TRANSCONTINENTAL REALTY INVESTORS INC (Form: 8-K, Received: 11/29/2006 14:32:27)

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act

Date of Report (Date of earliest event reported): November 21, 2006

TRANSCONTINENTAL REALTY INVESTORS, INC.

(Exact Name of Registrant as Specified in its Charter)


Nevada	001-09240	94-6565852

(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)

1800 Valley View Lane, Suite 300
Dallas, Texas		75234

(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code 469-522-4200

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS


Item 1.01 Entry into a Material Definitive Agreement
Item 2.01 Completion of Acquisition or Disposition of Assets
Item 3.02 Unregistered Sales of Equity Securities
Item 9.01 Financial Statements and Exhibits
SIGNATURES
Certificate of Designation
Securities Acquisition and Put Agreement

Item 1.01 Entry into a Material Definitive Agreement.

On November 21, 2006, Transcontinental Realty Investors, Inc. (“TCI” or the “Registrant”) received by assignment from Prime Income Asset Management, Inc., a Nevada corporation (“PIAMI”) and closed two separate Contracts of Sale, as amended, covering the acquisition of approximately 3,000+ acres of land located in Kaufman County, Texas in a residential development project known as “Windmill Farms.” The Contracts of Sale are (i) Contract of Sale effective August 8, 2006, as amended, between Kaufman Land Partners, Ltd. and PIAMI (the “KLP Contract”), and (ii) Contract of Sale effective August 8, 2006, as amended, between Leman Development, Ltd. and PIAMI (the “Leman Contract”); both of the KLP Contract and the Leman Contract are collectively referred to as the “Contracts.” The Contracts covered the sale by the sellers to TCI as the assignee of a substantial portion of the development consisting of approximately 2,900 acres of land owned by Kaufman Land Partners, Ltd. (“Kaufman”) and approximately 100 acres of developed land owned by Leman Development, Ltd. (“Leman”). The aggregate Purchase Price under both Contracts was approximately $49,970,000, which was paid by TCI $37,970,000 in cash, $2,000,000 as a first lien note secured by two commercial tracts of land (which are located on the south side of the property on either side of Windmill Farms Boulevard) and $10,000,000 in liquidation value in a new preferred stock issued by TCI described below.

The property purchased by TCI consists of acreage which is developed by the installation of streets and utilities generally into single family lots for sale to builders in an area approximately 20 miles from downtown Dallas, Texas. The property is in the Forney, Texas independent school district but adjacent to and not within the City of Forney, Texas.

Also on November 21, 2006, as one of the requirements under the Contracts, TCI entered into a Securities Acquisition and Put Agreement dated November 21, 2006 (the “Securities Agreement”) among TCI, Leman and Kaufman. The Securities Agreement covers (i) the designation by TCI of a new Series D Cumulative Preferred Stock (which was done on August 14, 2006), (ii) the issuance of 10,500 shares and 89,500 shares of Series D Cumulative Preferred Stock of TCI to Leman and Kaufman respectively, and (iii) the grant by TCI to the holders of the Series D Cumulative Preferred Stock of an option to demand that TCI purchase from such holder all shares of Series D Cumulative Preferred Stock at the liquidation value of $100 per share plus accrued and unpaid dividends upon the occurrence of any one of six specified events set forth in the Securities Agreement through and until its termination on January 31, 2012.

Prior to the occurrence of the transactions involving the assignment of the Contracts to TCI, the closing under such Contracts and the execution and delivery of the Securities Agreement, TCI had no material relationship with Leman or Kaufman or their respective general partners. PIAMI is the sole member of Prime Income Asset Management LLC, a Nevada limited liability company (“Prime”) which is the contractual advisor to TCI.

Also on November 21, 2006, TCI entered into a Contract for Sale and Purchase of Real Property with EQK Windmill Farms, LLC, a newly formed Nevada limited liability company (the “EQK LLC Contract”) pursuant to which TCI sold to EQK Windmill Farms, LLC (“EQK LLC”) all of the property purchased under the Contracts at an aggregate purchase price equal to $49,970,000 which included the assumption by EQK LLC of the $2,000,000 first lien note secured by the two commercial tracts of land. EQK LLC is an indirect subsidiary of American Realty

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Investors, Inc. (“ARL”) which, through subsidiaries is the owner and holder of approximately 82% of the outstanding Common Stock of TCI. ARL is also advised by Prime pursuant to a contractual arrangement. EQK LLC arranged for part of the consideration it paid to TCI to be funded from a loan made in the ordinary course of business by a bank to EQK LLC. Such lender had also been a lender to Kaufman and Leman, the sellers of the assets pursuant to the Contracts.

Item 2.01 Completion of Acquisition or Disposition of Assets

See Item 1.01 for a description of terms and conditions of the acquisition by TCI of approximately 3,000 acres of land in Kaufman County, Texas in a residential development known as “Windmill Farms” and the disposition of such assets at an equivalent purchase price to EQK LLC, an indirect wholly owned subsidiary of ARL. The formula or principal followed in determining the amount of the consideration in connection with purchase of such assets by TCI was by negotiation with independent sellers of the price and composition of consideration such sellers were willing to take to effectuate the acquisition of such assets. The formula or principal followed in determining the amount of the consideration paid by EQK LLC to TCI upon TCI’s sale of such assets to EQK LLC was a determination of the same price in total value as that paid by TCI to the sellers under the Contracts.

Item 3.02 Unregistered Sales of Equity Securities

On November 21, 2006, TCI issued 100,000 shares of its newly designated Series D Cumulative Preferred Stock to Kaufman (89,500 shares) and Leman (10,500 shares) both Texas limited partnerships which are the two “sellers” of approximately 3,000 acres of land to TCI which TCI resold to EQK LLC, an indirect subsidiary of ARL. The shares of Series D Cumulative Preferred Stock were issued as part of the consideration for the acquisition of the real property under the Contracts. Each share of Series D Cumulative Preferred Stock has a liquidation value of $100 per share (a total of $10,000,000), has a right to cumulative cash dividends initially at the annual rate of $7 per share until September 30, 2007 payable quarterly, and thereafter at an escalating annual rate up to $9 per share after October 1, 2010; has the right to payment of $100 per share in the event of dissolution, liquidation or winding up of TCI before any distribution is made by TCI to its common stock holders; and optional redemption at any time after issuance at a price of $100 per share plus cumulative dividends. The Series D Cumulative Preferred Stock is not convertible; has no voting rights except as required by Nevada law with respect to matters affecting such Series and a limited right to elect an additional director in the event four consecutive quarterly dividends are in arrears. At any time after September 30, 2011, any holder may request of TCI and TCI shall redeem all shares of Series D Cumulative Preferred Stock held by that holder at the liquidation value of $100 per share plus any accrued and unpaid dividends. The shares of Series D Cumulative Preferred Stock were issued without registration pursuant to the exemption afforded by Section 4 (2) of the Securities Act of 1933, as amended. Such shares of Series D Cumulative Preferred Stock may not be transferred during the first two years after November 21, 2006 and may not be transferred thereafter by the holders except in transactions which are exempt from registration under the Securities Act of 1933, as amended.

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Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

The following exhibits are filed with this report:


Exhibit
Designation		Description of Exhibit

3.8		Certificate of Designation as filed with the Secretary of State of Nevada on August 14, 2006.

10.1		Securities Acquisition and Put Agreement dated November 21, 2006 among Transcontinental Realty Investors, Inc., Leman Development, Ltd., and Kaufman Land Partners, Ltd.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly-caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly-authorized.


Dated: November 27, 2006	TRANSCONTINENTAL REALTY INVESTORS, INC.
	By:	/s/ Steven A. Abney
		Steven A. Abney, Executive Vice President,
		Chief Financial Officer and Acting Principal Executive Officer

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Exhibit 3.8


DEAN HELLER Secretary of state RENEE L. PARKER Chief Deputy Secretary of State PAMELA RUCKEL Deputy Secretary for Southern Nevada	STATE OF NEVADA OFFICE OF THE SECRETARY OF STATE	CHARLES E. MOORE Securities Administrator SCOTT W. ANDERSON Deputy Secretary for Commercial Recordings ELLICK HSU Deputy Secretary for Elections

	Filing Acknowledgement
		August 14, 2006


Job Number C20060814-0984	Corporation Number C11752-1991

Filing Description	Document Filing Number	Date/Time of Filing

Designation	20060517059-85	August 14, 2006 10:30:35 AM


Corporation Name		Resident Agent
TRANSCONTINENTAL REALTY		CORPORATION TRUST COMPANY OF
INVESTORS, INC.		NEVADA

The attached document(s) were filed with the Nevada Secretary of State, Commercial Recordings Division. The filing date and time have been affixed to each document, indicating the date and time of filing. A filing number is also affixed and can be used to reference this document in the future.


		Respectfully,


		DEAN HELLER
		Secretary of State

Commercial Recording Division
202 N. Carson Street
Carson City, Nevada 89701-4069
Telephone (775) 684-5708
Fax (775) 684-7138

EXHIBIT 3.8


		DEAN HELLER Secretary of State 204 North Carson Street, Suite 1 Carson City, Nevada 89701-4299 (775) 684 5708 Website: Secretary of state.biz


		Entity #
		C11752-1991
		Document Number:
		20060517059-85

Certificate of Designation (PURSUANT TO NRS 78.1955)		Date filed: 8/14/2006 10:30:35 AM In the Office of /s/ Dean Heller

		Dean Heller
		Secretary of State

Certificate of Designation
For Nevada Profit Corporations
(Pursuant to NRS 78.1955)

1.		Name of corporation:

		Transcontinental Realty Investors, Inc.

2.		By resolution of the board of directors pursuant to a provision in the articles of incorporation, this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock:

		The Board of Directors hereby amends the Articles of Incorporation to provide for the issuance of one single series of Preferred Stock consisting of the number of shares in Rich Series D Cumulative Preferred Stock as set forth below, and, subject to the provisions of Article FOURTH of the Articles of Incorporation, as amended, of Transcontinental Realty Investors, Inc. (the “Corporation”), hereby fixes and determines with respect to such series the following designations, preferences and relative participating, optional or other special rights, if any, and qualifications, limitations or restrictions thereof as set forth on Attachment “A” attached hereto and incorporated herein.

