CONTRIBUTION AGREEMENT

among

PENNROSE GP, LLC and RALPH A. FALBO, INC.as General Partners

and

NORTH HILLS HOUSING II, LP,as the Project Partnership

and

COLTON ENTERPRISES, INC.,as the Investor

Property: North Hills Highlands Phase IIRoss Township, Pennsylvania

Dated: As ofApril~ ,2010

TABLE OF CONTENTS

CONTRIBUTION AGREEMENT 1

1. Acquisition ofAcquired Interest; Approvals 3

2. Contribution 4

3. Representations, Warranties and Agreements 5

4. The Closing; Documents to be Delivered 15

5. Note Payment Conditions; Documents to be Delivered 17

6. Broker's Commission; Indemnity 24

7. Taxes 22

8. Notices 22

9. Applicable Law 22

10. Binding Effect; Enforcement ~ 23

11. Indemnification 23

12. Liability of a Partner of Investor 23

13. Miscellaneous 23

CONTRIBUTION AGREEMENT

~ THIS CONTRIBUTION AGREEMENT ("Agreement") entered into as of the~ day ofApril, 2010 (the "Closing Date"), by and among COLTONENTERPRISES, INC., aPennsylvania corporation, as Limited Partner (together with any person or entity designated by itto acquire all or any portion of the Acquired Interest (as hereinafter defined) and any assigneesthereofbeing hereinafter referred to collectively as "Investor") and PENNROSE GP, LLC, aPennsylvania limited liability company ("Pennrose"), RALPH A. FALBO, INC., a Pennsylvaniacorporation ("Falbo," which, together with Pennrose is referred to herein as the "GeneralPartner" or ifmore than one, "General Partners") ofNORTH HILLS HOUSING II, LP, aPennsylvania Limited Partnership (the "Project Partnership" or "Partnership"), and thePROJECT PARTNERSHIP.

A. WHEREAS, the General Partner is the only general partner of the ProjectPartnership, and the Limited Partner (as hereinafter defined) are the only Limited Partner oftheProject Partnership;

B. WHEREAS, the Project Partnership has acquired, subject to the PermittedEncumbrances (as hereinafter defined), a leasehold simple interest in that certain real propertydescribed in Exhibit A-I annexed hereto (the "Leased Premises") located in Ross Township,Pennsylvania, on which the Project Partnership plans to construct 37 affordable residential rentalunits (as defined in the Amended Partnership Agreement, as hereinafter defined) and low incometax credit units (the "Construction") (the 37 units being constructed being hereinafter referred toas the "Improvements"; the leasehold interest in the Leased Premises, along with theImprovements, together with all related facilities, fixtures and personal property, beingcollectively referred to as the "Property");

C. WHEREAS, the Construction (the "Development") will proceed inaccordance with the plans and specifications described in Exhibit A-2 annexed hereto (the "Plansand Specifications") and pursuant to certain agreements with an architect (the "ProjectArchitect"), a general construction contractor (Lhe "Project Contractor") and related constructionprofessionals, contractors and subcontractors, true, correct and complete copies ofwhichagreements are annexed hereto as Schedule I (the "Construction Agreements");

D. WHEREAS, in connection with the Construction, the Project Partnershipwill enter into certain leasehold mortgages and certain other agreements relating to the Property,executed by and with (i) Allegheny County Department ofEconomic Development ("ACDED")with respect to a mortgage loan ofHOME Funds in the aggregate principal amount of$1,675,482 (the "ACDED Loan"), (ii) the Pennsylvania Housing Finance Agency ("PHFA")with respect to a $1,578,290 loan from the Tax Credit Assistance Program (the "PHFA Loan"),(iii) the Allegheny County Housing Authority ("ACHA") with respect to a $844,200 loan ofReplacement Housing Factor Funds (the "ACHA Loan"), as such loans are described in RecitalF hereof; the ACDED, ACHA and PHFA and any other third party lender holding a mortgage onthe Property shall be referred to as the "Lenders" or the "Lender"), which relate to the financing

of the Property, true and complete copies ofwhich documents are annexed hereto as Schedule 2~

1 (the "Loan Documents" which are collectively referred to as the "Mortgages");

E. WHEREAS, in connection with the development and financing oftheProperty, the Project Partnership (i) has entered or will enter into certain other agreements withthe City and/or other Federal, state, city or local governmental agencies (collectively referred toas the "Governmental Agencies"), including, without limitation, certain agreements with RossTownship, Pennsylvania and other Governmental Agencies with respect to certain payments inlieu of taxes (the "Tax Exemption Agreements") with respect to the Property, true, correct andcomplete copies ofwhich agreements are annexed hereto as Schedule 2~2(collectively, the"Governmental Agreements" which together with the Mortgages, are collectively referred to asthe "Loan Documents") and (iii) has entered into a Development Services Agreement withPennrose Properties, LLC and Ralph A. Falbo, Inc. (collectively, the "Developer"), a copy ofwhich is annexed hereto at Schedule 2-4 (the "Development Agreement").

F. WHEREAS, as ofthe date hereof, the Property and financing therefor areas follows:

Name And Address of Property:

Lender:

Principal Amount:

Interest Rate:

Maturity Date:

Lender:

Principal Amount:

Interest Rate:

Maturity Date:

Lender:

Principal Amount:

Interest Rate:

Maturity Date:

2

North Hills Highlands Phase 2, Ross Township,Pennsylvania

PHFA

$1,578,290 Tax Credit Assistance Program("TCAP") loan (first lien priorityconstruction/permanent)

0%

30 years after construction completionACDED (second lien priorityconstruction/permanent loan)

$1,675,482

.01%

31 years from the date of construction completion

ACHA

$844,200 (third lien priority)

The applicable federal rate

40 years from the first day of the month followingconstruction completion

G. WHEREAS, the Partnership has obtained, at the expense of the GeneralPartner, a conditional reservation (the "Credit Letter") and a Carryover Allocation Agreement(the "Allocation") of at least $581,415 of Credits from PHFA's 2009 authority, the appropriatestate or local authority under Section 42(h) ofthe Code.

H. WHEREAS, the Investor has been organized for the purpose of acquiringLimited Partnership interests in Limited Partnerships owning housing projects which qualify forlow income housing credits under Section 42 of the Internal Revenue Code of 1986, as amended(the "Code");

1. WHEREAS, the Investor desires to acquire an interest in the ProjectPartnership equal to the Acquired Interest. The "Acquired Interest" is that Limited Partnershipinterest in the Project Partnership which the Amended Partnership Agreement (as hereinafterdefined) reflects as being owned by the "Investor Limited Partner" (as defined in suchagreement); and

J. WHEREAS, the Project Partnership was formed pursuant to an Agreementof Limited Partnership (the "Limited Partnership Agreement") and the Certificate of LimitedPartnership ofthe Project Partnership (the "Limited Partnership Certificate"), copies ofwhichare annexed hereto as Exhibits B-1 and B-2, respectively. The Limited Partnership Agreementshall be amended and restated on the Closing Date substantially in the form ofthe Amended andRestated Agreement of Limited Partnership (the "Amended Partnership Agreement") annexedhereto as Exhibit C.

K. WHEREAS, on the Closing Date, pursuant to the Amended PartnershipAgreement, the Investor shall be admitted to the Project Partnership as substitute limited partnerand a owning the Acquired Interest. (The Investor, is sometimes referred to herein as the"Limited Partner"). The Limited Partner and the General Partner are herein sometimescollectively referred to as the "Partners."

NOW, THEREFORE, in consideration of the mutual covenants and agreementsherein contained and other good and valuable consideration, the receipt and sufficiency ofwhichare hereby acknowledged, the pWlies hereto agree as follows:

1. Acquisition ofAcquired Interest; Approvals.

(a) (i) On the terms and subject to the conditions set forth in thisAgreement and in the Amended Partnership Agreement, the Investor hereby acquires itsportion of the Acquired Interest.

