Loading...
HomeMy WebLinkAboutAttachment No. 6 Purchase and Sale AgreementAttachment No. 6 REAL ESTATE PURCHASE AGREEMENT This Real Estate Purchase Agreement (this "Agreement") dated as of September CI , 2013 (the "Effective Date"), is entered into by and between PLAZA MANOR PRESERVATION, L.P., a California limited partnership ("Seller"), and AFFORDABLE HOUSING ASSOCIATES, LLC, a California limited liability company ("Buyer"). Background. Seller is the owner of a 372-unit apartment development (the "Apartment Development") commonly known as "Summercrest Apartments" located at 2721 Plaza Boulevard, in the City of National City, County of San Diego, State of California. The Apartment Development was allocated low-income housing tax credits (the "Tax Credits") as provided in Section 42 of the Internal Revenue Code of 1986, as amended (the "Code"). Buyer has expressed an interest in purchasing the Apartment Development on the terms provided in this Agreement, and Seller has indicated that it is willing to sell the Apartment Development to Buyer on such terms. 2. Agreement to Purchase. Buyer agrees to purchase from Seller, and Seller agrees to sell to Buyer, all of the following property (collectively, the "Property"): (1) the tract or tracts of land described in Exhibit A to this Agreement and all right, title, interest and estate of Seller in and to all related rights, easements, privileges, and appurtenances (the "Land"); (2) all right, title, interest and estate of Seller in and to all buildings, structures, parking areas, sidewalks, landscaping and other improvements located on the Land (collectively, the "Improvements" and with the Land, collectively, the "Real Property"); (3) all right, title, interest and estate of Seller in and to all furniture, fixtures, equipment, including computer hardware, machinery, building materials, supplies, inventory and other tangible property, in each case, owned or leased by Seller and located on the Real Property (collectively, "Personalty"); (4) all right, title, interest and estate of Seller in, to and under all leases and rental agreements permitting occupancy or use of any apartment unit or other space in the Improvements (collectively, "Leases"), including unapplied 'refundable security deposits plus any interest earned thereon to the extent required to be maintained by applicable law- and unapplied refundable tenant fees, if any, all guaranties of Leases; and advance payments of and all rents due under Leases (collectively, "Rents") allocable to the period after Close of Escrow; (5) all right, title and interest of Seller in and to (a) all transferable permits, licenses, approvals, utility rights, development rights and similar rights related to the Property, if any, whether granted by governmental autEorities or Sumrnercrest v3 Attachment No. 6 private persons, (b) all telephone numbers and hot lines now serving the Apartment Development, (c) all assignable warranties and guaranties covering all or any part of the Property, excluding warranties and guaranties provided by any affiliate of Seller, (d) the name "Summercrest Apartments" and related domain names, if any (collectively, the "Intangibles"), and (e) all Service Contracts (defined below); (6) all tenant files and other tenant records for any period from and after the placed in service date of the Apartment Development (the "Tenant Records" and collective with the Tax Credit Documents, the "Records"). Notwithstanding anything to the contrary contained in this Agreement, without limitation, the following are not included in the Property: (a) any lump sum or upfront payments heretofore paid to Seller or its predecessors under any of the Service Contracts, (b) any unearned insurance premiums, (c) any insurance policies or insurance contracts owned or held by Seller or its affiliates in connection with the Property, (d) any and all deposits, cash and other accounts owned or held by Seller or its affiliates, except as may otherwise be provided herein, and except for any unapplied refundable tenant deposits plus legally required interest and prepaid rents, (e) the existing property management contract in connection with the Property, (f) any and all reserves currently maintained by Seller pursuant to loan documents, the HAP Contract or other project documents, which shall remain the property of Seller at the Close of Escrow, to the extent HUD or any other applicable regulatory does not prohibit such release, and (g) the computer software systems and programs utilized by Seller or its property manager in connection with the Property, provided, however, Seller shall provide to Buyer a print-out of the Rent Roll and operating statements prior to Closing, and subject to any licensing issues, Seller shall reasonably cooperate with Buyer in an attempt to provide the Rent Roll and operating statements in electronic format prior to Closing. As used herein, "Service Contracts" means all contracts to which Seller or Property Manager is a party relating to the operation, maintenance or management of the Property, including any agreements for electric, gas, telephone, cable television, security alarm monitoring, sewer, trash collection or similar services, supply contracts, equipment leases, and leasing brokerage agreements. The transfer of the Property contemplated by this Agreement is referred to in this Agreement as the "Transaction." 3. Purchase Price. The purchase price to be paid by Buyer for the Property (the "Purchase Price") is FORTY SLX MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($46, 250, 000. 00). 4. eposit. (A) Initial Deposit. Buyer shall deliver to the Escrow Agent (as hereinafter defined) a deposit in the amount of TWO HUNDRED FIFTY THOUSAND ONE HUNDRED DOLLARS ($250,100,00) within three (3) Business Days of the Effective Date, $100 of which shall be nonrefundable and immediately released to Seller as independent consideration for this Agreement, and the remaining $250,000.00 shall be considered the Initial Deposit (the "Initial Deposit"), The Initial Deposit and all other sums to be paid by Buyer to Escrow Agent pursuant to this Agreement shall be delivered by wire transfer in accordance with the wiring instructions Summercres1 v3 Attachment No. 6 provided by the Escrow Agent. The term "Business Day," as used in this Agreement, means any day of the week other than a Saturday, Sunday or a legal holiday in California. (b) Additional tieposit unless tills Agreement is terminated on or betore tne expiration of the Feasibility Period (defined in Section 7 below), pursuant to the provisions of Section 7(B) hereof, then, within one (1) Business Day of the end of the Feasibility Period, Buyer shall deposit the additional amount of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) (the "Additional Deposit" and, together with the Initial Deposit, the "Deposit") with the Escrow Agent. (C) Timely Payment of Initial Deposit and Additional Deposit. If the Initial Deposit is not received by Escrow Agent in a timely manner as provided herein, Seller shall have the right to terminate this Agreement upon written notice to Buyer as provided herein. If the Additional Deposit is not received by Escrow Agent in a timely manner as provided herein, Buyer shall be deemed to have terminated the Agreement during the Feasibility Period and thereafter the Initial Deposit previously made pursuant to this Section 4 shall be released to the Buyer. (D) Non -Refundable Deposit. Unless this Agreement is terminated before the expiration of the Feasibility Period, Buyer shall not be entitled to a return of the Initial Deposit except (i) as a result of a material default by Seller under this Agreement, (ii) in the event of a casualty or condemnation event as described in Section 15 hereof, or (iii) Buyer is unable to obtain all consents and approvals described in Sections 5 (B), (C), (D) and (E); provided, however, with respect to the items listed in (D)(iii) above, Buyer (a) shall exercise good faith efforts to secure the consents and approvals prior to the expiration of the Contingency Approval Date defined in Section 5(A) below, and (b) shall not be entitled to the return of the Initial Deposit pursuant to (D)(iii) above unless Buyer provides Seller with a written denial of consent or approval from the applicable governmental agency prior to the Closing Date set forth in Section 6 below. In the event of termination of this Agreement for any reason following the expiration of the Feasiblity Period, the Additional Deposit shall be returned to Buyer. (E) Balance. On the Closing Date (as hereinafter defined), Buyer shall deposit into escrow an amount equal to the Purchase Price, decreased by the Deposit, and increased or decreased by the amount of any items chargeable or any credits due to Buyer under this Agreement ("Seller Proceeds") Interest, All funds received from or for the account of Buyer shall be deposited by the Escrow Agent in a money market fund that invests in short term, US Treasury bills ancEor US agency notes with a federally insured state or national bank, to the extent such option is available to the Escrow Agent. Except as provided in Section 4(D), all interest accrued on the Deposit shall become part of the Deposit. All interest earned on the Deposit shall be reported to the Internal Revenue Service, and to any other taxing authority with jurisdiction (if any), as income of the party ultimately entitled to the Deposit. Seller and Buyer, as appropriate, shall promptly execute all forms reasonably required by the other party to effectuate the intent of this Section 4(F), including Form W-9. (G) Escrow Agent, Escrow Agent (as defined in Section 6 below) shall hold and disburse the Deposit in escrow pursuant to the terms of this Agreement. If the Closing does not 3 Surnmeicrest v3 Attachment No. 6 occur on or before the Closing Date, Escrow Agent shall distribute the Deposit in accordance with this Agreement and all additional mutual instructions as the parties may provide. In the event of any dispute between Buyer and Seller regarding the disposition of the Deposit, Escrow Agent may withhold such disposition until such dispute is resolved or may interplead the Deposit into a court of competent jurisdiction within Orange County, California. Escrow Agent shall not be liable for any damage, liability or loss arising out of or in connection with the services rendered by Escrow Agent pursuant to this Agreement, except in the event of a breach by Escrow Agent of its obligations hereunder or the gross negligence or willful misconduct of Escrow Agent. 5. Financing Commitment, Assumption of the HAP Contract, CaIHFA Approval and TCAC Consent (A) Buyer's Financin . Buyer shall have a period of seventy-five (75) days from the Effective Date ("Financing Approval Period") to obtain an irrevocable, binding commitment from its lender(s) in an amount sufficient to finance the acquisition of the Property (the "Financing Commitment"). Provided that Buyer complies with each of its obligations under this Agreement. Buyer's obligations hereunder shall be expressly contingent upon Buyer obtaining the Financing Commitments on or prior to the expiration of the Financing Approval Period (the "Contingency Approval Date"). If, prior to the expiration of the Financing Approval Period, Buyer fails to notify Seller that Buyer has obtained the Financing Commitment, including evidence of same reasonably satisfactory to Seller, then this Agreement shall be deemed terminated as of the expiration of the Financing Approval Period and the Deposit, less the Initial Deposit, shall be returned to Buyer; otherwise, the Purchase Agreement shall remain in full force and effect. If this Agreement is terminated pursuant to this Section 5(A), Seller shall provide written notice of such termination to Buyer and Escrow Agent within three(3) business days from the date of termination; provided, however, Seller's failure to provide such notice shall not effect or rescind the termination of this Agreement. (B) Assumption of HAP Contract. Buyer shall submit to the U.S. Department of Housing and Urban Development ("HUD") (i) a HUD Form 2530 Previous Participation Certification, and (ii) a request for an Assignment, Assumption and Amendment Agreement Section 8 Housing Assistance Payments Preservation Renewal Contract (Uninsured Project) (the "Section 8 Assignment") to gain approval for the assignment of that certain Section 8 Housing Assistance Payments Contract from Seller to Buyer, identified as HAP Contract Number CA-33L00001 I (the "HAP Contract") no later than the Contingency Approval Date. Buyer, at its sole cost and expense and on or prior to the date which is seven (7) days after the expiration of the Feasibility Period, shall submit to HUD the Form 2530 Previous Participation Certification, a request for the Section 8 Assignment and all documents and infomiation required in connection therewith (collectively the "Section 8 Assignment Packet"), and shall thereafter diligently pursue using commercially- reasonable efforts the administrative processing of the Section 8 Assignment Packet to completion with HUD and obtaining 2530 clearance on or prior to the Contingency Approval Date, Buyer shall deliver to Seller copies of all correspondence Buyer transmits to HUD or any other entities associated with the approval of the Section 8 Assignment within three (3) business days of such transmittal. Surnmercrest v3 Attachment No. 6 (C) CalHFA Fannie Ma A oval. Seller entered into that certain Regulatory Agreement, dated December 6, 2000, by and between Seller and the California Housing Finance Agency ("CalHFA"), and recorded against the Property in the Official Records of San Diego County, California on December 12, 2000, as Document No. 2000-0674834, as amended by that certain First Amendment to Regulatory Agreement dated as ofJune 1, 2002, by