Document:

ex_10-26.htm

    TBS
INTERNATIONAL PLC & SUBSIDIARIES                EXHIBIT
10.26

     

    
 

     

    

    Date  28
January 2010

     

    

    

    

    

    TBS
INTERNATIONAL PUBLIC LIMITED COMPANY

    as
Guarantor

    

    

    

    - and
-

    

    

    

    

    JOH.
BERENBERG, GOSSLER  & CO. KG

    as
Lender

    

    

    

    ________________________________________________

    

    GUARANTEE

    ________________________________________________

    

    relating
to a Loan Agreement

    dated 19
June 2008

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    INDEX

    

    
    

    

    

      
        	
                Clause

              	 
      	
                Page

              
	
                
1

              	
                
INTERPRETATION

              	
                
1

              
	
                
2

              	
                
GUARANTEE

              	
                
1

              
	
                
3

              	
                
LIABILITY AS PRINCIPAL AND INDEPENDENT
      DEBTOR

              	
                
2

              
	
                
4

              	
                
EXPENSES

              	
                
2

              
	
                
5

              	
                
ADJUSTMENT OF
    TRANSACTIONS

              	
                
2

              
	
                
6

              	
                
PAYMENTS

              	
                
3

              
	
                
7

              	
                
INTEREST

              	
                
3

              
	
                
8

              	
                
SUBORDINATION

              	
                
3

              
	
                
9

              	
                
ENFORCEMENT

              	
                
3

              
	
                
10

              	
                
REPRESENTATIONS AND
      WARRANTIES

              	
                
4

              
	
                
11

              	
                
UNDERTAKINGS

              	
                
5

              
	
                
12

              	
                
JUDGMENTS AND CURRENCY
      INDEMNITY

              	
                
6

              
	
                
13

              	
                
SET-OFF

              	
                

6

              
	
                
14

              	
                
SUPPLEMENTAL

              	
                
7

              
	
                
15

              	
                
ASSIGNMENT

              	
                
7

              
	
                
16

              	
                
NOTICES

              	
                
7

              
	
                
17

              	
                
INVALIDITY OF LOAN
      AGREEMENT

              	
                
8

              
	
                
18

              	
                
GOVERNING LAW AND
      JURISDICTION

              	
                
8

              
	 
      	
                
EXECUTION PAGE

              	
                
10

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    THIS GUARANTEE is made on 28
January 2010

    

    BETWEEN

    

    
      	
              (1)  

            	
              TBS INTERNATIONAL PUBLIC
      LIMITED COMPANY, a company incorporated in Ireland (registered no.
      476578) whose registered office is at Arthur Cox Building, Earlsfort
      Terrace, Dublin 2, Ireland (the “Guarantor”);
      and

            

    

     

    
      	
              (2)  

            	
              JOH. BERENBERG, GOSSLER &
      CO. KG, whose principal office is at Neuer Jungfernstieg 20, 20354
      Hamburg, Germany, (the “Lender”, which
      expression includes its successors and
assigns).

            

    

     

    BACKGROUND

    

    
      	
              (A)  

            	
              By
      a loan agreement dated 19 June 2008 (as supplemented from time to time)
      and made between (i) Grainger Maritime Corp. as borrower and (ii) the
      Lender, it was agreed that the Lender would make available to the Borrower
      a term loan facility of up to
US$13,000,000.

            

    

     

    
      	
              (B)  

            	
              By
      a supplemental agreement dated 28 January 2010 made between the Borrower,
      TBS International Limited, TBS Shipping Services Inc., the Guarantor, TBS
      Holdings Limited and the Lender, the Loan was further amended and
      supplemented.

            

    

     

    
      	
              (C)  

            	
              The
      execution and delivery to the Lender of this Guarantee is one of the
      conditions precedent to the continued availability of the term loan
      facility under the said Loan
Agreement.

            

    

     

    IT IS AGREED as
follows:

    

    
      	
              1  

            	
              INTERPRETATION

            

    

     

    
      	
              1.1  

            	
              Defined
      expressions.  Words and expressions defined in the Loan
      Agreement shall have the same meanings when used in this Guarantee unless
      the context otherwise requires.

            

    

     

    
      	
              1.2  

            	
              Construction of certain
      terms.  In this
Guarantee:

            

    

     

    “bankruptcy”  includes
a liquidation, receivership or administration and any form of suspension of
payments, arrangement with creditors or reorganisation under any corporate or
insolvency law of any country;

    

    “Loan Agreement” means the loan
agreement referred to in Recital (A) as amended by the Supplemental Agreement
and includes any existing or future amendments or supplements, whether made with
the Guarantor's consent or otherwise; and

    

    “Supplemental Agreement” means
the supplemental agreement to the Loan Agreement referred to in Recital
(B).

    

    
      	
              1.3  

            	
              Application of construction and
      interpretation provisions of Loan Agreement.  Clauses 1.2
      of the Loan Agreement applies, with any necessary modifications, to this
      Guarantee.

            

    

     

    
      	
              2  

            	
              GUARANTEE

            

    

     

    
      	
              2.1  

            	
              Guarantee and
      indemnity.  The Guarantor unconditionally and
      irrevocably:

            

    

     

    
      	
              (a)  

            	
              guarantees
      the due payment of all amounts payable by the Borrower under or in
      connection with the Loan Agreement and every other Finance
      Document;

            

    

     

    
      	
              (b)  

            	
              undertakes
      to pay to the Lender, on the Lender's demand, any such amount which is not
      paid by the Borrower when due and payable;
and

            

    

     

    
      	
              (c)  

            	
              fully
      indemnifies the Lender on its demand in respect of all claims, expenses,
      liabilities and losses which are made or brought against or incurred by
      the Lender as a result of or in connection with any obligation or
      liability guaranteed by the Guarantor being or becoming unenforceable,
      invalid, void or illegal; and the amount recoverable under this indemnity
      shall be equal to the amount which the Lender would otherwise have been
      entitled to recover.

            

    

     

    
      	
              2.2  

            	
              No limit on number of
      demands.  The Lender may serve more than one demand under
      Clause 2.1.

            

    

     

    
      	
              3  

            	
              LIABILITY
      AS PRINCIPAL AND INDEPENDENT DEBTOR

            

    

     

    
      	
              3.1  

            	
              Principal and independent
      debtor.  The Guarantor shall be liable under this
      Guarantee as a principal and independent debtor and accordingly it shall
      not have, as regards this Guarantee, any of the rights or defences of a
      surety.

            

    

     

    
      	
              3.2  

            	
              Waiver of rights and
      defences.  Without limiting the generality of Clause 3.1,
      the Guarantor shall neither be discharged by, nor have any claim against
      the Lender in respect of:

            

    

     

    
      	
              (a)  

            	
              any
      amendment or supplement being made to the Finance
    Documents;

            

    

     

    
      	
              (b)  

            	
              any
      arrangement or concession (including a rescheduling or acceptance of
      partial payments) relating to, or affecting, the Finance
      Documents;

            

    

     

    
      	
              (c)  

            	
              any
      release or loss (even though negligent) of any right or Security Interest
      created by the Finance Documents;

            

    

     

    
      	
              (d)  

            	
              any
      failure (even though negligent) promptly or properly to exercise or
      enforce any such right or Security Interest, including a failure to
      realise for its full market value an asset covered by such a Security
      Interest; or

            

    

     

    
      	
              (e)  

            	
              any
      other Finance Document or any Security Interest now being or later
      becoming void, unenforceable, illegal or invalid or otherwise defective
      for any reason, including a neglect to register
  it.