(ii) As of the date hereof, the Amended Partnership Agreement shall be dulyexecuted and delivered, and if required, an amendment to the Limited Partnership Certificatereflecting the same shall be filed promptly by the General Partner at the General Partner'sexpense in all appropriate government offices. The Amended Partnership Agreement shall, fromthe Closing Date, govern the relationship between the parties hereto and the General Partnershall exercise any and all rights in connection with the Acquired Interest in accordance with thedirections of the Investor.

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(iii) The General Partner expects, but makes no assurances, that there is areasonable possibility ofprofit and intends to take all action reasonably required for the ProjectPartnership to realize a profit.

(b) Both prior to or simultaneously with the Closing (as hereinafter. defined) hereunder, and prior to or simultaneously with the Note Payment Date (as hereinafterdefined), the General Partner shall have obtained, at General Partner's expense, all approvalsof the Governmental Agencies which may be required in connection with the transactionscontemplated by this Agreement and which are obtainable as of such date (the "GovernmentalApproval"), and the Investor shall have reasonably cooperated with the General Partner, at theInvestor's own expense, in obtaining the Governmental Approval.

2. Contribution.

(a) The contribution for the Acquired Interest (the "Contribution") shall be$4,185,351, payable by the Investor, in five (5) installments as follows:

(i) $1,255,000 (the "Initial Payment") on the Closing Date, bycertified or bank check, or by immediately available funds by wiretransfer payable to the person or entity designated as agent by theGeneral Partner; and

(ii) $800,000 (the "Second Installment Note Payment"), $620,000(the "Third Installment Note Payment"), $450,000 (the "FourthInstallment Note Payment") $580,000 (the "Fifth Installment NotePayment") and $480,351 (the "Final Installment Note Payment")by the Investor executing and delivering to General Partner apromissory note (the "Capital Note") in the aggregate amount of$2,930,351, as set forth in and in the form shown in the AmendedPartnership Agreement, payable to the person or entity designatedas agent by the General Partner upon satisfaction of the SecondInstallment Note Payment Conditions, the Third Installment NotePayment Conditions, the Fourth Installment Note PaymentConditions and the Final Installment Note Payments Conditions, asapplicable (as hereinafter defined).

(b) The Investor has obtained an engineering report for the Property from aqualified engineer, chosen by the Investor and obtained at the Investor's expense. TheGeneral Partner has obtained at its cost and expense a Phase I environmental study prepared inaccordance with ASTM standards satisfactory to the Investor and delivered a copy thereof tothe Investor.

(c) The cost in connection with Investor's acquisition of the AcquiredInterest with respect to any transfer fees or transfer taxes shall be borne by the GeneralPartner. In the event the transactions contemplated by this Agreement are not consummatedbecause of the actions of the General Partner or the inability of the General Partner to satisfyconditions to Closing set forth herein, in addition to all other fees payable by the General

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Partner as hereinafter provided, the General Partner shall pay for the Investor's legal fees upto $25,000.

3. Representations, Warranties and Agreements. The General Partner,Pennrose Properties, LLC, a Pennsylvania limited liability company ("PPL"), PennroseDevelopment, LLC, a Pennsylvania limited liability company ("PDL") (pPL, PDL, and,collectively with the General Partner, the "Warrantors"), hereby jointly and severally represent,warrant and agree that the recitals contained in paragraphs A-G and I.ofthe preamble to thisAgreement and the representations and warranties made in this Section 3 are and will be true andcorrect as of the Closing Date and the date payment ofthe Capital Note (i.e., the SecondInstallment Note Payment, the Third Installment Note Payment, the Fourth Installment NotePayment and the Final Installment Note Payment) is due, such dates sometimes being hereinafterreferred to, together, as the "Note Payment Date":

(a) The Project Partnership has good and clear leasehold title to theProperty, free from all easements, rights-of-way, liens, security interests, encumbrances anddefects ofany kind, except for those exceptions ("Permitted Encumbrances") set forth in thetitle policy of the Project Partnership attached hereto as Schedule 3. Except for the Property,the Project Partnership owns and will own no other property, tangible or intangible, real orpersonal. All real estate taxes, assessments, water and sewer charges and other municipalcharges with respect to the Property to the extent due and owing, have been paid in full.

(b) There are no contracts or agreements, written or oral, affecting theownership or operation of the Property except for the Loan Documents, the ProjectDocuments (as such terms are defined in the Amended Partnership Agreement), theManagement Agreement (as hereinafter defined), the Occupancy Agreements (as hereinafterdefined), the Development Agreement, the Construction Agreements and the PermittedEncumbrances; no party to any of such contracts or agreements is (or, with notice or thepassage of time or both, would be) in default thereunder and all conditions to the effectivenessor continuing effectiveness thereofrequired to be satisfied by the date hereof have beensatisfied. There is no contract or agreement, written or oral, which would prohibit theprepayment of the Mortgages or restrict the refinancing, sale or other disposition of theProperty, except as set forth in the Loan Documents, the Leased Premises Documents, theProject Documents, and the Permitted Encumbrances. Except for the ManagementAgreement and the Development Agreement, neither the General Partner nor an affiliate ofthe General Partner is a party to any contract or agreement with the Project Partnership.

(c) As of each Note Payment Date, there will be no leases or occupancyagreements affecting the Property or any part thereof except as set forth on the rent roll fortenants of individual apartment units comprising the Property ("Occupancy Agreements") tobe delivered to the Project Partnership on the Note Payment Date. On each Note PaymentDate, there will be no material defaults under any Occupancy Agreement and no rent dueunder any of such leases or occupancy rights will have been prepaid or concession made tothe tenant thereunder other than as set forth on said rent roll. Except as noted on said rent roll,all rents, security deposits, last month's rents, key deposits and other such funds charged orreceived by the Project Partnership from occupants ofthe Property will have been charged,collected and held in accordance with the provisions of all applicable laws, and any amounts

5

required to be returned to occupants will have been so returned. On each Note Payment Date,the Project Partnership will have performed all of its obligations required to such date underthe Occupancy Agreements.

(d) The information and copies set forth in Schedules 2-1, 2-2 and 2-3 as tothe Loan Documents, which information and copies shall, on each Note Payment Date, beupdated, are and will be true, complete and accurate. On each Note Payment Date: allpayments and other charges due under the Loan Documents will have been paid, except forthose payments for which failure to pay will not cause a default; no event ofdefault will havebeen declared and be continuing under any ofthe Loan Documents, and, to the best ofknowledge of the Warrantors, there is no default or state offacts or event which with notice orthe passage oftime, or both, would constitute a default under any of the Loan Documents; noperson or entity, including, but not limited to, the Project Partnership, the General Partner,affiliates of any ofthe foregoing or any party holding a partnership interest in the ProjectPartnership, is personally liable for, or is required hereafter to assume any liability under or inconnection with the Loan Documents in connection with the payment ofprincipal or interest;and consummation of the transactions contemplated by this Agreement will not permit anyparty to the Loan Documents to declare a default, to require payment of any penalty or othercharge, to alter, modify or amend any term thereof, or to impose any other requirement,restriction or charge ofany kind on the Property. The information and copies set forth inSchedule 2-4 as to the Development Agreement now is and will, on the Note Payment Date,be, true, complete and accurate; all payments and other charges due under the DevelopmentAgreement will be paid on each Note Payment Date (except to the extent provided in Section6.1 of the Amended Partnership Agreement); no event ofdefault will have been declared andbe continuing under the Development Agreement, and, to the best ofknowledge of theWarrantors there is no default or state of facts or event which with notice or the passage oftime, or both, would constitute a default under the Development Agreement.

