The URL can be used to link to this page

Home My WebLink About2013 CON HA (Subordination Agreement) Summercrest Apts AKA Plaza Manor - AmendmentFirst American Title Company NHS - 4349486-50 Recording Requested By, and When Recorded Return To: Citibank, N.A. Transaction Management Group/Post Closing 390 Greenwich Street, 2nd Floor New York, New York 10013 Attn: Joanne Marcino Freddie Mac Loan Number: 708202314 Citi Deal ID # 22029 DOC# 2073-0735309 11111111111111111MIIIIII111111111111111111111111111111111 DEC 24, 2013 BOO AM OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE Ernest J. Dronenburg, Jr., COUNTY RECORDER FEES: 79.00 PAGES: 22 I IIIII Illil IIIII IIill Ilill IIII Hil IIII IIM IIII IIIII 111111111 lli11 IIII IIII III SUBORDINATION AGREEMENT (CME AND PORTFOLIO) GOVERNMENTAL ENTITY (Revised 5-25-2012) Subordination Agreement (CME and Portfolio) — Governmental Entity Summercrest Apartments 12603564-v3 Freddie Mac Loan Number: 708202314 Property Name: Summercrest Apartments SUBORDINATION AGREEMENT (CME AND PORTFOLIO) GOVERNMENTAL ENTITY (Revised 5-25-2012) THIS SUBORDINATION AGREEMENT ("Agreement") is entered into this l 9`h day of December, 2013, by and between (i) CITIBANK, N.A., a national banking association ("Senior Mortgagee") and (ii) COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY acting in its capacity as the Housing Authority of the City of National City ("Subordinate Mortgagee"). RECITALS A. Summercrest Apartments, L.P., a Delaware limited partnership ("Borrower") is the owner of certain land located in San Diego County, California, described in Exhibit A hereto ("Land"). The Land is or will be improved with a multifamily rental housing project ("Improvements"). B. The Senior Mortgagee has made or is making a loan to the Borrower in the original principal amount of S33,000,000 ("Senior Loan") upon the terms and conditions of a certain Multifamily Loan and Security Agreement dated the date hereof between the Senior Mortgagee and the Borrower ("Senior Loan Agreement") in connection with the Mortgaged Property. The Senior Loan is secured by a Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated the date hereof ("Senior Mortgage") encumbering the Land, the Improvements and related personal and other property described in the Senior Mortgage and defined therein as the "Mortgaged Property." C. Subordinate Mortgagee is the holder of a certain Declaration of Covenants and Restrictions (Tenant Restrictions) ("Regulatory Agreement") dated December 18, 2001, and executed by Plaza Manor Preservation, L.P. and recorded June 19, 2002, in the office of the County Recorder of San Diego County, California as Document Number 2002- 0518422 and assumed by Borrower pursuant to a certain Assignment and Assumption of Declaration of Covenants and Restrictions and Deed of Trust dated December 19, 2013, and recorded or intended to be recorded in the office of the County Recorder of San Diego County, California (the "Assumption Agreement"), which Regulatory Agreement Subordination Agreement (CME and Portfolio) — Governmental Entity Summercrest Apartments Page 1 is secured by that certain Project Deed of Trust encumbering all or a portion of the Mortgaged Property. ("Subordinate Mortgage") dated December 18, 2001, and executed by Plaza Manor Preservation, L.P. and recorded June 19, 2002, in the office of the County Recorder of San Diego County, California as Document Number 2002- 0518423, as assumed by Borrower pursuant to the Assumption Agreement. D. The Senior Mortgage will be recorded in the office of the County Recorder of San Diego County, California ("Recording Office"). E. The execution and delivery of this Agreement is a condition of Senior Mortgagee's making of the Senior Loan and the Borrower's granting of the Subordinate Mortgage. NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Defined Terms. The following terms, when used in this Agreement (including, as appropriate, when used in the above recitals), will have the following meanings. (a) The terms "Condemnation," "Imposition Deposits," "Impositions," "Leases," "Rents" and "Restoration," as well as any term used in this Agreement and not otherwise defined in this Agreement, will have the meanings given to those terms in the Senior Loan Agreement. (b) "Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency, composition, restructuring, dissolution, liquidation, receivership, assignment for the benefit of creditors, or custodianship action or proceeding under any federal or state law with respect to the Borrower, any guarantor of any of the Senior Indebtedness, any of their respective properties, or any of their respective partners, members, officers, directors, or shareholders. (c) "Borrower" means all persons or entities identified as "Borrower" in the first Recital of this Agreement, together