		Continued on Attachment “A.”

Filing Fee: $175.00

IMPORTANT: Failure to include any of the above information and submit the proper fees may cause this filing to be rejected.

This form must be accompanied by appropriate fees.

ATTACHMENT “A”
TO CERTIFICATE OF DESIGNATION OF
TRANSCONTINENTAL REALTY INVESTORS, INC.

1. Designation . The distinctive designation of such series shall be the Series D Cumulative Preferred Stock and each Share of the Series D Cumulative Preferred Stock shall have a par value of S0.01 per Share and a preference on liquidation as provided in Paragraph 6 below. The Series D Cumulative Preferred Stock is sometimes referred to herein as the “Series D Preferred Stock.”

2. Number of Shares . The number of Shares which shall constitute the Series D Preferred Stock shall be such number as may actually be issued by the Corporation, not to exceed a maximum of 100,000 Shares, which number may be decreased (but not below the number then outstanding), from time to time by the Board of Directors, subject to the provisions hereof. All Shares of Series D Preferred Stock which are issued shall be fully paid and non-assessable, and the Corporation shall not be entitled to require, levy or collect assessments thereon after issuance.

3. Dividends and Dividend Rate . Holders of record on the fifteenth day of each September of each year of Shares of the Series D Preferred Stock shall be entitled to receive dividends, and the Corporation shall pay such dividends as declared by the Board of Directors, to the extent permitted under the Nevada General Corporation Law, due quarterly on each March 31, June 30, September 30 and December 31 of each year, beginning on September 30, 2006 (each a “Dividend Reference Date” and, collectively, the “Dividend Reference Dates”), in preference to and with priority over dividends upon all “Junior Securities” (as defined in Paragraph 6 below). Except as otherwise provided herein, dividends on each Share of Series D Preferred Stock (a “Share”) will accrue (but not compound) cumulatively on a daily basis in an amount per Share (rounded to the next-highest cent) equal to (i) 7% per annum during the period from issuance to September 30, 2007, (ii) 7.5% per annum from October 1, 2007 to September 30, 2008, (iii) 8% per annum from October 1, 2008 to September 30,2009, (iv) 8.5% during the period from October 1, 2009 to September 30, 2010, and (v) 9% per aumum from and after October 1, 2010 and thereafter, such dividends being computed on the “Liquidation Value” (as defined in Paragraph 6 below) to and including the date on which the “Redemption Price” (as defined in Paragraph 4 below) of such Share is paid. All such dividends shall accrue and fall due on each Dividend Reference Date, whether or not such dividends have been declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of such dividends, subject only to the limitations imposed by the Nevada General Corporation Law as in effect and applicable from time to time, and for this purpose the Board of Directors of the Corporation shall make and shall be deemed to have made all reasonable findings of fact, consistent with their fiduciary obligations, in support and in favor of making funds available under the Nevada General Corporation Law. Any dividend that is for any reason not paid in full on its respective Dividend Reference Date shall cumulate and remain in arrears until paid. For purposes of this Paragraph 3, the date on which the Corporation initially issues any Share is its date of issuance, regardless of the number of times transfer of such Share is made on the stock records maintained by or for the Corporation and regardless of the number of certificates that may be issued to evidence such Share (whether by reason of transfer of such


ATTACHMENT A — PREFERRED STOCK DESIGNATIONS		PAGE A-l

Share or for any other reason). Notwithstanding any other requirement of this paragraph, unless the holder of any Share of the Series D Preferred Stock requests of the Corporation payment of dividends in a form other than cash, and the Corporation agrees to such request, any and all dividends on the Series D Preferred Stock shall be satisfied by payment of cash. So long as any Shares of Series D Preferred Stock are outstanding, the Corporation will not declare or pay any dividends on Junior Securities (other than dividends in respect of Common Stock payable in shares of Common Stock) or make, directly or indirectly, any other “distribution” (as that term is defined in current Section 78.288 of the Nevada Revised Statutes [“NRS”]) of any sort in respect of Junior Securities, or any payment on account of the purchase or other acquisition of the Junior Securities, unless on the date of such declaration is the case of a dividend, or on such date of distribution or payment in the case of such distribution or other payment, (a) all dividends on the Series D Preferred Stock for all past quarterly dividend periods have been paid in full and the full dividends for the then current quarterly period shall have been paid or declared and a cash sum sufficient for the payment thereof set apart in trust for the benefit of the holders of the Series D Preferred Stock; and (b) after giving effect to such payment of dividends, other distributions, purchase or redemption, the aggregate capital of the Corporation applicable to all capital stock of the Corporation then outstanding, plus the earned and capital surplus of the Corporation shall exceed the aggregate amount payable on involuntary dissolution, liquidation or winding up of the Corporation on all Shares of the Series D Preferred Stock and all stock ranking prior to or on a parity with the Series D Preferred Stock as to dividends or assets outstanding after the payment of such dividends, other distributions, purchase or redemption; and (c) the Corporation shall not be in arrears on any obligation to redeem the Series D Preferred Stock. Dividends shall not be paid or declared and set apart for payment on any series of the Corporation’s Preferred Stock for any dividend period unless dividends have been or are contemporaneously paid and declared and a cash sum set apart in trust for payment of dividends accrued on the Series D Preferred Stock for all dividend periods terminating on the same or earlier date. All dividends on all series of the Corporation’s Preferred Stock shall be paid on a pro rata basis if for any reason the Corporation is prevented from paying the full amount of all such dividends. If at any time the Corporation pays less than the total amount of dividends then accrued with respect to the Series D Preferred Stock, such payment will be distributed ratably among the then holders of Series D Preferred Stock so that a pro rata equal amount is paid with respect to each outstanding Share. If the Corporation makes or declares and pays any dividends or distribution on the Series D Preferred Stock on a date other than a Dividend Reference Date, such payment shall be applied in direct order of cumulation of dividends ( i.e. , first credited against any unpaid past quarterly dividends with any surplus credited against the next succeeding dividend accrual).

4. Optional Redemption . The Corporation may, at any time after the date of issuance thereof and from time to time thereafter, at the election of the Board of Directors of the Corporation redeem any or all of the Series D Preferred Stock then outstanding by written notice given not less than twenty (20) nor more than sixty (60) days before the date fixed for redemption (the “Redemption Date”). If mailed, such notice shall be deemed to be delivered when deposited in the United States Mail, postage prepaid, addressed to the holder(s) of Shares of Series D Preferred Stock at his or her or its address as it appears on the stock transfer records of the Corporation. The “Redemption Price” (herein so called) of the Series D Preferred Stock shall be an amount equal to (a) $100 per Share, plus (b) the amount of all accrued but unpaid dividends thereon to the Redemption Date, which shall include all cumulative dividends in


ATTACHMENT A—PREFERRED STOCK DESIGNATIONS		PAGE A-2

arrears and also the proportionate part of the dividend accrued since the last Dividend Reference Date preceding the Redemption Date, such dividends to be payable whether or not earned or declared, but without interest. Notice of redemption shall set forth (a) the Shares to be so redeemed, (b) the date fixed for redemption, (c) the applicable Redemption Price, and (d) the place at which the holder(s) may obtain payment of the applicable Redemption Price upon surrender of the Share certificate(s). On issuance of a notice of redemption, the Corporation shall be unconditionally obligated to repurchase the Series D Preferred Stock covered by such notice at the Redemption Price on the Redemption Date, after surrender by the holder to the Corporation of any certificates evidencing such Series D Preferred Stock. If less than all Shares of Series D Preferred Stock at any time outstanding shall be called for redemption, such Shares shall be redeemed pro rata. If notice of redemption shall have been mailed, on or before the Redemption Date, the Corporation may provide for payment of a sum sufficient to redeem the applicable number of Series D Preferred Stock called for redemption by depositing such sum in a bank or trust company (either located in the state where the principal executive office of the Corporation is maintained, such bank or trust company having a combined surplus of at least $10,000,000 according to its latest statement of condition, or such other bank or trust company as may be permitted by the Articles of Incorporation, as amended, or by law) as a trust fund, with irrevocable instructions and authority to the bank or trust company to give or complete the notice of redemption and to pay, on or after the Redemption Date, the applicable Redemption Price on surrender of certificates evidencing the Share(s) of Series D Preferred Stock so called for redemption and, in either event, from and after the Redemption Date (A) the Share(s) of Series D Preferred Stock deemed to be redeemed, (B) such deposit shall be deemed to constitute full payment for such Share(s), (C) such Share(s) so redeemed shall no longer be deemed to be outstanding, (D) the holder(s) thereof shall cease to be a stockholder of the Corporation with respect to such Share(s), and (E) such holder(s) shall have no rights with respect thereto except the right to receive their proportionate share of the funds set aside pursuant hereto or deposited upon surrender of their respective certificates. Any interest on the funds so deposited shall be paid to the Corporation. Any and all such redemption deposits shall be irrevocable except to the extent any funds so deposited that shall not be required for the redemption of any Shares of Series D Preferred Stock because of any prior sale or purchase by the Corporation other than through the redemption process, subsequent to the date of deposit but prior to the Redemption Date, shall be repaid to the Corporation forthwith, and any balance of the funds so deposited and unclaimed by the holder(s) of any Shares of Series D Preferred Stock entitled thereto at the expiration of one calendar year from the Redemption Date shall be repaid to the Corporation upon its request or demand therefore. After any such repayment, the holder(s) of the Share(s) so called for redemption shall look only to the Corporation for payment of the Redemption Price thereof. In addition to the redemption under this Paragraph 4, the Corporation may redeem or repurchase Shares of the Series D Preferred Stock (i) from any holder(s) thereof who consents in writing to such redemption, Preferred Stock (i) from any holder(s) thereof who consents in writing to such redemption, (ii) pursuant to any offer by the Corporation to purchase or acquire share(s) from holders of less than one hundred (100) total shares (i.e., an “odd lot” or “99 or less” offer), or (iii) open market or negotiated purchases, and in each of clauses (i), (ii) and/or (iii), the provisions of this paragraph 4 will not apply to any such consented redemption. All Shares of Series D Preferred Stock redeemed shall be cancelled and retired and no Shares shall be issued in place thereof, but such Shares shall be restored to the status of authorized but unissued Shares of Series D Preferred Stock.