            

    

     

    
      	
              4  

            	
              EXPENSES

            

    

     

    
      	
              4.1  

            	
              Costs of preservation of
      rights, enforcement etc.  The Guarantor shall pay to the
      Lender on its demand the amount of all expenses incurred by the Lender in
      connection with any matter arising out of this Guarantee, including any
      advice, claim or proceedings relating to this
  Guarantee.

            

    

     

    
      	
              4.2  

            	
              Fees and expenses payable under
      Loan Agreement.  Clause 4.1 is without prejudice to the
      Guarantor's liabilities in respect of the Borrower’s obligations under
      clause 14 of the Loan Agreement (fees and expenses) and under similar
      provisions of other Finance
Documents.

            

    

     

    
      	
              5  

            	
              ADJUSTMENT
      OF TRANSACTIONS

            

    

     

    
      	
              5.1  

            	
              Reinstatement of obligation to
      pay.  The Guarantor shall pay to the Lender on its demand
      any amount which the Lender is required, or agrees, to pay pursuant to any
      claim by, or settlement with, a trustee in bankruptcy of the Borrower or
      of another Security Party (or similar person) on the ground that the Loan
      Agreement or a payment by the Borrower or of another Security Party, was
      invalid or on any similar ground.

            

    

     

    
      	
              6  

            	
              PAYMENTS

            

    

     

    
      	
              6.1  

            	
              Method of
      payments.  Any amount due under this Guarantee shall be
      paid:

            

    

     

    
      	
              (a)  

            	
              in
      immediately available funds;

            

    

     

    
      	
              (b)  

            	
              to
      such account as the Lender may from time to time notify to the
      Guarantor;

            

    

     

    
      	
              (c)  

            	
              without
      any form of set-off, cross-claim or condition;
  and

            

    

     

    
      	
              (d)  

            	
              free
      and clear of any tax deduction except a tax deduction which the Guarantor
      is required by law to make.

            

    

     

    
      	
              6.2  

            	
              Grossing-up for
      taxes.  If the Guarantor is required by law to make a tax
      deduction, the amount due to the Lender shall be increased by the amount
      necessary to ensure that the Lender receives and retains a net amount
      which, after the tax deduction, is equal to the full amount that it would
      otherwise have received.

            

    

     

    
      	
              7  

            	
              INTEREST

            

    

     

    
      	
              7.1  

            	
              Accrual of
      interest.  Any amount due under this Guarantee shall
      carry interest after the second Business Day following the date on which
      the Lender demands payment of it until it is actually paid, unless
      interest on that same amount also accrues under the Loan
      Agreement.

            

    

     

    
      	
              7.2  

            	
              Calculation of
      interest.  Interest under this Guarantee shall be
      calculated and accrue in the same way as interest under clause 7 of the
      Loan Agreement.

            

    

     

    
      	
              7.3  

            	
              Guarantee extends to interest
      payable under Loan Agreement.  For the avoidance of
      doubt, it is confirmed that this Guarantee covers all interest payable
      under the Loan Agreement, including that payable under clause 7 of the
      Loan Agreement.

            

    

     

    
      	
              8  

            	
              SUBORDINATION

            

    

     

    
      	
              8.1  

            	
              Subordination of rights of
      Guarantor.  All rights which the Guarantor at any time
      has (whether in respect of this Guarantee or any other transaction)
      against the Borrower, any other Security Party or their respective assets
      shall be fully subordinated to the rights of the Lender under the Finance
      Documents and in particular, the Guarantor shall
  not:

            

    

     

    
      	
              (a)  

            	
              claim,
      or in a bankruptcy of the Borrower or any other Security Party prove for,
      any amount payable to the Guarantor by the Borrower or any other Security
      Party, whether in respect of this Guarantee or any other
      transaction;

            

    

     

    
      	
              (b)  

            	
              take
      or enforce any Security Interest for any such
  amount;

            

    

     

    
      	
              (c)  

            	
              claim
      to set-off any such amount against any amount payable by the Guarantor to
      the Borrower or any other Security Party;
or

            

    

     

    
      	
              (d)  

            	
              claim
      any subrogation or other right in respect of any Finance Document or any
      sum received or recovered by the Lender under a Finance
      Document.

            

    

     

    
      	
              9  

            	
              ENFORCEMENT

            

    

     

    
      	
              9.1  

            	
              No requirement to commence
      proceedings against the Borrower.  The Lender will not
      need to commence any proceedings under, or enforce any Security Interest
      created by, the Loan Agreement or any other Finance Document before
      claiming or commencing proceedings under this
  Guarantee.

            

    

     

    
      	
              9.2  

            	
              Conclusive evidence of certain
      matters.  However, as against the
    Guarantor:

            

    

     

    
      	
              (a)  

            	
              any
      judgment or order of a court in England, Germany, the Marshall Islands,
      Bermuda or Ireland in connection with the Loan Agreement;
    and

            

    

     

    
      	
              (b)  

            	
              any
      statement or admission of the Borrower in connection with the Loan
      Agreement,

            

    

     

    
      	
               
      

            	
              shall
      be binding and conclusive as to all matters of fact and law to which it
      relates.

            

    

    

    
      	
              9.3  

            	
              Suspense
      account.  The Lender may, for the purpose of claiming or
      proving in a bankruptcy of the Borrower or any other Security Party, place
      any sum received or recovered under or by virtue of this Guarantee on a
      separate suspense or other interest bearing nominal account without
      applying it in satisfaction of the Borrower’s obligations under the Loan
      Agreement.

            

    

     

    
      	
              10  

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
              10.1  

            	
              General.  The
      Guarantor represents and warrants to the Lender as
  follows.

            

    

     

    
      	
              10.2  

            	
              Status.  The
      Guarantor is duly incorporated and validly existing under the laws of
      Ireland.

            

    

     

    
      	
              10.3  

            	
              Corporate
      power.  The Guarantor has the corporate capacity, and has
      taken all corporate action and obtained all consents necessary for
      it:

            

    

     

    
      	
              (a)  

            	
              to
      execute this Guarantee; and

            

    

     

    
      	
              (b)  

            	
              to
      make all the payments contemplated by, and to comply with, this
      Guarantee.

            

    

     

    
      	
              10.4  

            	
              Consents in
      force.  All the consents referred to in Clause 10.3
      remain in force and nothing to the best of the Guarantor’s knowledge and
      belief has occurred which makes any of them liable to
      revocation.

            

    

     

    
      	
              10.5  

            	
              Legal
      validity.  This Guarantee constitutes the Guarantor's
      legal, valid and binding obligations enforceable against the Guarantor in
      accordance with its terms subject to any relevant insolvency laws
      affecting creditors' rights generally and subject to any qualification as
      to matters of law which are specifically referred to in any legal opinion
      delivered to the Lender pursuant to the Supplemental
      Agreement.

            

    

     

    
      	
              10.6  

            	
              No
      conflicts.  The execution by the Guarantor of this
      Guarantee and its compliance with this Guarantee will not involve or lead
      to a contravention of:

            

    

     

    
      	
              (a)  

            	
              any
      law or regulation in force at the date of the Guarantee;
  or

            

    

     

    
      	
              (b)  

            	
              the
      constitutional documents of the Guarantor;
or

            

    

     

    
      	
              (c)  

            	
              any
      contractual or other obligation or restriction which is binding on the
      Guarantor or any of its assets.