(e) The General Partner hereby represents and warrants that there is nolitigation or claim pending or, to the best knowledge ofany of the General Partner, threatened,against or involving the Property or the Project Partnership or assets ofthe Project Partnership(except routine claims as to which the Project Partnership has sufficient insurance coverage)or the General Partner (to the extent that any such litigation would affect the Property, theProject Partnership or the General Partner's interest in the Project Partnership, or would havea material adverse effect on the General Partner's net worth), and, to the best knowledge ofthe General Partner, there are no facts or circumstances which could give rise to any suchclaim or litigation. The Project Partnership does not have any liabilities that are not disclosedin this Agreement or any Exhibit or Schedule attached hereto or any documents, Schedules orExhibits to be delivered on each Note Payment Date. The Project Partnership has received nonotice oftaking, condemnation, betterment or assessment, actual or proposed, with respect tothe Property; to the knowledge of the General Partner, no such taking, condemnation,betterment or assessment has occurred; and the General Partner has no reason to believe thatany such taking, condemnation, betterment or assessment has been proposed or is underconsideration.

(f) [Intentionally Omitted].

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(g) Attached hereto as Schedule 4 is a complete and current list of allinsurance policies maintained by the Project Partnership with respect to the Property or theoperation thereof, setting forth, with respect to each such policy: (i) the nature and extent ofthe coverage provided thereunder, including deductibles, (ii) the name of the insurancecompany which issued the same, (iii) the expiration date thereof, (iv) the total premiumspayable thereunder and (v) whether such premiums have been paid in full or are payable ininstallments and the next payment date thereof. The amount of insurance which will bemaintained by the Project Partnership against a casualty loss (as defined in Section 420)(4)(E)of the Code) with respect to the Property will be sufficient to permit a substantialreconstruction of the Property within a reasonable period oftime following any such casualty.Each of said policies is, and as of each Note Payment Date will be, in full force and effect, andall premiums due thereunder have been paid, and all premiums due thereunder as of theClosing Date and each Note Payment Date will have been paid at or prior to such date. Nonotice has been received by the General Partner from the insurance company which issued anyof such policies stating in effect that any of such policies is not in full force and effect, willnot be renewed or will be renewed only at a higher premium rate than is presently payabletherefor or only upon satisfaction of other specified conditions.

(h) The Premises have not been damaged by fire or other casualty.

(i) None of the Project Partnership, the General Partner, or the Property issubject to any outstanding agreement with any third party pursuant to which any such partyhas or may acquire any interest in the Property (other than the Occupancy Agreements, [thePurchase Option] and the Mortgages) or in the Project Partnership.

0) The identity of the management agent (the "Management Agent") thatthe General Partner has retained to manage the Property, together with a true, correct andcomplete copy ofthe management agreement (the "Management Agreement") is set forth inExhibitD.

(k) (i) Except for the conditions listed in the Phase I Environmental SiteAssessment, prepared by React Environmental Services Group, Inc. ("React"), dated October1, 2008, together with accompanying reports (collectively, the "Environmental Survey"), theProperty complies and as of each Note Payment Date: (A) the Property will comply with allapplicable laws, rules, restrictions, orders and regulations ofall governmental authorities, (B)all governmental certificates, authorizations, permits and licenses required in connection withthe Development and the operation and occupancy ofthe Improvements which are obtainableat the time in question (collectively, the "Governmental Permits") will have been obtained,and copies thereof have been delivered to Investor and will be attached hereto as Schedule 2­2., (C) the Improvements will lie within the perimeter of the Property, (D) the Property will beconstructed in accordance with the Plans and Specifications which have been prepared by theProject Architect, and (E) there will be no structural defects in the Property as completed andno violation of any requirement of any governmental authority will exist with respect to theImprovements, and the anticipated use and operation thereof complies with all applicablezoning, environmental and other laws, ordinances, regulations and restrictive covenants andeasements affecting the Property. To the best knowledge of the Warrantors, the Propertycomplies with all applicable laws, rules, restrictions, orders and regulations ofall

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governmental authorities and the Improvements will be constructed in accordance with allrestrictive covenants applicable thereto; there will be no structural defects in theImprovements, and if such defects or violations or non-compliance should become known toany ofthe Warrantors at any time, notwithstanding that such defects or violations or non­compliance relate to a condition existing prior to the Closing Date or each Note PaymentDate, the Warrantors agree that they, at their sole cost and expense, shall promptly remedysuch defects or cure such violations or non-compliance.

(ii) To the best knowledge of the Warrantors, the Property is not in violationofany federal, state or local law, ordinance or regulation, except for the conditions listed in theEnvironmental Survey, relating to the environmental conditions on, under or about the Property.Neither the General Partner, nor, to the best knowledge of the Warrantors, any third party hasused, generated, manufactured, stored or disposed of on, under or about the Property ortransported to or from the Property any flammable explosives, radioactive materials hazardouswastes, toxic substances or related materials ("Hazardous Materials"). For the purpose of thisSection 3(k)(ii), Hazardous Materials shall include, but not be limited to, substances defined as"hazardous substances," "hazardous materials," or "toxic substances" in the ComprehensiveEnvironmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.Section 9601 et seq.; the Hazardous Materials Transportation Act, 39 U.S.C. Section 1801 etseq.; the Resource Conservation and Recovery Act, 42, U.S.C. Section 6901 et seq.; allapplicable state and local laws; and in the regulations adopted and publications promulgatedpursuant to said laws. The Warrantors hereby agree to indemnify and hold harmless theInvestor, its partners, employees, and agents, and any successors to the Investor's interest in thechain of title to the Property, their directors, officers, partners, employees, and agents, from andagainst any and all liability (i) including all foreseeable damages, directly or indirectly arisingout of the use, generation, storage, or disposal ofHazardous Materials by the General Partner orany prior owner or operator of the Property, and (ii) including, without limitation, the cost of anyrequired or necessary repair, cleanup, or detoxification and the preparation ofany closure orother required plans, whether such action is required or necessary prior to or following transferoftitle to the Property, to the full extent that such action is attributable, directly or indirectly, tothe presence or use, generation, storage, release, threatened release, or disposal ofHazardousMaterials by any person on the Property prior thereto. The Warrantors fu...rther covenant that, theProject Partnership shall conduct sampling for radon at the Property after Completion, but beforeoccupancy ofthe Property, and, if radon is present at levels above 4.0 Pico Curies per liter of air,abatement measures shall be implemented at the Property. The Warrantors' obligations pursuantto the foregoing indemnity shall survive the Closing Date and each Note Payment Date.

(iii) The Warrantors covenant and agree that all construction and demolitiondebris resulting from the Development including that which may contain lead or lead-based

. paint, shall be sampled and analyzed for waste characterization purposes in compliance with allapplicable environmental laws, and that all construction and demolition debris thereafter shall beproperly disposed of off-site, in compliance with all applicable environmental laws.

(iv) The Warrantors covenant and agree that, prior to the Development, allbuilding surfaces at the Property which potentially contain asbestos or asbestos-containingmaterials ("ACM"), shall be sampled and analyzed for asbestos in compliance with applicableenvironmental laws. Any ACM identified at the Property which is required to be removed by

8

applicable environmental laws shall be handled, managed, removed and disposed ofoff-site,prior to the Development, in compliance with applicable environmental laws.

