accordance with Section 11.3, notwithstanding such casualty.  In
such event, Seller may at its election endeavor to make such Repairs to the
extent of any recovery from insurance carried on the Property, if such Repairs
can be reasonably effected before the Closing.  Regardless of Seller's
election to commence such Repairs, or Seller's ability to complete such Repairs
prior to Closing, this transaction shall be closed in accordance with
Section 11.3 below. 

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

11.4         
Repairs.  To the extent that Seller elects to commence
any Repairs prior to Closing, then Seller shall be entitled to receive and apply
available insurance proceeds to any portion of such Repairs completed or
installed prior to Closing, with Purchaser being responsible for completion of
such Repairs after Closing.  To the extent that any Repairs have been
commenced prior to Closing, then the Property Contracts shall include, and
Purchaser shall assume at Closing, all construction and other contracts entered
into by Seller in connection with such Repairs.

Article XII
EMINENT
DOMAIN

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

Article
XIII
MISCELLANEOUS

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

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

13.3         
Assignability.  Except to the extent required to
comply with the provisions of Section 13.18 related to a 1031 Exchange, this
Contract is not assignable by Purchaser without first obtaining the prior
written approval of Seller.  Notwithstanding the foregoing, Purchaser may
assign this Contract, without first obtaining the prior written approval of
Seller, to one or more entities so long as (a) Purchaser is an affiliate of the
purchasing entity(ies), (b) Purchaser is not released from its liability
hereunder, and (c) Purchaser provides written notice to Seller of any proposed
assignment no later than 10 days prior to the Closing Date.  As used
herein, an affiliate is an entity controlled by, under common control with, or
controlling an entity or is an entity owned in whole or in part by William H.
Freeman, James A. Webb, III or Kent Burns.

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

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

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

To
Purchaser:

 

Freeman
Webb Investments, Inc.

3810
Bedford Ave., Suite 300

Nashville,
Tennessee  37215

Attention: 
Kent Burns

Telephone: 
(615) 271-2733

Facsimile: 
(800) 531-4542

Email: 
kent.burns@freemanwebb.com

 

with
a copy to:

 

Miller
& Martin, PLLC

One
Nashville Place, Ste. 1200

150
4th Avenue North

Nashville,
Tennessee  37219

Attention: 
Jack F. King, Jr., Esq.

Phone: 
(615) 744-8531

Fax: 
(615) 744-8631

Email:
jking@millermartin.com

 

To
Seller:

 

THE
TRAILS, L.P.

c/o
AIMCO

4582
South Ulster Street Parkway 

Suite
1100

Denver,
Colorado  80237

Attention: 
Mark Reoch

Telephone: 
(303) 691-4337

Facsimile: 
(303) 300-3261

 

And:

 

c/o
AIMCO

4582
South Ulster Street Parkway 

Suite
1100

Denver,
Colorado  80237

Attention: 
Mr. Harry Alcock

Telephone: 
(303) 691-4344

Facsimile: 
(303) 300-3282

 

with copy to:

 

AIMCO

4582
South Ulster Street Parkway 

Suite
1100

Denver,
Colorado  80237

Attention: 
John Spiegleman, Esq.

Telephone:
(303) 691-4303

Facsimile: 
(303) 300-3260

 

and a copy to:

 

Holliday
Fenoglio Fowler, L.P.

3414
Peachtree Road, NE, Suite 736

Atlanta,
Georgia  30326

Attention: 
Jason Nettles

Telephone:
(404) 942-3186

Cell: 
(404) 218-8940

Facsimile: 
(404) 942-2181

Email: 
jnettles@hfflp.com

 

and
a copy to:

 

Kutak
Rock LLP

1801
California Street, Suite 3100

Denver,
Colorado  80202-2626

Attention: 
Stephen J. Ismert, Esq.

Telephone:
(303) 297-2400

Facsimile: 
(303) 292-7799

 

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

8450
East Crescent Parkway, Suite 410

Greenwood
Village, Colorado  80111

Attention: 
Valena Bloomquist

Telephone: 
(303) 244-9198

Facsimile: 
(720) 489-7593 

 

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
Tennessee shall govern the validity, construction, enforcement, and
interpretation of this Contract, unless otherwise specified herein except for
the conflict of laws provisions thereof.  Subject to Section 13.24, all claims, disputes and other
matters in question arising out of or relating to this Contract, or the breach
thereof, shall be decided by proceedings instituted and litigated in a court of
competent jurisdiction in the 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.  Purchaser shall not disclose the
terms and conditions contained in this Contract and shall keep the same
confidential, provided that Purchaser may disclose the terms and conditions of
this Contract (a) as required by law, (b) to consummate the terms of this
Contract, or any financing relating thereto, or (c) to Purchaser's or Seller's
lenders, attorneys and accountants.  Any information obtained by Purchaser
in the course of its inspection of the Property, and any Materials provided by
Seller to Purchaser hereunder, shall be confidential and Purchaser shall be
prohibited from making such information public to any other person or entity
other than its Consultants, without Seller's prior written authorization, which
may be granted or denied in Seller's sole discretion.  In addition,
Purchaser shall use its reasonable efforts to prevent its Consultants from
divulging any such confidential information to any unrelated third parties
except as reasonably necessary to third parties engaged by Purchaser for the
limited purpose of analyzing and investigating such information for the purpose
of consummating the transaction contemplated by this Contract.  Unless and
until the Closing occurs, Purchaser shall not market the Property (or any
portion thereof) to any prospective purchaser or lessee without the prior
written consent of Seller, which consent may be withheld in Seller's sole
discretion.  Notwithstanding the provisions of Section 13.8 Purchaser agrees that the covenants,
restrictions and agreements of Purchaser contained in any confidentiality
agreement executed by Purchaser prior to the Effective Date shall survive the
execution of this Contract and shall not be superseded hereby.

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

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

13.16     
Attorneys' Fees.  In the event either party hereto
commences litigation or arbitration against the other to enforce its rights
hereunder, the substantially 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 30
days in order to facilitate a tax free exchange pursuant to this Section 13.18, and to obtain all documentation
in connection therewith.

13.19     
No Personal Liability of Officers, Trustees or Directors of
Seller's Partners.  Purchaser acknowledges that this Contract is
entered into by Seller which is a South Carolina limited partnership, and
Purchaser agrees that none of Seller's Indemnified Parties shall have any
personal liability under this Contract or any document executed in connection
with the transactions contemplated by this Contract.