            

    

     

    
      	
              10.7  

            	
              No withholding
      taxes.  No tax is imposed in any jurisdiction in which
      the Guarantor is ordinarily resident for tax by way of withholding or
      deduction or otherwise on any payment to be under this
      Agreement.

            

    

     

    
      	
              10.8  

            	
              No
      default.  To the knowledge of the Guarantor, no Event of
      Default or Potential Event of Default has occurred and is
      continuing.

            

    

     

    
      	
              10.9  

            	
              Information.  All
      information which has been provided in writing by or on behalf of the
      Guarantor to the Lender in connection with any Finance Document was to the
      best of the Guarantor’s knowledge and belief true and not misleading as at
      the time it was given; all audited and unaudited accounts which have been
      so provided satisfied the requirements of Clause 11.4; and there has been
      no material adverse change in the financial position or state of affairs
      of the Guarantor from that disclosed in the latest of those
      accounts.

            

    

     

    
      	
              10.10  

            	
              No
      litigation.  No legal or administrative action involving
      the Guarantor has been commenced or taken or, to the Guarantor's
      knowledge, is likely to be commenced or taken which, in either case, would
      be likely to have a material adverse effect on the Guarantor's financial
      position or profitability.

            

    

     

    
      	
              11  

            	
              UNDERTAKINGS

            

    

     

    
      	
              11.1  

            	
              General.  The
      Guarantor undertakes with the Lender to comply with the following
      provisions of this Clause 11 at all times during the Security Period,
      except as the Lender may otherwise
permit.

            

    

     

    
      	
              11.2  

            	
              Information provided to be
      accurate.  All financial and other information which is
      provided in writing by or on behalf of the Guarantor under or in
      connection with this Guarantee will, to the best of the Guarantor’s
      knowledge and belief, be true and not misleading and will not omit any
      material fact or consideration which if disclosed would reasonably be
      expected to adversely affect the decision of a person considering whether
      to enter into the Loan Agreement.

            

    

     

    
      	
              11.3  

            	
              Shareholder and creditor
      notices.  The Guarantor will send the Lender, at the same
      time as they are despatched, copies of all communications which are
      despatched to the Guarantor's shareholders or creditors or any class of
      them.

            

    

     

    
      	
              11.4  

            	
              Consents.  The
      Guarantor will maintain in force and promptly obtain or renew, and will
      promptly send certified copies to the Lender of, all consents
      required:

            

    

     

    
      	
              (a)  

            	
              for
      the Guarantor to perform its obligations under this
    Guarantee;

            

    

     

    
      	
              (b)  

            	
              for
      the validity or enforceability of this
  Guarantee;

            

    

     

    and the
Guarantor will comply with the terms of all such consents.

    

    
      	
              11.5  

            	
              Further
      Assurance.  The Guarantor
will:

            

    

     

    
      	
              (a)  

            	
              at
      its own cost, do all that it reasonably can to ensure that this Guarantee
      creates the obligations which it purports to create;
  and

            

    

     

    
      	
              (b)  

            	
              without
      limiting the generality of paragraph (a) above, at its own cost, promptly
      register, file, record or enrol this Guarantee with any applicable court
      or authority, pay any applicable stamp, registration or similar tax in
      respect of this Guarantee, give any notice or take any other step which in
      the reasonable opinion of the Lender, is or has become necessary or
      desirable for this Guarantee to be valid, enforceable or admissible in
      evidence.

            

    

     

    
      	
              11.6  

            	
              Notification of
      litigation.  The Guarantor will provide the Lender with
      details of any legal or administrative action involving the Guarantor
      promptly upon becoming aware of the same where such legal or
      administrative action might, if adversely determined, have a material
      adverse effect on the ability of the Guarantor to perform its obligations
      under this Guarantee.

            

    

     

    
      	
              11.7  

            	
              Notification of
      default.  The Guarantor will notify the Lender as soon as
      the Guarantor becomes aware of:

            

    

     

    
      	
              (a)  

            	
              the
      occurrence of an Event of Default or a Potential Event of Default;
      or

            

    

     

    
      	
              (b)  

            	
              any
      matter which indicates that an Event of Default or a Potential Event of
      Default may have occurred and is
continuing;

            

    

     

    and will
thereafter keep the Lender fully up-to-date with all developments.

    

    
      	
              11.8  

            	
              Maintenance of
      status.  The Guarantor will maintain its separate
      corporate existence under the laws of
Ireland.

            

    

     

    
      	
              11.9  

            	
              No disposal of assets, change
      of business.  The Guarantor will
  not:

            

    

     

    
      	
              (a)  

            	
              transfer,
      lease or otherwise dispose of all or a substantial part of its assets,
      whether by one transaction or a number of transactions, whether related or
      not except in the usual course of its trading operations;
    or

            

    

     

    
      	
              (b)  

            	
              make
      any substantial change to the nature of its business from that existing at
      the date of this Guarantee.

            

    

     

    
      	
              11.10  

            	
              No merger
      etc.  The Guarantor shall not, and shall procure that
      none of its subsidiaries will, enter into any form of merger,
      sub-division, amalgamation or other
  reorganisation.

            

    

     

    
      	
              11.11  

            	
              Chief Executive
      Office.  The Guarantor will maintain its chief executive
      office, and keep its corporate documents and records, at Arthur Cox
      Building, Earlsfort Terrace, Dublin 2,
Ireland.

            

    

     

    
      	
              12  

            	
              JUDGMENTS
      AND CURRENCY INDEMNITY

            

    

     

    
      	
              12.1  

            	
              Judgments relating to Loan
      Agreement.  This Guarantee shall cover any amount payable
      by the Borrower under or in connection with any judgment relating to the
      Loan Agreement.

            

    

     

    
      	
              13  

            	
              SET-OFF

            

    

     

    
      	
              13.1  

            	
              Application of credit
      balances.  The Lender may without prior notice following
      the occurrence of an Event of Default which is
  continuing:

            

    

     

    
      	
              (a)  

            	
              apply
      any balance (whether or not then due) which at any time stands to the
      credit of any account in the name of the Guarantor at any office in any
      country of the Lender in or towards satisfaction of any sum then due from
      the Guarantor to the Lender under this Guarantee;
  and

            

    

     

    
      	
              (b)  

            	
              for
      that purpose:

            

    

     

    
      	
              (i)  

            	
              break,
      or alter the maturity of, all or any part of a deposit of the
      Guarantor;

            

    

     

    
      	
              (ii)  

            	
              convert
      or translate all or any part of a deposit or other credit balance into
      Dollars;

            

    

     

    
      	
              (iii)  

            	
              enter
      into any other transaction or make any entry with regard to the credit
      balance which the Lender considers
appropriate.

            

    

     

    
      	
              13.2  

            	
              Existing rights
      unaffected.  The Lender shall not be obliged to exercise
      any of its rights under Clause 13.1; and those rights shall be without
      prejudice and in addition to any right of set-off, combination of
      accounts, charge, lien or other right or remedy to which the Lender is
      entitled (whether under the general law or any
  document).

            

    

     

    
      	
              14  

            	
              SUPPLEMENTAL

            

    

     

    
      	
              14.1  

            	
              Continuing
      guarantee.  This Guarantee shall remain in force as a
      continuing security at all times during the Security
    Period.

            

    

     

    
      	
              14.2  

            	
              Rights cumulative,
      non-exclusive.  The Lender's rights under and in
      connection with this Guarantee are cumulative, may be exercised as often
      as appears expedient and shall not be taken to exclude or limit any right
      or remedy conferred by law.