ATTACHMENT A — PREFERRED STOCK DESIGNATIONS		PAGE A-3

5. Sinking Fund and Mandatory Redemption . The Corporation shall not be required to maintain any so-called “Sinking Fund” for the retirement on any basis of the Series D Preferred Stock. Notwithstanding the lack of any requirement to maintain any “Sinking Fund,” the Corporation shall, at any time following September 30, 2011, upon the written request of any holder of the Series D Preferred Stock, redeem on a mandatory basis all (but not less than all) of the Series D Preferred Stock then held by such holder. The Corporation shall effect such redemption at the Redemption Price within thirty (30) calender days after the date of receipt by the Corporation of written notice from the holder thereof. The holder may at its option request a delay of the effectiveness of redemption by specifying any date not less than thirty (30) calendar days after receipt by the Corporation of such written notice and not more than ninety (90) calendar days after receipt by the Corporation of such written notice, and the Corporation shall effect the redemption when and as requested by the holder Whether mailed, personally delivered or delivered by electronic transmission, such written notice from the holder shall only be effective upon receipt by the Corporation. Such written notice shall set forth (a) the Share(s) to be so redeemed, (b) the date preferred for redemption by the holder thereof, (c) the Redemption Price, and (d) the place at which the holder(s) desires to receive payment of the applicable Redemption Price upon surrender of the certificate(s). A holder may not request less than all shares of Series D Preferred Stock held by such holder to be mandatorily redeemed unless the Corporation consents in writing thereto. In the event that the Corporation does not have adequate equity accounts to effect the mandatory redemption required hereunder, the Corporation shall redeem such of the Series D Preferred Stock as it is able to redeem on a pro rata basis as among those holders who have requested redemption to date. For this purpose the Board of Directors of the Corporation shall make and shall be deemed to have made all reasonable findings of fact, consistent with their fiduciary obligations, in support and in favor of making funds available under the Nevada General Corporation Law for such redemption. In the event that the Corporation has received a written notice of mandatory redemption from any holder of Series D Preferred Stock as required, and the Corporation does not fulfill its obligations by so redeeming such Shares, the affected holder shall have the contractual as well as the equitable right to require such redemption, and actions shall lie in contract for sums as well as in mandamus and similar actions. In the event that the Corporation avails itself of a formal proceeding under Title 11 United States Code, such holder shall, to the extent permitted by applicable law, be entitled to treatment as a general unsecured creditor in any such proceeding as to the amount of the Redemption Price. If the Corporation shall be at any time be unable to or refuse to redeem Shares as to which one or more holders have exercised their rights under this Paragraph 5, the Corporation will not declare or pay any dividends on Junior Securities (other than dividends in respect of Common Stock payable in shares of Common Stock) or make, directly or indirectly, any other “distribution” (as that term is defined in current Section 78.288 of the Nevada Revised Statutes [“NRS”]) of any sort in respect of Junior Securities, or any payment on account of the purchase or other acquisition of the Junior Securities.

6. Rights on Liquidation . In the event of any liquidation, dissolution or winding-up of the Corporation, and after paying and providing for the payment of all creditors of the Corporation, the holders of Shares of the Series D Preferred Stock then outstanding shall be entitled, before any distribution or payment is made upon any “Junior Securities” (defined to be and mean the Common Stock and any other equity security of any kind which the Corporation at any time has issued, issues or is authorized to issue other than, the Preferred Stock authorized


ATTACHMENT A — PREFERRED STOCK DESIGNATIONS		PAGE A-4

under the Corporation’s Articles of Incorporation), to receive a liquidation preference in an amount in cash equal to the aggregate Liquidation Value of all Shares of Series D Preferred Stock then outstanding, whether any such liquidation, dissolution or winding up is voluntary or involuntary and the holders of the Series D Preferred Stock shall not be entitled to any other or further distributions of assets. The term “Liquidation Value” shall be and mean, as of any particular date, an amount per Share of Series D Preferred Stock equal to the Redemption Price if such Share were so redeemed in accordance with the provisions of Paragraph 5 above, provided that accrued dividends shall be calculated through the date fixed by the Corporation for payment of liquidation proceeds to the holders of such Shares, which shall be the date that the Corporation reasonably expects that such funds will be remitted to holders. In the event that the Corporation (or its agent for this purpose) does not for any reason remit payment of the Liquidation Value to the holders of the Shares by the date fifteen (15) days after the date so fixed for payment, then the Corporation must in order to satisfy the superior rights of the holders of Shares remit all additional dividends that will accrue on the Series D Preferred Stock through the date that liquidation proceeds will actually be remitted to the holders of such Shares. If, upon any dissolution, liquidation or winding-up of the affairs of the Corporation, the net assets available for distribution shall be insufficient to permit payment to the holders of all outstanding shares of all series of Preferred Stock of the amounts to which they respectively shall be entitled, then the assets of the Corporation remaining after the payment of creditors shall be distributed to such holders ratably among them based upon the amounts payable on the shares of each such series of Preferred Stock in the event of voluntary or involuntary dissolution, liquidation or winding-up, as the case may be, in proportion to the full preferential amounts, together with any and all arrearages to which they are respectively entitled. Upon any such liquidation, dissolution or winding-up of the Corporation, after the holders of Preferred Stock have been paid in full the amounts to which they are entitled, the remaining assets of the Corporation may be distributed to the holders of Junior Securities, including Common Stock, of the Corporation. The Corporation will mail written notice of such liquidation, dissolution or winding-up, not less than twenty (20) or more than fifty (50) days prior to the payment date stated therein to each record holder of Series D Preferred Stock. Neither the consolidation nor merger of the Corporation into or with any other corporation or corporations, nor the sale or transfer by the Corporation of all or any part of its assets, nor a reduction of the capital stock of the Corporation, nor the purchase or redemption by the Corporation of any shares of its Preferred Stock or Common Stock or any other class of its stock will be deemed to be a liquidation, dissolution or winding-up of the Corporation within the meaning of this Paragraph 6.

7. Ranking . As to dividends and upon liquidation, dissolution or winding up, the Series D Preferred Stock shall rank on a parity with all other shares of Preferred Stock issued by the Corporation. As long as any Shares of the Series D Preferred Stock are issued and outstanding, the Corporation shall not authorize or issue any shares of Preferred Stock of any series that have rights superior to those of the Series D Preferred Stock as to dividends or rights upon liquidation, dissolution or winding up of the Corporation; provided that the Corporation may do so with the prior written consent of the holders of a majority of such Shares of Series D Preferred Stock then outstanding, voting separately as a class.

8. Voting Rights and Powers . The holders of Shares of Series D Preferred Stock shall have only the following voting rights:


ATTACHMENT A — PREFERRED STOCK DESIGNATIONS		PAGE A-5

(a) Except as may otherwise be specifically required by law under the Nevada General Corporation Law or otherwise provided herein, the holders of the Shares of Series D Preferred Stock shall not have the right to vote such stock, directly or indirectly, at any meeting of the stockholders of the Corporation, and such Shares of stock shall not be counted in determining the total number of outstanding Shares to constitute a quorum at any meeting of stockholders.

(b) In the event that, under the circumstances, the holders of the Series D Preferred Stock are required by law to vote upon any matter, the approval of such series shall be deemed to have been obtained only upon the affirmative vote of the holders of a majority of the Shares of Series D Preferred Stock then outstanding.

(c) Except as expressly set forth herein, or as otherwise provided in the Articles of Incorporation, as amended, or by law, the holders of the Series D Preferred Stock shall have no voting rights, and their consent shall not be required for the taking of any corporate action.

(d) The consent of the holders of at least a majority-in-interest of the Series D Preferred Stock at the time outstanding, given in person or by proxy, either in writing or at any special or annual meeting called for the purpose at which the Series D Preferred Stock shall vote separately as a class, shall be necessary for the Corporation to effect or validate any one or more of the following:

(i) The creation or authorization of any additional class of stock ranking prior to the Series D Preferred Stock in any respect or having rights superior to those of the Series D Preferred Stock in any respect, or the creation or authorization of any obligation or security convertible into shares of stock of any class ranking prior to or having rights superior to the Series D Preferred Stock in any respect; or

(ii) The amendment, alteration, restatement or repeal of any of the provisions of the Articles of Incorporation, as amended, or of the Bylaws of the Corporation, which amendment, alteration, restatement or repeal adversely affects the rights or preferences of the Series D Preferred Stock or of the holders thereof, provided , however , for the purposes of this subdivision, an amendment to the Articles of Incorporation increasing the authorized number of shares of any class of stock, or creating or authorizing shares of Junior Securities shall not be deemed to affect adversely the rights or preferences of the Series D Preferred Stock or the holders thereof by reason of the rights of such additional shares to vote with the holders of any other class of stock entitled to vote, without regard to class, on all matters to be voted on by the shareholders of the Corporation, so long as such additional shares are not entitled to vote with the Series D Preferred Stock when such Series D Preferred Stock is entitled to vote as a class.

9. No Conversion Rights . The Series D Preferred Stock may not be converted into



ATTACHMENT A — PREFERRED STOCK DESIGNATIONS		PAGE A-6

any other securities of the Corporation by the sole action of the holder thereof.