13.20     
No Exclusive Negotiations.  Seller shall have the
right, at all times prior to the expiration of the Feasibility Period, to
solicit backup offers and enter into discussions, negotiations, or any other
communications concerning or related to the sale of the Property with any
third-party; provided, however, that such communications are subject to the
terms of this Contract, and that Seller shall not enter into any binding
contract with a third-party for the sale of the Property unless such contract is
contingent on the termination of this Contract without the Property having been
conveyed to Purchaser.

13.21     
ADA Disclosure.  Purchaser acknowledges that the
Property may be subject to the federal Americans With Disabilities Act (the
"ADA") and the federal Fair Housing Act (the
"FHA").  The ADA requires, among other matters, that tenants
and/or owners of "public accommodations" remove barriers in order to make the
Property accessible to disabled persons and provide auxiliary aids and services
for hearing, vision or speech impaired persons.  Seller makes no warranty,
representation or guarantee of any type or kind with respect to the Property's
compliance with the ADA or the FHA (or any similar state or local law), and
Seller expressly disclaims any such representations.

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

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

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

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

13.26     
Non-Solicitation of Employees.  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.

13.27     
Survival.  Except for (a) all of the provisions of
this Article XIII (other than Sections 13.18 and 13.20); (b) Sections 2.3, 3.3, 3.4, 3.5, 4.5.5, 4.5.6, 5.4, 5.5, 6.2, 6.5, 9.1 and 11.4; (c) any other provisions in this
Contract, that by their express terms survive the termination or Closing; and
(d) any payment obligation of Purchaser under this Contract (the foregoing (a),
(b), (c) and (d) referred to herein as the "Survival Provisions"),
none of the terms and provisions of this Contract shall survive the termination
of this Contract, and if the Contract is not so terminated, all of the terms and
provisions of this Contract (other than the Survival Provisions, which shall
survive the Closing) shall be merged into the Closing documents and shall not
survive Closing. 

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

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.

[Remainder of page intentionally left blank; signatures to
follow]

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

 

Seller:

 

THE
TRAILS, L.P.,

a
South Carolina limited partnership

 

By:      
THE TRAILS GP LIMITED PARTNERSHIP,

a
South Carolina limited partnership,

           
its general partner

 

           
By:       GP SERVICES XV, INC.,

           
            a South
Carolina corporation,

           
            its general
partner

 

           
            By:
      /s/Brian J.
Bornhorst                

           
            Name: 
Brian J.
Bornhorst                    

           
           
Title:     Vice
President                         

 

 

Purchaser:

 

 

FREEMAN
WEBB INVESTMENTS, INC.

a
Tennessee corporation

 

By:
      /s/Kent A.
Burns                      

Name: 
Kent A.
Burns                         

Title:    
Presidentf8klad040709cov.htm - Generated by SEC Publisher for SEC Filing

 

Exhibit 10.1

SIXTH AMENDMENT TO LOAN AGREEMENT

     This Sixth Amendment to Loan Agreement (this "Agreement") dated as of March 31, 2009, is entered into among Lithia Motors, Inc., an Oregon corporation ("Borrower"); the lenders which are from time to time parties to the Loan Agreement (each a "Lender" and any two or more "Lenders"); and U.S. Bank National Association, as agent for the Lenders (in such capacity, "Agent").

R E C I T A L S

                      A.      Borrower, the Lenders and Agent have entered into a Loan Agreement dated as of August 31, 2006, which has been amended by amendments dated as of June 29, 2007, February 13, 2008, March 17, 2008, August 15, 2008, and December 12, 2008 (collectively, the "Loan Agreement").

                      B.      The parties wish to modify the terms and conditions of the Loan Agreement, as set forth below.

                      For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

                      1.      Amendments to Loan Agreement.

                              1.1      
Changed Definitions. The following defined terms in Section 1.1 of the Loan Agreement are deleted and replaced with the following:

            "LIBOR Rate" means the one-month LIBOR rate quoted by Agent from Reuters Screen LIBOR01 Page or any successor thereto, which shall be that one-month LIBOR rate in effect two Business Days prior to the beginning of each calendar month, adjusted for any Reserve Requirements and any subsequent costs arising from a change in government regulation, such rate to be reset at the beginning of each succeeding month; provided, however, if the first Loan is made other than on the first day of the month, the initial monthly LIBOR Rate shall be that one-month LIBOR rate in effect two Business Days prior to the date of the initial Loan, which rate shall be in effect for the remaining days of the month in which such Loan is made; such monthly LIBOR Rate to be reset at the beginning of each succeeding month. Agent's internal records of applicable interest rates shall be determinative in the absence of manifest error.

            "Swingline Commitment" means (a) $35,000,000 through September 29, 2009; (b) $25,000,000 from September 30, 2009 through December 30, 2009; and (c) $12,500,000 on and after December 31, 2009.

            "Total Revolving Loan Commitment"  means (a) $150,000,000 prior to the Sixth Amendment Date; (b) $100,000,000 from the Sixth Amendment Date through April 30, 2009; (c) $75,000,000 from May 1, 2009 through September 29, 2009; (d) $50,000,000 from September 30,

Page
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2009 through December 30, 2009; and (e) $25,000,000 on and after December 31, 2009.

                              1.2           New Definitions.  The following definitions are hereby added to Section 1.1 of the Loan Agreement:

               "Base Rate"  means, as of any date of determination, the greatest of (a) the Prime Rate in effect on such date, (b) the Federal Funds Rate in effect on such date plus 1.50% or (c) the Daily Reset LIBOR Rate in effect on such date plus 2.0%.

               "Daily Reset LIBOR Rate"  means the one-month LIBOR rate quoted by Agent from Reuters Screen LIBOR01 Page or any successor thereto, which shall be that one-month LIBOR rate in effect on and reset on each Business Day, adjusted for any Reserve Requirements and any subsequent costs arising from a change in government regulation. Agent’s internal records of applicable interest rates shall be determinative in the absence of manifest error.

               "Sixth Amendment Date"  means the date of the Sixth Amendment to Loan Agreement between Borrower, the Lenders, and Agent.

                              1.3          
Swingline Loans.  Sections 3.1.1 and 3.1.2 of the Loan Agreement are deleted and replaced with the following:

                          3.1.1  
Maximum Amount.  Subject to the terms and conditions of this Agreement, the Swingline Lender may, in its sole discretion, but without any obligation to do so, make loans (each, a "Swingline Loan" and collectively, the Swingline Loans") to Borrower on a revolving credit basis during the period from the Closing Date to but not including the Expiration Date; provided that (a) the aggregate outstanding principal balance of the Swingline Loans shall not at any time exceed the Swingline Commitment; and (b) the outstanding principal balance of all Revolving Loans made by all Lenders plus the outstanding principal balance of all Swingline Loans, plus the LC Outstandings, shall not at any time exceed the Maximum Amount.