with their successors and assigns, and any other person or entity who acquires title to the Mortgaged Property after the date of this Agreement; provided that the term "Borrower" will not include the Senior Mortgagee in the event that the Senior Mortgagee may acquire title to the Mortgaged Property. (d) "Casualty" means the occurrence of damage to or loss of all or any portion of the Mortgaged Property by fire or other casualty. (e) "Enforcement Action" means any of the following actions taken by or at the direction of the Subordinate Mortgagee: the acceleration of all or any part of the Subordinate Indebtedness, the advertising of or commencement of any foreclosure or trustee's sale proceedings, the exercise of any power of sale, the acceptance of a deed or assignment in lieu of foreclosure or sale, the collecting of Rents, the obtaining of or seeking of the appointment of a receiver, the seeking of default Subordination Agreement (CME and Portfolio) — Governmental Entity Page 2 Summercrest Apartments interest, the taking of possession or control of any of the Mortgaged Property, the commencement of any suit or other legal, administrative, or arbitration proceeding based upon any Subordinate Documents, the exercising of any banker's lien or rights of set-off or recoupment, or the exercise of any other remedial action against the Borrower, any other party liable for any of the Subordinate Indebtedness or obligated under any of the Subordinate Documents, or the Mortgaged Property. (f) "Enforcement Action Notice" means a written notice from the Subordinate Mortgagee to the Senior Mortgagee, given following one or more Subordinate Mortgage Default(s) and the expiration of any notice or cure periods provided for such Subordinate Mortgage Default(s) in the Subordinate Documents, setting forth in reasonable detail the Subordinate Mortgage Default(s) and the Enforcement Actions proposed to be taken by the Subordinate Mortgagee. "Loss Proceeds" means all monies received or to be received under any insurance policy, from any condemning authority, or from any other source, as a result or any Condemnation or Casualty. (k) (1) "Senior Indebtedness" means the "indebtedness" as defined in the Senior Loan Agreement. "Senior Loan Documents" means the "Loan Documents" as defined in the Senior Loan Agreement. "Senior Mortgage Default" means any act, failure to act, event, condition, or occurrence which constitutes, or which with the giving of notice or the passage of time, or both, would constitute, an "Event of Default" as defined in the Senior Loan Agreement. "Senior Mortgagee" means the "Lender" as defined in the Senior Mortgage. When any other person or entity becomes the legal holder of the Senior Note, such other person or entity automatically will become the Senior Mortgagee. "Senior Note" means the promissory note or other evidence of the Senior Indebtedness referred to in the Senior Loan Agreement and any replacement of the Senior Note. (m) "Subordinate Indebtedness" means all sums evidenced or secured or guaranteed by, or otherwise due and payable to the Subordinate Mortgagee pursuant to, the Subordinate Documents. (n) "Subordinate Documents" means the Subordinate Mortgage, the Regulatory Agreement and all other documents at any time evidencing, securing, guaranteeing, or otherwise delivered in connection with the Subordinate Indebtedness, as the same may be amended from time to time. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 3 Summercrest Apartments (0) "Subordinate Mortgage Default" means any act, failure to act, event, condition, or occurrence which allows (but for any contrary provision of this Agreement), or which with the giving of notice or the passage of time, or both, would allow (but for any contrary provision of this Agreement), the Subordinate Mortgagee to take an Enforcement Action. (p) "Subordinate Mortgagee" means the person or entity named as such in the first paragraph of this Agreement. 2. Subordination of Subordinate Indebtedness. (a) The Subordinate Indebtedness is and will at all times continue to be subject and subordinate in right of payment to the prior payment in full of the Senior Indebtedness. (b) The Subordinate Mortgagee acknowledges that a Subordinate Mortgage Default constitutes a Senior Mortgage Default. Accordingly, upon the occurrence of a Subordinate Mortgage Default, the Subordinate Mortgagee will be deemed to have actual knowledge of a Senior Mortgage Default. (c) If (i) the Subordinate Mortgagee receives any payment, property, or asset of any kind or in any form on account of the Subordinate Indebtedness (including, without limitation, any proceeds from any Enforcement Action) after a Senior Mortgage Default of which the Subordinate Mortgagee has actual knowledge (or is deemed to have actual knowledge as provided in 