10. Limited Right to Elect One Director . If, and when, at any time, four consecutive quarterly dividends, in whole or in part, on the Series D Preferred Stock shall be in arrears, then the holders of the Shares of Series D Preferred Stock, voting separately as a class, shall be entitled, at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the Shares of the Series D Preferred Stock called as hereinafter provided, to elect one (1) director and, except as otherwise provided in the Articles of Incorporation, as amended, the holders of shares of Common Stock and any other class of stock of the Corporation, to the extent it shall have the right to vote, shall be entitled to elect all remaining members of the Board of Directors, but the holders of Common Stock and any other class of stock of the Corporation shall not be entitled to vote in the election of the director of the Corporation so to be elected by the holders of Shares of Series D Preferred Stock. Such right of the holders of Shares of Series D Preferred Stock to elect one (1) director may be exercised until dividends in default on the outstanding Shares of Series D Preferred Stock have been paid in full or funds sufficient therefor set aside in cash in trust for the holders of the Series D Preferred Stock, and when so paid or provided for, then the right of the holders of Shares of Series D Preferred Stock to elect such director shall cease, but subject always to the same provisions for the vesting of such voting rights in the case of any such future dividend default or defaults, subject to and in accordance with the following:

(a) At any time after such voting power shall have vested in the holders of the outstanding Shares of Series D Preferred Stock, the Secretary of the Corporation may, and upon the written request of holders of record of 25% or more of the Shares of Series D Preferred Stock then outstanding addressed to him at the principal office of the Corporation, shall call a special meeting of the holders of Shares of Series D Preferred Stock for the election of the director to be elected by them as herein provided, to be held within sixty (60) days after delivery of such request and at the place and upon the notice provided by law and in the Bylaws for the holding of meetings of stockholders; provided , however , that the Secretary shall not be required to call such special meeting in the case of any such request received less than 120 days before the date fixed for the next ensuing annual meeting of stockholders. No such special meeting and no adjournment thereof shall be held on a date less than 30 days before the annual meeting of stockholders or special meeting held in place thereof next succeeding the time when the holders of the Series D Preferred Stock become entitled to elect one (1) director as above provided. If at any annual or special meeting or any adjournment thereof the holders of at least a majority of the Shares of Series D Preferred Stock then outstanding shall be present or represented by proxy then, by vote of the holders of at least a majority of the Shares of Series D Preferred Stock present or so represented at such meeting, the authorized number of directors of the Corporation shall be increased by one (1) and the holders of Shares of Series D Preferred Stock shall be entitled to elect the additional director so provided for.

(b) The director so elected shall serve until the next annual meeting or until his successor shall be elected and shall qualify; provided , however , that whenever the holders of Shares of Series D Preferred Stock shall be divested of voting power as above



ATTACHMENT A — PREFERRED STOCK DESIGNATIONS		PAGE A-7

provided, the term of office of the person elected as director by the holders of Shares of Series D Preferred Stock as a class shall forthwith terminate and the number of the Board of Directors of the Corporation shall be reduced accordingly.

(c) If, during any interval between any special meeting of the holders of Shares of Series D Preferred Stock for the election of one (1) director to be elected by them as provided in the preceding paragraph and the next ensuing annual meeting of stockholders, or between annual meetings of stockholders for the election of directors and while the holders of Shares of Series D Preferred Stock shall be entitled to elect one (1) director, the director so elected by the holders of Shares of Series D Preferred Stock shall resign or die, a majority of the directors then in office though less than a quorum shall designate the successor to fill the vacancy thereby created; provided , however , that if a successor shall not be designated to fill the vacancy created by the resignation or death of the director elected by the holders of Shares of Series D Preferred Stock as hereinabove provided, within forty (40) days after the creation of such vacancy the Secretary of the Corporation shall call a special meeting of the holders of Shares of Series D Preferred Stock and such vacancy shall be filled at such special meeting as hereinabove provided. Any director elected by the holders of the Shares of Series D Preferred Stock or designated to fill a vacancy may be removed from office only by the vote of the holders of a majority of the outstanding Shares of Series D Preferred Stock at a special meeting of the holders of Shares of Series D Preferred Stock called for the purpose of removing such director. Upon the written request of holders of 25% or more of the Shares of Series D Preferred Stock then outstanding addressed to him at the principal office of the Corporation, the Secretary shall, within ten (10) calendar days after delivery to him of such request, call a special meeting of the holders of Shares of Series D Preferred Stock for such purpose to be held within sixty (60) days after delivery of such request; provided , however , that the Secretary shall not be required to call a special meeting in the case of any request received less than 120 calendar days before the date fixed for the next ensuing annual meeting of stockholders. The holders of Shares of Series D Preferred Stock voting separately as a class shall be entitled to fill any vacancy created by the removal of the director at any meeting at which such removal shall have been approved or if such vacancy is not so filled, it may be filled as provided above.

(d) Notwithstanding the preceding paragraphs, any action required or permitted to be taken at a meeting of the holders of the Shares of Series D Preferred Stock may be taken without a meeting if, before or after the action, a written consent thereto is signed by stockholders holding at least a majority of the voting power of the Shares of Series D Preferred Stock. In no instance where action is authorized by written consent need a meeting of holders be called or notice given. Every such written consent shall bear the date of signature of each holder of Shares of Series D Preferred Stock, together with an indication of the number of Shares so held, and no such written consent shall be effective to take the action referred to therein unless within fifteen (15) calendar days of the earliest dated consent is delivered to the Corporation at the address of its principal executive office. Prompt notice of the taking of the corporate action without a meeting by less than a consent of all holders of Series D Preferred Stock shall be given to those holders of Series D Preferred Stock who have not executed such written consent



ATTACHMENT A — PREFERRED STOCK DESIGNATIONS		PAGE A-8

either by the Secretary of the Corporation by U.S. First Class Mail or by the holders of such number of Shares of Series D Preferred Stock represented by the executed consent.

(e) Notwithstanding any other paragraph or provision of this Paragraph 10, if a notice has been given by the holders of more than fifty percent (50%) of the outstanding Shares of Series D Preferred Stock pursuant to Paragraph 5 above to require the Corporation to redeem such Shares, or any other right has been exercised by more than fifty percent (50%) of the outstanding Shares of Series D Preferred Stock to require the Corporation under any set of circumstances to purchase or acquire Shares of Series D Preferred Stock, the limited right to elect one director under this Paragraph 10 may not be exercised by the holders of the Series D Preferred Stock and the holders of the Series D Preferred Stock shall be divested of voting power as provided in this Paragraph 10. Likewise, if any such right has been exercised by the holders of more than fifty percent (50%) of the outstanding Shares of Series D Preferred Stock, or if the Corporation has set aside in trust for the benefits of the holders of the Preferred Stock cash sufficient to pay for all then accrued dividends on and all requested redemptions of the Series D Preferred Stock, the term of office of any person previously elected as a director by the holders of Shares of Series D Preferred Stock as a class shall forthwith terminate.

11. Reacquired Shares . Any Shares of Series D Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such Shares shall, upon cancellation, become authorized but unissued shares of Preferred Stock and may be re-issued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth in the Articles of Incorporation, as amended, or as otherwise required by law.

12. Fractional Shares . The Series D Preferred Stock may not be issued in fractions of Shares which would entitle the holder, in proportion to such holder’s fractional Shares to exercise voting rights, receive dividends or participate in distributions or have the benefit of any other rights of the holders of Series D Preferred Stock. No fractional Shares of Series D Preferred Stock shall be issued by the Corporation.

13. Notice .Any notice or request made to the Corporation in connection with the Series D Preferred Stock shall be given and shall be conclusively deemed to have been given and received five (5) Business Days following deposit thereof in writing, in the United States mail, certified mail, return receipt requested, duly-stamped and addressed to the Corporation, to the attention of its General Counsel, at its principal executive offices (which shall be deemed to be the address most recently provided to the Securities and Exchange Commission [the “SEC”] as its principal executive offices for so long as the Corporation is required to file reports with the SEC).

14. Definitions . For purposes of this Certificate of Designation, the following defined terms shall have the meanings set forth below:

(a) “Business Day” shall be and mean a day on which national and state banks are open for regular business in Dallas County, Texas, but shall not include any Saturday,



ATTACHMENT A — PREFERRED STOCK DESIGNATIONS		PAGE A-9

Sunday or national holiday.

(b) “Corporation” shall be and mean Transcontinental Realty Investors, Inc., a Nevada corporation, and its successors and assigns.

(c) “Distribution” shall have the meaning ascribed in Paragraph 3 above and be as defined in Section 78.288 of the Nevada Revised Statutes.

(d) “Dividend Reference Date” and “Dividend Reference Dates” shall have the meaning assigned in Paragraph 3 above.

(e) “Junior Securities” shall have the meaning ascribed in Paragraph 6 above.

(f) “Liquidation Value” shall have the meaning ascribed in Paragraph 6 above.

(g) “NRS” shall have the meaning ascribed in Paragraph 3 above and be the Nevada Revised Statutes.

(h) “Redemption Price” shall have the meaning ascribed in Paragraph 4 above.

(i) “Share” shall have the meaning ascribed in Paragraph 3 above and shall be a share of Series D Cumulative Preferred Stock, par value $0.01 per share, with a liquidation value equal to the Liquidation Value.