            

    

     

    
      	
              14.3  

            	
              No impairment of rights under
      Guarantee.  If the Lender omits to exercise, delays in
      exercising or invalidly exercises any of its rights under this Guarantee,
      that shall not impair that or any other right of the Lender under this
      Guarantee.

            

    

     

    
      	
              14.4  

            	
              Severability of
      provisions.  If any provision of this Guarantee is or
      subsequently becomes void, illegal, unenforceable or otherwise invalid,
      that shall not affect the validity, legality or enforceability of its
      other provisions.

            

    

     

    
      	
              14.5  

            	
              Guarantee not affected by other
      security.  This Guarantee shall not impair, nor be
      impaired by, any other guarantee, any Security Interest or any right of
      set-off or netting or to combine accounts which the Lender may now or
      later hold in connection with the Loan
  Agreement.

            

    

     

    
      	
              14.6  

            	
              Guarantor bound by Loan
      Agreement.  The Guarantor agrees with the Lender to be
      bound by all provisions of the Loan Agreement which are applicable to the
      Security Parties in the same way as if those provisions had been set out
      (with any necessary modifications) in this
  Guarantee.

            

    

     

    
      	
              14.7  

            	
              Applicability of provisions of
      Guarantee to other rights.  Clauses 3 and 17 shall also
      apply to any right of set-off or netting or to combine accounts which the
      Guarantor creates by an agreement entered into at the time of this
      Guarantee or at any later time (notwithstanding that the agreement does
      not include provisions similar to Clauses 3 and 17), being an agreement
      referring to this Guarantee.

            

    

     

    
      	
              14.8  

            	
              Third party
      rights.  A person who is not a party to this Guarantee
      has no right under the Contracts (Rights of Third Parties) Act 1999 to
      enforce or to enjoy the benefit of any term of this
    Guarantee.

            

    

     

    
      	
              15  

            	
              ASSIGNMENT

            

    

     

    
      	
              15.1  

            	
              Assignment by
      Lender.  The Lender may assign its rights under and in
      connection with this Guarantee to the same extent as it may assign its
      rights under the Loan Agreement.

            

    

     

    
      	
              16  

            	
              NOTICES

            

    

     

    
      	
              16.1  

            	
              Notices to
      Guarantor.  Any notice or demand to the Guarantor under
      or in connection with this Guarantee shall be given by letter or fax
      at:

            

    

     

    TBS
International Public Limited Company

    Arthur
Cox Building

    Earlsfort
Terrace

    Dublin
2

    Ireland

    

    
      	
               
      

            	
              Fax
      No:  +353 1 618 0618

            

    

    

    or to such other address which the
Guarantor may notify to the Lender.

    

    
      	
              16.2  

            	
              Application of certain
      provisions of Loan Agreement.  Clause 19.1 of the Loan
      Agreement applies to any notice or demand under or in connection with this
      Guarantee.

            

    

     

    
      	
              16.3  

            	
              Validity of
      demands.  A demand under this Guarantee shall be valid
      notwithstanding that it is served:

            

    

     

    
      	
              (a)  

            	
              on
      the date on which the amount to which it relates is payable by the
      Borrower under the Loan Agreement;

            

    

     

    
      	
              (b)  

            	
              at
      the same time as the service of a notice under clause 13.2 (events of
      default) of the Loan Agreement;

            

    

     

    and a
demand under this Guarantee may refer to all amounts payable under or in
connection with the Loan Agreement without specifying a particular sum or
aggregate sum.

    

    
      	
              16.4  

            	
              Notices to the
      Lender.  Any notice to the Lender under or in connection
      with this Guarantee shall be sent to the same address and in the same
      manner as notices to the Lender under the Loan
  Agreement.

            

    

     

    
      	
              17  

            	
              INVALIDITY
      OF LOAN AGREEMENT

            

    

     

    
      	
              17.1  

            	
              Invalidity of Loan
      Agreement.  In the event
of:

            

    

     

    
      	
              (a)  

            	
              the
      Loan Agreement now being or later becoming, with immediate or
      retrospective effect, void, illegal, unenforceable or otherwise invalid
      for any other reason whatsoever, whether of a similar kind or not;
      or

            

    

     

    
      	
              (b)  

            	
              without
      limiting the scope of paragraph (a),  bankruptcy of the
      Borrower, the introduction of any law or any other matter resulting in the
      Borrower being discharged from liability under the Loan Agreement, or the
      Loan Agreement ceasing to operate (for example, by interest ceasing to
      accrue);

            

    

     

    this
Guarantee shall cover any amount which would have been or become payable under
or in connection with the Loan Agreement if the Loan Agreement had been and
remained entirely valid, legal and enforceable, or the Borrower had not suffered
bankruptcy, or any combination of such events or circumstances, as the case may
be, and the Borrower had remained fully liable under it for liabilities whether
invalidly incurred or validly incurred but subsequently retrospectively
invalidated;  and references in this Guarantee to amounts payable by
the Borrower under or in connection with the Loan Agreement shall include
references to any amount which would have so been or become payable as
aforesaid.

    

    
      	
              17.2  

            	
              Invalidity of Finance
      Documents.  Clause 17.1 also applies to each of the other
      Finance Documents to which the Borrower is a
  party.

            

    

     

    
      	
              18  

            	
              GOVERNING
      LAW AND JURISDICTION

            

    

     

    
      	
              18.1  

            	
              English
      law.  This Guarantee and any non-contractual obligations
      arising out of or in connection with it shall be governed by, and
      construed in accordance with, English
law.

            

    

     

    
      	
              18.2  

            	
              Exclusive English
      jurisdiction.  Subject to Clause 18.3, the courts of
      England shall have exclusive jurisdiction to settle any disputes which may
      arise out of or in connection with this
  Guarantee.

            

    

     

    
      	
              18.3  

            	
              Choice of forum for the
      exclusive benefit of the Lender.  Clause 18.2 is for the
      exclusive benefit of the Lender, which reserves the
  rights:

            

    

     

    
      	
              (a)  

            	
              to
      commence proceedings in relation to any matter which arises out of or in
      connection with this Guarantee in the courts of any country other than
      England and which have or claim jurisdiction to that matter;
      and

            

    

     

    
      	
              (b)  

            	
              to
      commence such proceedings in the courts of any such country or countries
      concurrently with or in addition to proceedings in England or without
      commencing proceedings in England.

            

    

     

    The
Guarantor shall not commence any proceedings in any country other than England
in relation to a matter which arises out of or in connection with this
Guarantee.

    

    
      	
              18.4  

            	
              Process
      agent.  The Guarantor irrevocably appoints James W.
      Bayley, its registered office for the time being, presently at Globe
      Maritime Limited, St. Magnus House, 5th
      Floor, 3 Lower Thames Street, London, EC3R R6HE, United Kingdom, to act as
      its agent to receive and accept on its behalf any process or other
      document relating to any proceedings in the English courts which are
      connected with this Guarantee.

            

    

     

    
      	
              18.5  

            	
              Lender’s rights
      unaffected.  Nothing in this Clause 18 shall exclude or
      limit any right which the Lender may have (whether under the law of any
      country, an international convention or otherwise) with regard to the
      bringing of proceedings, the service of process, the recognition or
      enforcement of a judgment or any similar or related matter in any
      jurisdiction.

            

    

     

    
      	
              18.6  

            	
              Meaning of
      “proceedings”.  In this Clause 18, “proceedings” means
      proceedings of any kind, including an application for a provisional or
      protective measure.