and between Seller and CalHFA, recorded on June 20, 2002, as Document No. 2002-05233684 in the Official Records of said County (as amended, the "CaIHFA Regulatory Agreement"), which CaIHFA Regulatory Agreement was assigned by CallIFA to Citibank, N.A. pursuant to that certain Assignment of Regulatory Agreement dated December 16, 2011 and recorded in the Official Records of said County on December 20, 2011 as Document No. 2011-0683663, and was subsequent assigned by Citibank, N.A. to Fannie Mae pursuant to that certain Assignment of Regulatory Agreement dated December 16, 2011 and recorded in the Official Records of said County on December 20, 2011 as Document No. 2011-0683664. Buyer acknowledges that pursuant to the CaIHFA Regulatory Agreement, transfer of ownership of the Property to Buyer is subject to CalHFA's approval, and may further require the approval of such transfer by Fannie Mae. Buyer, at its sole cost and expense and on or prior to the date which is seven (7) days after the expiration of the Feasibility Period, shall submit to Call-IFA. (and, if required, to Fannie Mae) a request for approval of the conveyance of the Property to the Buyer in accordance with the terms of the CaIHFA Regulatory Agreement, and all documents and information required in connection therewith (collectively, the "CaIHFA Regulatory Agreement Assignment Packet"), and shall thereafter diligently pursue using commercially reasonable efforts the administrative processing by CaIHFA (and, if required, by Fannie Mae) of the CaIHFA Regulatory Agreement Assignment Packet and Ca1HFA's approval (and, if required, Fannie Mae's approval) thereof to completion on or prior to the Contingency Approval Date. Buyer shall deliver to Seller copies of all correspondence Buyer transmits to CaIHFA or any other entities associated with the approval of the conveyance of the Property within three (3) business days of such transmittal. (D) HUD and CaIHFA Approval. Notwithstanding anything to the contrary in this Section 5, Buyer shall have until the Contingency Approval Date to obtain (i) HUD's approval of Buyer's assumption of the Section 8 Assignment Packet and the assignment of the HAP Contract to Buyer ("HAP Contract Approval"), and (ii) Ca1F1FA's (and, if required, Fannie Mae's) approval of the transfer and conveyance of the Property to Buyer as required by the CaIHFA Regulatory Agreement (the "CalHFA Transfer Approval"). If Buyer has not secured HAP Contract Approval and CaIHFA Transfer Approval (or obtained such approvals with material adverse conditions) or has not secured the TCAC Consent (as defined below) (or obtained such approvals with material adverse conditions), in each case, on or prior to the Contingency Approval Date, then in such event, Buyer shall have the right to terminate this Agreement by providing written notice of such termination to Seller no later than three (3) Business Days after the Contingency Approval Date (provided, that, Buyer's right to terminate this Agreement hereunder shall only apply if Buyer has complied in all material respects with its obligations under Section 5) and, thereafter, this Agreement shall be terminated and of no further force or effect subject to and except for those provisions that expressly survive termination of this Agreement, and Escrow Agent shall promptly return the Deposit to Buyer. For purposes of this Section (D), the term "material adverse conditions" shall mean the imposition of one or more conditions on either or both of the HAP Contract Approval or CaIHFA Transfer Approval that are reasonably likely in the Surnmercrest v3 Attachment No. 6 future to significantly and negatively impact or decrease the financial performance of the Apartment Development. ( ) t�"f l consent. Buyer acknowleages that pursuant to that certain Regulatory Agreement dated February 15, 2001 (the "TCAC Regulatory Agreement") between Seller and the California Tax Credit Allocation Committee ("TCAC"), the consent of TCAC is required to transfer the Apartment Development to Buyer (the "TCAC Consent"). Buyer, at its sole cost and expense and promptly and no later than seven (7) business days after the end of the Feasibility Period and Buyer's deposit of the Additional Deposit, shall submit a request to TCAC for consent to the conveyance of the Property to Buyer in accordance with the terms of the TCAC Regulatory Agreement. Buyer shall use its commercially reasonable efforts to obtain the TCAC Consent on or prior to the Contingency Approval Date. Seller and Buyer acknowledge that Seller and Buyer shall be required to execute an assignment and assumption of the Regulatory Agreement (the "TCAC Regulatory Assumption Agreement"). Seller shall cooperate with Buyer's reasonable requests to assist in obtaining the TCAC Consent and shall be entitled, in Seller's reasonable discretion, to actively participate in the process. Buyer shall deliver to Seller copies of all correspondence Buyer transmits to TCAC and any entities associated with the approval of the conveyance of the Property within three (3) business days of such transmittal. (F) Assumption of CC&Rs. A Declaration of Covenants, Conditions and Restrictions (Tenant Restrictions) dated December 18, 2001 ("CC&Rs"), was recorded against the Property on June 19, 2002, as Document No. 2002-0518422, in the Official Records of San Diego County, California, in connection with a loan to Seller from the Community Development Commission of the City of National City. Section 17 of the CC&Rs requires that any transferee of the Property expressly assume and be bound by all of the provisions of the CC&Rs. Buyer agrees to execute an assumption of the CC&Rs in a form reasonably acceptable to Seller and Buyer prior to the expiration of the Contingency Approval Date. 6. Close of Escrow. (A) Escrow. The purchase of the Property will be completed through an escrow ("Escrow") to be opened with First American Title Insurance Company, 18500 Von Karman Avenu, Suite 600, Irvine, California 92612 ("Escrow Agent"). The Escrow will be opened within two (2) Business Days of the Effective Date by delivering to the Escrow Agent a fully executed copy of this Agreement. The Close of Escrow will occur no later than fourteen (14) days following the last to occur of Buyer's receipt of (1) H[JD Contact Approval, (3) the TCAC Consent, (4) the Ca1HFA Transfer Approval, or (4) the Financing Commitment; provided, however, in no event shall the Close of Escrow occur later than January 31, 2014, or such earlier date as rnav be mutually acceptable to Buyer and Seller (the "Closing Date"). Notwithstanding any of the foregoing to the contrary, due to the prepayment requirements of the existing financing, the loan may not be prepaid between the 27th and 31st days of a calendar month and a result, the Closing Date shall not fall on such dates. As used in this Agreement, "Close of Escrow" means the recording of the Deed (as defined below) by the Escrow Agent and payment to Seller of the Purchase Price (net of adjustments allowed by this Agreement). 6 Attachment No. 6 (B) Conditions to Seller's Obligation to Close. Seller's obligation to close Escrow hereunder is conditioned upon the satisfaction of all of the conditions set forth in this Section 6(B), which conditions are for the benefit of Seller, in addition to the other conditions to Seller's obligations provided for elsewhere in this Agreement. (1) Deposit; Buyer's timely payment of the Deposit, and the Additional (2) Buyer's timely payment of the Purchase Price and any other amounts which are to be paid by Buyer under this Agreement; (3) Buyer's representations and warranties set forth in Sections 10(B)(1), (2), (3), (5), (6), (7), (8), (9) and (10) of this Agreement shall remain true, correct and complete in all material respects as of the Closing Date and Buyer shall have complied in all material respects with all of its obligations and covenants under this Agreement; provided, however, such condition shall be deemed satisfied unless the failure of any such representations and warranties to remain true, correct and complete in all material respects as of the Closing Date, or Buyer's failure to comply in all material respects with its obligations and covenants is reasonably likely to result in a material and adverse effect on the Transaction; (4) Buyer's execution of an agreement whereby Buyer assumes all obligations of Seller under, and agrees to be bound by, the CC&Rs described in Section 5(F) above; (5) Buyer's timely payment of the closing costs set forth in Section 9 below; and (6) Buyer's delivery to Escrow of Buyer's Deliveries as set forth in Section 6(E) below. If any of the foregoing Seller's conditions to Closing have not been satisfied or performed on or prior to the Closing Date, then Seller shall have the right, at Seller's option, to either (a) waive, in writing, compliance with any one or more of said conditions to Closing and proceed with the Closing without adjustment to the Purchase Price, (b) extend the Closing Date to provide the p ties with additional time to satisfy the condition(s), or (c) terminate this Agreement by written notice to Buyer, whereupon the Deposit (excluding the Released Deposit) shall be returned to Buyer and, thereafter, this Agreement shall be terminated and of no further force or effect subject to and except for those provisions that expressly survive termination of this Agreement; provided, however, if and only if such failure of condition constitutes a default by Buyer under this Agreement, Seller shall be entitled to the Deposit as and to the extent provided in Section 12(A). (C) Conditions to Buyer's Obligation to Close. Buyer's obligation to close Escrow hereunder is conditioned upon the satisfaction of all of the conditions set forth in this Section 6(C), which conditions are for the benefit of Buyer, in addition to the other conditions to Buyer's obligations provided for elsewhere in this Agreement. 7 Summcrcrst v3 Attachment No. 6 ( I) Seller's delivery to Escrow of Seller's Deliveries as set forth in Section 6(D) below. L) Neuer s representations and warranties set torth in this Agreement shall remain true, correct and complete in all material respects as of the Closing Date and Seller shall have complied in all material respects with all its obligations and covenants under this Agreement; provided, however, such condition shall be deemed satisfied unless the failure of any such representations and warranties to remain true, correct and complete in all material respects as of the Closing Date, or Seller's failure to comply in all material respects with its obligations and covenants is reasonably likely to result in a material and adverse effect on the Transaction. (3) The title insurance company shall be prepared to issue the Title Policy in accordance with Section 8(D) and Seller shall have cured or removed, within the time period for cure or removal, any title or survey matter that Seller has agreed in writing prior to the end of the Feasibility Period to cure or remove, if any. If any of the foregoing Buyer's conditions to Closing have not been satisfied or performed on or prior to the Closing Date, then Buyer shall have the right, at Buyer's option, to either (a) waive, in writing, compliance with any one or more said conditions to Closing and proceed with the Closing without adjustment to the Purchase Price, or (b) terminate this Agreement by written notice to Seller, provided, to the extent the Deposit (including the Additional Deposit and the Released Deposit, subject to the provision set forth below) has been previously released to Seller or is required to be released to Seller pursuant to the terms of Section 4(D), the Deposit shall be retained by Seller. Thereafter, this Agreement shall be terminated and of no further force or effect subject to and except for those provisions that expressly survive termination of this Agreement; provided, however, if and only if such failure of condition constitutes a material default by Seller under this Agreement, Buyer shall be entitled to the return of the Deposit as and to the extent provided in Section 12(B). (D) Seller's Deliveries. Prior to Close of Escrow, Seller will deposit with the Escrow Agent the following items (collectively, the "Seller Documents"): (1) a grant deed (the "Deed"), executed and acknowledged by Seller, conveying to Buyer fee simple title to the Real Property; (2) a bill of sale and general assignment, executed by Seller, conveying the Personalty to Buyer free of any liens or encumbrances, the Intangibles, Records, and Service Contracts that Buyer is obligated to assume as provided in Section 7(D); (3) an assignment of leases and rents, executed and acknowledged by Seller, conveying to Buyer all right, title, interest and estate of Seller in, to and under all Leases and all Rents allocable to the period after Close of Escrow; (4) such documents as the Escrow Agent may reasonably require to establish the authority of Seller to complete the Transaction; (5) an affidavit, dated as of the date of Close of Escrow and executed by an appropriate representative of Seller under penalty of perjury, stating that Seller is not a person with respect to whom withholding is required under Section 1445 of the Internal Revenue Code and, if factually accurate, a California Form 593 C certifying that an exemption from withholding related to California income tax is applicable to Seller; (6) a termination of the current property management contract, (7) an updated Rent Roll dated no sooner than five (5) Business Days prior 8 Surnmercrest v3 Attachment No. 6 to the Closing Date; (8) the TCAC Regulatory Assumption Agreement, executed by Seller; (9) an operating statement for the Property for the month immediately preceding the month of Closing and an interim operating statement for the month to date of Closing; and (10) a