(v) The Warrantors covenant and agree that the general liability insurancepolicy and the property insurance policy of the Project Partnership shall not contain an exclusionfor loss or damage caused by mold, fungus, moisture, microbial contamination or pathogenicorganisms ("Mold Conditions") unless, based upon information provided by the General Partner,the Limited Partner shall have determined that either such insurance without the exclusions forMold Conditions is not affordable by the Project Partnership or is not available to the ProjectPartnership. Ifsuch insurance provides for such exclusions and the Limited Partner hasapproved such exclusions, unless waived by the Limited Partner in writing, the General Partnershall implement a moisture management and control program (the "Moisture ManagementProgram") for the Improvements at the Property to prevent the occurrence of Mold Conditionsat the Improvements at the Property. Any such Moisture Management Program shall include, ata minimum: (a) periodic inspections of the Improvements at the Property for Mold Conditions,(b)either (i) removing or cleaning up any Mold Conditions identified at the Improvements at theProperty, or (ii) ifMold Conditions identified at the Improvements at the Property cannot beremoved or cleaned from any impacted building materials (sh&, porous materials such ascarpeting, certain types of ceiling materials, etc.) and/or equipment, removing all such impactedbuilding materials and/or equipment from the Property, all in accordance with the procedures setforth in the United States Environmental Protection Agency's ("EPA") guide entitled "MoldRemediation in Schools and Commercial Buildings", EPA No. 402-K-OI-00l, dated March 2001or any update or successor guide thereto; and (c) and identifying and curing the source of theMold Conditions to prevent the occurrence or re-occurrence ofany Mold Conditions at theImprovements at the Property. The Investor acknowledge and agree that the General Partner'sproposed Moisture Management Program, if implemented by the General Partner with respect tothe Improvements at the Property, is sufficient to comply with the requirements ofthissubparagraph.

(vi) [Intentionally Omitted].

(1) To the best knowledge ofthe Warrantors, neither the General Partnernor the Project Partnership is in default with respect to any law, administrative rule,regulation, judgment, decision, order, writ, injunction, decree or demand of any court or anygovernmental authority, and the consummation of the transactions contemplated herein willnot conflict with, or constitute a breach of or default under, any ofthe foregoing or anyagreement or instrument applicable to the Project Partnership, the General Partner or theProperty. Notwithstanding the foregoing, if such a default shall become known to any of theWarrantors at any time, notwithstanding that such default relates to a condition existing priorto the Closing Date or the Note Payment Date, the General Partner and the Warrantors, jointlyand severally, agree that the General Partner and the Warrantor shall, at their sole cost andexpense, promptly remedy or cure such default.

(m) Annexed hereto as Schedule 5 is a true and correct copy ofthe budgetfor the Development and the furnishing of all personalty with respect to the Property (the"Budget").

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(n) All utility services necessary for the operation ofthe Property for itsintended purpose, including water supply, storm and sanitary sewer facilities, gas, electric andtelephone facilities, are or will be available at the boundaries of the Premises and either reachthe Improvements through adjoining public streets or if they pass through adjoining privateland do so in accordance with valid, permanent, non-terminable public or private easements;there is no impediment or restriction to connecting any facilities to the Improvements. Allsuch sanitary sewer, water, gas and storm drainage facilities will be provided to the Property.The General Partner will obtain any permit or easement necessary or desirable"to provide anysuch services to the Property.

(0) (i) All roads necessary for the full utilization of the Property for itsintended purpose have either been completed or the necessary rights ofway therefor havebeen or will be acquired by the appropriate governmental authority or have been dedicated topublic use and accepted by said governmental authority.

(ii) The Project Partnership and the tenants of the Property will have fulland complete access from the Property to the public roads adjacent thereto at the proposeddriveway for the Property as currently planned without the requirement of any additionalpermit or license. If any permit or license is required to improve the driveway access fromwhat is currently planned, such improvement will not be committed to or commenced prior toobtaining any required permit or license.

(P) As of each Note Payment Date, all contractors and subcontractors willhave been paid all amounts due them with respect to all work done at the Property to dateexcept for allowable retainages and/or holdbacks held by the Project Partnership pursuant tothe Construction Agreements, which retainages and/or holdbacks will be promptly paid as andwhen due. With respect to the Development, the General Partner has obtained and will keepin fun force and effect at all times until the completion thereof, payment and performancebonds for 10% of the obligations of the Project Contractor under the Construction Agreementsin a form reasonably acceptable to the Investor. True and complete copies of such paymentand performance bonds are annexed as part of Schedule 1 hereto.

(q) Except as otherwise provided in the Loan Documents and the TaxExemption Agreements, the Property is not subject to any Federal, state or local regulatoryscheme which does not generally affect all rental properties in the locality in which theProperty is located.

(r) Other than any benefit plan for personnel of the Management Agentassigned to the Property for which the Project Partnership will reimburse the ManagementAgent on a cost basis pursuant to the Management Agreement, the Project Partnership has notentered into any labor union contract or any benefit plan which will affect persons involved inoperation of the Property.

(s) If the Loan Documents require that escrow accounts be established forthe purpose ofaccumulating adequate reserves for replacement, the payment ofreal estatetaxes and insurance premiums arising in connection with the operation ofthe Property, such

10

accounts will be duly established, and all payments required to be made to such accounts willbe made in a timely fashion.

(t) The copies ofthe Limited Partnership Agreement and the LimitedPartnership Certificate, as amended to date, annexed hereto as Exhibit B-1 and B-2,respectively, are true and complete copies of all documents reflecting agreements among thecurrent partners of the Project Partnership pertaining to the subject matter ofthe ProjectPartnership. Neither the Limited Partnership Agreement nor the Limited PartnershipCertificate has been further altered or amended and each is in full force and effect. There areno oral modifications, amendments or waivers by or among such partners pertaining to thesubject matter of the Limited Partnership Agreement and the Limited Partnership Certificate.

(u) The Project Partnership is a Limited Partnership du1y constituted andexisting and is in good standing under the Pennsylvania Revised Uniform Limited PartnershipAct (the "RULPA"). The Project Partnership has taken all requisite action in order to conductlawfully its business in the State in which the Property is situated, and is not qualified to dobusiness and is not required to so qualify in any other jurisdiction. The Project Partnership isentitled to own and lease the properties of the Project Partnership and to carry on its businessas, and in the places where, such properties are now owned, leased and operated and wheresuch business is now conducted. The Project Partnership has complied with all recording,filing and other requirements with the proper authorities necessary to establish the limitedliability of the Limited Partner of the Project Partnership pursuant to the RULPA.

(v) The execution and delivery of this Agreement by the General Partnerand the performance by the General Partner of the transactions contemplated hereby havebeen duly authorized by all requisite corporate, partnership or trust actions and proceedings.If the General Partner is a corporation or partnership, it is duly organized, validly existing andin good stfu"'lding under the laws of the state of its formation with power to enter into thisAgreement and to consummate the transactions contemplated hereby. The execution anddelivery of this Agreement by the General Partner and the performance ofthe transactionscontemplated hereby will not violate or result in a breach of, or default under, any instrumentor agreement to which the General Partner or the Project Partnership is a party or is bound, orunder any law, administrative rule, regulation or decree of any court or any governmentalbody or administrative agency applicable to any ofthem, and this Agreement is binding uponand enforceable against the General Partner in accordance with its terms.

(w) Annexed hereto as Exhibit E is a complete and accurate list of thenames and addresses of all Partners of the Project Partnership.

(x) All Federal, state and local tax returns (including tax returns concerning"gross receipts") required to be filed with respect to the Project Partnership and the Propertyhave been timely, duly and accurately completed and filed, or have been duly grantedextensions of time to file the same, and all Federal, state and local taxes arising in connectionwith the Project Partnership and the ownership and operation ofthe Property have been paidin full and no tax certiorari or audit proceedings are currently pending with respect to theProperty or the Project Partnership. The Project Partnership has received no notice of and the

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General Partner is not aware ofany increase in either the tax rate or property assessment withrespect to the Property at the Federal, state or local level.

(y) The financial statement ofthe General Partner annexed as Schedule 6(the "General Partner's Financial Statement") is true, complete and accurate as ofthe datethereof, and there has been no material adverse change in the financial condition of theGeneral Partner since the date thereof

(z) No distribution ofassets (including cash) of the Project Partnership hasbeen made to any ofthe Partners of the Project Partnership (in their capacity as partners), norhas any payment on account ofdebts owed by the Project Partnership to any such Partnerbeen made. There has been no distribution ofassets by the Project Partnership in excess ofthe amounts permitted to be distributed by the Project Partnership with the applicable laws,regulations or rules ofany Governmental Agency.