ATTACHMENT A — PREFERRED STOCK DESIGNATIONS		PAGE A-10

Exhibit 10.1

SECURITIES ACQUISITION AND PUT AGREEMENT

THIS SECURITIES ACQUISITION AND PUT AGREEMENT (the “Agreement”) is made and entered into on November 21, 2006, by and among TRANSCONTINENTAL REALTY INVESTORS, INC., a Nevada corporation (“ TCI ” or the “ Company ”), LEMAN DEVELOPMENT, LTD., a Texas limited partnership (“ Leman ”), acting by, through and under its General Partner, WINDMILL/KAUFMAN, LTD., a Texas limited partnership (“ WKL ”), in turn acting by, through and under its General Partner, SIEPELA DEVELOPMENT CORPORATION, a Texas corporation (“ Siepela ”); and KAUFMAN LAND PARTNERS, LTD., a Texas limited partnership (“ KLP ”), acting by, through and under its General Partner, KAUFMAN LAND MANAGEMENT, LLC, a Texas limited liability company (“ Kaufman LLC ”) (Leman and KLP and their respective successors and assigns hereunder are sometimes collectively called “Holders,” and all of the signatories hereto are collectively called the “Parties”); and

WITNESSETH:

WHEREAS, the Holders are also parties to two separate contracts (the “ Contracts ”) covering and relating to the purchase and sale of certain real property and related assets consisting of approximately 3,242 acres of land, more or less, known as part of Windmill Farms, Kaufman County, Texas (the “ Real Property ”);

WHEREAS, pursuant to the Contracts, Prime Income Asset Management, Inc., a Nevada corporation (“PIAMI”), and/or TCI and/or one or more of their respective affiliates, are purchasing the Real Property and related assets from Holders upon the terms and conditions set forth in the Contracts;

WHEREAS, pursuant to the payment provisions of the Contracts, PIAMI is obligated to deliver, in partial payment for the Real Property, certain shares of a newly-designated Series D Cumulative Preferred Stock of TCI;

WHEREAS, TCI is authorized by its Articles of Incorporation, as amended, to issue up to 10,000,000 shares of ‘Preferred Stock, par value $0.01 per share;’

WHEREAS, TCI’s Board of Directors has the authority from time to time to designate one or more series of any number of shares of Preferred Stock by filing one or more Certificates of Designation for such stock with the Secretary of State of Nevada;

WHEREAS, TCI has designated a new series of Preferred Stock of TCI denominated as the Series D Cumulative Preferred Stock and to issue such Series D Preferred Stock to enable an affiliate of TCI to meet the terms of the Contracts;

WHEREAS, PIAMI has assigned the Purchaser’s rights under the Contracts to TCL, and TCI has agreed to issue the Preferred Stock to Leman and Kaufman as part of the “Purchase Price” thereunder;



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 1

WHEREAS, as a material inducement to the Holders to accept the Series D Preferred Stock issued by TCI, and in accordance with the terms of the Contracts, each of the Holders desires the right to require, upon the occurrence of certain contingencies, that TCI repurchase the shares of Series D Preferred Stock from the Holders as set forth below;

WHEREAS, the Parties hereto desire to delineate certain other rights, obligations and governance arrangements with respect to such Series D Preferred Stock.

ACCORDINGLY, for an in consideration of the foregoing premises, the mutual promises, covenants, representations and warranties contained herein, and to facilitate the delivery of the Series D Preferred Stock as part of the consideration for the Real Property under the Contracts, and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged by all of the Parties hereto, the Parties hereto do hereby agree as follows:

1. Adoption of Recitals. All of the recitals set forth above are hereby adopted, confirmed, ratified and approved in the same manner as if fully recopied herein.

2. Designation of Preferred Stock. Prior to or contemporaneously with the execution of this Agreement, the Company has or will designate a new series of its Preferred Stock pursuant to that certain Certificate of Designations substantially in the form annexed hereby as Exhibit “A” (the “Certificate of Designations”) , pursuant to which the Company shall designate a new Series D Cumulative Preferred Stock consisting of 100,000 shares and having a liquidation value of $100 per share (the “Series D Preferred Stock”) , to be issued by TCI pursuant to the terms and conditions hereof and in conformity with the Certificate of Designations. The Series D Preferred Stock will have, among other rights, the right to cumulative cash dividends based upon a $100 per share valuation at the rates set forth in the Certificate of Designation, payable quarterly; the right to payment of $100 per share plus accrued and unpaid dividends in the event of dissolution, liquidation or winding-up of TCI before any distribution is made by TCI to its junior stockholders; and the right to mandatory redemption at any time after September 30, 2011 at a price of $100 per share plus accrued and unpaid dividends. The Series D Preferred Stock shall have no right to conversion into any other securities of the Company and voting rights only as required by law, all as set forth in the Certificate of Designations.

3. Distribution of Securities. Prior to or contemporaneously with the closing under the Contracts (the “Closing”), the Company shall file the Certificate of Designations with the Secretary of State of Nevada, and at such Closing, TCI shall issue and deliver 100,000 shares of the Series D Preferred Stock to Leman and Kaufman of the number of shares of Series D Preferred Stock set forth opposite their respective names below:


	No. of Shares of Series D
Name	Preferred Stock
Leman		10,500
KLP		89,500

Total:		100,000



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 2

4. Representations and Warranties of Leman and KLP as to Shares of Series D Preferred Stock. Each of Leman and KLP separately represents, warrants and acknowledges to TCI as follows:

(a) Accredited Investor. Each of Leman and KLP is an “accredited investor” within the meaning of Regulation D, Rule 501 (a), promulgated under the Securities Act of 1933, as amended, and each of Leman and KLP is acquiring the shares of Series D Preferred Stock (the “Shares”) for its own account and not with a view to the distribution thereof, in whole or part. Each of Leman and KLP hereby confers authority upon TCI (i) not to transfer any of the Shares until TCI has received written confirmation from counsel acceptable to TCI to the effect that any such transfer does not require that the Series D Preferred Stock or such transfer be registered under the Securities Act of 1933, as amended (provided that no such opinion shall be required in the case of a transfer to TCI), and (ii) to affix to the face of the certificate or certificates representing the Shares a legend with respect to the representations set forth herein in the following form or in such other similar form as shall be approved by counsel to TCI:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED OR HYPOTHECATED, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL OF THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

(b) Authorization. Each of Leman and KLP has all requisite power and authority to enter into and perform this Agreement and to acquire the securities to be issued in connection herewith, and Leman and KLP have each obtained all requisite consents, approvals, permits and authorizations for each of Leman and KLP to participate in the Closing of this Agreement and to receive the Shares to be issued to each.

(c) Validity and Binding Effect . This Agreement constitutes each of Leman’s and KLP’s valid and legally binding obligations, enforceable according to its terms, except as such enforcement may be limited or affected by the availability of equitable remedies such as specific performance, and by applicable bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the enforcement of creditors’ rights, including court decisions and general equity principles relating thereto.

(d) Acquisition Entirely for Own Account . The Shares to be acquired by each of Leman and/or KLP will be acquired for investment for each of Leman’s and KLP’s respective own accounts, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof. Neither Leman nor KLP has any present intention of selling, granting any participation in, or otherwise distributing any of the Shares. Neither



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 3

of Leman or KLP has any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares.

(e) Disclosure of Information. Each of Leman and KLP acknowledges that TCI is a reporting company under the Securities Exchange Act of 1934 and as such is required to and does file with the Securities and Exchange Commission (“SEC”) annual reports on Form 10-K, quarterly reports on Form 10-Q, other periodic reports on Form 8-K, proxy statements and other information which is available for public review on the SEC’s website at www.sec.gov. Information is also available on TCI’s website at www.transconrealty-invest.com. Each of Leman and KLP has reviewed the publicly-available information it considers necessary or appropriate for deciding whether to acquire the securities. Each of Leman and KLP further represents that it has had an opportunity to ask questions and receive answers from representatives of TCI regarding the terms and conditions of the offering of the Shares.

(f) Investment Experience. Each of Leman and KLP (a) is an investor in securities of companies investing in real estate and acknowledges that it understands that an investment in real estate is inherently somewhat speculative and any anticipated returns are dependent upon a number of factors beyond the control of TCI; (b) is able to fend for itself and bear the economic risk of its investment; and (c) has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares.

(g) Restricted Securities. Each of Leman and KLP understands that the Shares each is acquiring ate characterized as “restricted securities” under the securities laws of the United States in as much as they are being acquired from TCI in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the “Act’), only in certain limited circumstances. In this connection, each of Leman and KLP represents that it is familiar with SEC Rule 144, as presently in effect, understands the resale limitations imposed thereby and by the Act, and understands that although TCI is a reporting company under the Securities Exchange Act of 1934, Rule 144 will not be available for resales of the Shares. Each of Leman and KLP also understands and acknowledges that there will be no available public market for the Shares and that although TCI has a class of equity securities listed and traded on the New York Stock Exchange, the securities being acquired by Leman and/or KLP will not be listed or traded on the New York Stock Exchange or any other self-regulated organization or exchange.

(h) Further Limitations on Disposition. Without in any way limiting the representations set forth above, and subject to any requirement of law that its property remain within its control, each of Leman and KLP further agrees not to make any disposition of all or any portion of the Shares to any party other than TCI during the first two years after the date of this Agreement, unless:



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 4

(i) There is then in effect a registration statement under the Act covering such proposed disposition, and such disposition is made in accordance with such registration statement; or

(ii) Each of Leman and KLP, as applicable, shall have notified TCI of the proposed disposition and shall have furnished TCI with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by TCI, each of Leman and TCI, shall have furnished TCI with an opinion of counsel reasonably satisfactory to TCI that such disposition will not require registration of such shares under the Act; or

(iii) The transfer is made without consideration by either of Leman or KLP, as the case may be, to an affiliate of, or successor entity to, either of Leman or KLP, as the case may be, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he were the original recipient hereunder.

5. Representations and Warranties of TCI . TCI hereby represents and warrants to each Leman and KLP as follows:

(a) Organization and Authority . TCI is a corporation duly authorized, validly existing and in good standing under the laws of the State of Nevada. TCI has the full power and authority (corporate and other) to execute and file the Certificate of Designations and to perform its obligations under the Certificate of Designations and under this Agreement to be performed by TCI. The execution, filing and performance of the Certificate of Designations, the issuance of the Series D Preferred Stock thereunder and the execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action of TCI. The Series D Preferred Stock is duly and validly issued and is fully paid and nonassessable. The consideration received by TCI for the Series D Preferred Stock is adequate. All necessary filings have been made with the Nevada Secretary of State for the Certificate of Designations and issuance of the Series D Preferred Stock. The execution, filing and performance of the Certificate of Designations, the issuance of the Series D Preferred Stock and the execution, deliver and performance of this Agreement do not conflict with or result in the breach of any organizational documents of TCI or of any contract or agreement binding on TCI, and the Certificate of Designations, the Series D Preferred Stock and this Agreement represent the valid and binding obligation of TCI, enforceable against TCI in accordance with their respective terms, subject only to bankruptcy laws and other laws of general application.