standard form owner's affidavit for the benefit of the tit1 company. (E) Buyer's Deliveries. Prior to Close of Escrow, Buyer will deposit with the Escrow Agent the following: (1) the Seller Proceeds and any other amounts required to be paid by Buyer under this Agreement at or prior to the Close of Escrow; (2) such documents as the Escrow Agent may reasonably require to establish the authority of Buyer to complete the Transaction; (3) the Section 42 Indemnification Agreement in the form attached hereto as Exhibit D executed by Buyer and Indemnitor; (4) assumption agreements, in form and content acceptable to Seller and Buyer, executed by Buyer, assuming Seller's obligations under the HAP Contract, the CalHFA Regulatory Agreement, and all Leases and Service Contracts that Buyer is obligated to assume as provided in Section 7(D) from Seller; (5) the TCAC Regulatory Assumption Agreement executed by Buyer; (6) a California preliminary change of ownership form (PCOR); and (7) countersigned pages to any of the documents set forth in Sections 6(D)(2), and 6(D)(3). (F) Return of Documents. Documents and any refundable funds deposited in escrow under Section 4 will be returned to the person who deposited them if the Seller or Buyer terminates its obligation to complete the Transaction under circumstances permitted by this Agreement. (G) Close of Escrow. Escrow Agent will accomplish the Close of Escrow on the Closing Date by recording the Deed (and such other documents as may be necessary to procure the Title Policy), and delivering funds and documents to the parties WHEN AND ONLY WHEN each of the conditions set forth in Sections 6(B) and 6(C) above have been satisfied or waived, and First American Title Insurance Company ("Title Company") irrevocably commits to issue the Title Policy with liability in the amount of the Purchase Price, insuring fee title to the Real Property in Buyer subject only to and otherwise in compliance with Section 8(D): a. General and special real estate taxes and assessments that are, as of the Close of Escrow, not delinquent; b. Supplemental taxes, if any, pursuant to California Revenue and Taxation Code section 75, et seq,, that are assessed and pertain to the period of time after the Close of Escrow; c. The Pe fitted Exceptions; and d. Any encumbrance voluntarily imposed by Buyer. (H) Contracts, Leases. etc. Simultaneously with the Close of Escro . , Seller will deliver to Buyer, outside of the Escrow, originals or, if originals are not in Seller's possession, copies of (1) documents evidencing other permits, licenses, approvals, utility rights, development rights and similar rights related to the Property, if any, that are transferred to Buyer, (2) all Leases, other Tenant Records, and all guaranties of Leases, (3) all assignable warranties and guaranties covering all or any part of the Property that are transferred to Buyer; and (4) all Service Contracts that Buyer is obligated to assume as provided in Section 7(D) and Tax Credit Documents, 9 Attachment No. 6 (I) Tenant Notification. Immediately following Close of Escrow, Buyer will deliver to each tenant of the Property a letter (in a form approved by Seller, which approval shall not be unreasonably withheld), which Seller shall sign along with Buyer, notifying the tenants of the transter ot the Property and advising the tenants that Buyer has assumed responsibility for Tenant Deposits (as defined below) made by such tenants. (J) Section 42 Indemnification Agreement. Buyer acknowledges that Seller has developed, owned and operated the Apartment Development as a project intended to generate low-income housing tax credits under Section 42 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder. As a material inducement to Seller's agreement to enter into this Agreement and sell the Property to Buyer, at the Close of Escrow (and as a condition thereto) Buyer shall execute and deliver to Seller, and shall cause the indemnitor described in Section 10.B.(2) below ("Indemnitor") to execute and deliver to Seller, the Section 42 Indemnification Agreement in the foini attached hereto as Exhibit D (the "Section 42 Indemnification Agreement"). 7. Feasibility Period. (A) Seller, to the extent not already delivered to Buyer, shall deliver to Buyer copies of the following documents ("Seller Documents") to the extent they are actually in Seller's possession or under Seller's reasonable control: (1) Rent Rolls — Current, and for the months that occur between the Effective Date and the month of Closing; (2) Historical Occupancy — For current year to date, and the previous three full years; (3) List of vacant units (employee/model); (4) Financials — Trailing 12 and the three full years prior to the current year; (5) (6) (7) years; Audited Financials — For the previous three years; List of capital expenditures for the past 3 years and current YTD; Copies of real estate and/or personal property taxes for the past 2 (8) Saniple Tenant Lease — currently used at the Property; (9) Service Contracts & Leases; (10) Site plan and floor plans (for all unit types); (11.) Ali comrnercial leases; (12) Current year operating budget; (13) Architectural, mechanical, electrical, plumbing, drainage, construction, and similar plans, specifications and blueprints relating to the construction and/or improvements; 10 Surnmercrest v3 Attachment No. 6 (14) Any private or governmental inspection report (REAC, MOR, etc.) relating to the Property; ()T!nti3ftv. hfl3for the Prortertv fir the t-tttQt zi 6c.henrir months; (16) Termite inspection reports; (17) ALTA Survey; (18) Engineering reports; (19) Phase I environmental and/or any environmental reports and any written notice of environmental violations which Seller has received from any governmental entity; (20) Mold and Asbestos plans, if applicable; (21) Most recent appraisal and rent comp study; (22) Current Insurance bill(s) for the property including a 3 year loss run and the declaration pages; (23) Certificates of Occupancy; (24) Fire inspection reports, building permits, pool permits, and any fire zoning, pool, and or health violations; (25) Personal property list to be transferred with the sale; (26) A list of staff names, positions, benefits, salary and length of employment; (27) 8609's; (28) Any outstanding 8823's; (29) Most recent inspection report from the local multifamily housing administrator; (30) Zoning letter or report; (31) Current Financing; (32) HAP Contract and the past two renewals, plus any regulatory agreements: (33) Most recent rent schedule; (34) L1HPREIA Plan of Action; (35) LIHPRHA Use Agreernent; (36) Payroll summary for on -site employees, noting whether full or part-time and what, if any, rent reduction they receive if they live on site/list of staff names, positions, benefits, salary and length of employment; 1 1 Summeterest v3 Attachment No. 6 (37) HUD Regulatory Agreement and amendments thereto, HUD Use Agreement. HUD Plan of Action, HUD-50059 Tenant Income Certifications (available for review at the Property site). (AA) All tenant files and tenant records shall be made available to Buyer at the Property. Buyer acknowledges that, except as may otherwise be expressly provided in Section 10(4), all materials made available by Seller and its affiliates or any officer, director, trustee, agent, employee or other person acting or purporting to act on behalf of Seller or any of its affiliates, including the materials described in this Section 7, are provided to Buyer without representation or warranty as to the accuracy thereof or sufficiency for the purposes for which Buyer uses such materials. (B) Feasibility Period. Buyer shall have a period expiring at 5:00 PM (Pacific Time) on the thirtieth (30th) day from the Effective Date (the "Feasibility Period") to conduct its due diligence investigation of the Property and determine if Buyer wishes to proceed with the Transaction. Buyer may terminate its obligation to complete the Transaction at any time during the Feasibility Period if Buyer, in its sole discretion, is not satisfied for any reason whatsoever with the Property or any matter relating to the Property. Buyer may exercise its right under this Section 7(B) to terminate the Transaction by delivering notice to Seller at any time during the Feasibility Period, in which event the Deposit shall be refunded to Buyer. Buyer may conduct a "Mock" REAC Inspection of the Property during the Feasibility Period. Seller shall reasonably cooperate with Buyer to allow Buyer to conduct the Mock REAC Inspection, including making all areas of the Property available to Buyer for purposes of conducting the inspection, subject to the provision of reasonable advance notice to Seller by Buyer. (C) Inspections. Buyer and its representatives, consultants and contractors may enter upon the Property upon reasonable notice to make such inspections and tests regarding the Property as Buyer deems necessary or desirable, subject to rights of tenants to exclude or limit such inspections and tests. Buyer shall obtain Seller's approval before undertaking any intrusive, destructive or invasive testing or any soil borings, which approval Seller may withhold in its reasonable discretion. Damages to the Property resulting from any inspection or testing conducted by or at the direction of Buyer will be repaired by Buyer so that the Property is restored to substantially the same condition as of the Effective Date. Buyer will indemnify, defend and hold harmless Seller, its property manager and the Lender against any and all claims, demands, causes of action, liabilities, fosses, costs, damages and expenses (including, without limitation, reasonable fees and disbursements of attorneys and other professionals and court costs) that are actually incurred by any of the indemnified parties or which adversely affect the Property (excluding consequential, punitive, and special damages), in connection with or arising out of any such inspections or tests; provided, however. Buyer shall not be liable for the mere discovery of any pre-existing conditions which are not exacerbated by Buyer or its agents, representatives, consultants or contractors or the mandatory reporting thereof to applicable state or federal agencies. Prior to any entry onto the Property, Buyer shall provide Seller with evidence that Buyer maintains liability insurance with coverage in an amount not less than $1,000,000 and that Seller, its property manager and the Lender have been named as additional insureds under such insurance. Summercrest -v3 Attachment No. 6 (D) Service Contracts. Within twenty (20) days of the Effective Date, Buyer shall review all of the Service Contracts, and within such 20-day period notify Seller in writing of its request that Seller terminate any or all of such Service Contracts by the Close of Escrow (the `uisapproved Service Contracts"). Buyer's failure to provide such written notice within such 20-day period shall be deemed to constitute Buyer's approval of, and election to assume, all Service Contracts. Within five (5) days following Seller's receipt of Buyer's notice to terminate the Disapproved Service Contracts, Seller may notify Buyer in writing whether Seller will terminate any or all of the Disapproved Service Contracts by the Close of Escrow. Seller's failure to provide any such response within such 5-day period shall be deemed to constitute Seller's election not to terminate any of the Disapproved Service Contracts. Notwithstanding anything to the contrary contained in this Agreement, except for Seller's property management agreement, Seller shall have no obligation to terminate any of the Disapproved Service Contracts. Unless Seller agrees in writing to terminate all of the Disapproved Service Contracts by the Close of Escrow, Buyer shall elect in a written notice delivered to Seller no later than the end of the Feasibility Period, either (i) to waive its objection to all Disapproved Service Contracts (except any Disapproved Service Contracts that Seller has agreed in writing to terminate), in which case Buyer shall be obligated to assume all of such Disapproved Service Contracts as well as all other Service Contracts, or (ii) to terminate its obligation to complete the Transaction, in which case the Deposit with accrued interest will be refunded to Buyer. If Buyer fails to deliver written notice of its election to waive its objections to all Disapproved Service Contracts (except any Disapproved Service Contracts that Seller has agreed in writing to terminate), Buyer will be deemed to have elected to assume all of such Disapproved Service Contracts (except any Disapproved Service Contracts that Seller has agreed in writing to terminate) as well as all other Service Contracts. 