(00) The Acquired Interest is not subject to any lien, pledge or encumbranceofany nature whatsoever and is acquired free ofany rights to same by any other party.

(bb) To the extent the Project Partnership owns personal property, suchpersonal property will be incidental to making apartment units available as livingaccommodations.

(cc) The Project Partnership has no guaranty ofa specified return nor aguaranty against loss ofincome, other than an operating deficit guaranty, a developmentdeficit guaranty, and a rent-up guaranty.

(dd) (i) Leasehold title to the Property has been acquired by the ProjectPartnership. No portion of the Property will have been placed in service (as that term isdefined for-purposes of Section 42 of the Code) by the Project Partnership as of the ClosingDate.

(ii) It is anticipated that the Project Partnership will incur at least$8,162,776 ofcosts which are chargeable to capital account and of a character subject to theallowance for depreciation an amortization in connection with the Development excluding thecost of the portion of the Property that shall be commercial space (and excluding the cost ofacquiring the land or any building or interest therein); provided, however, that in the event theProject Partnership's accountant certifies a lesser amount ofcapital expenditures pursuant toSection 3.3.B(i) ofthe Amended Partnership Agreement, the amount set forth herein will bereduced to that amount. Such amount is (A) the reasonably anticipated tax basis of the Property,(B) the basis for the calculation ofthe Contribution pursuant to Section 2(a), and (C) equal to orgreater than the currently estimated Eligible Tax Credit Base. The actual Eligible Tax CreditBase will not include any costs incurred in connection with nonresidential rental property or inconnection with any residential unit which is not a low-income unit (as defined in Section 42 ofthe Code) and which is above the average quality standard of the low-income units in theProperty. None of the amounts that will be includible in the Eligible Tax Credit Base will befinanced with the proceeds ofany obligation which is a below-market Federal loan (as defined inSection 42(i)(2)(D) ofthe Code) other than an obligation which would be a below market

12

Federalloan solely by reason of assistance provided under Sections 106-108 ofthe Housing andCommunity Development Act of 1974 (as in effect on the date ofenactment of the last sentenceof Section 42(i)(2)(D) of the Code). None of the amounts that will be includible in the EligibleTax Credit Base (y) will be funded with any obligation the interest on which is exempt from taxunder Section 103 of the Code or a Federal grant within the meaning of Section 42(d)(5)(A) ofthe Code or (z) is attributable to amounts with respect to which an election is made under Section167(k) ofthe Code. For purposes of this Agreement, the term "Eligible Tax Credit Base" shallmean an amount equal to the adjusted basis of the Property as defined in Section 1016 oftheCode as of the close ofthe first taxable year ofthe Credit Period (as defined in Section 42(f)(1)of the Code) with respect to the Property for which a Credit is available and for which Creditshave been allocated to the Project Partnership for the Property, but excluding the cost of the land.Notwithstanding the foregoing, but only to the extent prohibited under existing law, without theConsent of the Limited Partner, there shall not be included in eligible basis construction loancosts which are not allocable under Section 263A ofthe Code to the adjusted bases of "Section168 property" that qualifies as residential rental property under Section 103 ofthe Code or"Section 168 property" used in a common area or provided as a comparable amenity to allresidential units in the building, or the issuance costs of tax exempt bonds or land preparationcosts referred to in Internal Revenue Service Technical Advice Memorandum 200043015.Notwithstanding anything to the contrary herein, any breach of the preceding sentence will notresult in (i) removal of the General Partner or (ii) damages on account of such breach of thisAgreement.

(iii) It is anticipated that the Development will be completed by December31,2011 (as such date may be extended for six (6) months due to Unavoidable Events, provided,however, that all of the buildings in the Apartment Complex shall be "placed in service" (forpurposes of Section 42 ofthe Code) by any placement in service deadline established by anyAuthority or the Code), and that all of the Governmental Permits required to operate the Propertywill be issued by such date.

(iv) The Property upon Completion (as such term is hereinafter defined) willconsist ofthirty-seven (37) units on the fourth floor of the nursing home known as the John J.Kane Regional Center, and related improvements and facilities on a parcel located in RossTownship, Pennsylvania containing 12 residential rental Public Housing Units and relatedsubordinate facilities and parking. The residential units will consist of thirty-seven (37) one­bedroom units, an elevator bank and lobby. The residential rental units will be constructed foruse by seniors, will be suitable for occupancy and will be used on other than a transient basis.All of the apartment units in the Property will be of approximately the same quality standardwithin the meaning of Section 42(d)(3) of the Code. All ofthe amenities of the Property will beavailable to all of the residential rental units in the Property, without separate charge. There willnot be any medical, nursing, psychiatric, food or other additional significant services provided bythe Project Partnership to the tenants ofthe Property. None of the apartment units in theProperty will be leased to students. The Property lies entirely within a "qualified census tract" asdefined in Section 42(d)(5)(B)(ii) of the Code.

(v) At Completion, the qualified basis ofthe Property under Section 42 ofthe Code is anticipated to be at least $7,752,254 and the Property is anticipated to be eligible forannual Credits ofat least $581,415 with respect to the Development; provided, however, that in

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the event the Project Partnership's accountant certifies a lesser amount of capital expenditurespursuant to Section 3.3.B(i) of the Amended Partnership Agreement, the amount set forth hereinwill be reduced to that amount.

(vi) The tenants in at least 100% ofthe apartment units in the Property willhave incomes which do not exceed 50% as such percentages are adjusted as required by Section142(d)(2)(B) of the Code, ofthe median gross income in the area in which the Property is located.The Project Partnership has or will have the right to receive annual reports from tenants of theProperty concerning their incomes and family sizes. The gross rents charged for the apartmentunits in the Property specified in the second preceding sentence, subject to the provisions ofSection 42(g)(2)(B) ofthe Code, do not and will not exceed 30% ofthe income limitation for thetenant of such units as described in such sentence. For purposes of this Section 3(dd), it isunderstood that the term "gross rents" (i) does not include any payment under Section 8 oftheUnited States Housing Act of 1937 or any comparable rental assistance program with respect tosuch units or the occupants thereof, (ii) includes any utility allowance determined by the Secretaryof the United States Treasury Department (the "Treasury Secretary") (after taking into accountsuch determinations under Section 8 of the United States Housing Act of 1937), and (iii) does notinclude any fee for a supportive service which is paid to the owner of the unit (on the basis of thelow-income status of the tenant ofthe unit) by any governmental program of assistance (or by anorganization described in Section 501(c)(3) of the Code, and exempt from tax under Section501(a) ofthe Code), if such program (or organization) provides assistance for rent and the amountof assistance provided for rent is not separable from the amount of assistance provided forsupportive services. 100% of the units will be occupied by, or reserved for occupancy by,tenants age 62 or older.

(vii) As of the Admission Date, the Project Partnership has received theAllocation from PHFA pursuant to Section 42(h) of the Code for annual Credits in the amount of$581,415 from PHFA's 2009 allocation, a copy ofwhich has been delivered to the Investor. Allconditions required to be met as of the Admission Date under the Allocation for the Creditsawarded from PHFA's 2009 authority have been met, including the requirements forqualification for a carryover allocation of2009 Credits. All conditions required to be met as ofthe Admission Date under the Credit Letter for the Credits awarded from PHFA's 2009 authorityhave been met. The Property win be placed in service on or before the close of2011.

(viii) It is estimated that the Property will have a depreciable basis ofnot lessthan $7,752,254, and will depreciate such basis (other than the portion properly allocable to taxexempt use property) over 27.5 years at the rate of $268,082 per annum.