            

    

     

    THIS GUARANTEE has been
executed and delivered as a deed on the date stated at the beginning of this
Guarantee.

    

    
 

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXECUTION
PAGE

     

    

     

    

    

      
        	
                GUARANTOR

              	 
      	 
      
	 
      	 
      	 
      
	
                SIGNED SEALED AND
      DELIVERED

              	
                )

              	 
      
	
                by
      Christophil B. Costas

              	
                )

              	
                /s/
      Christophil B. Costas

              
	
                acting
      as lawfully appointed attorney of

              	
                )

              	 
      
	
                TBS
      International Public Limited Company

              	
                )

              	 
      
	
                in
      the presence of: 

              	
                )

              	
                /s/
      Lorraine Brown

              
	 
      	 
      	
                Lorraine
      Brown

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                LENDER

              	 
      	 
      
	 
      	 
      	 
      
	
                SIGNED
      by 

              	
                )

              	 
      
	
                for
      and on behalf of  

              	
                )

              	 
      
	
                Joh.
      Berenberg, Gossler & Co. KG

              	
                )

              	 
      
	
                in
      the presence of:

              	
                )Exhibit
10(iii)(l)

 

FHLMC Loan No.
504180630
Parktown Townhouses

MULTIFAMILY
NOTE

MULTISTATE – FIXED
RATE

(REVISION DATE 
2-15-2008)

 

	
US $5,121,000.00
	
Effective Date:  As of
March 11, 2010

FOR VALUE RECEIVED, the undersigned
(together with such party's or parties' successors and assigns,
"Borrower") jointly and severally (if more than one) promises to pay to
the order of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, the principal sum of Five Million One Hundred Twenty-One Thousand
and 00/100 Dollars (US $5,121,000.00), with interest on the unpaid
principal balance, as hereinafter provided.

1.                 
Defined Terms.  

(a)               
As used in this Note: 

"Base Recourse" means a
portion of the Indebtedness equal to zero percent (0%) of the original principal
balance of this Note.

"Business Day" means any day
other than a Saturday, a Sunday or any other day on which Lender or the national
banking associations are not open for business.

"Default Rate" means an annual
interest rate equal to four (4) percentage points above the Fixed Interest
Rate.  However, at no time will the Default Rate exceed the Maximum
Interest Rate.

"Fixed Interest Rate" means the
annual interest rate of six and forty-eight hundredths percent (6.48%).

"Installment Due Date" means,
for any monthly installment of interest only or principal and interest, the date
on which such monthly installment is due and payable pursuant to Section 3 of
this Note. The "First Installment Due Date" under this Note is May 1,
2010.  

"Lender" means the holder from
time to time of this Note.

"Loan" means the loan evidenced
by this Note.

"Maturity Date" means
the earlier of (i) January 1, 2021 (the "Scheduled Maturity
Date"), and (ii) the date on which the unpaid principal
balance of this Note becomes due and payable by acceleration or otherwise
pursuant to the Loan Documents or the exercise by Lender of any right or remedy
under any Loan Document. 

"Maximum Interest Rate" means
the rate of interest that results in the maximum amount of interest allowed by
applicable law. 

"Prepayment Premium Period"
means the period during which, if a prepayment of principal occurs, a prepayment
premium will be payable by Borrower to Lender.  The
Prepayment Premium Period is the period from and including the date of this Note
until but not including the first day of the Window Period.

"Security Instrument" means the
multifamily mortgage, deed to secure debt or deed of trust effective as of the
effective date of this Note, from Borrower to or for the benefit of Lender and
securing this Note.

"Treasury Security" means the
8.750% U.S. Treasury Security due August 15, 2020.

"Window Period" means the six
(6) consecutive calendar month period prior to the Scheduled Maturity
Date.

"Yield Maintenance Period"
means the period from and including the date of this Note until but not
including July 1, 2020. 

(b)              
Other capitalized terms used but not defined in this Note shall
have the meanings given to such terms in the Security Instrument.

2.                 
Address for Payment.  All payments due under this
Note shall be payable at 2010 Corporate Ridge, Suite 1000, McLean, Virginia
22102, or such other place as may be designated by Notice to Borrower from or on
behalf of Lender.

3.                 
Payments.  

(a)               
Interest will accrue on the outstanding principal balance of this
Note at the Fixed Interest Rate, subject to the provisions of Section 8 of this
Note.  

(b)              
Interest under this Note shall be computed, payable and allocated
on the basis of a 360-day year consisting of twelve 30-day months. 

(c)               
Unless disbursement of principal is made by Lender to Borrower on
the first day of a calendar month, interest for the period beginning on the date
of disbursement and ending on and including the last day of such calendar month
shall be payable by Borrower simultaneously with the execution of this Note.
 If disbursement of principal is made by Lender to Borrower on the first
day of a calendar month, then no payment will be due from Borrower at the time
of the execution of this Note.  The Installment Due Date for the first
monthly installment payment under Section 3(d) of interest only or principal and
interest, as applicable, will be the First Installment Due Date set forth in
Section 1(a) of this Note.  Except as provided in this Section 3(c) and in
Section 10, accrued interest will be payable in arrears. 

(d)              
Beginning on the First Installment Due Date, and continuing until
and including the monthly installment due on the Maturity Date, principal and
accrued interest shall be payable by Borrower in consecutive monthly
installments due and payable on the first day of each calendar month.  The
amount of the monthly installment of principal and interest payable pursuant to
this Section 3(d) on an Installment Due Date shall be Thirty-Two Thousand Three
Hundred and 88/100 Dollars ($32,300.88).

(e)               
All remaining Indebtedness, including all principal and interest,
shall be due and payable by Borrower on the Maturity Date.

(f)                
All payments under this Note shall be made in immediately
available U.S. funds.

(g)               
Any regularly scheduled monthly installment of interest only or
principal and interest payable pursuant to this Section 3 that is received
by Lender before the date it is due shall be deemed to have been received on the
due date for the purpose of calculating interest due.

(h)               
Any accrued interest remaining past due for 30 days or more, at
Lender's discretion, may be added to and become part of the unpaid principal
balance of this Note and any reference to "accrued interest" shall refer to
accrued interest which has not become part of the unpaid principal
balance.  Any amount added to principal pursuant to the Loan Documents
shall bear interest at the applicable rate or rates specified in this Note and
shall be payable with such interest upon demand by Lender and absent such
demand, as provided in this Note for the payment of principal and
interest.    

4.                 
Application of Payments.  If at any time Lender
receives, from Borrower or otherwise, any amount applicable to the Indebtedness
which is less than all amounts due and payable at such time, Lender may apply
the amount received to amounts then due and payable in any manner and in any
order determined by Lender, in Lender's discretion.  Borrower agrees that
neither Lender's acceptance of a payment from Borrower in an amount that is less
than all amounts then due and payable nor Lender's application of such payment
shall constitute or be deemed to constitute either a waiver of the unpaid
amounts or an accord and satisfaction.

5.                 
Security.  The Indebtedness is secured by, among
other things, the Security Instrument, and reference is made to the Security
Instrument for other rights of Lender as to collateral for the
Indebtedness.

6.                 
Acceleration.  If an Event of Default has occurred
and is continuing, the entire unpaid principal balance, any accrued interest,
any prepayment premium payable under Section 10, and all other amounts
payable under this Note and any other Loan Document, shall at once become due
and payable, at the option of Lender, without any prior notice to Borrower
(except if notice is required by applicable law, then after such notice). 
Lender may exercise this option to accelerate regardless of any prior
forbearance.  For purposes of exercising such option, Lender shall
calculate the prepayment premium as if prepayment occurred on the date of
acceleration.  If prepayment occurs thereafter, Lender shall recalculate
the prepayment premium as of the actual prepayment date.