2(b) above) or has been given notice, or (ii) the Subordinate Mortgagee receives, voluntarily or involuntarily, by operation of law or otherwise, any payment, property, or asset in or in connection with any Bankruptcy Proceeding, such payment, property, or asset will be received and held in trust for the Senior Mortgagee. The Subordinate Mortgagee will promptly remit, in kind and properly endorsed as necessary, all such payments, properties, and assets to the Senior Mortgagee. The Senior Mortgagee will apply any payment, asset, or property so received from the Subordinate Mortgagee to the Senior Indebtedness in such order, amount (with respect to any asset or property other than immediately available funds), and manner as the Senior Mortgagee will determine in its sole and absolute discretion. (d) Without limiting the complete subordination of the Subordinate Indebtedness to the payment in full of the Senior Indebtedness, in any Bankruptcy Proceeding, upon any payment or distribution (whether in cash, property, securities, or otherwise) to creditors (i) the Senior Indebtedness will first be paid in full in cash before the Subordinate Mortgagee will be entitled to receive any payment or other distribution on account of or in respect of the Subordinate Indebtedness, and (ii) until all of the Senior Indebtedness is paid in full in cash, any payment or distribution to which the Subordinate Mortgagee would be entitled but for this Subordination Agreement (CME and Portfolio) — Governmental Entity Page 4 Summercrest Apartments Agreement (whether in cash, property, or other assets) will be made to the Senior Mortgagee. (e) The subordination of the Subordinate Indebtedness will continue in the event that any payment under the Senior Loan Documents (whether by or on behalf of the Borrower, as proceeds of security or enforcement of any right of set-off or otherwise) is for any reason repaid or returned to the Borrower or its insolvent estate, or avoided, set aside or required to be paid to the Borrower, a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law. In such event, the Senior Indebtedness or part thereof originally intended to be satisfied will be deemed to be reinstated and outstanding to the extent of any repayment, return, or other action, as if such payment on account of the Senior Indebtedness had not been made. 3. Subordination of Subordinate Documents. (a) Each of the Subordinate Documents is, and will at all times remain, subject and subordinate in all respects to the liens, terms, covenants, conditions, operations, and effects of each of the Senior Loan Documents, (b) The subordination of the Subordinate Documents and of the Subordinate Indebtedness will apply and continue notwithstanding (i) the actual date and time of execution, delivery, recording, filing or perfection of each of the Senior Loan Documents and of each of the Subordinate Documents, and (ii) the availability of any collateral to the Senior Mortgagee, including the availability of any collateral other than the Mortgaged Property. (c) By reason of, and without in any way limiting, the full subordination of the Subordinate Indebtedness and the Subordinate Documents provided for in this Agreement, all rights and claims of the Subordinate Mortgagee under the Subordinate Documents in or to the Mortgaged Property or any portion thereof, the proceeds thereof, the Leases thereof, the Rents, issues and profits therefrom, and the Loss Proceeds payable with respect thereto, are expressly subject and subordinate in all respects to the rights and claims of the Senior Mortgagee under the Senior Loan Documents in or to the Mortgaged Property or any portion thereof, the proceeds thereof, the Leases thereof, the Rents, issues' and profits therefrom and the Loss Proceeds payable with respect thereto. (d) If the Subordinate Mortgagee, by indemnification, subrogation or otherwise, will acquire any lien, estate, right or other interest in any of the Mortgaged Property, that lien, estate, right or other interest will be fully subject and subordinate to the receipt by the Senior Mortgagee of payment in full of the Senior Indebtedness, and to the Senior Loan Documents, to the same extent as the Subordinate Indebtedness and the Subordinate Documents are subordinate pursuant to this Agreement. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 5 Summercrest Apartments 4. Additional Representations and Covenants. (a) The Subordinate Mortgagee represents and warrants each of the following: (i) The Subordinate Mortgagee is now the owner and holder of the Subordinate Documents. (ii) The Subordinate Documents are now in full force and effect. (iii) The Subordinate Documents have not been modified or amended. (iv) To the actual knowledge of the Subordinate Mortgagee, as of the date of this Agreement, no Subordinate Mortgage Default has occurred. (v) None of the rights of the Subordinate Mortgagee under any of the Subordinate Documents are subject to the rights of any third parties, by way of subrogation, indemnification or otherwise. (b) Without the prior written consent of the Senior Mortgagee in each instance, the Subordinate Mortgagee will not do any of the following: (i) Amend, modify, waive, extend, renew or replace any provision of any of the Subordinate Documents. (ii) Pledge, assign, transfer, convey, or sell any interest in the Subordinate Indebtedness or any of the Subordinate Documents. (iii) Take any action which has the effect of increasing the Subordinate Indebtedness. (iv) Appear in, defend or bring any action to protect the Subordinate Mortgagee's interest in the Mortgaged Property. (v) Take any action concerning environmental matters affecting the Mortgaged Property, except as otherwise set forth in Section 5, below. (c) The Subordinate Mortgagee will deliver to the Senior Mortgagee a copy of each default notice received or delivered by the Subordinate Mortgagee pursuant to the Subordinate Documents or in connection with the Subordinate Indebtedness, simultaneously with the Subordinate Mortgagee's delivery or receipt of such notice. The Senior Mortgagee will deliver to the Subordinate Mortgagee in the manner required in Section 5(b) a copy of each notice of a Senior Mortgage Default delivered to the Borrower by the Senior Mortgagee. Neither giving nor failing to give a notice to the Senior Mortgagee or Subordinate Mortgagee pursuant to this Section 4(c) will affect the validity of any notice given by the Senior Mortgagee or Subordinate Mortgagee to the Borrower, as between the Subordination Agreement (CME and Portfolio) — Governmental Entity Page 6 Summercrest Apartments Borrower and such of the Senior Mortgagee or the Subordinate Mortgagee as provided the notice to the Borrower. (d) Without the prior written consent of the Senior Mortgagee in each instance, the Subordinate Mortgagee will not commence, or join with any other creditor in commencing, any Bankruptcy Proceeding. In the event of a Bankruptcy Proceeding, the Subordinate Mortgagee will not vote affirmatively in favor of any plan of reorganization or liquidation unless the Senior Mortgagee has also voted affirmatively in favor of such plan. In the event of any Bankruptcy Proceeding, the Subordinate Mortgagee will not contest the continued accrual of interest on the Senior Indebtedness, in accordance with and at the rates specified in the Senior Loan Documents, both for periods before and for periods after the commencement of such Bankruptcy Proceedings. (g) [Intentionally Omitted]. All requirements pertaining to insurance under the Subordinate Documents (including requirements relating to amounts and types of coverages, deductibles and special endorsements) will be deemed satisfied if the Borrower complies with the insurance requirements under the Senior Loan Documents and of the Senior Mortgagee. All original policies of insurance required pursuant to the Senior Loan Documents will be held by the Senior Mortgagee. Nothing in this Section 4(f) will preclude the Subordinate Mortgagee from requiring that it be named as a mortgagee and loss payee, as its interest may appear, under all policies of property damage insurance maintained by the Borrower with respect to the Mortgaged Property, provided such action does not affect the priority of payment of Loss Proceeds, or that the Subordinate Mortgagee be named as an additional insured under all policies of liability insurance maintained by the Borrower with respect to the Mortgaged Property. In the event of a Condemnation or a Casualty, all of the following provisions will apply: (i) The rights of the Subordinate Mortgagee (under the Subordinate Documents or otherwise) to participate in any proceeding or action relating to a Condemnation or a Casualty, or to participate or join in any settlement of, or to adjust, any claims resulting from a Condemnation or a Casualty, will be and remain subordinate in all respects to the Senior Mortgagee's rights under the Senior Loan Documents with respect thereto, and the Subordinate Mortgagee will be bound by any settlement or adjustment of a claim resulting from a Condemnation or a Casualty made by the Senior Mortgagee. (ii) All Loss Proceeds will be applied either to payment of the costs and expenses of Restoration or to payment on account of the Senior Subordination Agreement (CME and Portfolio) — Governmental Entity Page 7 Summercrest Apartments Indebtedness, as and in the manner determined by the Senior Mortgagee in its sole discretion. (iii) In the event the Senior Mortgagee applies or releases Loss Proceeds for the purposes of Restoration of the Mortgaged Property, the Subordinate Mortgagee will release for such purpose all