(ee) Upon the request ofthe Investor, the General Partner shall provide tothe Investor such information concerning the General Partner, the Property or the ProjectPartnership as the Investor may reasonably require for inclusion in a registration statementand other offering materials prepared for the Investor, and any such information providedshall be true, correct and complete in all material respects.

(ft) The cost of the Acquired Interest is being paid by the Investor as acapital contribution to the Project Partnership. In the event that the Investor should be entitled

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to damages on account of a material default under or material breach ofthis Agreement, theamount ofthe Investor's damages shall include all such amounts invested by the Investor.

(gg) The documents delivered or to be delivered to the Investor hereunder orannexed hereto as Exhibits or Schedules constitute true, correct and complete copies oftheinstruments which they purport to be, and, with respect to each of such documents, there is noother document ofthe same sort which has been executed by the parties thereto. Suchdocuments, Exhibits or Schedules shall be delivered to the Investor again as required by thisAgreement on the Note Payment Date and shall reflect the facts existing as ofeach NotePayment Date.

(hh) All ofthe representations and warranties contained in any certificatesand documents to be delivered by the Warrantors at Closing and the Schedules and Exhibitshereto, as the same may be updated as required herein, shall be true and correct as oftheirrespective dates and as of the Closing Date and each Note Payment Date, as ifmade on suchdate. No fact necessary to make the information and statements contained in this Section 3not misleading has been omitted therefrom, and no material fact concerning the Property orthe Project Partnership has been withheld from the Investor.

All ofthe representations and warranties contained herein shall survive theClosing Date and each Note Payment Date; provided, however, except with respect to therepresentations and warranties contained in Section 3(a) hereof or unless otherwise expresslystated herein, the Investor may not maintain an action for breach thereof unless it shall havegiven the General Partner written notice of such breach not later than two years after the FinalInstallment Note Payment Date (as hereinafter defined).

4. The Closing; Documents to be Delivered.

(a) The closing ofthe transaction contemplated hereunder and theInvestor's acquisition of the Acquired Interest (the "Closing") shall take place on the date firstabove written. There shall not be any adjustments made to the Contribution for accrued orprepaid income or expenses existing on the books of the Project Partnership on the ClosingDate.

(b) At the Closing and as a condition thereof, the following documents(collectively, the "Closing Documents"), all in form and substance satisfactory to Investor,shallbe delivered and/or executed by all necessary parties:

(i) The Amended Partnership Agreement.

(ii) A title insurance policy, or marked-up title commitment, dated as oftheClosing Date (or an endorsement to an existing fee title policy) in the amount of $8,619,588insuring the Project Partnership's fee ownership of the Property subject only to the PermittedEncumbrances and such other matters consented to by Investor in writing, and containing a non­imputation endorsement and a survey endorsement. The cost of obtaining such non-imputationendorsement shall be paid by the Investor.

15

(iii) An opinion of the Project Partnership's counsel, which counsel shall bereasonably satisfactory to the Investor, obtained at the General Partner's expense, substantially inthe form of Schedule 7 annexed hereto, confirming such matters as the Investor or its counselmay reasonably request. Such opinion shall expressly permit reliance thereon by counselengaged to render other opinions in connection with this transaction.

(iv) Financial statements (which need not be audited) ofthe General Partner,obtained at its expense.

(v) A copy ofthe Limited Partnership Agreement and the recorded LimitedPartnership Certificate of the Project Partnership and all amendments thereto.

(vi) All Governmental Permits required to be issued as of the Closing Date,except that full building permits for the development ofthe Property will be delivered on the SecondInstallment Note Payment Date (as hereinafter defined).

(vii) The Development Deficit Guaranty Agreement in the form ofExhibit Fannexed hereto.

(viii) The Operating Deficit Guaranty Agreement in the form of Exhibit Gannexed hereto.

(ix) The Rent-Up Guaranty Agreement in the form ofExhibit H annexedhereto.

(x) A certificate ofthe Warrantors dated the Closing Date in the form ofExhibit K annexed hereto.

(xi) A copy of all instruments comprising the Governmental Approval as ofthe Closing Date.

(xii) A copy of the Credit Letter and the Allocation for the Credits awardedfrom PHFA's 2009 authority.

(xiii) The amendment to the Management Agreement in the form ofExhibit D-lannexed hereto.

(xiv) Resolutions of the General Partner authorizing the actions to be taken bysuch entities pursuant to this Agreement.

(xv) The Capital Note and Pledge Agreement (as defined in and executed inconnection with the Amended Partnership Agreement).

(xvi)The Accountant's certification submitted to PHFA with respect to thesatisfaction of the 10% carryover basis requirement of Section 42(h)(1 (E), together with suchbackup documentation reasonably required by counsel to the Limited Partner, and whichcertification and backup documentation shall be reasonably acceptable to counsel to the LimitedPartner.

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(xvii) The Purchase Agreement, in the form ofExhibit P attached hereto.

(xviii) A copy ofany Tax Exemption Agreements affecting the Property,namely the Financial Agreement between the Ross Township, Pennsylvania and the ProjectPartnership.

(xix) Such other documents as may be required under the provisions of thisAgreement (or as the Investor or its counsel may reasonably require) in order to effect thetransactions contemplated hereby.

5. Note Payment Conditions; Documents to be Delivered.

(a) The following conditions set forth in this Section 5(a) shall be deemedconditions precedent for payment by Investor of the Second Installment Note Paymentrepresented by the Capital Note as set forth in Section 2(a)(ii) (collectively, the "SecondInstallment Note Payment Conditions"):

Completion of such portion of the construction which constitutes 50% of the totalproject costs under the Budget set forth in Schedule 5, as evidenced by the issuance of (A) thecertification in the form annexed hereto as Exhibit 1-1 (the "50% Completion Certificate")executed by the Project Architect on or before the date ofpayment ofthe Second InstallmentNote Payment Date (as hereinafter defined); and (B) an inspection report by the Investor'sconsultant ("Investor's Consultant") concluding that such Improvements have been completedsubstantially in accordance with Plans and Specifications, which inspection must be performedwithin ten (10) business days following written notice to the Investor and ifnot so performedsuch condition shall be deemed to have been waived. The Investor's engineer shall promptlynotify the General Partner in writing ofdeficiencies in the Improvements and the General Partnershall have a right to cure or cause any deficiencies set forth in such inspection report to be cured,provided, however, the Investor shall not be obligated to make its Second Installment NotePayment until such conditions are cured unless such condition can be cured from proceeds of theSecond Installment Note Payment in which case Investor will, provided all other conditions tothe payment of the Second Installment Note Payment have been satisfied, fund the SecondInstallment Note Payment. Satisfaction ofthe foregoing conditions shall be deemed "50%Completion".

(b) On the Second Installment Note Payment Date, the Investor shall, subjectto the provisions of Section 3.3 of the Amended Partnership Agreement, pay the Partnership theSecond Installment Note Payment provided that, as a condition to such payment, the followingdocuments (collectively, the "Second Installment Note Payment Documents"), all in form andsubstance reasonably satisfactory to the Investor, shall be delivered and/or executed by allnecessary parties:

(i) The Partnership shall deliver to the Investor a Second Installment NotePayment Certificate in the form annexed hereto as Exhibit L-l duly executed by the Warrantorscertifying that all of the representations and warranties and covenants of the General Partner setforth in this Agreement are true and correct in all respects as of the Second Installment NotePayment Date as ifmade thereon.

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(ii) The Partnership shall have delivered to the Investor full buildingpermits for the development of the Property in a form reasonably acceptable to the Investor.

(iii) The Partnership shall have (A) certified to the Investor that theaforesaid conditions has been met and (B) given the Investor at least seven days' written noticeof the Partnership's proposed date (the "Second Installment Note Payment Date") for payment tothe Partnership of the Second Installment Note Payment.