8. Title Insurance. (A) Within twenty (20) days of the Effective Date, Buyer shall examine the Title Report and, if obtained by Buyer at its sole cost and expense, a survey of the Property (the "Survey"), and within such 20-day period notify Seller in writing of its approval of or its objections to any exceptions to title reflected by the Title Report or matters reflected in the Survey, a copy of which shall be provided to Seller. Exceptions to which Buyer objects shall be "Disapproved Exceptions." Exceptions which are approved or not disapproved by Buyer shall be "Permitted Exceptions." If Buyer fails to so notify Seller of Buyer's objection to or approval of any exceptions to title set forth in the Title Report or Survey within such period, Buyer shall be deemed to have approved the Title Report and Survey. (B) Within five (5) days following Seller's receipt of Buyer's notice of any Disapproved Exceptions, Seller shall notify Buyer in writing whether Seller elects to remove the same (for purposes of the foregoing, obtaining affirmative insurance coverage over a Disapproved Exception shall not be deemed removal). Seller shall have no obligation to remove any Disapproved Exception, except as provided below with respect to Monetary Liens. Unless Seller agrees to remove all Disapproved Exceptions, Buyer shall elect, in a written notice delivered to Seller no later than the end of the Feasibility Period, either (1) to waive its objection to all Disapproved Exceptions (except any Disapproved Exception that Seller has agreed to remove), in which case those Disapproved Exceptions covered by the waiver shall become Permitted Exceptions, or (2) terminate its obligation to complete the Transaction, in which case the Deposit 13 sjmmercrc,s v3 Attachment No. 6 with accrued interest will be refunded to Buyer. If Buyer fails to deliver written notice of its election to waive its objection to all Disapproved Exceptions (except any Disapproved Exception that Seller has agreed to remove), Buyer will be deemed to have elected to waive its objections_to `all iisapprOved Exeepti©ns (except any isapproved EXcept ©ri that Seller liar agreed t© remove). If Seller agrees to remove any Disapproved Exception and then is unable or fails to remove such Disapproved Exceptions prior to Close of Escrow, and Buyer, within five (5) business days of the scheduled Closing Date, does not then elect to deem all such Disapproved Exceptions to be Permitted Exceptions and proceed with the transactions contemplated under this Agreement with a reasonable postponement of the Closing Date (not to exceed fifteen (15) days) then the provisions of Section 12(B) below shall apply, Notwithstanding the foregoing, Seller shall cause all monetary liens and encumbrances, including any mortgages, and excluding real estate taxes and assessments not yet delinquent or payable ("Monetary Liens") to be removed prior to Close of Escrow. Seller shall be responsible for the payment of any prepayment penalty or yield maintenance amount charged by the existing lenders. (C) If any exception to title to the Property not shown on the Title Report or Survey is discovered prior to Close of Escrow ("New Exceptions") Seller shall immediately give written notice to Buyer and Escrow Agent of each such New Exception. Buyer shall, within three (3) Business Days of receiving such notice, provide written notice to Seller and Escrow Agent of any New Exceptions which Buyer (1) approves, and such approved New Exceptions shall be deemed to be Permitted Exceptions, and/or (2) disapproves, and such disapproved New Exceptions shall be deemed to be Disapproved Exceptions. Buyer's failure to respond to Seller's notice of New Exceptions within three (3) Business Days of receipt of Seller's notice shall be deemed to be Buyer's approval of such New Exceptions. Any New Exception which becomes a Disapproved Exception pursuant to this Section shall be handled in accordance with the notice provisions and within the number of days in the time frames established in Section 8(B) above; provided that if the Closing Date is within five (5) days after the date a New Exception becomes a Disapproved Exception pursuant to this Section, the parties shall agree on a reasonable postponement of the Closing Date (not to exceed five (5) days) for the purposes of handling such Disapproved Exceptions in accordance with Section 8(B), (D) Buyer's obligation to purchase the Property is conditioned on the Escrow Agent issuing to Buyer an ALTA Extended Title Policy upon the Close of Escrow pursuant to the terms of this Agreement (the `Title Policy") insuring that Buyer holds fee simple title to the Real Property, The Title Policy must be in the amount of the Purchase Price, must contain as exceptions only Permitted Exceptions and additional exceptions for matters created by Buyer, and without mechanic's lien, survey, encroachment, and other standard exceptions (to the extent the title company shall have agreed in writing prior to the end of the Feasibility Period to eliminate such matters), and shall contain those endorsements to the Title Policy that the title company (First American Title Insurance Company) has agreed in writing to issue prior to the end of the Feasibility Period, which shall be paid for by Buyer. Seller will pay the premiumfor the Standard Title Policy (excluding endorsements) issued in the amount of the Purchase Price. If Buyer requires an ALTA Extended Title Policy, or a binder in lieu of a policy of title insurance, then Seller shall pay only the cost of the ALTA Standard Title Policy and Buyer shall pay all additional costs of obtaining the ALTA Extended Title Policy or binder including, without limitation, any survey costs. Seller shall provide such customary information and standard owner's affidavits as 14 s mmercrest v� Attachment No. 6 of Closing as may be required by the title insurance company to enable the title insurance company to issue the Title Policy as required herein. 7. ►using costs, rn rauin*s anu uepusiLS. (A) Closing Costs. Seller shall pay any and all defeasance and prepayment fees, to the extent applicable, due in connection with its prepayment of the existing loan secured by the Apartment Development. Seller shall pay one-half of the escrow fees charged by the Escrow Agent, the county real property transfer tax on the Deed, and the recording costs for the Deed. Buyer shall pay one-half the escrow fees charged by Escrow Agent, the cost of a current survey, and all other customary closing costs. Buyer and Seller each will pay its own attorneys' fees. Other costs will be paid by Seller or Buyer, as applicable, as specified by other provisions of this Agreement. (B) Prorations. Seller and Buyer will prorate, effective as of 11:59 p.m. on the Closing Date (i.e., Seller will be charged with expenses and credited with income up to and including the Closing Date), all collected Rents and all expenses of operation of the Property (including utilities and real property assessments, based upon the official tax bill(s) for the current tax year, if available), except for insurance premiums. If such bills are not available, the proration shall be based upon the last ascertainable tax bills. If any expenses cannot be determined finally as of Close of Escrow, such expense will be prorated on the best available information. Adjustments to the prorations will be made from time to time after Close of Escrow to take account of final information as to expenses estimated as of Close of Escrow that were not included in the prorations calculated at the Close of Escrow, and Buyer or Seller, as applicable, will pay the other on demand such amounts as may be appropriate based on such adjustments, together with interest at 10% per annum from the date of demand if such amount remains unpaid more than ten (10) days after demand. Buyer and Seller shall use reasonable efforts to complete any reproration of expenses within one hundred eighty (180) days after Close of Escrow or, in the case of real property assessments, within ninety (90) days after the 2013-2014 tax bills are issued. Notwithstanding any of the foregoing to the contrary, in no event shall Seller be responsible for the payment of any supplemental real estate taxes assessed as a result of the sale of the Property to Buyer. (C) Delin uent Rents or Other Income. Rents or other income delinquent as of Close of Escrow will not be prorated. Rents or other income collected after Close of Escrow by Buyer for any tenant or other party must be applied first against Rents and other income due and payable by that tenant or other party for the period after Close of Escrow, until all of such Rents and other income due and payable have been collected, and then to Rents and other income attributable to the period before Close of Escrow. Buyer shall use its commercially reasonable efforts to collect all delinquent Rents and other income from tenants residing at the Property or current contracting parties. but without any obligation to pursue judicial or other action to collect any such past amounts. Buyer will remit to Seller any Rents or other income actually collected, Less collection costs, by Buyer that, in accordance with this Section 9(C) are owed to Seller allocable to the period before Close of Escrow. (D) Deposits and Reserves: Rent Ready Units, Seller shall convey to Buyer all unapplied refundable security deposits, plus any interest earned thereon to the extent required to be 15 Summercrest v3 Attachment No. 6 maintained by law, and all advance payments of Rent allocable to the period after Close of Escrow by providing Buyer with a credit through the Close of Escrow for all such amounts (collectively, "Tenant Deposits") held by Seller as of Close of Escrow. All reserves currently maintained by Seller pursuantt© loan documents, the HAP Contract or other project documents shall remain with the Seller at the Close of Escrow unless specifically prohibited by a regulatory agency with jurisdiction over such reserves. Seller shall provide Purchaser a credit of $1000 for any units not in "rent ready" condition as of the Closing Date. Purchaser shall have the right to perform a walk-through of all units in the Apartment Development at least five (5) days prior to Closing. 10. Representations and Warranties. (A) Seller Representations and Warranties. In order to induce Buyer to enter into this Agreement and to complete the Transaction, Seller represents and warrants to Buyer that as of the Effective Date: (1) Seller is a limited partnership duly organized and validly existing under the laws of the State of California. Seller is the owner of the fee simple title to the Land and Improvements. Seller has the authority and power to enter into this Agreement, to perform its obligations under this Agreement and to complete the Transaction as contemplated by this Agreement. Seller has taken all action necessary to authorize the execution and delivery of this Agreement, the performance by Seller of its obligations under this Agreement and the completion of the Transaction as contemplated by this Agreement; (2) this Agreement has been duly executed and delivered by Seller and constitutes a valid, binding and enforceable obligation of Seller, subject to bankruptcy and other debtor relief laws and principles of equity; (3) the execution and delivery of this Agreement by Seller and the performance by Seller of its obligations under this Agreement and the completion of the Transaction as contemplated by this Agreement will not result in (a) a breach of, or a default under, any contract, agreement, commitment or other document or instrument to which Seller is party or by which Seller or the Property is bound except (i) Service Contracts, as to which Seller makes no representation or warranty, (ii) the HAP Contract (unless the HAP Contract Approval is properly obtained), (iii) the Ca1HFA Regulatory Agreement (unless the CalHF A Transfer Approval is properly obtained), and (iv) the TCAC Consent, or (b) a violation of any law, ordinance, regulation or rule of any governmental authority applicable to Seller or any judgment, order or decree of any court or governmental authority that is binding on Seller (4) except as disclosed on Exhibit B, there s no action, suit, proceeding, inquiry or investigation pending or, to the knowledge of Seller, threatened by or before any court or governmental authority (a) against or affecting the Property or arising out of the development, construction, financing, operation, leasing, maintenance or management of the Property or (b) that would prevent or hinder the performance by Seller of its obligations under this 16 Summercrest v3 Attachment No. 6 Agreement or the completion of the Transaction as contemplated by this Agreement; ' (3) except 'Cur uutisents required under Service Contracts, t-tAr Contract Approval and CaIHFA Transfer Approval, consents required by the Agency Agreements listed on Exhibit C attached hereto and the TCAC Consent, and approvals, authorizations and filings already completed, Seller is not required to obtain any consent, approval or authorization from, or to make any filing with, any person (including any governmental authority) in connection with, or as a condition to, the execution and delivery of this Agreement, the performance by Seller of its obligations under this Agreement or the completion of the Transaction as contemplated by this Agreement; (6) to Seller's knowledge, the Seller Documents are true, accurate and complete in all material respects; (7) Seller has not received any written notice from a governmental agency of any uncured material violations of any federal, state, county or municipal law, ordinance, order, regulation or requirement affecting the Property other than normal regulatory correspondence from HUD, as applicable, and, to the best of Seller's knowledge, no event or condition has occurred which if not corrected would result in such notice; (8) Seller has not received any written notice of any material default by Seller under any assigned Service Contracts. As of the Effective Date, to the best of Seller's knowledge, there are no Service Contracts other than those made available to Buyer; (9) Except as may otherwise be disclosed in writing by Seller to Buyer no later than three (3) Business Days prior to the end of the Feasibility Period, Seller has not received any written notice of any outstanding default by Seller under the HAP Contract, the Ca1HFA Regulatory Agreement, the TCAC Regulatory Agreement, and the CC&Rs and, to the best of Seller's knowledge, there is no outstanding material default, or any event or condition that with notice or the passage of time would constitute a material default, under the HAP Contract, the Ca1HFA Regulatory Agreement, the TCAC Regulatory Agreement or the CC&Rs, and, to the best of Seller's knowledge, Seller has not received any outstanding written notice asserting that Seller has failed to operate the Apartment Development in compliance in all material