                         3.1.2  
Term.  Subject to the terms and conditions hereof, Borrower may borrow, prepay and reborrow Swingline Loans. The availability of Swingline Loans shall terminate automatically and permanently on the Expiration Date and no Swingline Loans shall be made on or after that date.

                              1.4          
Interest Rate.  Effective as of the Sixth Amendment Date, Section 5.1.1 of the Loan Agreement is deleted and replaced with the following:

5.1.1        Interest Rate.  
Unless the Default Rate is applicable, (a) the Revolving Loans shall bear interest at a variable per annum rate equal to the LIBOR Rate plus 4.40% ("Revolving Loan Borrowing

Page
2

 
 

 

Rate"); and (b) the Swingline Loans shall bear interest at a variable per annum rate equal to the LIBOR Rate plus 4.40% ("Swingline Borrowing Rate"), in each case adjusted without notice on the date of each change in the LIBOR Rate.

                              1.5          
Unavailability or Illegality.   Section 6.3 of the Loan Agreement is deleted and replaced with the following:

                6.3           Unavailability or Illegality.  If at any time any Lender determines that the LIBOR Rate is unascertainable or unavailable or that the LIBOR Rate will not adequately and fairly reflect the cost of maintaining or funding the Loans, or if, because of the introduction of or any change in, or because of any judicial, administrative or other governmental interpretation of, any law or regulation, it becomes unlawful for any Lender to make, fund or maintain Loans based on the LIBOR Rate, then such Lender’s obligation to make, fund or maintain any such loans at the Revolving Loan Borrowing Rate or Swingline Borrowing Rate shall terminate and the Loans of such Lender shall, on the earlier of the date specified by Agent in a notice to Borrower or on date the making, funding or maintaining of such Loans becomes unlawful, be converted to Loans bearing interest at a variable rate equal to the Base Rate plus 1.80%.

                             1.6           Total Net Worth.  Effective as of March 31, 2009, Section 10.1.1 of the Loan Agreement is deleted and replaced with the following, it being understood that for time periods prior to such date, Section 10.1.1 shall be calculated in accordance with the provisions then in effect:

                         10.1.1 Total Net Worth.  The Total Net Worth for Borrower and its Subsidiaries, on a consolidated basis, as of the last day of any fiscal quarter, shall not be less than (a) $175,000,000 as of March 31, 2009; or (b) on and after June 30, 2009, (i) $175,000,000 plus (ii) seventy five percent (75%) of consolidated net income (to the extent such amount is positive, but without deduction for consolidated net loss) for fiscal quarters ending on or after June 30, 2009, plus (iii) one hundred percent (100%) of the consolidated net cash proceeds realized from the issuance of any equity securities by Borrower or any of its Subsidiaries (and other capital contributions made to Borrower or any of its Subsidiaries) after March 31, 2009.

                          As used herein, "Total Net Worth" means for any Person (a) the net book value of all of such Person's assets, minus (b) all of such Person's liabilities.

                             1.7          
Current Ratio.  
The first paragraph of Section 10.1.2 of the Loan Agreement is deleted and replaced with the following:

Current Ratio.  
The Current Ratio for Borrower and its Subsidiaries on a consolidated basis, as of the last day of each fiscal quarter, shall not be less than (a) 1.20 to 1.0 as of the last day of each fiscal quarter ending on

Page
3

 
 

 

or before March 31, 2009, (b) 1.05 to 1.0 as of June 30, 2009 and September 30, 2009, and (c) 1.10 to 1.0 as of the last day of each fiscal quarter ending on or after December 31, 2009.

                              1.8           
Approved Sales.

                                              1.8.1           Sections 12.1.2 and 12.1.3 of the Loan Agreement are deleted and replaced with the following:

                                   12.1.2     Notwithstanding the provisions of Section 12.1.1, Borrower or any Subsidiary may sell all or substantially all of the assets (including Equity Interests) of any Dealership or other Subsidiary (or of any business unit or franchise of a Dealership or other Subsidiary) for not less than fair market value, if no Default shall exist immediately prior to or upon giving effect to any such sale, and

                                   (a)           the sale is included on the Schedule of Approved Sales attached hereto (which shall replace the Schedule of Approved Sales attached to the Fifth Amendment to Loan Agreement dated December 12, 2008) or

                                   (b)           Required Lenders have consented in writing to the sale and Borrower has complied with all terms and conditions of such consent, it being acknowledged that Required Lenders have consented to the sales of facilities in Issaquah, Washington and Burlingame, California which occurred in August, 2008.

                                   12.1.3      Notwithstanding the provisions of Sections 12.1.1 and 12.1.2, any Subsidiary that no longer has assets (or that has assets with an aggregate book value less than $25,000) may discontinue operations and dissolve or liquidate unless such action would constitute a Material Adverse Effect or any Default shall exist immediately prior to or upon giving effect thereto.

                                            1.8.2            Section 12.1.4 of the Loan Agreement is hereby deleted.

                             1.9          Subordinated Debt.       Section 12.5 of the Loan Agreement is deleted and replaced with the following:

                                            12.5             Subordinated Debt.

                                  12.5.1       Borrower will not and will not permit any Loan Party to, make any redemption, prepayment, principal payment, defeasance or repurchase of any Subordinated Debt other than the Senior Subordinated Notes, or agree to modify the terms of any Subordinated Debt other than the Senior Subordinated Notes, except that Borrower or any Loan Party may take any of the foregoing actions so long as no Event of Default has occurred or will exist after giving effect to such action.

Page
4

 
 

 

                  12.5.2      Borrower will not and will not permit any Loan Party to, make any redemption, prepayment, principal payment, defeasance or repurchase of all or any of the Senior Subordinated Notes, or agree to modify the terms of the Senior Subordinated Notes; provided, however, that so long as no Event of Default has occurred or will exist after giving effect thereto (a) Borrower may repurchase Senior Subordinated Notes prior to May 1, 2009, and (b) Borrower may repurchase the Senior Subordinated Notes on May 1, 2009, if and to the extent requested to do so by the noteholders in accordance with the terms of the Indenture governing the Senior Subordinated Notes.

                              1.10          
Debt.  The following is hereby added to Section 12.10 (Debt) of the Loan Agreement:

                  (n)           Debt appearing as a claims reserve (or similar term) on the balance sheet of Borrower and its Subsidiaries, which represents amounts which have been received but which will be expended to pay warranty and service claims by customers of the Dealerships.