(c) The following conditions set forth in this Section 5(c) shall be deemedconditions precedent for payment by the Investor ofthe Third Installment Note Payment (asdefined in the Amended Partnership Agreement) represented by the Capital Note as set forth inSection 2(a)(ii) (collectively, the "Third Installment Note Payment Conditions"):

Completion of such portion ofthe construction which constitutes 85% ofthe totalproject costs under the Budget set forth in Schedule 5, as evidenced by the issuance of (A) thecertification in the form annexed hereto as Exhibit 1-2 (the "85% Completion Certificate")executed by the Project Architect on or before the date ofpayment of the Third Installment NotePayment Date (as hereinafter defined); and (B) an inspection report by the Investor's consultant("Investor's Consultant") concluding that such Improvements have been completed substantiallyin accordance with Plans and Specifications, which inspection must be performed within ten (10)business days following written notice to the Investor and ifnot so performed such condition .shall be deemed to have been waived. The Investor's engineer shall promptly notify the GeneralPartner in writing ofdeficiencies in the Improvements and the General Partner shall have a rightto cure or cause any deficiencies set forth in such inspection report to be cured, provided,however, the Investor shall not be obligated to make its Third Installment Note Payment untilsuch conditions are cured unless such condition can be cured from proceeds ofthe ThirdInstallment Note Payment in which case Investor will, provided all other conditions to thepayment ofthe Third Installment Note Payment have been satisfied, fund the Third InstallmentNote Payment. Satisfaction of the foregoing conditions shall be deemed "85% Completion".

(d) On the Third Installment Note Payment Date, the Investor shall, subject tothe provisions of Section 3.3 ofthe Amended Partnership Agreement, pay the Partnership theThird Installment Note Payment provided that, as a condition to such payment, the followingdocuments (collectively, the "Third Installment Note Payment Documents"), all in form andsubstance reasonably satisfactory to the Investor, shall be delivered and/or executed by allnecessary parties:

(i) The Partnership shall deliver to the Investor a Third InstallmentNote Payment Certificate in the form annexed hereto as Exhibit L·2 duly executed by theWarrantors certifying that all ofthe representations and warranties and covenants of the GeneralPartner set forth in this Agreement are true and correct in all respects as of the Third InstallmentNote Payment Date as if made thereon.

(ii) The Partnership shall have (A) certified to the Investor that theaforesaid condition has been met and (B) given the Investor at least seven days' written notice ofthe Partnership's proposed date (the "Third Installment Note Payment Date") for payment to thePartnership ofthe Third Installment Note Payment.

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(e) The following conditions set forth in this Section 5(e) shall be deemedconditions precedent for payment by the Investor of the Fourth Installment Note Payment (asdefined in the Amended Partnership Agreement) represented by the Capital Note as set forth inSection 2(a)(ii) (collectively, the "Fourth Installment Note Payment Conditions"):

Completion of such portion of the construction which constitutes 95% ofthe totalproject costs under the Budget set forth in Schedule 5, as evidenced by the issuance of (A) thecertification in the form annexed hereto as Exhibit 1-3 (the "95% Completion Certificate")executed by the Project Architect on or before the date ofpayment ofthe Fourth InstallmentNote Payment Date (as hereinafter defined); and (B) an inspection report by the Investor'sconsultant ("Investor's Consultant") concluding that such Improvements have been completedsubstantially in accordance with Plans and Specifications, which inspection must be performedwithin ten (10) business days following written notice to the Investor and ifnot so performedsuch condition shall be deemed to have been waived. The Investor's engineer shall promptlynotify the General Partner in writing of deficiencies in the Improvements and the GeneralPartner shall have a right to cure or cause any deficiencies set forth in such inspection report tobe cured, provided, however, the Investor shall not be obligated to make its Fourth InstallmentNote Payment until such conditions are cured unless such condition can be cured from proceedsof the Fourth Installment Note Payment in which case Investor will, provided all otherconditions to the payment of the Fourth Installment Note Payment have been satisfied, fund theFourth Installment Note Payment. Satisfaction of the foregoing conditions shall be deemed"95% Completion".

(f) On the Fourth Installment Note Payment Date, the Investor shall,subject to the provisions of Section 3.3 of the Amended Partnership Agreement, pay thePartnership the Fourth Installment Note Payment provided that, as a condition to suchpayment, the following documents (collectively, the "Fourth Installment Note PaymentDocuments"), all in form and substance reasonably satisfactory to the Investor, shall bedelivered and/or executed by all necessary parties:

(i) The Partnership shall deliver to the Investor a Fourth InstallmentNote Payment Certificate in the form annexed hereto as Exhibit L-3 duly executed by theWarrantors certifying that all of the representations and warranties and covenants of the GeneralPartner set forth in this Agreement are true and correct in all respects as ofthe Fourth InstallmentNote Payment Date as ifmade thereon.

(ii) The Partnership shall have (A) certified to the Investor that theaforesaid condition has been met and (B) given the Investor at least seven days' written notice ofthe Partnership's proposed date (the "Fourth Installment Note Payment Date") for payment to thePartnership of the Fourth Installment Note Payment.

(g) The following conditions shall be deemed conditions precedent forpayment by Investor of the Final Installment Note Payment as set forth in Section 2(a)(ii)(collectively, the "Fifth Installment Note Payment Conditions"):

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Completion ofall of the Improvements as evidenced by the issuance (i) ofall Governmental Permits required in connection therewith for the use and occupancy thereof,including the receipt ofa temporary or permanent Certificate of Occupancy or the localequivalent thereof; (ii) the certification in the form annexed hereto as Exhibit J (the "CompletionCertificate") executed by the Project Architect as ofthe Final Note Payment Date (as hereinafterdefmed); and (iii) final certificates from the accountants in the form ofExhibit 0 annexed heretowhich shall set forth the eligible basis ofthe Project and the amount of Credits to which theProject Partnership is entitled.

(h) Satisfaction of the conditions set forth in Section 5(g) shall be deemed"Completion" and upon Completion, the Investor shall, subject to the provisions of Section 3.3of the Amended Partnership Agreement, on a date which is within seven business days ofCompletion (the "Fifth Installment Note Payment Date") pay the Project Partnership the FinalInstallment Note Payment evidenced by the Capital Note provided that, as a condition to suchpayment, the following documents (collectively, the "Fifth Note Payment Documents"), all inform and substance reasonably satisfactory to Investor, shall be delivered and/or executed by allnecessary parties:

(i) A leasehold title insurance policy endorsement, brought down to the dateof the Fifth Installment Note Payment Date, in the same form, substance and amount as the titlepolicy issued in connection with the Closing, the cost of which endorsement shall be borne bythe Investor.

(ii) [Intentionally omitted].

(iii) All Governmental Permits required to be issued as ofthe Fifth InstallmentNote Payment Date.

(iv) A certificate, dated the Fifth Installment Note Payment Date in the form ofExhibit L-4 annexed hereto, duly executed by the Warrantors certifying that all of therepresentations and warranties and covenants of the General Partner set forth in this Agreementare true and correct in all respects as of the Fifth Installment Note Payment Date as ifmadethereon.

(v) A copy ofall instruments comprising the Governmental Approval as of. the Fifth Installment Note Payment Date.

(vi) Reserved.

(vii) The Low Income Housing Credit Certificate in the form of Exhibit Kattached hereto dated as of the Final Note Payment Date.

(viii) [Intentionally omitted].

(ix) A certificate from the Architect dated the Fifth Installment Note PaymentDate, in the form ofExhibit J annexed hereto.

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(x) The Accountants' Certificate in the form ofExhibit 0 attached heretodated as of the Fifth Installment Note Payment Date.

(xi) [Intentionally Omitted].

(xii) Such other documents as may be required under the provisions of thisAgreement (or as the Investor or its counsel may reasonably require) in order to effect thetransactions contemplated hereby.