respects with Section 42 of the Code, and all federal and TCAC regulations applicable thereto, Seller has not received written notice of any outstanding noncompliance or IRS Point 8823 issued by TCAC or written notice of any outstanding IRS proceeding, and, to the best of Seller's knowledge, there are no facts or circumstances that could reasonably be expected to result in a loss or recapture of any Tax Credits. I 7 Surnmercrest v3 Attachment No. 6 (10) Except as may be set forth in the tax bills for the Property, Seller has received no written notice of any additional special assessments of any kind being levied against all or part of the Property after Closing. (11) No bankruptcy, insolvency, rearrangement or similar action involving the Property, Seller, or Seller's general partners, whether voluntary or involuntary, is pending or, to Seller's knowledge, threatened. (12) Except for this Agreement, Seller has not entered into any outstanding contract to sell the Property of any part thereof. (13) Seller is not a foreign person, corporation, partnership, trust or estate for purposes of Section 1445 of the Internal Revenue Code, as amended. (14) Seller has provided or will provide to Buyer complete copies of all of the documents described in Sections 7(A) which are in Seller's possession or reasonably available to Seller. As used in this Section 10(A), the term "to the best of Seller's knowledge" means the actual knowledge (as opposed to imputed or constructive knowledge) of William Witte and Steve Sherman, after due inquiry of the on -site property manager (collectively, the "Seller Knowledge Parties"), who are familiar with the Property and have information with respect to the Property sufficient for purposes of the representations and warranties of Seller in Section 10(B). The parties hereby agree that recourse under this Agreement is limited to Seller and no claim will be made against the Seller Knowledge Parties. (B) Buyer Representation and Warranties. In order to induce Seller to enter into this Agreement and to complete the Transaction, Buyer represents and warrants to Seller that, as of the Effective Date: (1) Buyer is a limited liability company duly organized and validly existing under the laws of the State of Nevada and is qualified to do business in the State of California. Buyer has the corporate or other power to enter into this Agreement, to perform its obligations under this Agreement and to complete the Transaction as contemplated by this Agreement. Buyer has taken all corporate or other action necessary to authorize the execution and delivery of this Agreement, the performance by Buyer of its obligations under this Agreement and the completion of the Transaction as contemplated by this Agreement; (2) Indemnitor will be a special purpose entity, duly organized and validly existing under the taws of the State of its formation and will be qualified to do business in the State of California. Indemnitor will have the corporate or other power to enter into the Section 42 Indemnification Agreement and to perform its obligations under the Section 42 Indemnification Agreement. Indemnitor will take all corporate or other action necessary to authorize the execution and delivery of the Section 42 Indemnification Agreement and the performance by Indemnitor of its obligations under the Section 42 Indemnification Agreement. The name of 18 Summercrest v3 Attachment No. 6 Indemnitor will be inserted in the Section 42 Indemnification Agreement following execution of this Agreement and prior to the expiration of the Feasibility Period; (3) this Agreement has been duly executed and delivered by Buyer and constitutes a valid, binding and enforceable obligation of Buyer, subject to bankruptcy and other debtor relief laws and principles of equity; (4) the execution and delivery of this Agreement by Buyer, the performance by Buyer of its obligations under this Agreement and the completion of the Transaction as contemplated by this Agreement will not result in (a) a breach of, or a default under, any contract, agreement, commitment or other document or instrument to which Buyer is party or by which Buyer is bound or (b) a violation of any law, ordinance, regulation or rule of any governmental authority applicable to Buyer or any judgment, order or decree of any court or governmental authority that is binding on Buyer; (5) the execution and delivery of the Section 42 Indemnification Agreement by Indemnitor and the performance by Indemnitor of its obligations under the Section 42 Indemnification Agreement will not result in (a) a breach of, or a default under, any contract, agreement, commitment or other document or instrument to which Indemnitor is party or by which Indemnitor is bound or (b) a violation of any law, ordinance, regulation or rule of any governmental authority applicable to Indemnitor or any judgment, order or decree of any court or governmental authority that is binding on Indemnitor; (6) there is no action, suit, proceeding, inquiry or investigation (including any bankruptcy or other debtor relief proceeding), pending or to the knowledge of Buyer threatened, against Buyer or Indemnitor by or before any court or governmental authority that would challenge, impair, prevent or hinder (i) the Buyer's ability to execute or perform its obligations under this Agreement or the completion of the Transaction as contemplated by this Agreement, or (ii) the Indemnitor's ability to execute or perform its obligations under the Section 42 Indemnification Agreement; (7) except for (i) the consents, approvals, authorizations and filings already completed, (ii) the consents expressly disclosed on Exhibit C hereto (which consents on Exhibit C are governed by Section .11(0), Buyer is not required to obtain any consent, approval or authorization from, or to make any filing with, any person (including any governmental authority) in connection with, or as a condition to, the execution and delivery of this Agreement, the performance by Buyer of its obligations under this Agreement or the completion of the Transaction as contemplated by this Agreement; (8) Neither Buyer nor Indemnitor has (A) made a general assignment for the benefit of its creditors, (B) instituted any proceeding to be adjudicated bankrupt or insolvent or consented to the institution of bankruptcy or insolvency 19 Surnmercrest v3 Attachment No. 6 proceedings against it, (C) filed a petition, answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy law or consented to the filing of any such petition or to the appointment of a receiver, itquidator, assignee, trustee, sequestrator or other similar official of it or of any part of its property, (D) admitted in writing its inability to pay its debts generally as they become due, or (E) taken any action in furtherance of any of the foregoing; (9) The certified financial statements and resumes/statements of experience for Indemnitor delivered or to be delivered to Seller are complete and accurate in all material respects, and there has been no material adverse change in any fact or circumstance that would make any such information incomplete or inaccurate; (10) Each of the representations and warranties set forth in the Section 42 Indemnification Agreement is true, correct and complete, in all material respects; (11) Buyer has not been debarred, suspended, or voluntarily excluded from participation in any program of a State government or agency, or has been the subject of a limited denial of participation issued pursuant to 24 CFR Part 24, Subpart G; and (12) Buyer has not been denied approval of participation in a HUD project or failed to obtain approval of a form HUD-2530 Previous Participation Certificate submitted to HUD. (C) Buyer acknowledges that it is knowledgeable and experienced about properties similar to the Property and that, except for Seller's express representations and warranties set forth herein, it is relying entirely on its own experience, expertise, inspection and study regarding the condition (including, without limitation, title, physical and environmental) and prospects for development of the Property. Buyer agrees that it is purchasing and accepting the Property "AS IS" and, subject to all faults of every kind and nature whatsoever, whether latent or patent, whether now or hereafter existing, and Buyer has based its purchase decision solely upon Buyer's inspection of the Property. Buyer shall acquire the Property subject to any and all laws, ordinances, requirements, limitations, restrictions, regulations and codes which are or may be imposed on the Property by any governmental or quasi-govemmental authority having any jurisdiction thereof, Seller makes no representations or warranties in this Transaction, except as expressly set forth in this Agreement. Except for Seller's express representations and warranties set forth herein, Buyer further agrees that Buyer has not relied, and will not rely, upon any other representation or statement, or the failure to make any representation or statement, by Seller or Seller's agents or employees or by any person acting, or purporting to act, on behalf of Seller, Except as specifically set forth herein, Buyer specifically agrees that Seller shall not be obligated to do any work in connection with the Property and that Seller shall not be responsible for any work or improvement necessary to cause the Property to meet any applicable law, ordinance, regulation and code or to be suitable for any particular use. As of the Closing Date, Buyer releases Seller from any and all liability in connection with any claims Buyer may have against Seller for 20 Summercrest v3 Attachment No. 6 damage, loss, compensation, contribution, cost recovery or otherwise, whether in tort, contract or otherwise, relating directly or indirectly to the physical condition of the Property (or any part of it) or its fitness for any particular use, except for claims arising out of Seller's fraud, a breach of a Seiler representation, warranty, or covenant set torth herein which expressly survives the Closing, or a third -party claim arising out of events occurring on or before the Closing. Buyer further acknowledges that Buyer shall be entitled to conduct an environmental investigation of the Property, and that Buyer will rely upon the results of such environmental investigation in making its decision whether or not to purchase the Property. As of the Closing Date, Buyer releases Seller from any and all liability in connection with any claims which Buyer may have against Seller, for damage, loss, compensation, contributions, cost recovery or otherwise, whether in tort, contract, or otherwise, relating directly or indirectly to the existence of Hazardous Substances (as defined below) at, on, under or about the Property, or arising under any Environmental Laws (as defined below), or relating in any way to the quality of the indoor or outdoor environment at the Property, including, without limitation, any right of contribution under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., as amended ("CERCLA"), except for claims arising out of Seller's fraud, a breach of a Seller representation, warranty, or covenant set forth herein which expressly survives the Closing, or a third -party claim arising out of events occurring or or before the Closing. As used herein, the term "Hazardous Substances" means (i) hazardous wastes, hazardous materials, hazardous substances, hazardous constituents, toxic substances or related materials, whether solids, liquids or gases, including but not limited to substances defined as "hazardous wastes," "hazardous materials," "hazardous substances," "toxic substances," "pollutants," "contaminants," "radioactive materials," or other similar designations in, or otherwise subject to regulation under, CERCLA, the Toxic Substance Control Act, 15 U.S.C. § 2601 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1802; the Resource Conservation and Recovery Act, 42 U.S.C. § 9601, et seq.; the Clean Water Act, 33 U.S.C. § 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq.; the Clean Air Act), 42 U.S.C. § 7401 et seq.; and in any permits, licenses, approvals, plans, rules, regulations or ordinances adopted, or other criteria and guidelines promulgated pursuant to the preceding laws or other federal, state or local laws, regulations, rules or ordinance now or hereafter in effect relating to environmental matters (collectively, the "Environmental Laws"); and (ii) any other substances, constituents or wastes subject to any applicable federal, state or local law, regulation or ordinance, including any Environmental Law, now or hereafter in effect, including but not limited to petroleum, refined petroleum products, waste oil, waste aviation or motor vehicle fuel, asbestos, lead in water, paint or elsewhere, radon, Polychlorinated Biphenyls (PCB's), microbial materials, and urea Formaldehyde. Buyer expressly acknowledges to Seller that Seller has complied with the disclosure requirements, if any, of California Government Code §§ 8589.3 (special flood hazard area), 8589,4 (dam failure inundation area), and 51183.5 (high fire severity area) and California Public Resources Code §§ 2621.9 (earthquake fault zone)), 2694 (seismic hazard zone) and 4136 (wildland fire area), regarding the possible presence of certain natural hazards (the "Disclosures"). Seller and Buyer acknowledge and agree that any such Disclosures are made based on maps or other information that is provided by various governmental agencies and that Seller shall have no liability for the accuracy or completeness of any such information and that such disclosures are for informational purposes only and may not be relied upon by any party. Buyer ACKNOWLEDGES AND AGREES THAT: 21 summezcrest v3 Attachment No. 6 THESE HAZARDS MAY LIMIT THE ABILITY OF BUYER TO DEVELOP THE REAL PROPERTY, TO