                       2.      Exhibits D and E.  Exhibit D (Compliance Certificate) and Exhibit E (Borrowing Base Certificate) are deleted and replaced with the Exhibits D and E attached hereto.

                       3.      Schedule 1.  
Schedule 1 to the Loan Agreement is deleted and replaced with the Schedule 1 attached hereto.

                       4.      Consent of Lenders.

                                4.1      Lithia of Spokane, Inc. has entered into an agreement to sell the Mercedes Benz of Spokane dealership. Part of the consideration for the sale is a promissory note payable by the buyer to Lithia Real Estate, Inc. (the "Mercedes of Spokane Note"). Pursuant to Section 12.6(m) of the Loan Agreement, the Lenders hereby consent to the Mercedes of Spokane Note in a principal amount of up to $4,000,000.

                       5.      Conditions Precedent.  The effectiveness of this Agreement is subject to satisfaction of each of the following conditions:

                                5.1      Agent has received executed originals of this Agreement and such other Loan Documents as Agent requires and Borrower and each Guarantor have provided such information and satisfied such requirements as Agent reasonably requires.

                                5.2      No Default shall have occurred and be continuing under the Loan Agreement.

                                5.3      The outstanding principal balance of the Obligations does not exceed the Maximum Amount, as in effect after giving effect to the amendments set forth in this Agreement.

                                5.4       Borrower has paid to Agent, for the account of the Lenders, in accordance with their Pro Rata Shares of the Revolving Loan Commitments, an amendment fee in the amount of $40,000.

Page
5

 
 

 
                                  5.5      All representations and warranties in the Loan Agreement and in this Agreement are true and correct as of the date of this Agreement.

                        6.      
Defined Terms.  Capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Loan Agreement.

                        7.      
Reaffirmation; Release.  By signing this Agreement or the attached Acknowledgment:

                                  7.1      Borrower and each Guarantor (each, a "Loan Party") affirm that the representations and warranties in each of the existing Loan Documents are and will be true, correct and complete as of the date hereof, and agree that (i) except as amended previously or in connection herewith, each Loan Document is and shall remain valid and enforceable in accordance with its terms and (ii) such Borrower or Guarantor has no claims, defenses, setoffs, counterclaims or claims for recoupment against Agent, the Lenders, or the indebtedness and obligations represented by the Notes, Guaranties, Security Documents and other Loan Documents.

                                 7.2      Each Loan Party hereby releases, acquits, and forever discharges Agent, each Lender, their parent corporations, affiliates, subsidiaries, employees, successors, agents, assigns, representatives, and attorneys (collectively, "Lenders' Agents"), and each of them, of and from any and all liability, claims, demands, damages, actions, causes of action, defenses, counterclaims, setoffs, or claims for recoupment of whatsoever nature, whether known or unknown, whether in contract or tort or otherwise, arising directly or indirectly from, or in any way related to the Loan Agreement, this Amendment, the Guaranties and the other Loan Documents, any other indebtedness or obligations of any Loan Party to Agent or any one or more of the Lenders or to the relationship between any Loan Party and Agent, any Lender, or Lenders' Agents.

                        8.      
References.  
On and after the effective date of this Agreement, all references in the Loan Agreement and the other Loan Documents to the Loan Agreement shall be deemed to refer to the Loan Agreement as amended hereby.

                        9.      
Representations and Warranties.  Each Loan Party represents and warrants to Agent and the Lenders as follows:

                                  9.1    
Authorization.  (a) It has all requisite power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its obligations under, the Loan Agreement as amended by this Agreement (the "Amended Agreement"), (b) its execution, delivery and performance of this Agreement and the other Loan Documents and all documents to be executed, delivered or performed by it have been duly authorized by all necessary entity action, do not require the approval of any governmental agency or other Person, do not contravene any law, regulation, rule, order, or restriction binding on it or its articles of incorporation or other organizational documents, and do not contravene the provisions of or constitute a default under any agreement or instrument to which it is a party or by which it may be bound or affected, and (c) this Agreement has been duly executed and delivered by each Loan Party and this Agreement and the Amended Agreement are the legally valid and binding obligations of each Loan party, enforceable against such Loan Party in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization,

Page
6

 
 

 
moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability.

                     9.2     
Absence of Default.  No Event of Default has occurred and is continuing and no event will result from the consummation of the transactions contemplated by this Agreement that would constitute a Default or Event of Default.

                    10.        Expenses.  
Borrower shall pay all outside and/or third party costs, fees and expenses (including without limitation, attorney fees) incurred by Agent and each Lender in connection with the preparation, negotiation, execution, and delivery of this Agreement and any other document required to be furnished herewith.

                    11.        
Recitals.  The Recitals are hereby incorporated herein.

                    12.        Counterparts.  
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of said counterparts taken together shall be deemed to constitute but one document.

(signature page follows)

Page
7

 
 

 
		
	
LITHIA MOTORS, INC.

	
U.S. BANK NATIONAL ASSOCIATION, 

as Agent, Lender, Swingline Lender, and 

Issuing Lender

	 
	
By: /s/ Jeff DeBoer 

Name: Jeff DeBoer 

Title:SVP and CEO

CHRYSLER FINANCIAL SERVICES 

AMERICAS LLC, as Lender

By: /s/ Judy C. Johnson

Name: Judy C. Johnson 

Title: Credit Director National Accounts

DCFS USA LLC, as Lender

By: /s/ Michele Nowak 

Name: Michele Nowak 

Title: Credit Director

         National Accounts

	
By: /s/ Silvia K. Boulger

Name: Silvia K. Boulger 

Title: Vice President

TOYOTA MOTOR CREDIT 

CORPORATION, as Lender

By: /s/ Mark Doi

Name: Mark Doi 

Title: National Dealer

         Credit Manager

 

 

Page
8

 
 

 
ACKNOWLEDGMENT AND CONSENT OF GUARANTORS

     Each Guarantor hereby acknowledges, consents, and agrees to all terms and conditions of the foregoing amendment.

Hutchins Eugene Nissan, Inc.

Hutchins Imported Motors, Inc.

LAD Advertising, Inc.

LGPAC, Inc.

Lithia Auto Services, Inc.

Lithia BNM, Inc.

Lithia DE, Inc.

Lithia DM, Inc.

Lithia Financial Corporation

Lithia Aircraft, Inc.

Lithia HPI, Inc.

Lithia Klamath, Inc.

L2 Auto, Inc.

Lithia Medford Hon, Inc.

Lithia Motors Support Services, Inc.

Lithia MTLM, Inc.

Lithia of Roseburg, Inc.