(i) Thirty (30) days after Completion, the Investor shall, subject to theprovisions of Section 3.3 ofthe Amended Partnership Agreement, pay the Partnership the FinalInstallment Note Payment evidenced by the Capital Note, provided that, as a condition to such

.payment, the following documents shall be delivered to the Investor:

(i)(i) An opinion of the Project Partnership's counsel, which counselshall be reasonably satisfactory to the Investor, obtained at the Project Partnership's expense,substantially in the form ofSchedule 8 annexed hereto, confirming, on the Fifth Installment NotePayment Date, such matters as the Investor or its counsel may reasonably request. Such opinionshall expressly permit reliance thereon by counsel engaged to render other opinions inconnection with this transactions.

(i)(ii)Delivery to the Investor ofthe Capital Note and Pledge Agreementgiven by the Investor to the Project Partnership pursuant to Section 2(a)(iii) hereof, such note tobe delivered marked "paid in full."

(ii) In addition, in connection with the assignment ofthe Acquired Interest bythe Investor Limited Partner as permitted in Section 1O.l.B of the Amended PartnershipAgreement, (i) the Project Partnership's and General Partner's counsel shall provide both a letterpermitting the assignees of the Acquired Interest to rely upon the opinion issued pursuant toSection 4(b)(iii) hereof and an opinion to the effect that such assignees have been duly andvalidly admitted into the Project Partnership, such letter and such opinion to be in form andsubstance satisfactory to the Investor, (ii) the General Partner shall execute and deliver anamendment to the Amended Partnership Agreement admitting the assignees of the AcquiredInterest into the Project Partnership and evidencing the withdrawal from the Project Partnershipof the assignors thereof, and (iii) the General Partner shall execute and deliver a letter to suchassignees allowing them to rely upon the agreements specified in Section 4(b)(vii), (viii) and(ix). Satisfaction ofthese conditions shall be a condition to payment of any installment of theInvestor's capital contribution remaining unpaid after any such assignment occurs.

6. Broker's Commission; Indemnity. Each of the parties hereto warrantsandrepresents to the other that it has not been introduced to the other by any broker, nor has it beenin contact with any real estate or business broker or consultant; each party hereto agrees toindemnify and hold the other harmless from all suits, claims, actions, loss or expense (includingreasonable attorneys' fees) arising from the claim of any person to a brokerage or other fee orcommission in connection with this transaction and resulting from contact with or other action,

. alleged or actual, of the indemnifying party.

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7. Taxes. The General Partner, out of the assets of the Project Partnership,shall be solely responsible for the prompt payment when due of all of the real estate transfertaxes at the initial closing of the acquisition of the Property and expenses of the ProjectPartnership in connection with such initial transaction. The General Partner shall indemnify andhold the Limited Partner and the Project Partnership harmless from and against all liability, loss,cost and expense arising by reason of any failure to make any such payments when due.

8. Notices. All notices permitted or required to be given hereunder shall bein writing and sent by certified mail, postage prepaid, return receipt requested, hand delivered, orovernight delivery addressed as follows:

If to the Project Partnership or the General Partner to the intended recipient, at:

Pennrose GP, LLCc/o Pennrose Properties, LLC230 Wyoming AvenueKingston, Pennsylvania 18704

With copies to:

Greenberg Traurig, LLP2700 Two Commerce Square2001 Market StreetPhiladelphia, PA 19103Attention: Steven P. Berman, Esq.

If to the Investor, at:

Colton Enterprises, Inc.Three Gateway Center10 EastPittsburgh, PA 15222

With a copy to:

Reed SmithReed Smith Centre225 Fifth AvenuePittsburgh, PA 15222Attn: Leo N. Hitt, Esq.

or to such other address or addresses as the parties may designate from time to time by noticegiven in accordance with this Section 8. Any such notice shall be deemed effective (i) as ofthree days after the date ofmailing or (ii) upon hand delivery, as the case may be.

9. Applicable Law. This Agreement shall be construed and interpretedunder, and governed and enforced according to, the laws of the State in which the Property issituated applicable to contracts made and to be performed entirely therein.

22

10. Binding Effect: Enforcement. The covenants, agreements, representationsand warranties contained herein shall be binding upon, be enforceable by and inure to the benefitofthe heirs, legal representatives, successors and 'assigns of the respective parties hereto.

11. Indemnification. If one or more of the representations and warrantieshereunder by the General Partner, PDL or PPL shall prove to be untrue or inaccurate in anymaterially adverse respect, or ifthe Warrantors shall default in their performance of anyagreement or covenant hereunder, the Warrantors shall indemnify and hold harmless the LimitedPartner (and their general partners, Limited Partner, affiliates, successors and assigns) and theProject Partnership from and against any loss, claim, damage, liability or expense incurred bysuch persons resulting from any such untruth or inaccuracy or from any such failure ofperformance, including, without limitation, reasonable attorneys' fees and accountants' fees.The indemnification ofthe Warrantors hereunder shall include, without lirriitation, any loss,claim, damage, liability or expense of any such person resulting from (i) any claim concerningthe operation ofthe Property or the Project Partnership with respect to any time prior to theClosing Date or the Fifth Installment Note Payment Date, and (ii) any claim concerning theinformation presented by the Warrantors as to the transactions contemplated by this Agreement.Any action by the Limited Partner under the provisions of this Section 11 shall be subject to theprovisions of the last paragraph of Section 3 hereof.

12. Liability ofa Partner ofInvestor. No person who is at any time a partner(whether limited or general) ofthe Investor shall have any personal liability for the payment orperformance of any obligation of Investor arising under or in connection with this Agreement orany document or instrument delivered pursuant to the terms of this Agreement, except asprovided in the Capital Note, which is with recourse to the Investor (but not to its generalpartners). Upon the occurrence ofa default by the Investor under any instrument securing anobligation of the Investor, the obligee thereunder, its successors and assigns shall look only tothe security provided by the Investor pursuant to this Agreement, except as provided in theCapital Note.

13. Miscellaneous. This Agreement (i) may be executed in multiplecounterparts, all ofwhich together constitute one and the same instrument, (ii) is to take effect asa sealed instrument and (iii) may be cCiJ.'"1celed, modified or amended only as set forth herein or bya written instrument executed by each party to be charged therewith. Any exhibit which forms apart of this Agreement and which is to be executed on the Closing Date may be executed by theparties thereto in exhibit form, in which case the document shall serve both as an exhibit to thisAgreement and as an independent agreement or certificate as if executed separately from thisAgreement. The captions and index notes are used only as a matter of convenience and are notto be considered a part of this Agreement or to be used in determining the intent of the parties toit. In the event the General Partner is composed of more than one party, then any referenceherein to the General Partner shall be deemed to refer jointly and severally to the partiescollectively constituting the General Partner.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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THIS CONTRIBUTION AGREEMENT IS EXECUTED as a sealed instrumentas of the date first set forth above.

PROJECT PARTNERSHIP

NORTH HILLS HOUSING II, LP, a Pennsylvanialimited partnership

By: PENNROSE GP, L /, a Pennsylvania limitedliability company;' .Ieral partner

By:

RALPH A. FALBO, INC., a Pennsylvania corporation

BY:~~ichael A. Polite, President

GENERAL PARTNER

PENNROSE GP, P, . /'

By:

RALPH A. FALBO, INC., a Pennsylvania corporation

PHl316546266v3

By:~ -~

ichael A. Pohte, President

THIS CONTRIBUTION AGREEMENT IS EXECUTED asa sealed instrumentas of the date first set forth above.

INVESTOR

COLTON ENTERPRISES, INC.

By:

THIS CONTRIBUTION AGREEMENT IS EXECUTED as a sealed instrumentas of the date first set forth above.

With respect to Sections 3 and 11 only:

PENNROSE PROPERTIES, LLC, a Pennsylvania limitedliability compan

By:

PENNROSE DEVELOPMENT, LLC, a Pennsylvanialimited liability pany

By:

:~~~tionMichael A. Polite, President

PHI316546266v3