7.                 
Late Charge.

(a)               
If any monthly installment of interest or principal and interest
or other amount payable under this Note or under the Security Instrument or any
other Loan Document is not received in full by Lender within ten (10) days after
the installment or other amount is due, counting from and including the date
such installment or other amount is due (unless applicable law requires a longer
period of time before a late charge may be imposed, in which event such longer
period shall be substituted), Borrower shall pay to Lender, immediately and
without demand by Lender, a late charge equal to five percent (5%) of such
installment or other amount due (unless applicable law requires a lesser amount
be charged, in which event such lesser amount shall be substituted). 

(b)              
Borrower acknowledges that its failure to make timely payments
will cause Lender to incur additional expenses in servicing and processing the
Loan and that it is extremely difficult and impractical to determine those
additional expenses.  Borrower agrees that the late charge payable pursuant
to this Section represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
expenses Lender will incur by reason of such late payment.  The late charge
is payable in addition to, and not in lieu of, any interest payable at the
Default Rate pursuant to Section 8.

8.                 
Default Rate.  

(a)               
So long as (i) any monthly installment under this Note
remains past due for thirty (30) days or more or (ii) any other Event of
Default has occurred and is continuing, then notwithstanding anything in Section
3 of this Note to the contrary, interest under this Note shall accrue on the
unpaid principal balance from the Installment Due Date of the first such unpaid
monthly installment or the occurrence of such other Event of Default, as
applicable, at the Default Rate.  

(b)              
From and after the Maturity Date, the unpaid principal balance
shall continue to bear interest at the Default Rate until and including the date
on which the entire principal balance is paid in full.  

(c)               
Borrower acknowledges that (i) its failure to make timely
payments will cause Lender to incur additional expenses in servicing and
processing the Loan, (ii) during the time that any monthly installment
under this Note is delinquent for thirty (30) days or more, Lender will incur
additional costs and expenses arising from its loss of the use of the money due
and from the adverse impact on Lender's ability to meet its other obligations
and to take advantage of other investment opportunities; and (iii)  it is
extremely difficult and impractical to determine those additional costs and
expenses.  Borrower also acknowledges that, during the time that any
monthly installment under this Note is delinquent for thirty (30) days or more
or any other Event of Default has occurred and is continuing, Lender's risk of
nonpayment of this Note will be materially increased and Lender is entitled to
be compensated for such increased risk.  Borrower agrees that the increase
in the rate of interest payable under this Note to the Default Rate represents a
fair and reasonable estimate, taking into account all circumstances existing on
the date of this Note, of the additional costs and expenses Lender will incur by
reason of the Borrower's delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquent loan.

9.                 
Limits on Personal Liability. 

(a)               
Except as otherwise provided in this Section 9, Borrower
shall have no personal liability under this Note, the Security Instrument or any
other Loan Document for the repayment of the Indebtedness or for the performance
of any other obligations of Borrower under the Loan Documents and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and to any other collateral held by Lender as security
for the Indebtedness.  This limitation on Borrower's liability shall not
limit or impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any other obligations of Borrower.

(b)              
Borrower shall be personally liable to Lender for the amount of
the Base Recourse, plus any other amounts for which Borrower has personal
liability under this Section 9. 

(c)               
In addition to the Base Recourse, Borrower shall be personally
liable to Lender for the repayment of a further portion of the Indebtedness
equal to any loss or damage suffered by Lender as a result of the occurrence of
any of the following events:

(i)                 
Borrower fails to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of the
Security Instrument and the amount of all security deposits collected by
Borrower from tenants then in residence.  However, Borrower will not be
personally liable for any failure described in this subsection (i) if
Borrower is unable to pay to Lender all Rents and security deposits as required
by the Security Instrument because of a valid order issued in a bankruptcy,
receivership, or similar judicial proceeding.

(ii)               
Borrower fails to apply all insurance proceeds and condemnation
proceeds as required by the Security Instrument.  However, Borrower will
not be personally liable for any failure described in this subsection (ii)
if Borrower is unable to apply insurance or condemnation proceeds as required by
the Security Instrument because of a valid order issued in a bankruptcy,
receivership, or similar judicial proceeding.

(iii)              
Borrower fails to comply with Section 14(g) or (h) of the
Security Instrument relating to the delivery of books and records, statements,
schedules and reports.  

(iv)             
Borrower fails to pay when due in accordance with the terms of the
Security Instrument the amount of any item below marked "Deferred";
provided however, that if no item is marked "Deferred", this
Section 9(c)(iv) shall be of no force or effect.   

[Deferred]       
Hazard Insurance premiums or other insurance premiums,

[Deferred]       
Taxes, 

[Deferred]       
water and sewer charges (that could become a lien on the Mortgaged
Property),

[N/A]  
            ground rents,

[Deferred]       
assessments or other charges (that could become a lien on the Mortgaged
Property)

(d)              
In addition to the Base Recourse, Borrower shall be personally
liable to Lender for:

(i)                 
the performance of all of Borrower's obligations under
Section 18 of the Security Instrument (relating to environmental
matters);

(ii)               
the costs of any audit under Section 14(g) of the Security
Instrument; and 

(iii)              
any costs and expenses incurred by Lender in connection with the
collection of any amount for which Borrower is personally liable under this
Section 9, including Attorneys' Fees and Costs and the costs of conducting
any independent audit of Borrower's books and records to determine the amount
for which Borrower has personal liability.

(e)               
All payments made by Borrower with respect to the Indebtedness and
all amounts received by Lender from the enforcement of its rights under the
Security Instrument and the other Loan Documents shall be applied first to the
portion of the Indebtedness for which Borrower has no personal liability.

(f)                
Notwithstanding the Base Recourse, Borrower shall become
personally liable to Lender for the repayment of all of the Indebtedness upon
the occurrence of any of the following Events of Default: 

(i)                 
Borrower's ownership of any property or operation of any business
not permitted by Section 33 of the Security Instrument;

(ii)               
a Transfer (including, but not limited to, a lien or encumbrance)
that is an Event of Default under Section 21 of the Security Instrument,
other than a Transfer consisting solely of the involuntary removal or
involuntary withdrawal of a general partner in a limited partnership or a
manager in a limited liability company; or 

(iii)              
fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.

(g)               
To the extent that Borrower has personal liability under this
Section 9, Lender may exercise its rights against Borrower personally
without regard to whether Lender has exercised any rights against the Mortgaged
Property or any other security, or pursued any rights against any guarantor, or
pursued any other rights available to Lender under this Note, the Security
Instrument, any other Loan Document or applicable law.  To the fullest
extent permitted by applicable law, in any action to enforce Borrower's personal
liability under this Section 9, Borrower waives any right to set off the
value of the Mortgaged Property against such personal liability.

10.             
Voluntary and Involuntary Prepayments.

(a)               
Any receipt by Lender of principal due under this Note prior to
the Maturity Date, other than principal required to be paid in monthly
installments pursuant to Section 3, constitutes a prepayment of principal
under this Note.  Without limiting the foregoing, any application by
Lender, prior to the Maturity Date, of any proceeds of collateral or other
security to the repayment of any portion of the unpaid principal balance of this
Note constitutes a prepayment under this Note. 