(b) Availability of Public Documents . TCI is subject to the informational filing requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and in accordance therewith, is required to file reports, proxy statements and other information with the SEC. TCI is current in its filings with the SEC under the Exchange Act which may be accessed at www.sec.gov . Certain of such filings may also be accessed through TCI’s website at www.transconrealtyinvest.com.



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Nevada state law as of the date of this Agreement, TCI is not a party to any agreement or instrument that contains a restriction or limitation on TCI’s ability to pay dividends on the Series D Preferred Stock or to redeem or repurchase such Series D Preferred Stock in accordance with the terms of the Certificate of Designations or of this Agreement. TCI is not a party to any agreement or instrument that requires TCI to maintain any minimum level of net worth or of liquidity except for property specific loan covenants requiring TCI to maintain certain debt coverage ratios on specific properties. As long as the Series D Preferred Stock shall remain outstanding, TCI shall not enter into covenants that would materially restrict TCI’s ability to pay dividends on the Series D Preferred Stock or to redeem or repurchase such Series D Preferred Stock in accordance with the terms of the Certificate of Designations or of this Agreement.

6. Accounting Practices; Delivery to Holders of Certain Public Filings and Financial Information. As long as any shares of Series D Preferred Stock shall remain outstanding, as soon as same are filed with the SEC and in any event within fifteen (15) calendar days thereafter, TCI will cause to be mailed to each of Leman and KLP at their respective addresses for notices a copy of TCI’s Form 10-K and Forms 10-Q, without exhibits. To the extent that TCI’s filing of any such report is delayed beyond any filing date or extension date permitted under the Securities Exchange Act of 1934, or to the extent that TCI shall cease to file with SEC the periodic reports set forth above for any reason, TCI shall instead deliver to a representative selected by the Holders of a majority of the outstanding Series D Preferred Stock (a) as soon as practicable and in any event within one hundred fifteen (115) calendar days after the close of each fiscal year of TCI consolidated audited Financial Statements prepared in accordance with GAAP, US, all in reasonable detail and with an opinion expressed by TCI’s independent public accountants that such Financial Statement have been prepared in accordance with GAAP, US, and fairly present the financial condition and results of operations of TCI and its consolidated subsidiaries as of the dates and for period indicated, and such opinion shall contain no qualifications as to whether TCI will continue as a going concern; and (b) as soon as practical and in any event within sixty (60) calendar days after the close of each fiscal quarter of TCI, unaudited Financial Statements prepared in accordance with GAAP, US (subject to normal year end adjustments which are not material individually or in the aggregate).

7. Put Option. Any Holder of the Series D Preferred Stock shall have the option to demand that TCI purchase from such Holder, and on exercise of such option, TCI shall purchase from such Holder at the “Put Price” (as defined below), all of the shares of Series D Preferred Stock held by such Holder at any time and from time to time after the occurrence of a “ Put Event ” (as defined below), subject to the limitations set forth in this Agreement (such option and reciprocal obligation to purchase are hereinafter referred to as the “ Put ”). Such Holder may exercise the Put at any time and from time to time by written notice of such exercise to TCI (the “Put Notice”) delivered at any time after the “ Put Event ” The Put Notice shall be the affected Holder’s demand that TCI repurchase from such Holder all, but not less than all, of the shares of Series D Preferred Stock then held by such Holder at a price of $100 per share plus any accrued and unpaid dividends through the date of the payment of such price (such amount is herein determined to be the “ Put Price ”). Any Put Notice shall set forth a date, which shall not be less than thirty (30) calendar days nor more than sixty (60) calendar days after the date of such Put Notice and which shall be a “ Business Day ,” for the purchase and sale of the shares of Series D Preferred Stock with respect to which the Put is exercised (a “ Put Closing Date ”). On or before



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 6

the selected Put Closing Date, each Holder exercising the Put shall deliver the certificates evidencing the shares of Series D Preferred Stock held by such Holder and being sold on such Put Closing Date, duly endorsed, free and clear of all “ Encumbrances ,” as defined in subpart (a) below, to TCI at its principal executive office, and TCI shall on the Put Closing Date pay to such Holder an amount equal to the Put Price multiplied by the number of shares of Series D Preferred Stock that are represented by the certificates so delivered to TCI on or before the Put Closing Date. The amount payable by TCI to any Holder upon exercise of the Put shall be paid by cashier’s check or by wire transfer of funds. If TCI is unable to purchase all of the shares of Series D Preferred Stock to be sold pursuant to the Put on the applicable Put Closing Date because it does not have adequate equity accounts to effect such repurchase under the Nevada General Corporation Law, TCI shall notify such Holders of the number of Shares TCI is so unable to purchase, and TCI shall purchase (on a pro rata basis among all Holders making the Put on the basis of the number of shares held) all of the shares of Series D Preferred Stock that TCI is then permitted to purchase without violating the capital requirements of the Nevada General Corporation Law, and TCI shall purchase the remaining shares covered by a Put as soon thereafter as is possible without violating such equity requirements. For these purposes the Board of Directors of the Corporation shall make and shall be deemed to have made all reasonable findings of fact, consistent with their fiduciary obligations, in support and in favor of making funds available for purchase of the Shares covered by a Put under the Nevada General Corporation Law. To the extent that TCI is not able to purchase all Series D Preferred Stock covered by the Put Notice because of inadequate equity to do so, or because of any other legal constraints that are not the result of any action or omission of the exercising Holder, the obligation to pay the remaining Put Price shall, to the extent permitted by applicable law, become a general unsecured obligation of TCI to the exercising Holder, and the accrual rate for calculating cumulative dividends on such shares shall increase as provided in Section 8 below.

By presenting a Put Notice to TCI, each signatory to such Put Notice makes in form and substance each and every one of the following representations, warranties and covenants to TCI with respect to the shares of Series D Preferred Stock subject to such Put Notice:

(a) Shares identified in and subject to the Put Notice are owned of record and beneficially by such stockholder free and clear of any “Encumbrance” (as defined below), except for any restrictions on transfer under this Agreement and applicable state and federal securities laws. Upon conclusion of the transfer to TCI there will be no Encumbrances whatsoever, fixed or contingent, that directly or indirectly (i) provide for the sale, pledge or other transfer or disposition of any of the shares held by such stockholder, any interest therein or any rights with respect thereto or which relate to the disposition, exercise or control of such shares, or (ii) obligate such stockholder to grant, offer, or enter into any of the foregoing. Except for restrictions on transfer under applicable federal and state securities laws, on the Put Closing Date, TCI will acquire valid and indefeasible title to such shares of such Series D Preferred Stock free and clear of any Encumbrance. For the purposes of this subpart, the term “ Encumbrance ” shall mean any security interest, pledge, option, lien, claim, commitment, proxy, equity right (including without limitation community property rights), restriction on transfer or encumbrance of any nature whatsoever, other than restrictions under federal and state securities laws.



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 7

(b) The consummation of the Put does not violate any agreement, law, rule, regulation, ordinance, order, writ, injunction, judgment or decree to which such Holder is a party or by which such Holder is bound that would cause any damage or cost to TCI upon payment of the Put Price by TCI.

(c) Such Holder has the power and authority to consummate the Put and to perform its obligations in connection with the Put set forth herein, all permits and approvals from all appropriate governmental regulatory agencies as may be deemed necessary for the lawful consummation of the Put by the Holders have been obtained (except for any such permits or approvals required under applicable state and federal securities laws), and if the stockholder is not an individual person, the exercise of the Put by such stockholder has been approved by the partners or governing body of such stockholder or such other persons or entities as required under such stockholders’ governing documents.

If at the time of the required closing of the Put, there shall be any order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order applicable to or binding on a Holder from any court or other governmental or regulatory authority or instrumentality that prohibits the affected Holder from consummating the transactions contemplated hereby, then the Holder affected by such matter shall disclose the same in writing to TCI before such closing, and TCI shall remain obligated to close hereunder on delivery of the certificates evidencing the Shares covered by the Put, duly endorsed to TCI, but closing shall be delayed until the Holder is lawfully able to close hereunder. Further, if there shall be then pending any action, proceeding or investigation involving such Holder before or by any court or governmental or regulatory or instrumentality or other person challenging, or seeking damages in connection with, the Put transaction contemplated hereby, then in any such event the Holder affected by such matter shall disclose the same in writing to TCI before such closing, and TCI shall remain obligated to close hereunder on delivery of the certificates evidencing the Shares covered by the Put, duly endorsed to TCI, but TCI may and shall be fully protected by interpleading all sums due from TCI hereunder or by otherwise depositing such sums into the control of the court or other authority having jurisdiction over the dispute. Failure by the Holder exercising the Put to disclose to TCI any matter required to be disclosed under this paragraph shall be a continuing representation and warranty by such Holder that no such matter exists, and the Holder who fails in such disclosure obligation shall indemnify and hold TCI harmless, and at TCI’s option, defend TCI, against any loss, cost, liability, damage or expense, including reasonable attorneys’ fees, arising from such breach.

For the purposes of this Agreement, the following terms shall have the meanings ascribed to each below unless otherwise specifically defined herein:

(a) “ Business Day ” shall be and mean any day other than a Saturday, Sunday or a day on which federally-chartered commercial banks are authorized by law to be closed.

(b) “ Capital Lease ” shall be and mean a lease that would be capitalized on a balance sheet of a lessee prepared in accordance with GAAP, US



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 8

(c) “Financial Statements” as of any date means the following consolidated financial statements of TCI: Balance Sheet(s), Consolidated Statement(s) of Operations, Consolidated Statement(s) of Stockholders Equity, and Consolidated Statement(s) of Cash Flows of TCI as of the date specified, prepared in conformity with GAAP, US, together with related notes thereto, as required by GAAP, US for the fiscal year then ended (in the case of annual statements) or the fiscal quarter then ended (in the case of quarterly statements).