of its right, title and interest, if any, in and to such Loss Proceeds. If the Senior Mortgagee holds Loss Proceeds, or monitors the disbursement thereof, the Subordinate Mortgagee will not do so. Nothing contained in this Agreement will be deemed to require the Senior Mortgagee to act for or on behalf of the Subordinate Mortgagee in connection with any Restoration or to hold or monitor any Loss Proceeds in trust for or otherwise on behalf of the Subordinate Mortgagee, and all or any Loss Proceeds may be commingled with any funds of the Senior Mortgagee. (iv) If the Senior Mortgagee elects to apply Loss Proceeds to payment on account of the Senior Indebtedness, and if the application of such Loss Proceeds results in the payment in full of the entire Senior Indebtedness, any remaining Loss Proceeds held by the Senior Mortgagee will be paid to the Subordinate Mortgagee unless another party has asserted a claim to the remaining Loss Proceeds. (h) The Subordinate Mortgagee will enter into attomment and non -disturbance agreements with all tenants under commercial or retail Leases, if any, to whom the Senior Mortgagee has granted attomment and non -disturbance, on the same terms and conditions given by the Senior Mortgagee. (i) Regardless of any contrary provision in the Subordinate Documents, the Subordinate Mortgagee will not collect payments for the purpose of escrowing for any cost or expense related to the Mortgaged Property or for any portion of the Subordinate indebtedness. (j) Within 10 days after request by the Senior Mortgagee, the Subordinate Mortgagee will furnish the Senior Mortgagee with a statement, duly acknowledged and certified setting forth the then -current amount and terms of the Subordinate Indebtedness, confirming that there exists no default under the Subordinate Documents (or describing any default that does exist), and certifying to such other information with respect to the Subordinate Indebtedness as the Senior Mortgagee may request. (k) The Senior Mortgagee may amend, waive, postpone, extend, renew, replace, reduce or otherwise modify any provisions of the Senior Loan Documents without the necessity of obtaining the consent of or providing notice to the Subordinate Mortgagee, and without affecting any of the provisions of this Agreement. Notwithstanding the forgoing, Senior Mortgagee may not modify any provision of the Senior Loan Documents that increases the Senior Indebtedness, except for Subordination Agreement (CME and Portfolio) — Governmental Entity Page 8 Summercrest Apartments increases in the Senior Indebtedness that result from advances made by the Senior Mortgagee to protect the security or lien priority of the Senior Mortgagee under the Senior Loan Documents or to cure defaults under the Subordinate Documents.' 5. Default Under Loan Documents. (a) For a period of 90 days following delivery to the Senior Mortgagee of an Enforcement Action Notice, the Senior Mortgagee will have the right to cure any Subordinate Mortgage Default, provided if such Subordinate Mortgage Default is a non -monetary default and is not capable of being cured within such 90-day period and the Senior Mortgagee has commenced and is diligently pursuing such cure to completion, the Senior Mortgagee will have such additional period of time as may be required to cure such Subordinate Mortgage Default or until such time, if ever, as the Senior Mortgagee (i) discontinues its pursuit of any cure and/or (ii) delivers to the Subordinate Mortgagee the Senior Mortgagee's written consent to the Enforcement Action described in the Enforcement Action Notice. The Senior Mortgagee will not have any obligation whatsoever to cure any Subordinate Mortgage Default. The Senior Mortgagee will not be subrogated to the rights of the Subordinate Mortgagee under the Subordinate Documents by reason of the Senior Mortgagee having cured any Subordinate Mortgage Default. However, the Subordinate Mortgagee acknowledges that all amounts advanced or expended by the Senior Mortgagee in accordance with the Senior Loan Documents or to cure a Subordinate Mortgage Default will be added to and become a part of the Senior Indebtedness and will be secured by the lien of the Senior Mortgage. (b) The Senior Mortgagee will deliver to the Subordinate Mortgagee a copy of any notice sent by the Senior Mortgagee to the Borrower of a Senior Mortgage Default within 5 Business Days of sending such notice to the Borrower. Failure of the Senior Mortgagee to send notice to the Subordinate Mortgagee will not prevent the exercise of the Senior Mortgagee's rights and remedies under the Senior Loan Documents. The Subordinate Mortgagee will have the right, but not the obligation, to cure any monetary Senior Mortgage Default within 30 days following the date of such notice; provided, however, that the Senior Mortgagee