(b)              
Borrower may voluntarily prepay all of the unpaid principal
balance of this Note on an Installment Due Date so long as Borrower designates
the date for such prepayment in a Notice from Borrower to Lender given at least
30 days prior to the date of such prepayment.  If an Installment Due Date
(as defined in Section 1(a)) falls on a day which is not a Business Day, then
with respect to payments made under this Section 10 only, the term "Installment
Due Date" shall mean the Business Day immediately preceding the scheduled
Installment Due Date.

(c)               
Notwithstanding subsection (b) above, Borrower may voluntarily
prepay all of the unpaid principal balance of this Note on a Business Day other
than an Installment Due Date if Borrower provides Lender with the Notice set
forth in subsection (b) and meets the other requirements set forth in this
subsection.  Borrower acknowledges that Lender has agreed that Borrower may
prepay principal on a Business Day other than an Installment Due Date only
because Lender shall deem any prepayment received by Lender on any day other
than an Installment Due Date to have been received on the Installment Due Date
immediately following such prepayment and Borrower shall be responsible for all
interest that would have been due if the prepayment had actually been made on
the Installment Due Date immediately following such prepayment.

(d)              
Unless otherwise expressly provided in the Loan Documents,
Borrower may not voluntarily prepay less than all of the unpaid principal
balance of this Note.  In order to voluntarily prepay all or any part of
the principal of this Note, Borrower must also pay to Lender, together
with the amount of principal being prepaid, (i) all accrued and unpaid
interest due under this Note, plus (ii) all other sums due to Lender at the
time of such prepayment, plus (iii) any prepayment premium calculated
pursuant to Section 10(e).

(e)               
Except as provided in Section 10(f), a prepayment premium shall be
due and payable by Borrower in connection with any prepayment of principal under
this Note during the Prepayment Premium Period.  The prepayment premium
shall be computed as follows:

(i)                 
For any prepayment made during the Yield Maintenance Period, the
prepayment premium shall be whichever is the greater of subsections (A) and (B)
below:

(A)             
1.0% of the amount of principal being prepaid; or 

(B)             
the product obtained by multiplying:

(1)              
the amount of principal being prepaid or accelerated, 

by

(2)              
the excess (if any) of the Monthly Note Rate over the Assumed
Reinvestment Rate, 

by

(3)              
the Present Value Factor.

For purposes of subsection (B),
the following definitions shall apply:

Monthly Note Rate:one-twelfth (1/12) of the Fixed
Interest Rate, expressed as a decimal calculated to five digits.

Prepayment Date:  in the case of a voluntary
prepayment, the date on which the prepayment is made; in the case of the
application by Lender of collateral or security to a portion of the principal
balance, the date of such application.

Assumed Reinvestment
Rate: 
one-twelfth (1/12) of the yield rate, as of the close of the trading session
which is 5 Business Days before the Prepayment Date, on the Treasury Security,
as reported in The Wall Street Journal, expressed as a decimal calculated
to five digits.  In the event that no yield is published on the applicable
date for the Treasury Security, Lender, in its discretion, shall select the
non-callable Treasury Security maturing in the same year as the Treasury
Security with the lowest yield published in The Wall Street Journal as of
the applicable date.  If the publication of such yield rates in The Wall
Street Journal is discontinued for any reason, Lender shall select a
security with a comparable rate and term to the Treasury Security.  The
selection of an alternate security pursuant to this Section shall be made
in Lender’s discretion.

Present Value Factor: 
the factor that
discounts to present value the costs resulting to Lender from the difference in
interest rates during the months remaining in the Yield Maintenance Period,
using the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:

 

 [1-{1/(1+ARR)}n]/ARR

 

n= the number of months remaining in
Yield Maintenance Period; provided, however, if a prepayment occurs on an
Installment Due Date, then the number of months remaining in the Yield
Maintenance Period shall be calculated beginning with the
month in which such prepayment occurs and if such prepayment occurs on a
Business Day other than an Installment Due Date, then the number of months
remaining in the Yield Maintenance Period shall be calculated beginning with the
month immediately following the date of such prepayment.

ARR = Assumed Reinvestment Rate

(ii)               
For any prepayment made after the expiration of the Yield
Maintenance Period but during the remainder of the Prepayment Premium Period,
the prepayment premium shall be 1.0% of the amount of principal being
prepaid.

(f)                
Notwithstanding any other provision of this Section 10, no
prepayment premium shall be payable with respect to (i) any prepayment made
during the Window Period, or (ii) any prepayment occurring as a result of
the application of any insurance proceeds or condemnation award under the
Security Instrument.

(g)               
Unless Lender agrees otherwise in writing, a permitted or required
prepayment of less than the unpaid principal balance of this Note shall not
extend or postpone the due date of any subsequent monthly installments or change
the amount of such installments. 

(h)               
Borrower recognizes that any prepayment of any of the unpaid
principal balance of this Note, whether voluntary or involuntary or resulting
from an Event of Default by Borrower, will result in Lender's incurring loss,
including reinvestment loss, additional expense and frustration or impairment of
Lender's ability to meet its commitments to third parties.  Borrower agrees
to pay to Lender upon demand damages for the detriment caused by any prepayment,
and agrees that it is extremely difficult and impractical to ascertain the
extent of such damages.  Borrower therefore acknowledges and agrees that
the formula for calculating prepayment premiums set forth in this Note
represents a reasonable estimate of the damages Lender will incur because of a
prepayment.  Borrower further acknowledges that the prepayment premium
provisions of this Note are a material part of the consideration for the Loan,
and that the terms of this Note are in other respects more favorable to Borrower
as a result of the Borrower's voluntary agreement to the prepayment premium
provisions. 

11.             
Costs and Expenses.  To the fullest extent allowed
by applicable law, Borrower shall pay all expenses and costs, including
Attorneys' Fees and Costs incurred by Lender as a result of any default under
this Note or in connection with efforts to collect any amount due under this
Note, or to enforce the provisions of any of the other Loan Documents, including
those incurred in post-judgment collection efforts and in any bankruptcy
proceeding (including any action for relief from the automatic stay of any
bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.

12.             
Forbearance.  Any forbearance by Lender in
exercising any right or remedy under this Note, the Security Instrument, or any
other Loan Document or otherwise afforded by applicable law, shall not be a
waiver of or preclude the exercise of that or any other right or remedy. 
The acceptance by Lender of any payment after the due date of such payment, or
in an amount which is less than the required payment, shall not be a waiver of
Lender's right to require prompt payment when due of all other payments or to
exercise any right or remedy with respect to any failure to make prompt
payment.  Enforcement by Lender of any security for Borrower's obligations
under this Note shall not constitute an election by Lender of remedies so as to
preclude the exercise of any other right or remedy available to Lender.

13.             
Waivers.  Borrower and all endorsers and
guarantors of this Note and all other third party obligors waive presentment,
demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment
or maturity, presentment for payment, notice of nonpayment, grace, and diligence
in collecting the Indebtedness.