(d) “Form 10-K” and “Form 10-Q” shall be and mean the annual and quarterly reports required to be filed by TCI with the Securities and Exchange Commission and any similar reports required to be filed in the future which contain annual financial statements or quarterly financial statements, as the case may be.

(e) “ Encumbrance ” shall have the meaning ascribed in Paragraph 7, subpart (a) above.

(f) “ GAAP, US ” shall be and mean accounting principles and practices generally accepted in the United States of America, together with the standards of the Public Company Accounting Oversight Board (United States), which assesses the accounting principles used and evaluates the overall presentation of financial statements and schedules from time to time, all applied on a basis consistent from year to year except for changes required by such principles and practices from time to time.

(g) “ In Arrears ” shall mean, with respect to any quarterly dividend accrued on the Series D Preferred Stock, that such dividend has not been paid in full for any reason on or before its respective “Dividend Reference Date,” as that term is defined in the Certificate of Designations (and for this purpose partial payment of any accrued quarterly dividend shall be considered nonpayment);

(h) “ Liabilities ” shall be and mean those liabilities required to be listed as liabilities under GAAP, US on the Consolidated Balance Sheet of TCI and shall include (i) all consolidated obligations for borrowed money, (ii) all obligations evidenced by bonds, debentures, notes or similar instruments of indebtedness (but shall not include any preferred stock), (iii) all obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations as lessee under any “ Capital Leases ,” and (v) all non-contingent obligations to reimburse any other person or entity for amounts which have actually been drawn under a letter of credit or similar instrument, but shall not include any guaranty of indebtedness of others or accommodation pledges of assets or customary trade payables that may under GAAP, US be disclosed in notes to the Financial Statements rather than as liabilities on such Consolidated Balance Sheet.

(i) “Liquidation Event” shall be and mean (i) any reorganization, consolidation or merger of TCI in which TCI is not the continuing or surviving



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 9

corporation, or (ii) any sale or other transfer of more than eighty percent (80%) of the TCI’s assets (in one transaction or a series of related transactions taking place within the same twelve-month period, and such transactions must be treated as sales under GAAP, US to be sales for purposes of determining whether a Liquidation Event has occurred); or (iii) approval by the stockholders of the Corporation of a plan or proposal for the liquidation or dissolution of the Corporation.

(j) “ Net Worth ” and/or “ Stockholders’ Equity ” shall be and mean the sum of TCI’s stockholders’ equity accounts as reflected from time to time on its consolidated balance sheet under GAAP, US, including preferred stock, common stock, paid-in capital, retained earnings and other accumulations less treasury stock, accumulated deficit or accumulated other comprehensive loss.

(k) “ Put Event ” shall be and mean any one or more of the following events or conditions (provided, however, that no event or condition described in subparts (i), (ii), (iii), (iv) or (v) below, to the extent that such event or condition arises after July 31, 2011, shall be a “Put Event”):

(i) A total of three quarterly dividends on the Series D Preferred Stock shall be In Arrears, whether or not such dividends are consecutive, whether or not funds are available for payment and whether or not such dividends have been declared, and such condition shall have continued for thirty calendar days after the Dividend Reference Date applicable to the third quarterly dividend; or

(ii) At least two quarterly dividends on the Series D Preferred Stock (whether or not such dividends are consecutive, whether or not funds are available for payment and whether or not such dividends have been declared) shall have been In Arrears as of any Test Date, and such condition of arrearage shall have occurred on five separate Test Dates, whether or not consecutive; or

(iii) the ratio of TCI’s Liabilities to TCI’s Stockholders’ Equity shall exceed 10 to 1 at the end of any calendar quarter or fiscal year as calculated from the Financial Statements for such calendar quarter or end of a fiscal year as applicable; or

(iv) the Stockholders’ Equity of TCI shall be less than $150 million at the end of any calendar quarter or fiscal year end as calculated from the Financial Statements for such calendar quarter or fiscal year end as applicable; or

(v) a Liquidation Event of TCI has occurred;

(vi) TCI shall fail to honor any of its obligations under any one or more of the following paragraphs of the Certificate of Designations, and such failure shall continue for a period of thirty (30) days after written notice of such failure and the action necessary to cure the same is given to TCI: Paragraphs 3(b), 5, 6, 7, 8 or 10 (provided that no Put Event may first arise under this paragraph (k)(vi) after December 31, 2011).



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 10

Breaches or events of default under this Agreement or under the Certificate of Designations that are not included within the definition of “ Put Event ” above shall give rise only to actions by the affected Holders for specific performance and for damages, as appropriate, but such other breaches or defaults shall not give rise to a Put under this Agreement; only the Put Events shall give rise to a Put.

The terms or phrases “ Put Exercise ,” “ Put Notice ,” “ Put Price ,” “ Put Closing Date ” and “Put” shall have the meanings ascribed in the first portion of this paragraph above. For the purposes of this Agreement, except as otherwise expressly provided or unless the context clearly requires, all terms defined in this Agreement include the plural as well as the singular, all accounting terms not otherwise defined herein shall have the meanings ascribed to them in accordance with GAAP, US and the words “ herein ,” “ hereof ” and “ hereunder ” and other words of similar import refer to this Agreement as a whole, and not to any particular paragraph, section, subpart or other subdivision.

(l) “ Test Date ” shall be and include each October 31, January 31, April 30 and July 31 during the time that any of the Series D Preferred Stock remains outstanding, provided that the final Test Date shall be July 31, 2011.

8. Exercise of Put; TCI’s Failure to Close . In the event that a Holder delivers a Put Notice to TCI and otherwise complies with its obligations in connection with the Put, and TCI does not for any reason on the Put Closing Date specified in the Put Notice [which must be at least thirty (30) calendar days after receipt by TCI of such Put Notice] consummate the Put by the purchase of all of the shares of Series D Preferred Stock covered by the Put at the Put Price, unless such Put Notice is rescinded by the Holder submitting the same, then TCI shall pay, in addition to the accrual rate for the dividends on any shares covered by such Put for which TCI has not paid the Put Price, late charges calculated on the aggregate Put Price not so paid at the “ Default Rate .” The Default Rate shall be five percent (5%) per annum. Therefore, if TCI shall not be able to close on the Put for any reason other than a breach by the Holder, dividends shall continue to accrue on Series D Preferred Stock covered by the Put and in addition TCI shall incur to the Holders a late charge calculated by applying to the $100 per share value of the Series D Preferred Stock covered by the Put a simple interest rate equal to 5% per annum. The total of dividends and late charges accruing shall never exceed fifteen percent (15%) per annum. In addition, any affected Holder may:

(a) elect to rescind the Put Notice, in whole or in part, and retain such of the shares of Series D Preferred Stock specified in the Put Notice as TCI is not able to or does not repurchase; or

(b) elect to bring legal action for damages or a specific performance; or

(c) elect to defer TCI’s compliance with the remaining terms of the Put Notice until such time as TCI is able to purchase such remaining shares of Series D Preferred Stock.



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 11

In all instances, at all times while TCI has not repurchased such additional shares of Series D Preferred Stock, such shares shall continue to accrue dividends plus interest at the Default Rate as set forth above until repurchased in accordance with the Put Notice (unless the Put Notice is withdrawn by the Holder).

9. Expiry of this Agreement . This Agreement shall expire and be without further force or effect on January 31, 2012, except that all terms and provisions of this Agreement shall remain in full force and effect as to any Put that has been exercised as of such expiry date but that has not been closed and funded, and any cause of action that has accrued in favor of any party under this Agreement prior to such expiry date shall survive the expiration of this Agreement.

10. Assignment . This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their permitted successors and transferees.

(a) Assignment by Holder; Right of First Refusal on Certain Transfers . Any Holder is free, without the joinder or consent of TCI, to assign all or any part of its rights (but not its obligations) under this Agreement in connection with the any transfer of that Holder’s Series D Preferred Stock that is a permitted transfer hereunder. In connection with any such permitted transfer by any Holder, the transferring Holder shall remain fully responsible for its obligations hereunder. Otherwise, any transfer of the rights of a Holder hereunder may be made only with the consent of TCI. It is provided, however, that prior to making any transfer of any rights under this Agreement in connection with a transfer of Series D Preferred Stock, and if such transfer is for valuable consideration, the Holder desiring to effect such transfer shall first give written notice of such proposed transfer for value to TCI (a “Notice of Sale”), including a copy of a letter of intent or contract for the proposed transaction, a statement of the identity of the person or entity to which such proposed transfer is being made, and a statement of the terms and conditions of the proposed transaction. On receipt of such Notice of Sale, TCI shall have, for a period of twenty (20) days after its receipt of such Notice if Sale, the preferential right or option to purchase the Series D Preferred Stock affected by the proposed transfer on the same terms and conditions as the transaction that the affected Holder desires to accept, as set forth in the Notice of Sale. To exercise such right and option, TCI must give written notice of such exercise to the affected Holder within such twenty (20) day period, and TCI must deposit on giving such notice an amount equal to ten percent (10%) of the cash consideration involved in the proposed transfer into its attorneys’ trust account as earnest money for the transaction, such earnest money to paid to the Holder as liquidated damages should TCI default after exercise. At the same time TCI must provide the affected Holder verification by TCI’s attorneys of such deposit with the notice of exercise. On giving such notice, TCI shall be obligated to close on the terms and conditions set out in the Notice of Sale (being the same terms offered by the third party), except that TCI shall be obligated to close such transaction within thirty (30) days of the Notice of Sale. If TCI fails to exercise the right and option, or if TCI exercises the right and option and then fails to close the purchase timely as set forth above, the affected Holder may sell, transfer or otherwise dispose of the offered shares and related rights under this Agreement to the party specified in the original Notice of Sale for the consideration and upon the term and conditions stated herein, and not otherwise; provided that such sale, transfer or other disposition must be completed at any