OBTAIN INSURANCE, OR TO RECEIVE ASSISTANCE AFTER A DISASTER. THE MAPS ON WHICH THE DISCLOSURES ARE BASED ESTIMATE WHERE NATURAL HAZARDS MAY EXIST. THEY ARE NOT DEFINITIVE INDICATORS OF WHETHER OR NOT A PROPERTY WILL BE AFFECTED BY A NATURAL DISASTER. BUYER MAY WISH TO OBTAIN PROFESSIONAL ADVICE REGARDING THOSE HAZARDS AND OTHER HAZARDS THAT MAY AFFECT TfIE PROPERTY, Buyer expressly represents to Seller that, as a material inducement to the execution and delivery of this Agreement by Seller, Buyer, on its own behalf and for its affiliates, partners, officers, directors, members, agents, heirs, representatives, legatees, successors and assigns (collectively, the "Releasing Parties"), hereby fully and forever releases, discharges and acquits Seller, and each of its partners, officers, dircctors, members, agents, heirs, representatives, legatees, successors and assigns, and each of their respective successors, heirs and assigns and each of them (collectively, the "Released Parties"), of, from and against any and all claims, demands, obligations, duties, liabilities, damages, expenses, indebtedness, debts, breaches of contract, duty or relationship, acts, omissions, misfeasance, malfeasance, causes of action, sums of money, accounts, compensation, contracts, controversies, promises, damages, costs, losses and remedies therefor, choses in action, rights of indemnity or liability of any type, kind, nature, description or character whatsoever, and irrespective of how, why or by reason of what facts, whether known or unknown, whether heretofore now existing or hereafter arising, whether liquidated or unliquidated (collectively, "Claims"), excluding Claims arising from a breach of a Seller representation, warranty, or covenant set forth herein which expressly survives the Closing, or arising from Seller's fraud, which any party comprising the Releasing Parties may now have, or heretofore have had or hereafter have against any party comprising thc Released Parties by reason of, arising out of or based upon the Disclosures, Released Parties acts, statements, conduct, representations and omissions made in connection with the Disclosures or the performance or non-performance by Released Parties of their obligations, if any, regarding the Disclosures. IN CONNECTION WITH THE FOREGOING, BUYER DOES HEREBY, KNOWINGLY AND WITH THE ADVICE OF COUNSEL OF BUYER'S SELECTION, WAIVE, RELEASE AND DISCHARGE ANY CLAIMS UNDER OR PURSUANT TO CALIFORNIA CIVIL CODE §1102.13, CALIFORNIA GOVERNMENT CODE §§ 8589.3(e), 8589.4(e) OR 51 I 83.5(e) OR CALIFORNIA PUBLIC RESOURCES CODE §§ 2621,90), 2694(0 OR 4136(f) OR ANY REPLACEMENT OR SUCCESSOR STATUTE THERETO THAT BUYER MAY NOW OR HE AFTER HAVE OR HAVE HAD WITH RESPECT TO ANY DISCLOSURES MADE BY OR ON BEHALF OF SELLER, Except for the breach of Seller's representations and warranties or the performance of Seller's covenants under this Agreement which expressly survive the Closing, Buyer hereby waives, as of the Closing, any and all rights which it may have under or pursuant to (1) the provisions of Section 1542 of the Civil Code of the State of California and/or(2) the provisions of Surntnercrest v3 Attachment No. 6 any other similar statutory, regulatory or common law of any state, or of the United States. Section 1542 of the Civil Code of the State of California provides: CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASES, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. Buyer understands fully the statutory language of Section 1542 of the Civil Code of the State of California and, having been so apprised, nevertheless releases all unknown claims as provided above. Buyer hereby acknowledges and agrees that the provisions of this Section 10(C) are material and included as a material portion of the consideration given to Seller by Buyer in exchange for Seller's performance under this Agreement and that Seller has given Buyer material concessions regarding this transaction in exchange for Buyer agreeing to the provisions of this Section 10(C). Notwithstanding anything to the contrary contained in this Agreement, the provisions of this Section 10(C) shall survive the Closing. Buyer and Seller each have separately initialed this provision to indicate its agreement to such waiver. Seller: Buyer: (D) Survival. The representations and warranties in Sections 10(A) and 10(B) will survive Close of Escrow, but only for a period of six (6) months, and no claim shall be allowed on any such representation or warranty unless notice of the claim and a detailed statement of the basis for the claim is delivered by the claimant to the other party within such 6-month period. The foregoing shall not impact Buyer's rights to recover from Seller with respect to a third -party claim arising out of events occurring or or before the Closing. Notwithstanding anything to the contrary contained in this Agreement, in no event shall Buyer be entitled to sue, seek, obtain or be awarded any damages from Seller for a breach of a representation or warranty, unless and until the aggregate amount of ages for which Seller is liable to Buyer exceeds the sum of Twenty Five Thousand Dollars ($25,000) (the "Base Amount"), whereupon Seller shall be liable to Buyer for all damages accruing above the Base Amount, but in no event will Seller be liable to Buyer to the extent that the aggregate damages to Buyer exceed the sum of Five Hundred Thousand Dollars ($500,000) ("Seller's Maximum Liability"), except such Maximum Liability shall not apply to Seller's fraud. Notwithstanding anything to the cont contained in this Agreement, to the extent that Buyer or any of its agents, employees or consultants obtain actual knowledge prior to Closing that any of Seller's representations or warranties were untrue when made in any material respect, or if Seller has delivered or made available to Buyer or any of its agents, employees or consultants information with respect to the Property at any time prior to the Closing Date, and such information indicates that any such representations or warranties were not true when made in any material respect, Buyer shall be deemed to have knowledge of such misrepresentation, and 23 Surnmercrest v3 Attachment No. 6 any other similar statutory, regulatory or common law of any state, or of the United States. Section 1542 of the Civil Code of the State of California provides: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASES, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. Buyer understands fully the statutory language of Section 1542 of the Civil Code of the State of California and, having been so apprised, nevertheless releases all unknown claims as provided above. Buyer hereby acknowledges and agrees that the provisions of this Section 10(C) are material and included as a material portion of the consideration given to Seller by Buyer in exchange for Seller's performance under this Agreement and that Seller has given Buyer material concessions regarding this transaction in exchange for Buyer agreeing to the provisions of this Section 10(C). Notwithstanding anything to the contrary contained in this Agreement, the provisions of this Section 10(C) shall survive the Closing. Buyer and Seller each have separately initialed this provision to indicate its agreement to such waiver. Buyer: jet (D) Survival. The representations and warranties in Sections 10(A) and 10(B) will survive Close of Escrow, but only for a period of six (6) months, and no claim shall be allowed on any such representation or warranty unless notice of the claim and a detailed statement of the basis for the claim is delivered by the claimant to the other party within such 6-month period. The foregoing shall not impact Buyer's rights to recover from Seller with respect to a third -party claim arising out of events occurring or or before the Closing. Notwithstanding anything to the contrary contained in this Agreement, in no event shall Buyer be entitled to sue, seek, obtain or be awarded any damages from Seller for a breach of a representation or warranty, unless and until the aggregate amount of damages for which Seller is liable to Buyer exceeds the sum of Twenty Five Thousand Dollars ($25,000) (the "Base Amount"), whereupon Seller shall be liable to Buyer for all d ages accruing above the Base ount, but in no event will Seller be liable to Buyer to the extent that the aggregate damages to Buyer exceed the sum of Five Hundred Thousand Doll. ($500,000) ("Seller's Maximum Liability"), except such Maximum Liability shall not apply to Seller's fraud. Notwithstanding anything to the contrary contained in this Agreement, to the extent that Buyer or any of its agents, employees or consultants obtain actual knowledge prior to Closing that any of Seller's representations or wzranties were untrue when made in any material respect, or if Seller has delivered or made available to Buyer or any of its agents, employees or consultants information with respect to the Property at any time prior to the Closing Date, and such information indicates that any such representations or warranties were not true when made in any material respect, Buyer shall be deemed to have knowledge of such misrepresentation, and Summercrest v3 Attachment No. 6 COVERNrry ANY REPLACEiMEN BUYER YIAY NOW OR I RESPECT TO ANY DISCL SELLER. 31JYI'R '011NSEL i)I' E3tDYER';S ANY Cl..ff=Y1Y[' 1JNDI.R 2.1+, CALIFORNIA 85€S9.4(e) OR 51183.5(e) C3R 2621.9(1). 2694(t3 OR 413t��`f) TUTS. TF[ERETO '[3IAT ER HAVE OR HAVE HAD WTTH ;URES MADE BY OR ON BEHALF OF Except ter the breach of Seller's representations and warranties or the performance of Seller's covenants under this Agreement which expressly survive the Closing, Buyer hereby waives, as of the Closing. any and all rights which it may have under or pursuant to (I) the provisions of Section 1542 of the Civil Code of the State of California and/or (2) the previsions of any rather sirrrilar statutory, regulatory_ or common law of any state, or of the United State .Section [542 of the Civil Code of the State of California provides: A GENERAL RELEASE DOES NOT EXTEND `FO CLAIMS VOUCH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST [N H[S OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASES, WHICH IF KNOWN BY HIM OR HER MUST HAVE (MATERIALLY AFFECTED I[[S OR HER SETTLEMENT W'[TH THE DEBTOR. Buyer understands fully the statutory language of Section 1542 of the Civil Code ot' the State of California and, having been so apprised, nevertheless releases all unknown claims as provided above. Buyer hereby aeknowand agrees that the prov °d as a material portion of the consideration g s performance under this Agreement and that Seller regarding this transaction in exchange for Buyer agreeing tr Notwithstanding anything to (he contrary contained in this Section /O(C) Shall survive the Closing er ari alcd this, provi cprescntation or warranty unless 10 (C) are material and yer in exchange for sessions /0(C). f this indicate its party within such 6-month per Seiler with resp{`et to a third -party Attachment No. 6 Buyer's sole and exclusive remedy as a result thereof shall be to terminate this Agreement and receive a return of the Deposit and thereafter, Buyer and Seller shall have no further rights or obligations under this Agreement except for those that are expressly provided in this Agreement to survive Inc - -termination 'hereor;- and if -notWittiStatictirig'Slien- bredertvoi a-rePreSeritation,—BnYer' elects to close the transactions contemplated by this Agreement, Buyer shall be deemed to have waived its rights to recover damages from Seller following the Closing. Nothing in this Section 10(D) limits the disclaimers, waivers and releases in Section 10(C) or indemnities set forth in this Agreement or the Section 42 Indemnification Agreement, all of which will survive Close of Escrow without limit as to time. 11. Pre -Closing Obligations. (A) Maintenance of Insurance. Seller agrees that it will maintain all insurance in effect as of the Effective Date with respect to the Property (or comparable insurance) until the earlier of the Close of Escrow or the termination by Buyer or Seller of its obligation to complete the Transaction. (B) Service Contracts and Liens. Until the earlier of the Close of Escrow or the termination by Buyer or Seller of its obligation to complete the Transaction, without Buyer's consent, which consent shall not be unreasonably withheld or delayed, Seller will not (1) other than in the ordinary course of business, enter into any new Service Contract that will be binding upon Buyer or the Property after Close of Escrow, or amend or otherwise modify any existing Service Contract that will not expire prior to Close of Escrow, (2) grant, create or allow the creation of any easement, right-of-way, encumbrance, lien, restriction, condition, assessment or other cloud on title which affects the Property except for Leases executed in the ordinary course of business, (3) except in the ordinary course of business and except as contemplated by the Transaction, make any material commitments to any applicable governmental authorities, any adjoining or surrounding property owners, any utility or any other person or entity that would in any manner be binding upon Buyer or the Property after Closing, (4) make or allow any material physical changes or alterations to the Property or the building or any part thereof, except in the ordinary course of business, except as required as the result of an emergency or governmental order or except as required under the Seller's existing Loan Documents or covenants binding upon the Seller or the Property, (5) amend, extend or otherwise modify the terms of any existing license, permit, easement, right-of-way, encumbrance, lien, restriction, condition, assessment or other cloud on title which affects the Property, except in the ordinary course of business. (C) From the Effective Date until the Closing. Seller shall manage and operate the Property, including rental operations and inventory levels, in a manner consistent with Seller's historical practices and shall conduct and complete all scheduled repairs, maintenance and replacements. Seller shall endeavor to keep the Apartment Development fully leased consistent with its ordinary course of business. (D) Seller shall use its commercially reasonable efforts in a manner consistent with Seller's historical practices to continue to maintain in full force and affect all permits, licenses and related items relating to the Property or any part thereof. 