14.             
Loan Charges (Texas Only). 
Borrower and Lender intend at all times to comply with the law of the State of
Texas governing the Maximum Interest Rate or the maximum amount of interest
payable on or in connection with this Note and the Indebtedness (or applicable
United States federal law to the extent that it permits Lender to contract for,
charge, take, reserve or receive a greater amount of interest than under Texas
law).  If the applicable law is ever judicially interpreted so as to render
usurious any amount payable under this Note or under any other Loan Document, or
contracted for, charged, taken, reserved or received with respect to the
Indebtedness, or as a result of acceleration of the maturity of this Note, or if
any prepayment by Borrower results in Borrower having paid any interest in
excess of that permitted by any applicable law, then Borrower and Lender
expressly intend that all excess amounts collected by Lender shall be applied to
reduce the unpaid principal balance of this Note (or, if this Note has been or
would thereby be paid in full, shall be refunded to Borrower), and the
provisions of this Note, the Security Instrument and any other Loan Documents
immediately shall be deemed reformed and the amounts thereafter collectible
under this Note or any other Loan Document reduced, without the necessity of the
execution of any new documents, so as to comply with any applicable law, but so
as to permit the recovery of the fullest amount otherwise payable under this
Note or any other Loan Document.  The right to accelerate the Maturity Date
of this Note does not include the right to accelerate any interest, which has
not otherwise accrued on the date of such acceleration, and Lender does not
intend to collect any unearned interest in the event of acceleration.  All
sums paid or agreed to be paid to Lender for the use, forbearance or detention
of the Indebtedness shall, to the extent permitted by any applicable law, be
amortized, prorated, allocated and spread throughout the full term of the
Indebtedness until payment in full so that the rate or amount of interest on
account of the Indebtedness does not exceed the applicable usury ceiling. 
Notwithstanding any provision contained in this Note, the Security Instrument or
any other Loan Document that permits the compounding of interest, including any
provision by which any accrued interest is added to the principal amount of this
Note, the total amount of interest that Borrower is obligated to pay and Lender
is entitled to receive with respect to the Indebtedness shall not exceed the
amount calculated on a simple (i.e., non-compounded) interest basis at
the maximum rate on principal amounts actually advanced to or for the account of
Borrower, including all current and prior advances and any advances made
pursuant to the Security Instrument or other Loan Documents (such as for the
payment of taxes, insurance premiums and similar expenses or costs).

15.             
Commercial Purpose.  Borrower represents that
Borrower is incurring the Indebtedness solely for the purpose of carrying on a
business or commercial enterprise, and not for personal, family, household, or
agricultural purposes.

16.             
Counting of Days.  Except where otherwise
specifically provided, any reference in this Note to a period of "days" means
calendar days, not Business Days.

17.             
Governing Law.  This Note shall be governed by the
law of the Property Jurisdiction.

18.             
Captions.  The captions of the Sections of
this Note are for convenience only and shall be disregarded in construing this
Note.

19.             
Notices; Written Modifications.  

(a)               
All Notices, demands and other communications required or
permitted to be given pursuant to this Note shall be given in accordance with
Section 31 of the Security Instrument.  

(b)              
Any modification or amendment to this Note shall be ineffective
unless in writing signed by the party sought to be charged with such
modification or amendment; provided, however, in the
event of a Transfer under the terms of the Security Instrument that requires
Lender's consent, any or some or all of the Modifications to Multifamily Note
set forth in Exhibit A to this Note may be modified or rendered void by
Lender at Lender's option, by Notice to Borrower and the transferee, as a
condition of Lender's consent.

20.             
Consent to Jurisdiction and Venue.  Borrower
agrees that any controversy arising under or in relation to this Note may be
litigated in the Property Jurisdiction.  The state and federal courts and
authorities with jurisdiction in the Property Jurisdiction shall have
jurisdiction over all controversies that shall arise under or in relation to
this Note.  Borrower irrevocably consents to service, jurisdiction, and
venue of such courts for any such litigation and waives any other venue to which
it might be entitled by virtue of domicile, habitual residence or
otherwise.  However, nothing in this Note is intended to limit any right
that Lender may have to bring any suit, action or proceeding relating to matters
arising under this Note in any court of any other jurisdiction.

21.             
WAIVER OF TRIAL BY JURY.  BORROWER AND LENDER EACH
(A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING
OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER
THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR
IN THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN
BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL
COUNSEL. 

22.             
State-Specific Provisions.  N/A.

ATTACHED EXHIBIT.  The Exhibit noted below, if
marked with an "X" in the space provided, is attached to this Note: 

	
X
	
 
	
Exhibit A
	
Modifications to Multifamily
Note

IN WITNESS WHEREOF, and in consideration of the Lender's
agreement to lend Borrower the principal amount set forth above, Borrower has
signed and delivered this Note under seal or has caused this Note to be signed
and delivered under seal by its duly authorized representative.

SHELTER
PROPERTIES II LIMITED PARTNERSHIP, a South Carolina limited
partnership

 

By:  Shelter Realty II
Corporation, a South Carolina corporation, its general partner

 

 

 

By: /s/Patti K.
Fielding

Patti K. Fielding

Executive Vice President and
Treasurer

 

 

 

 

 

 

 

 

PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE
CORPORATION, WITHOUT RECOURSE.

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association

 

 

 

By:  /s/Christian Adrian

Christian Adrian

Assistant Vice President

 

 

 

 

 

 

FHLMC Loan No.
504180630

 

EXHIBIT A

 

MODIFICATIONS TO MULTIFAMILY
NOTE

 

 

The following modifications are made to the text of the
Note that precedes this Exhibit.

 

I.         
Transaction Specific Modification

 

1.        
Paragraph 9 of the Note is modified to add the following to subsection 9(d)(i)
before the semi-colon:

 

"and
under Section 17 of the Security Instrument relating to galvanized steel piping/polybutylene piping; as well
as for any costs, loss or damage incurred or suffered by Lender as a result of
the existence at the Mortgaged Property of galvanized
steel piping/polybutylene piping, such loss or damage to include the cost
of replacing all such piping and the cost of repairing any damage associated
with the leaks in or other failure of any galvanized
steel piping/polybutylene piping"

 

II.        AIMCO
Standard Modifications

 

1.   Intentionally
Deleted.

 

2.     
The following
definition is added to Section 1(a) of this Note:

”Prime Rate” means the rate
of interest announced by The Wall Street Journal from time to time as the
“Prime Rate”.

 

3.   The second sentence of
Section 9(c)(i) is deleted and replaced with the following:

 

           
However, Borrower will not be personally liable for any failure described in
this subsection (i) if Borrower is unable to pay to Lender all Rents and
security deposits as required by the Security Instrument (a) because of a valid
order issued in a bankruptcy, receivership, or similar judicial proceeding, or
(b) if such funds have been applied by Borrower as required or permitted by the
Security Instrument prior to the occurrence of an Event of Default.

 

4.   Section 19(b) of this
Note is modified by deleting: “provided, however, in the event of a Transfer
under the terms of the Security Instrument that requires Lender's consent, any
or some or all of the Modifications to Multifamily Note set forth in
Exhibit A to this Note may be modified or rendered void by Lender at
Lender's option, by Notice to Borrower and the transferee, as a condition of
Lender's consent” in the last sentence of the Section; and by adding the
following new sentence: 

 

           
The Modifications to Multifamily Note set forth in this Exhibit A shall be null
and void unless title to the Mortgaged Property is vested in an entity whose
Controlling Interest(s) are directly or indirectly held by
AIMCO REIT or AIMCO OP.  The capitalized terms used in this Section are
defined in the Security Instrument.

5.     
Section 20 of this
Note is deleted and replaced with the following:

 

20.      
Consent to Jurisdiction and Venue.  Borrower agrees that any
controversy arising under or in relation to this Note shall be litigated
exclusively in the jurisdiction in which the Land is located (the "Property
Jurisdiction").  The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over
all controversies which shall arise under or in relation to this Note. 
Borrower irrevocably consents to service, jurisdiction, and venue of such courts
for any such litigation and waives any other venue to which it might be entitled
by virtue of domicile, habitual residence or otherwise.

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