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 12

time within, but not after ninety (90) days after the date that the Notice of Sale is delivered to TCI. If not completed within the appropriate period designated above, the Notice of Sale theretofore given shall in all respects be a nullity and shall be treated as though it never had been given and any resulting transfer shall be of no force, effect or validity for any purpose whatsoever. If such other disposition is not consummated on the same terms as stated in the Notice of Sale, such disposition shall be of no force, effect or validity for any purpose whatsoever and the notice thereof shall be rendered ineffective. The right of first refusal provisions of this paragraph shall not apply in any way to (x) any pledge of any of the Series D Preferred Shares and related rights under this Agreement; provided that in event of any such pledge, the Holder shall obtain the related lender’s agreement to be bound by the terms of this Agreement in making any disposition of such Shares and legal rights, by foreclosure or otherwise; (y) any transfer of Series D Preferred Shares and related rights under this Agreement by a Holder to TCI; and (z) any transfer of Series D Preferred Shares and related rights under this Agreement by a Holder (i) if such Holder is a legal entity, to the shareholders, members, partners or other beneficial owners of such Holder in connection with the dissolution of such Holder; or (ii) to the spouse or descendants of such Holder, or (iii) to any trust, partnership or limited liability company created solely for his benefit or of a Holder, his spouse and/or descendants, or (iv) to any beneficiary of such a trust; provided that this exception under subpart (iv) shall apply only to distributions or transfers from such a trust to its beneficiaries pursuant to the terms of the trust. In the case of any transfer to which these right of first refusal provisions apply, the purchaser from such Holder shall take the Series D Preferred Stock and related rights under this Agreement free from any further right of first refusal under this paragraph; that is, TCI shall have only one opportunity to exercise the right of first refusal and if the transaction to a third party closes, the right shall be without further force or effect. In the case of any transfer to which these right of first refusal provisions do not apply because of the exceptions in subsections (i) through (iv) above, the transferee from such Holder shall take the Series D Preferred Stock and related rights under this Agreement subject to the right of first refusal under this paragraph, so that TCI shall in every case have at least one opportunity to exercise the right. As used in this paragraph, the term “descendants” shall include descendants by adoption if the adoption was a court adoption of a minor under fourteen (14) years of age.

(b) Assignment by TCI . TCI is free, without the joinder or consent of any Holder, to transfer all or any part of its rights under this Agreement in connection with any reorganization or sale of all or substantially all of TCI’s assets, including any merger, conversion in entity form or other change in organization. In connection with any such transfer by TCI, TCI shall remain fully responsible for its obligations hereunder and any successor entity shall likewise assume such obligations. Otherwise, any transfer of the rights of TCI hereunder may be made only with the consent of a majority in interest of the holders of the Series D Preferred Stock.

11. Miscellaneous . The following provisions form a part a part of this Agreement:

(a) Costs and Expenses . Except as otherwise expressly provided for in this Agreement, each Party hereto shall bear its own costs, expenses and fees incurred or assumed by such party in the preparation or execution of this Agreement and in compliance with the covenants and conditions herein, whether or not the transactions contemplated hereby shall be consummated.



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 13

(b) Further Cooperation . To the extent that either Party’s further approval or other action is deemed necessary or desirable by any other party hereto in order to effectuate the terms, conditions and purposes of this Agreement and the matters covered hereby, each of the Parties hereto hereby agrees to execute all reasonable documents and take all actions reasonably requested by any other Party.

(c) Notices . Any notice or other communication required or permitted to be given by this Agreement or any other document or instrument referred to herein which has been executed in connection herewith must be given in writing (which may be by facsimile or electronic transmission followed by mail or personal delivery), and must be personally delivered or mailed by prepaid, first class or certified or registered mail to the Party to whom such notice or communication is directed at the address of such Party set forth opposite his or its name on the signature page to this Agreement. Subject to the other provisions of this Agreement, any Party may change its address (or redesignate the person to whom such notice shall be delivered) for purposes of this Agreement by giving notice of such change to the other Party pursuant to this provision. In all instances, any notice or other communication required or permitted to be given by this Agreement shall only be effective upon actual receipt thereof by the person intended to receive same. Although not required for effectiveness of the notice, a copy should also be delivered to counsel for the respective Parties as follows:


		For TCI:		Steven C. Metzger
				Metzger & McDonald PLLC
				3626 N. Hall Street, Suite 800
				Dallas, TX 75219-5133
				214-224-7555 (Facsimile)

		For Leman and KLP:		Rudy Beuttenmuller
				Thomas, Sinclair, Beuttenmuller, P. C.
				5335 Spring Valley Road
				Dallas, TX 75254
				972-991-2121 (Facsimile)

(d) Amendments . Neither this Agreement nor any term hereby may be changed, waived, discharged or terminated orally, but only by written agreement among the Parties hereto.

(e) Headings . The headings of sections or paragraphs of this Agreement are inserted for convenience of reference only and shall not be deemed to constitute apart of this Agreement.

(f) Binding Effect . All terms and provisions of this Agreement shall be binding upon and inure to the benefit and be enforceable by the heirs, legal representatives, successors and assigns of the Parties hereto whenever applicable to such Party.



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 14

(g) Entire Agreement . This Agreement constitutes the entire agreement among the Parties hereto, supersedes and any and all prior understandings and arrangements, and may not be modified or amended except on or after the date hereof by a writing executed by the party against whom such modification or amendment is sought to be enforced. The failure of any of the Parties to this Agreement to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be deemed to be a waiver or deprive such person or entity of the light thereafter to insist upon strict adherence to that term or any other term of this Agreement. No waiver of this Agreement, the obligations or conditions hereon, shall be valid unless the writing is signed by the Party against whom said waiver is sought to be enforced.

(h) Governing Law and Enforcement . This Agreement shall be construed and enforced in accordance with the laws of the State of Texas, the state in which it was negotiated, executed and delivered; provided , that matters relating to the corporate powers of TCI, the internal governance of TCI, TCI’s right or ability to pay dividends and to effect repurchases of its share and the obligations and/or duties of TCI’s governing body shall be governed by the laws of the State of Nevada. Should any clause, sentence or paragraph of this Agreement be judicially or administratively declared to be invalid, unenforceable or void under the laws of the State of Texas or Nevada, as applicable, or the United States of America or any agency or subdivision thereof, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement, so long as the offending provision does not go to the benefit of the economic bargain of the Parties. To the extent that any offending provision does not go to the benefit of such economic bargain, the Parties hereto agree that the part or parts of this Agreement so held to be invalid, unenforceable or void shall be deemed to have been deleted herefrom, the remainder shall have been included herein and a provision with effect as close as possible to the deleted provision but that is enforceable shall be substituted therefor by the body making the determination of invalidity or unenforceability. The Holders shall be entitled to specific enforcement of their rights under this Agreement, to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The Parties agree and acknowledge that money damages will not be an adequate remedy for any breach of the provisions of this Agreement and that the Holders may in their sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and for other injunctive or equitable relief in order to enforce or prevent violation of the provisions of this Agreement. In the event any Party hereto shall fail to perform any of its obligations under this Agreement, such Party hereby agrees to pay all reasonable expenses, including reasonable attorneys’ fees, in such reasonable amount as may be awarded by a court of competent jurisdiction to any Party hereto which is successful in enforcing this Agreement.

(i) No Third Party Beneficiaries . This Agreement does not create and shall not be construed as creating any rights enforceable by any person other than the undersigned Parties and their respective lawful successors and assigns and other persons named herein and does not imply or release and shall not be construed as implying or



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 15

releasing that any rights are enforceable against any person or entity other than the undersigned parties and their respective successors and assigns and the persons named herein.

(j) Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed to be an original for all purposes, and all of which shall constitute one and the same instrument, and it shall not be necessary for the proof of this Agreement that any party produces or accounts for more than one such counterpart.

(k) Facsimile: Electronic Transmission . This Agreement or any notices hereunder may be transmitted by facsimile or by electronic transmission, and it is the intent of the parties for the facsimile or electronically reproduced autograph by a receiving facsimile machine or computer to be an original signature, and for the facsimile or any electronic reproduction and any complete photocopy of this Agreement or notice to be deemed an original counterpart.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS



SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 16

IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be executed, in one or more counterparts, each of which shall be deemed to be an original, by their respective, duly-authorized representatives as of the date and year first above written.

Addresses, Telephone Nos. and
Facsimile Nos. for Notices

See Section 10(c) above for additional
notice addresses for legal counsel.


	TCI:

	TRANSCONTINENTAL REALTY INVESTORS, INC., a Nevada corporation
1800 Valley View Lane, Suite 300
Dallas, TX 75234	By:	/s/ Steven A. Shelley

469-522-4200 (Telephone)		Name: Steven A. Shelley
469-522-4360 (Facsimile)		Title Vice President

	LEMAN:

	LEMAN DEVELOPMENT, LTD., a Texas limited partnership, by, through and under its general partner

	By: WINDMILL/KAUFMAN, LTD., a Texas limited partnership, general partner, acting by, through and under its general partner
5001 LBJ Freeway, Suite 830
Dallas, Texas 75244
972-960-2777 (Telephone)		By: SIEPELA DEVELOPMENT
972-960-2660 (Facsimile)		CORPORATION, a Texas
		corporation, general partner



	By:	/s/ James A. Siepela
		James A. Siepela, President


	KLP:

	KAUFMAN LAND PARTNERS, LTD., a Texas limited partnership, acting by, through and under its general partner

5001 LBJ Freeway, Suite 830	By: KAUFMAN LAND MANAGEMENT LLC, a
Dallas, Texas 75244		Texas limited liability company, general partner
972-960-2777 (Telephone)
972-960-2660 (Facsimile)


	By:	/s/ James A. Siepela
		James A. Siepela, Manager


		SECURITIES ACQUISITION AND PUT AGREEMENT		PAGE 17

Effective date of filing (optional):

(must not be later than 90 days after the certificate is filed)

Officer Signature:

/s/ Louis J. Corna