Lithia Real Estate, Inc.

Lithia Rentals, Inc.

Lithia Rose-FT, Inc.

Lithia SOC, Inc.

Saturn of Southwest Oregon, Inc.

Lithia Chrysler Jeep of Anchorage, Inc.

Lithia Imports of Anchorage, Inc.

Lithia NA, Inc.

Lithia of Anchorage, Inc.

Lithia of Fairbanks, Inc.

Lithia of South Central AK, Inc.

Lithia CIMR, Inc.

Lithia DC, Inc.

Lithia FMF, Inc.

Lithia JEF, Inc.

Lithia MMF, Inc.

Page
9

 
 

 
Lithia NF, Inc.

Lithia of California, Inc. 

Lithia of Eureka, Inc. 

Lithia Seaside, Inc. 

Lithia Sea P, Inc.

Lithia of Santa Rosa, Inc. 

Lithia TKV, Inc.

Lithia TR, Inc.

Lithia Centennial Chrysler Plymouth Jeep, Inc. 

Lithia Cherry Creek Dodge, Inc.

Lithia Colorado Jeep, Inc.

Lithia Colorado Springs Jeep Chrysler Plymouth, Inc. 

Lithia Foothills Chrysler, Inc.

Lithia of Thornton, Inc. 

Lithia CCTF, Inc.

Lithia Ford of Boise, Inc. 

Lithia of Caldwell, Inc. 

Lithia of Pocatello, Inc. 

Lithia Poca-Hon, Inc. 

Lithia of TF, Inc.

Lithia MBDM, Inc. 

Lithia of Des Moines, Inc. 

Lithia CDH, Inc.

Lithia HGF, Inc. 

Lithia of Billings, Inc. 

Lithia of Great Falls, Inc. 

Lithia of Helena, Inc. 

Lithia of Missoula, Inc. 

Lithia CJD of Omaha, Inc. 

Lithia CJDSF, Inc.

Lithia of Santa Fe, Inc. 

Lithia Reno Sub-Hyun, Inc. 

Lithia SALMIR, Inc.

Lithia ND Acquisition Corp. #1 

Lithia ND Acquisition Corp. #3 

Lithia ND Acquisition Corp. #4 

Lithia Automotive, Inc.

Camp Automotive, Inc. 

Lithia BC, Inc.

Lithia DC of Renton, Inc. 

Lithia Dodge of Tri-Cities, Inc. 

Lithia FTC, Inc.

Lithia HyR, Inc. 

Lithia IC, Inc. 

Lithia of Seattle, Inc. 

Lithia of Spokane, Inc. 

Lithia of Wenatchee, Inc. TC Hon, Inc.

Lithia of Cedar Rapids #1, Inc.

Page
10

 
 

 
Lithia of Cedar Rapids #2, Inc.

Lithia of Cedar Rapids #3, Inc.

Lithia AcDM, Inc.

Lithia HDM, Inc.

Lithia NDM, Inc.

Lithia VAuDM, Inc.

Lithia Bryan Texas, Inc.

Lithia CJDO, Inc.

Lithia CJDSA, Inc.

Lithia CM, Inc.

Lithia CO, Inc.

Lithia CSA, Inc.

Lithia DMID, Inc.

Lithia HMID, Inc.

Lithia NSA, Inc.

Lithia of Abilene, Inc.

Lithia of Corpus Christi, Inc.

Lithia of Midland, Inc.

Lithia TA, Inc.

Lithia TO, Inc.

Lithia VaUB, Inc.

Lithia Community Development Company, Inc.

L2 Auto of Colorado, Inc.

L2 Auto of Texas, Inc.

L2 Auto of Idaho, Inc.

By: /s/ Jeff DeBoer

Name: Jeff DeBoer

Title: Authorized Agent

SOE, LLC

Lynnwood Properties, LLC 

Lithia GP of Texas, LLC

By: /s/ Jeff DeBoer

Name: Jeff DeBoer

Title: Authorized Agent

Page
11

 

SCHEDULE 1

	
     Name of

     
Financial

     
Institution	
     Pro Rata

     
Share

     
of Revolving

     
Loans	
     Revolving Loan Commitment
	
Prior to Sixth

Amendment Date

	
     Sixth

     
Amendment Date 

     through 4/30/09	
     5/1/09
      – 9/29/09	
     9/30/09
      – 12/30/09	
     12/31/09
      and

     
Thereafter
	
     U.S. Bank

     National

     Association	
     25.0%	
     $37,500,000	
     $25,000,000	
     $18,750,000	
     $12,500,000	
     $6,250,000
	
     Chrysler

     Financial

     Services

     Americas LLC	
     25.0%	
     $37,500,000	
     $25,000,000	
     $18,750,000	
     $12,500,000	
     $6,250,000
	
     Toyota Motor

     Credit

     Corporation 	
     25.0%	
     $37,500,000	
     $25,000,000	
     $18,750,000	
     $12,500,000	
     $6,250,000
	
     DCFS USA LLC	
     25.0%	
     $37,500,000	
     $25,000,000	
     $18,750,000	
     $12,500,000	
     $6,250,000
	
     TOTAL	
     100% 	
     $150,000,000 	
     $100,000,000 	
     $75,000,000 	
     $50,000,000	
     $25,000,000

 

 

Page 12

 
 

EXHIBIT D

COMPLIANCE CERTIFICATE

     This Compliance Certificate is executed and delivered by Lithia Motors, Inc. ("Borrower") to U.S. Bank National Association, as Agent (in such capacity, "Agent") pursuant to the requirements of the Loan Agreement dated as of August 31, 2006 between Borrower, the Lenders which are from time to time parties thereto, and Agent ("Loan Agreement"). Any capitalized terms used herein and not defined herein shall have the meanings given to such terms in the Loan Agreement. This Compliance Certificate covers the four (4) consecutive fiscal quarters ended __________________ with respect to Section 10.1.3 and 10.1.4 of the Loan Agreement and is prepared as of _______________ with respect to Sections 10.1.1 and 10.1.2 of the Loan Agreement.

     1. A review of the activities of the Borrower during the fiscal period covered by this Compliance Certificate has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Borrower performed and observed all of their obligations under the Loan Agreement. To the best knowledge of the undersigned, during such fiscal period all covenants and conditions of the Borrower have been performed and observed and no Default has occurred and is continuing under the Loan Agreement
[with the exceptions set forth below in
response to which Borrower has taken or propose to take the following actions: 

______________________________________________________________________________
______________________________________________________________________________    
___________________________________________.]