24 Sumrnercrest v3 Attachment No. 6 (E) Seller shall terminate as of the Closing Date all Disapproved Service Contracts which Seller has agreed to tetritinate prior to the Closing pursuant to the terms of Section 7(D ). 1 ,... <JelleC "stiaii `use ifs c€ii i het tatty t a €moire e"traits" to a' rianne co tstent with . , Seller's historical practices to pay in a timely fashion all taxes, payables in connection with Service Contracts, water bills and other public charges against the Property. (G) Seller shall provide Buyer, within five (5) days after receipt, with copies of any written notices of default, written notices of violation and written material correspondence relating to the Property or the consents described on Exhibit C which Seller receives with respect to the Property. (H) Subject to the terms ofSection 7(C), Seller shall provide Buyer continued access to the Property and the Records through the date of Closing. (I) Consents. With respect to consents required under the Agency Agreements listed on Exhibit C, Buyer shall provide all information reasonably required of a buyer under the provisions of such agreements or by the governing agency in time to allow consents to be obtained on or prior to Contingency Approval Date and shall execute an assignment and assumption agreement for each such agreement wherein Buyer agrees to assume and observe all duties and obligations set forth in such agreements following the Close of Escrow. Seller shall cooperate with Buyer's reasonable requests to assist in obtaining the foregoing consents, at Buyer's cost. Each of Buyer and Seller shall provide the other all written material correspondences received by Buyer or Seller, as applicable, with respect thereto. Seller and Buyer shall join in any requests and submissions reasonably required by the other for the consents within five (5) days of being requested to do so. (J) Managing General Partner. Promptly after the Effective Date, Buyer will enter into due diligence and negotiations to determine whether to retain the Seller's existing managing general partner, Las Palmas Foundation, and complete such discussions prior to the Contingency Approval Date. Prior to the Contingency Approval Date, Buyer will also work with Las Palmas on negotiating an extension of the social service contract for the Property. 12. Remedies. (A) Li uldated Damages. IF BUYER FAILS TO PURCHASE THE PROPERTY IN VIOLATION OF THIS AGREEMENT, THE PARTIES HAVE DETERMINED AND AGREED THAT TIE ACTUAL AMOUNT OF DAMAGES THAT WOULD BE SUSTAINED BY SELLER AS A RESULT OF SUCH BUYER'S DEFAULT UNDER THIS AGREEMENT IS DIFFICULT OR IMPOSSIBLE TO ASCERTAIN AND THAT IN SUCH EVENT SELLER, AS ITS SOLE dD EXCLUSIVE REMEDY, MAY TERMINATE ITS OBLIGATION TO COMPLETE THE TRANSACTION AND, UPON SO DOING, WILL BE ENTITLED TO RECEIVE THE DEP©SIT AS LIQUIDATED DAMAGES. BY PLACING THEIR INITIALS BELOW, BUYER AND SELLER ACKNOWLEDGE THEIR AGREEMENT TO THISS LIQUIDATED DAMAGES PROVISION. IT IS AGREED THAT SELLER SHALL NOT HAVE ANY CAUSE OF ACTION OR CLAIM WHATSOEVER AGAINST BUYER BECAUSE OF A DEFAULT OF THIS AGREEMENT BY BUYER, AND SELLER'S SOLE 25 Summacrest v3 Attachment No. 6 AND EXCLUSIVE REMEDY SHALL BE THE RECEIPT OF THE ABOVE REFERENCED SUM AS LIQUIDATED DAMAGES. PAYMENT TO SELLER OF THE ABOVE REFERENCED SUM IS NOT INTENDED AS A FORFEITURE OR PENALTY, BUT 11'13 I LAU, i 1IN 1 LINULL) .LU CONS illU LIQUIDA 1 Ell DAMAGES 1'0 SELLER. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 12 SHALL LIMIT ANY RECOVERY BY SELLER UNDER THE INDEMNITY MADE BY BUYER IN SECTION 7(C) HEREIN OR IN THE SECTION 42 INDEMNIFICATION AGREEMENT, OR SELLER'S RIGHTS TO ANY ATTORNEYS' FEES OR COSTS RECOVERABLE BY SELLER HEREUNDER. BUYER'S INITIALS: SELLER'S INITIALS: (B) Buyer's Remedy. If Seller breaches a representation or warranty in Section 10(A) in any material respect or fails to perform any of its obligations under this Agreement in any material respect, then Buyer (provided that Buyer is not then in a material default under this Agreement), as its sole and exclusive remedy, may either (1) terminate its obligation to complete the Transaction, in which case Buyer may recover the Deposit, or (2) enforce specific performance of Seller's obligation to sell the Property pursuant to this Agreement, in which case the provisions of Section 17(C) shall apply. Buyer waives all remedies for Seller's failure in performance (including any right to obtain damages from Seller), except those specifically provided for in this Agreement. In the event Buyer elects to obtain specific performance of Seller's obligations hereunder, Buyer and Seller shall each be entitled to their rights under Section 17(C). If seeking to recover or receive the Deposit, Buyer and Seller shall be entitled to their rights under Section 17(C). (C) Cumulative Remedies. Except as otherwise specifically provided in this Agreement, all remedies provided for in this Agreement or available as a matter of law (whether at law, in equity, by statute or otherwise) are cumulative and may be exercised concurrently or consecutively, in such order as a party may elect. Limitations on remedies apply only to the obligations specifically referenced to be limited. 13, Brokerage. Seller will pay Marcus & Millichap ("Broker") a commission in accordance with Seller's agreement with Broker. Subject to the preceding sentence, Seller and Buyer each agree to indemnify and defend the other and hold the other harmiess against any claim for a commission, finder's fee or similar compensation asserted by any person retained by or claiming through the indemnifying party in connection with the Transaction or the execution of this Agreement and all related loss, damage, liability, obligation, claim, suit, cause of action, judgment, settlement, penalty, fine or cost or expense (including fees and disbursements of attorneys and other professionals and court costs). The parties acknowledge that Broker represents the Seller. 26 Summcrerest v3 Attachment No. 6 AND EXCLUSIVE REMEDY SHALL BE THE RECEIPT OF THE ABOVE REFERENCED sUM AO LQUEE r4AcJ,,D A VATUNIT Tfl 4..'F; I f PR (--)F TI-IF A ROVF REFERENCED SUM IS NOT INTENDED AS A FORFEITURE OR PENALTY, BUT NSTEAD, IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 12 SHALL LIMIT ANY RECOVERY BY SELLER UNDER THE INDEMNITY MADE BY BUYER IN SECTION 7(C) HEREIN OR IN THE SECTION 42 INDEMNIFICATION AGREEMENT, OR SELLER'S RIGHTS TO ANY ATTORNEYS' FEES OR COSTS RECOVERABLE BY SELLER HEREUNDER. t fV BUYER'S INITIALS: SELLER'S INITIAL (B) Buyer's Remedy. If Seller breaches a representation or w. y in Section 10(A) in any material respect or fails to perform any of its obligations under this Agreement in any material respect, then Buyer (provided that Buyer is not then in a material default under this Agreement), as its sole and exclusive remedy, may either (1) terminate its obligation to complete the Transaction, in which case Buyer may recover the Deposit, or (2) enforce specific performance of Seller's obligation to sell the Property pursuant to this Agreement, in which case the provisions of Section 17(C) shall apply. Buyer waives all remedies for Seller's failure in perfoiinance (including any right to obtain damages from Seller), except those specifically provided for in this Agreement. In the event Buyer elects to obtain specific performance of Seller's obligations hereunder, Buyer and Seller shall each be entitled to their rights under Section 17(C). If seeking to recover or receive the Deposit, Buyer and Seller shall be entitled to their rights under Section 17(C). (C) Cumulative Remedies. Except as otherwise specifically provided in this Agreement, all remedies provided for in this Agreement or available as a matter of law (whether at law, in equity, by statute or otherwise) are cumulative and may be exercised concurrently or consecutively, in such order as a party may elect. Limitations on remedies apply only to the obligations specifically referenced to be limited. 13. Brokerage. Seller will pay Marcus & Millichap ("Broker") a commission in accordance with Seller's agreement with Broker. Subject to the preceding sentence, Seller and Buyer each agree to indemnify and defend the other and hold the other h less against any claim for a commission, finder's fee or similar compensation asserted by any person retained by or claiming through the indemnifying prty in connection with the Transaction or the execution of this Agreement and all related loss, damage„ liability, obligation, claim, suit, cause of action, judgrnent, settlement, penalty, fine or cost or expense (including fees and disbursements of attorneys and other professionals and court costs). The prties acknowledge that Broker represents the Seller. Surnmercrest v3 26 Attachment No. 6 Remedies. (A) Liquidated Damages, IF BUYER FAILS TO PIJkCI 1ASE J1 IF PROPERTY IN VIOLATION OF THIS AG REEMENT THE PARTI NS HAVF DETERMINED AND AGREED THAT THE ACTUAL„AMOUN'T OF DAMAGES '1"1-1A'1 OULD BE SUSTAINED BY SFITHZ AS A RESULT Or SUCH BEEYER.•S DETA[Jur UNDER 'THIS AGREEMENT IS DIFFICULT 01Z IMPOSSIBLE, TO ASCERTAIN i\ND THAT IN SUCH EVENT SELLER, AS ITS SOLE AND EXCLUSIVE REMEDY, MAY TERMINATE ITS OBLIG/VTION TO COMPLETE TILE TRANSACTION AND, UPON SO DOING, WILL f3E ENTITLED TO RECEIVE THE DEPOSIT AS LIQUIDATE[) DAMAGES, BY PLACING THEIR INITIALS BELOW, BUYER AND SELLER ACKNOWLEDGE THEIR AGREEMENT TO THIS LIQUIDATED DAMAGES PROVISION, rr IS AGREED THAT SELLER SHALL N0'1 HAVE': ANY CAUSE OF iNCTION OR CLAIM WHATSOEVER AGAINST BUYER BECAUSE OF A DEFAULT OF THIS AGREEMENT BY BUYER, AND SELLER'S SOLE AND EXCLUSIVE REMEDY SELALL BE THE RECEIVE" OF THE ;,..\ BOVE REFERENCED SUM AS LIQUIDATED DAMAGES, PAYMENT TO SELLER OF THE ABOVE REFERENCED SUM IS NOT INTENDED AS A FORFEITURE OR PENALTY, BUT INSTEAD, IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES 'FO SELLER. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION( 12 SHALL LIMIT ANY RECOVERY BY SELLER UNDER THE INDEMNITY MADE BY BUYER IN SECTION 7(C) HEREIN OR IN THE SECTION 42 INDEMNIFICATION AGREEMENT, OR SELLER'S RIGHTS TO ANY ATTORNEYS' FEES OR COSTS RECOVERABLE BY SELLER HEREUNDER. BUYER'S INITIALS: SELLER'S INEEIALS: (B) Buyer's Remedy, IfScIler breaches a representation or warranty. in Section 100) in any material respect or fails to perform any of its obligations under this Agreement in any material respect, then Buyer (provided that I3uyer is not then in a material default under this Agreement), as its sole and exclusive remedy, may either (I) terminate its obligation to complete the Transaction, in which case Buyer may recover the Deposit, or (2) enforce specific performance of Seller's obligation to sell the Property pursuant to this Agreement, in which case the provisions ol Section 17(C) shall apply. Buyer waives all remedies for Seller's failure in performance (including any right to obtain damages from Seller), except those specifically provided for in this Agreement. In the event Buyer elects fo obtain specific performance of Seller's' obligations hereunder, Buyer and Seller shall each be entitled to their riQhts under Section I 7()_ ilseeking to recover or receive. the Deposit, Buyer and Seller shall he izntitled their rights under Section 7(0 (0 Cumulative Remedies. F.Ncept as otherwise specifically provided in this Agrecinems an rerriedka4 provided for in this Agreement or available as a matter of law (whether at_ law, in Nulty. by statute or otherwise) arc cumulative and may be exercised concurrently or consecutively, in such order as a party may elect. Limitations on remedies apply only to the obligations specifically referenced to be limited, l'n Attachment No. 6 14. Posse Seller will deliver possession of the Property to Buyer at the ti s CO"'r ;iz a f c x cz iid es iue ltiiied i trite tet zot 'uc t eti t effi ::t and (B) the Permitted Exceptions. Close of Escrow, 15. Casualty and Condemnation. (A) Notice to Buyer. Seller will notify Buyer within five (5) days after receiving notice of, or otherwise becoming aware of O any Casualty Loss (as defined below), or (2) the commencement of any proceedings for the taking by eminent domain of all or any part of the Property. (B) Casualty Loss. If, prior to Close of Escrow, the Property is damaged by fire, windstoiiii, rioting or other civil disturbance, acts of war, earthquake or other casualty or the environmental condition of the Property has adversely changed from the condition existing as of the expiration of the Feasibility Period (i.e., a new environmental condition which first arises after the expiration of the Feasibility Period) and the cost to repair or remediate the related damage is more than five percent (5%) of the Purchase Price or, regardless of the amount, such loss is uninsured and Seller does not agree to pay the cost of repair or remediation (a "Casualty Loss"), then Buyer, at its option, may terminate its obligation to complete the Transaction, in which case the Deposit with accrued interest will be returned to Buyer. If, prior to Close of Escrow, the Property is damaged by fire, windstorm, rioting or other civil disturbance, acts of war, earthquake or other casualty and the cost to repair the related damage is less than five percent (5%) of the Purchase Price