     2. To the best knowledge of the undersigned, no event or circumstance which has had or may have a Material Adverse Effect has occurred since the last Compliance Certificate was delivered
[with the exceptions set forth below:

______________________________________________________________________________
______________________________________________________________________________    
___________________________________________.]

     3. Attached are the calculations showing whether Borrower was in compliance with Sections 10.1.1, 10.1.2, 10.1.3, and 10.1.4 of the Loan Agreement as of the end of the fiscal period covered by this Compliance Certificate. Each such calculation is derived from the books and records of Borrower and correctly reflects whether Borrower is in compliance with the applicable Sections of the Loan Agreement.

     4. Borrower hereby gives notice of a Current Assets Election in the Specified Current Assets Commitment Amount of $
_____________.

        This Compliance Certificate is executed on ______________________________.

LITHIA MOTORS, INC.

By:______________________

Name:___________________

Title:_____________________

 Page 13

 

 
  

Calculation of Financial Covenants

______________________________________________________________________________

							
	 	 	 	 	 	 	Amounts in Thousands 
	10.1.1 	Total Net Worth 	 	 
					
	 	A. 	Required Total Net Worth 	 	 
							
	 	 	1	. 	 $175,000,000.00 	
     $
							
	 	 	2	. 	 PLUS 75% of positive net income for quarters 	 	 
	 	 	 	 	 ending on or after 6-30-09 	
     $
							
	 	 	3	. 	 PLUS Proceeds from issuance of equity securities 	 	 
	 	 	 	 	 (and other capital contributions) after 3-31-09 	
     $
							
	 	 	 	 	Minimum Requirement 	
     $
							
	 	B. 	 	 	 Net Book Value of Assets 	
     $
							
	 	C. 	 	 	 MINUS Total Liabilities 	
     $
							
	 	D. 	 	 	 Total Net Worth 	
     $
				
	10.1.2 	Current Ratio 	 	 
					
	 	A. 	Borrowing Base Minus the Total Outstandings 	
     $
					
	 	B. 	Specified Current Assets Commitment Amount 	
     $
					
	 	C. 	Total Revolving Loan Commitment minus Total 	 	 
	 	 	Outstandings 	
     $
					
	 	D. 	Current Assets Commitment Amount (least of A, 	 	 
	 	 	B, and C) 	
     $
					
	 	E. 	Consolidated Current Assets (including any Current 	 	 
	 	 	Assets Commitment Amount specified above) 	
     $
					
	 	F. 	MINUS Receivables from Related Parties 	
     $
					
	 	G. 	Total 
     Current Assets 	
     $
					
	 	H. 	Total 
     Current Liabilities 
     (if the Expiration Date is 	 	 
	 	 	within one year, including any Current Assets 	 	 
	 	 	Commitment Amount specified above)(1) 	
     $

 

 

__________________

1 Excludes any portion of Senior Subordinated Notes, which is not due and payable.
 

 Page 14 
 

 

 
							
	 	I. 	Permitted Ratio of G to H: Not less than______ to 1.0. 	 	 
							
	 	 	
     RATIO:	 	 	
      ____	
     to 1.0 
				
	10.1.3 	Fixed Charge Coverage Ratio 	 	 
							
	 	A. 	EBITDAR	 	 	 	 
							
	 	 	1.		
     Consolidated Net Income (or Loss) 	
     $__________
							
	 	 	2.		
     PLUS interest expense 	
     $__________
							
	 	 	3.		
     PLUS income tax expense 	
     $__________
							
	 	 	4.		
     PLUS depreciation expense 	
     $__________
							
	 	 	5.		
     PLUS amortization expense 	
     $__________
							
	 	 	6.		
     PLUS goodwill impairment charges 	
     $__________
							
	 	 	7.		PLUS stock-based compensation 	 	 
	 	 	 		
     charges 	
     $__________
							
	 	 	8.		PLUS other approved non-cash 	 	 
	 	 	 		
     charges 	
     $__________
							
	 	 	9.		
     MINUS non-cash gains 	
     $__________
							
	 	 	10.		
     PLUS rental expense 	
     $__________
							
	 	 	11.		
     PLUS extraordinary losses 	
     $__________
							
	 	 	12.		
     MINUS extraordinary gains 	
     $__________
							
	 	 	13.		
     PLUS or MINUS Excluded Items 	
     $__________
							
	 	 	14.		
     PLUS Other Income(2) 	
     $__________
					
	 	 	
     Total EBITDAR 	
     $__________
					
	 	B. 	
     PLUS pro forma Permitted Acquisitions EBITDA 	
     $__________
							
	 	C. 	1.		
     MINUS Dividends paid in cash 	
     $__________
							
	 	 	2.		
     MINUS Income taxes paid in cash 	
     $__________

 __________________

 2 Maximum $10 million for fiscal quarter ending 6-30-08, $10 million for fiscal quarter ending 9-30-08, $0 for other fiscal quarters.
  

 Page
 15 
 

 

 
											
					
     3.		
     MINUS Maintenance capital		
     $__________
							
     expenditures 				
						
			
     TOTAL EBITDAR plus EBITDA from acquisitions			
			
     minus Dividends paid in cash, Income Taxes paid in			
			
     cash and Maintenance Capital Expenditures ("Total			
			
     Adjusted EBITDAR") 			
     $__________
									
		
     D. 	
     Fixed Charges						
										
					
     1.		
     Interest paid in cash		
     $__________
	
					
     2.		
     PLUS Required principal payments on		
     $__________
							
     Debt (except Senior Subordinated			
							
     Notes) 				
										
					
     3.		
     PLUS Rental expense		
     $__________
							
			
     TOTAL Fixed Charges 			
     $__________
						
		
     E. 	
     Permitted Ratio of Total Adjusted EBITDAR to Total			
			
     Fixed Charges: Not less than_____ to 1.0		
									
			
     RATIO:  		
     ____ 	
     to 1.0 
						
	
      10.1.4 	
     Cash Flow Leverage 				
							
		
     A. 	
     Adjusted Funded Debt 				
								
			
     1.		
     Current Maturities of Long Term Debt		
     $__________
								
			
     2.		
     PLUS Long Term Debt, less current maturities		
     $__________
								
			
     3.		
     PLUS Flooring Notes Payable		
     $__________
									
			
     4.		
     Total Funded Debt 			
     $__________
									
			
     5.		
     MINUS Subordinated Debt 			
     $__________
	
			
     6.		
     MINUS Flooring Notes Payable (New and			
					
     Program Inventory) 			
     $__________
								
			
     7.		
     MINUS Service Loaner Vehicle Notes		
     $__________
									
			
     8.		
     MINUS Real Estate Debt 			
     $__________
					

 Page 16

 

 
 
 

 
	 							
	 	 	9.	 	
     PLUS Current Asset Commitment Amount 	
     $ __________
	 			
	 	 	
     Total Adjusted Funded Debt 	
     $ __________
	 					
	 	B. 	EBITDA	 	 	 
	 							
	 	 	 	 	1.	 	
     Consolidated Net Income (or Loss) 	
     $ __________
	 							
	 	 	 	 	2.	 	
     PLUS interest expense 	
     $ __________
	 							
	 	 	 	 	3.	 	
     PLUS income tax expense 	
     $ __________
	 							
	 	 	 	 	4.	 	
     PLUS depreciation expense 	
     $ __________
	 							
	 	 	 	 	5.	 	
     PLUS amortization expense 	
     $ __________
	 							
	 	 	 	 	6.	 	
     PLUS goodwill impairment charges 	
     $ __________
	 							
	 	 	 	 	7.	 	
     PLUS stock-based compensation 	 
	 	 	 	 	 	 	
     charges 	
     $ __________
	 							
	 	 	 	 	8.	 	
     PLUS other approved non-cash 	 
	 	 	 	 	 	 	
     charges 	
     $ __________
	 							
	 	 	 	 	9.	 	
     MINUS non-cash gains 	
     $ __________
	 							
	 	 	 	 	10.	 	
     MINUS all extraordinary gains (or 	 
	 	 	 	 	 	 	
     PLUS extraordinary losses) 	
     $ __________
	 							
	 	 	 	 	11.	 	
     PLUS or MINUS Excluded Items 	
     $ __________
	 							
	 	 	 	 	12.	 	
     PLUS Other Income 	 
	 							
	 	 	 	 	13.	 	
     PLUS pro forma Permitted Acquisitions 	 
	 	 	 	 	 	 	
     EBITDA 	
     $ __________
	 					
	 	 	Total EBITDA	 	 	
     $ __________
	 							
	 	 	 	 	1.	 	
     MINUS Floorplan Interest 	
     $ __________
	 							
	 	 	 	 	2.	 	
     MINUS Real Estate Debt Interest 	
     $ __________
	 							
	 	 	 	 	3.	 	MINUS Required Principal Payments 	 
	 	 	 	 	 	 	
     on Real Estate Debt 	
     $ __________

 

 

Page 17 

 
 

 
	 						
	 	 	Total EBITDA MINUS Floorplan Interest, Real	 	 	
	 	 	Estate Debt Interest, and Required Principal Payments	 	 	
	 	 	on Real Estate Debt ("Total Adjusted EBITDA")	 	
     $__________
	 	 
	 	D. 	Permitted Ratio of Total Adjusted Funded Debt to Total	 	 	
	 	 	Adjusted EBITDA: Not greater than ________to 1.0	 	
	 	 
	 	 	
     RATIO:  	
     ______to 1.0

 

 

Page
18 

 

 
EXHIBIT E

BORROWING BASE CERTIFICATE

This Borrowing Base Certificate is executed and delivered by Lithia Motors, Inc. ("Borrower") to U.S. Bank National Association, as Agent (in such capacity, "Agent") pursuant to the requirements of Section 10.2.6 of the Loan Agreement dated as of August 31, 2006, between Borrower, the Lenders which are from time to time parties thereto, and Agent ("Loan Agreement"). Any capitalized terms used herein and not defined herein shall have the meanings given to such terms in the Loan Agreement. This Borrowing Base Certificate is prepared as of ___________________ ("Calculation Date").

     Attached are the calculations showing the status of the Borrowing Base as of the Calculation Date. The Borrowing Base Certificate has been prepared in accordance with the requirements of the Loan Agreement and the information contained therein is true, accurate and complete as of the Calculation Date.

This Borrowing Base Certificate is executed on ______________________________.

LITHIA MOTORS, INC.

By:__________________________

Title:_________________________

 Page
 19

 

 
 

 
               Borrowing Base Calculation

[Date]

								
	
     (a) Vehicle Equity: 	 	 	 	 	 
	
     1	
     . 	
     Contracts in Transit 	 	
      $________ 
	 
	
     2	
     . 	
     Vehicle Receivables 	 	
       $ ________
	 	 	
     a. 	
     Vehicle Receivables 	 	
       $ ________
	 	 	
     b. 	
     Less: amounts outstanding 30+ days 	
     - $ ________
	 
	
     3	
     . 	
     Cash on Deposit with perfected security 	 	 
	 	 	
     interest (1)	 	 	
       $ ________
	 	 	
     a. 	
     Cash and Cash Equivalents (per 	 	 
	 	 	 	
     balance sheet)	 	
       $ ________
	 	 	
     b. 	
     Less: 	 	 	 	 
	 	 	
     c. 	
     Undeposited Cash 	 	
     - $ ________
	 	 	
     d. 	
     Insurance Trust Accounts 	 	
     - $ ________
	 	 	
     e. 	
     Ford Money Market Account 	
     - $ ________
	 	 	
     f. 	
     Ameritrade Cash Balance 	 	
     - $ ________
	 	 	
     g. 	
     Lynwood Security Deposit Trust 	
     - $ ________
	 	 	
     h. 	
     Washington Customer Deposit Trust 	 	 
	 	 	 	
     Accounts 	 	 	
     - $ ________
	 	 	
     i. 	
     Nevada Sales Tax Trust Accounts 	
     - $ ________
	 	 	
     j. 	
     Nebraska Sales Tax Trust Accounts 	
     - $ ________
	 
	
     4	
     . 	
     Net Book Value of Inventory 	 	
       $ ________
	 	 	
     a. 	
     New Vehicle Inventory 	 	
       $ ________
	 	 	
     b. 	
     Used Vehicle Inventory (includes 	 	 
	 	 	 	
     Program Vehicles) held 100 days or 	
     +$ ________
	 	 	 	
     less 	 	 	 	 
	 	 	
     c. 	
     Flooring N/P New Vehicle 	 	
     - $ ________
	 	 	
     d. 	
     Flooring N/P Program Vehicle 	
     - $ ________
	 	 	
     e. 	
     Vehicle
      Lien Payoff
      (includes 	 	 
	 	 	 	
     discontinued operations) 	 	
     - $ ________
	 	 	
     f. 	
     Other Debt secured by New, Used, 	 	 
	 	 	 	
     Program Vehicles 	 	
     - $ ________
	 	 	 	
     Discontinued Operations: 	 	 	 
	 	 	
     g. 	
     New Vehicle Inventory 	 	
     +$ ________
	 	 	
     h. 	
     Used Vehicle Inventory (includes 	 	 
	 	 	 	
     Program Vehicles) held 100 days or 	 	 
	 	 	 	
     less 	 	 	
     +$ ________
	 	 	
     i. 	
     Flooring N/P New Vehicle 	 	
     - $ ________
	 	 	
     j. 	
     Flooring N/P Program Vehicle 	
     - $ ________
	 

Page 20

 