and is an insured loss (or in the event of an uninsured loss, Seller does not agree to pay the cost of repair) (a "Minor Casualty Loss"), then Buyer shall be obligated to proceed with Closing. If Buyer elects to complete the Transaction notwithstanding a Casualty Loss, or if this Agreement requires Buyer to purchase the Property despite a Minor Casualty Loss, then, unless Seller repairs the damage prior to the Close of Escrow, Seller will deliver to Buyer at Close of Escrow, through Escrow, all casualty insurance proceeds previously received by Seller, an amount equal to the deductible under Seller's casualty insurance in respect of the damage and an assignment of Seller's rights with respect to all uncollected casualty insurance proceeds (in either case, net of proceeds of rental loss and business interruption insurance allocable to the period through the Closing Date, amounts expended by Seller to stabilize or repair the Property and costs incurred by Seller in making proof of loss or settling claims with insurers), and Seller will cooperate with Buyer after Close of Escrow in making claim for, and collecting, all available insurance proceeds. (C) Eminent Domain, If prior to Close of Escrow, all or a material part of the Property is en by eminent domain or any proceedings for the taking by eminent domain of all or a material part of the Property is coenced, then Buyer, at its option, mayterminate its obligation to complete the Transaction, in which case the Deposit (with accrued interest) will be returned to Buyer. For purposes of this Section 15(C), a taking by eminent domain shall be deemed to be for a "material part of the Property" if the portion of the Property subject to eminent domain shall require the reduction of the number of residential units in the Apartment Development. If Buyer elects to complete the Transaction notwithstanding any taking by eminent domain or proceeding 27 Surnmercrestv3 Attachment No. 6 therefore (material or non -material), Seller will deliver to Buyer at Close of Escrow, all condemnation proceeds previously received by Seller and an assignment of Seller's rights with respect to all uncollected condemnation proceeds (in either case, net ofyroceeds allocable to loss OfUS the Pr Operty 'foi• -rind through CiOsing bate- and -Costs-inc-urred -by 'Seiler - connection with such proceedings) and such documents as Buyer may reasonably request to substitute itself for Seller in any pending eminent domain proceedings. 16. Consequences of Termination. If Buyer or Seller terminates its obligation to complete the Transaction under circumstances permitted by this Agreement, neither Buyer nor Seller will have any further obligation under this Agreement, except release and indemnity obligations under this Agreement. Nothing in this Section 16 is intended to limit the obligations of the Escrow Agent or the provisions of this Agreement dealing with the disposition of funds or documents held in escrow following termination of the obligations of Buyer or Seller. If Buyer or Seller terminates its obligation to complete the Transaction (other than as a consequence of Seller's default), Buyer will deliver to Seller (A) all materials related to the Property provided to Buyer by Seller, and (B) copies of all reports and studies prepared for Buyer by third -party consultants (other than attorneys) relating to the Property, without any representation or warranty, and to the extent Buyer's proposed lender does not prohibit release of such reports and studies. 17. Miscellaneous. (A) Survival. Subject to Sections 7(C) and 10(D), all covenants, undertakings and obligations under this Agreement and all representations and warranties contained in this Agreement will survive the Close of Escrow and will not be merged into the Deed or other documents delivered pursuant to this Agreement. (B) Interpretation. When the context so requires in this Agreement, words of one gender include one or more other genders, singular words include the plural, and plural words include the singular. Use of the words "include" and "including" are intended as an introduction to illustrative matters and not as a limitation. References in this Agreement to "Sections" are to the numbered subdivisions of this Agreement, unless another document is specifically referenced. The word "party" when used in this Agreement means either Buyer or Seller unless another meaning is required by the context. The word "person" includes individuals, entities and governmental authorities. The word "governmental authority" is intended to be construed broadly and includes governmental agencies, instrumentalities, bodies, boards, departments and officers and individuals acting in any official capacity. The word "laws" is intended to be construed broadly and includes all codes, statutes, case law, rules, regulations, pronouncements, requirements, orders, directives, decisions, decrees, judgments and formal or informal guidance or interpretations of any court or governmental authority, (C) Attorneys' Fees, If litigation is commenced by Buyer or Seller against the other party in connection with this Agreement or the Transaction, the party prevailing in the litigation will be entitled to collect from the other party the expense (including reasonable fees and disbursements of attorneys and other professionals and court costs) incurred in connection with the Litigation. 28 Summercrest v3 Attachment No. 6 (D) Notice. Any notice or other communication to any party given under this Agreement will be effective only if in writing delivered to whichever of the following addresses is applicable: If to Seller: With a copy to: If to Buyer: With a copy to: Plaza Manor Preservation, L.P. 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 Attention: William A. Witte Fax: (949) 660-7273 The Related Companies of California 18201 Von Karman Avenue, Suite 900 Irvine, California 92612 Attention: Steve Sherman Fax: (949) 660-7273 Affordable Housing Associates, LLC 19772 Mac Arthur Boulevard, Suite 200 Irvine, California 92612 Attention: Gary Grant Fax: (949) 440-2311 Dan Vaughn Law 3480 W. Marginal Way SW Seattle, Washington 98106 Attention: Daniel C. Vaughn Fax: (949) 440-2311 and a copy to: Escrow and Title Company First American Title Company 5 First American Way Santa Ana, California 92707 Attention: Jeanne Gould Fax: (714) 250-5381 Any notice or other communication will be deemed received only upon delivery to the address provided for in this Section 17(D) or rejection of delivery at such address. Notice may be given by facsimile transmission, and confirmation of transmission generated by the sender's equipment will be prima facie evidence of receipt, The addresses and addressees to which notice is to be given may be changed by written notice given in the manner specified in this Section 17(LD) and actually received by the addressee. (E) Successors and Permitted Assigns. Subject to Section 17(K) below, this Agreement will be binding upon and will inure to the benefit of Buyer and Seller and their respective successors and permitted assigns. Any indemnity in favor of a party also will benefit 29 Summercrest v3 Attachment No. 6 each person who holds a direct or indirect ownership interest in such party and the respective officers, directors, trustees, agents, employees and affiliates of such party and such owners, and all such persons are third -party beneficiaries of this Agreement to the extent of their rights to indemnity unaer tne related provision and may entorce that provision against Buyer or Seller, as applicable. The Escrow Agent and the Broker are not third -party beneficiaries of this Agreement, nor may the Escrow Agent or the Broker enforce this Agreement or any obligation under this Agreement. (F) Headings. The Section headings contained in this Agreement are for convenience of reference only and are not intended to delineate or limit the meaning of any provision of this Agreement or be considered in construing or interpreting the provisions of this Agreement. (G) Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original and all of which, taken together, will constitute one instrument. (H) Entire Agreement. This Agreement embodies the entire agreement and understanding between Buyer and Seller with respect to its subject matter and supersedes all prior agreements and understandings, written and oral, between Buyer and Seller related to that subject matter. This Agreement and the obligations of the partics under this Agreement may be amended, waived and discharged only by an instrument in writing executed by the party against which enforcement of the amendment, waiver or discharge is sought. Joinder of the Escrow Agent and the Broker will not be necessary to make any amendment, waiver or discharge effective between Buyer and Seller. (I) Severability. The determination that any provision of this Agreement is invalid or unenforceable will not affect the validity or enforceability of the remaining provisions or of that provision under other circumstances. Any invalid or unenforceable provision will be enforced to the maximum extent permitted by law. Limited Liability. No limited partner or general partner of the limited partnership comprising Seller, nor an officer, director or shareholder of any partner comprising, nor any employee or agent of, Seller or of Seller's partners, shall have any personal liability directly or indirectly, under or in connection with this Agreement or any agreement made or entered into under or in connection with this Agreement, and Buyer and Buyer's successors and assigns shall look solely to Seller's interest in the Property or Seller's interest in the net sales proceeds from the sale of the Property following a transfer thereof, for the payment of any claim or for any performance hereunder, and Buyer hereby waives any and all claims for personal liability against any limited partner, manager or member, or general partner of Seller, and any officer, director or shareholder of any partner comprising Seiler, and any employee or agent of Seller or of any of Seller's partners. (K) Assignment. Neither Buyer nor Seller may assign this or its rights under this Agreement without the approval of the other party, which approval may be withheld in such other party's discretion, except that Buyer may assign its rights to a related or affiliated limited partnership including an affiliate having a nonprofit managing general partner, without Seller's approval, provided, however that if Buyer makes such an assignment. Buyer shall, 30 Surnmercrest v3 Attachment No. 6 notwithstanding thc assignment, remain obligated under this Agreement. No such assignment shall affect, release or otherwise reduce the liability of Buyer or Indemnitor under the Section 42 Indemnity Agreement. (L) Confidentiality. Buyer and Seller will treat this Agreement as confidential and will not disclose the existence of this Agreement or the terms of this Agreement without the consent of the other party, except for (1) disclosure necessary to allow a party's employees, representatives, advisors, attorneys and consultants to perform their duties or to conduct due diligence regarding the Property or to obtain the approvals and consents described in Section 5; (2) disclosure required by law or by regulators and other governmental entities described in Exhibit C (e.g., TCAC will require a copy of this Agreement), including in response to a subpoena or similar process or as part of a filing required to be made under securities laws; (3) disclosure to Buyer's partners, investors and lenders, including the nonprofit managing general partner; and (4) disclosure in connection with litigation to enforce the terms of this Agreement. (M) Governing Law. This Agreement will be governed by the laws of the State of California without giving effect to principles of conflicts of law. (N) Exclusivity. Unless this Agreement is terminated and so long as Buyer is not in default hereunder, Seller shall cease to actively market the Property and shall not enter into any other written agreements, including letters of intent, for or related to the sale of the Property; provided, however, the foregoing shall not prohibit Seller from having discussions with other potential buyers. (0) Natural Hazard Disclosure Statements. Promptly after the Effective Date, Seller shall instruct the Escrow Agent to provide Buyer with the natural hazard disclosure statements customarily provided in similar transactions, at Seller's cost. SIGNATURES ON FOLLOWING PAGE 3 I Surnrnercrest v3 Attachment No. 6 EN WITNESS WHEREOF, the parties hereto have executed this Real Estate Purchase Agreement as of the Effective Date. SELLER: PLAZA MANOR PRESERVATION, L.P., a California limited partnership, By: Plaza Manor Development Co., LLC, a California limited liability company, its General Partner By: Nicholas Real Estate Investments, LLC a California limited-lia ility company, its Managing Member By: William A. Witte President By: Las Palmas Foundation, a California nonprofit public benefit corporation, its General Partner By: S Summercrest 5005611 3 Joseph Michaels, President Attachment No. 6 IN WITNESS WHEREOF, the parties hereto have executed this Real Estate Purchase Agreement as of the Effective Date SELLER: PLAZA MANOR PRESERVATION, L.P., a California limited partnership, By: Plaza Manor Development Co., LLC, a California limited liability company, its General Partner By: Nicholas Real Estate Investments, LLC a California limited liability company, its Managing Member By: William A. Witte President By: Las Palmas Foundation, a California nonprofit public benefit corporation, its General Partner By: S I Summercrest v3 I 50056 ; 3.9 os ichaels, President Attachment No. 6 BUYER: AFFORDABLEJIIOUSING ASSOCIATES, 1,1,C, a Calitbrnia lirnYed liability company. Name: ?le 4- '774 Title; Manavang Member S - 2