 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	k. 	
     Other debt secured by New, 	 	
       $ ________	 	 	 
	 	 	 	 	
     Used, Program
     Vehicles 	
     - $ ________	 	 	 
													
	 
	 	
     Total Vehicle Equity 	 	 	
       $ ________	
     80%  	
      $ ________
	 
	(b) 	Eligible Receivables: 	 	 	 	 	 	 
	 
	 	1.	 	Eligible Accounts 	 	 	  $ 	 	 	 
	 	 	 	a. 	
     Customer Receivables 	 	
       $ ________	 	 	 
	 	 	 	b. 	
     Less: amounts 60+ past due 	
     - $ ________	 	 	 
	 	2.	 	PLUS Insurance Receivables 	 	
       $ ________	 	 	 
	 	3.	 	PLUS Factory Receivables 	 	
       $ ________	 	 	 
	 	4.	 	PLUS Finance Receivables 	 	
       $ ________	 	 	 
	 	5.	 	PLUS Notes Receivable (2) 	 	
       $ ________	 	 	 
	 
	 	Total Eligible Receivables 	 	
       $ ________	
     50%  	
      $ ________
	 
	(c) 	Service Loaner Vehicles 	 	 	 	 	 	 
	 
	 	1.	 	Service Loaner Vehicles, cost 	 	
       $ ________	 	 	 
	 	2.	 	MINUS Service Loaner Vehicles, 	 	 	 	 
	 	 	 	
     accumulated depreciation 	 	
       $ ________	 	 	 
	 	
     3.	 	
     MINUS Service Loaner Vehicle Notes 	
       $ ________	 	 	 
	 
	 	
     Total Service Loaner Vehicles (3) 	 	
       $ ________	
     80%  	
      $ ________
	 
	(d) 	Parts & Accessories 	 	 	 	 	 	 
	 
	 	 	 	Continuing Operations: 	 	 	 	 	 
	 	1.	 	Parts and Accessories Inventory 	 	
       $ ________	 	 	 
	 	2.	 	PLUS Materials 	 	 	
       $ ________	 	 	 
	 	3.	 	MINUS Factory Trade Creditors (includes 	 	 	 	 
	 	 	 	discontinued operations) 	 	
       $ ________	 	 	 
	 	 	 	Discontinued Operations: 	 	 	 	 	 
	 	4.	 	PLUS Parts and Accessories Inventory 	
       $ ________	 	 	 
	 	5.	 	PLUS Materials 	 	 	
       $ ________	 	 	 
	 
	 	Total Parts & Accessories 	 	
       $ ________	65%  	
      $ ________

 

 

Page 21 

 
 
  

								
	(e) 	
     Aircraft 	 	 	 	 
	 
	 	
     1.	 	
     Lithia Aircraft, cost 	
     $ __________	 	 	 
	 	
     2.	 	
     MINUS Lithia Aircraft, accumulated 	 	 	 	 
	 	 	 	
     depreciation 	
     $ __________	 	 	 
	 
	 	
     Net Book Value of Aircraft 	
     $ __________	
     80%	 	
     $__________ (3) 
	 
	
     (f) 	
     Equipment 	 	 	 	 
	 
	 	1.	 	
     Continuing Operations: 	
     $ __________	 	 	 
	 	2.	 	
     Office Equipment, cost (includes aircraft) 	
     $ __________	 	 	 
	 	3.	 	
     MINUS Office Equipment, accumulated 	 	 	 	 
	 	 	 	
     depreciation	
     $ __________	 	 	 
	 	4.	 	
     PLUS Service and Parts Equipment, cost 	
     $ __________	 	 	 
	 	5.	 	
     MINUS Service and Parts Equipment, 	 	 	 	 
	 	 	 	
     accumulated depreciation 	
     $ __________	 	 	 
	 	6.	 	
     MINUS Net Book Value of Aircraft 	
     $ __________	 	 	 
	 	 	 	
     Discontinued Operations:(4) 	 	 	 	 
	 	7.	 	
     PLUS Office Equipment, cost 	
     $ __________	 	 	 
	 	8.	 	
     MINUS Office Equipment, accumulated 	 	 	 	 
	 	 	 	
     depreciation 	
     $ __________	 	 	 
	 	9.	 	
     PLUS Service and Parts Equipment, cost 	
     $ __________	 	 	 
	 	10.	 	
     MINUS Service and Parts Equipment, 	 	 	 	 
	 	 	 	
     accumulated depreciation 	
     $ __________	 	 	 
	 
	 	
     Net Equipment book value (5) 	
     $ __________	
     35%	 	
     $ __________
	 
	(g) 	
     Required Reduction 	Minus 	 	 	
     $__________ (6) 
	 
	 	 	 	Total Aggregate Borrowing Base 	 	
     $__________ 
	 
	 	 	 	Outstandings on Line of Credit and 	 	 
	 	 	 	
     Letters of Credit 	 	
     $ __________
	 	 	 	            	 	 
	 	 	 	Total Revolving Loan Commitment 	 	
     $__________ (7) 
	 
	 	 	 	Total Revolving Loan Commitment 	 	 
	 	 	 	Minus Outstandings 	 	
     $ 
	 
	 	 	 	Borrowing Base Minus Outstandings 	 	
     $ 

 

 

Page 22 

 
 

 
Notes:

(1)   Cannot exceed $10 million 

(2)   Cannot exceed $50 thousand 

(3)   Lesser of 80% of nbv or $6 million

(4)   Discontinued Operations does not include $_______________ in non-collateral assets such as Real Estate, Leasehold Improvements, Goodwill and Other Intangible Assets classified as "Held for Sale" 

(5)   Net Equipment Book Value does not include $_________________ in "Leasehold Improvements" included in "Equipment and other" on the balance sheet 

(6)   $40 million prior to February 28, 2009 or $85 million on and after February 28, 2009, minus, in either case, permitted principal payments made on the Senior Subordinated Notes 

(7)   $150 million prior to Sixth Amendment Date; $100 million from Sixth Amendment Date through April 30, 2009; $75 million from May 1, 2009 through September 29, 2009; $50 million from September 30, 2009 through December 30, 2009; and $25 million on and after December 31, 2009.

Page 23

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