will be entitled during such 30-day period to continue to pursue its remedies under the Senior Loan Documents. The Subordinate Mortgagee may have up to 90 days from the date of the notice to cure a non -monetary Senior Mortgage Default if, during such 90-day period, the Subordinate Mortgagee keeps current all payments required by the Senior Loan Documents. In the event that such a non -monetary Senior Mortgage Default creates an unacceptable level of risk relative to the Mortgaged Property, or Senior Mortgagee's secured position relative to the Mortgaged Property, as determined by the Senior Mortgagee in its sole discretion, then the Senior Mortgagee may exercise during such 90-day period all available rights and remedies to protect and preserve the Mortgaged Property and the Rents, revenues and other proceeds from the Mortgaged Property. The Subordinate Mortgagee will not be subrogated to the rights of the Senior Mortgagee under the Senior Loan Documents by reason of the Subordinate Mortgagee having cured any Senior Mortgage Default. However, the Subordination Agreement (CME and Portfolio) — Governmental Entity Page 9 Summercrest Apartments (c) Senior Mortgagee acknowledges that all amounts paid by the Subordinate Mortgagee to the Senior Mortgagee to cure a Senior Mortgage Default will be deemed to have been advanced by the Subordinate Mortgagee pursuant to, and will be secured by the lien of, the Subordinate Mortgage. Notwithstanding anything in this Section 5(b) to the contrary, the Subordinate Mortgagee's right to cure any Senior Mortgage Default will terminate immediately upon the occurrence of any Bankruptcy Proceeding. In the event of a Subordinate Mortgage Default, the Subordinate Mortgagee will not commence any Enforcement Action until 90 days after the Subordinate Mortgagee has delivered to the Senior Mortgagee an Enforcement Action Notice with respect to such Enforcement Action, provided that during such 90-day period or such Longer period as provided in Section 5(a), the Subordinate Mortgagee will be entitled to seek specific performance to enforce covenants and agreements of the Borrower relating to income, rent, or affordability restrictions contained in the Regulatory Agreement, subject to the Senior Mortgagee's right to cure a Subordinate Mortgage Default set forth in Section 5(a). The Subordinate Mortgagee may not commence any other Enforcement Action, including but not limited to any foreclosure action under the Subordinate Documents, until the earlier of (i) the expiration of such 90-day period or such longer period as provided in Section 5(a) or (ii) the delivery by the Senior Mortgagee to the Subordinate Mortgagee of the Senior Mortgagee's written consent to such Enforcement Action by the Subordinate Mortgagee. The Subordinate Mortgagee acknowledges that the Senior Mortgagee may grant or refuse consent to the Subordinate Mortgagee's Enforcement Action in the Senior Mortgagee's sole and absolute discretion. At the expiration of such 90-day period or such longer period as provided in Section 5(a) and, subject to the Senior Mortgagee's right to cure set forth in Section 5(a), Subordinate Mortgagee may commence any Enforcement Action. Any Enforcement Action on the part of the Subordinate Mortgagee will be subject to the provisions of this Agreement. The Subordinate Mortgagee acknowledges that the provisions of this Section 5(c) are fair and reasonable under the circumstances, that the Subordinate Mortgagee has received a substantial benefit from the Senior Mortgagee having granted its consent to the Subordinate Mortgage, and that the Senior Mortgagee would not have granted such consent without the inclusion of these provisions in this Agreement. (d) The Senior Mortgagee may pursue all rights and remedies available to it under the Senior Loan Documents, at law, or in equity, regardless of any Enforcement Action Notice or Enforcement Action by the Subordinate Mortgagee. No action or failure to act on the part of the Senior Mortgagee in the event of a Subordinate Mortgage Default or commencement of an Enforcement Action will constitute a waiver on the part of the Senior Mortgagee of any provision of the Senior Loan Documents or this Agreement. (e) In the event that the Enforcement Action taken by the Subordinate Mortgagee is the appointment of a receiver for any of the Mortgaged Property, all of the Rents, Subordination Agreement (CME and Portfolio) — Governmental Entity Page 10 Summercrest Apartments issues, profits and proceeds collected by the receiver will be paid and applied by the receiver solely to and for the benefit of the Senior Mortgagee until the Senior Indebtedness will have been paid in full. (f) The Subordinate Mortgagee hereby expressly consents to and authorizes the release by the Senior Mortgagee of all or any portion of the Mortgaged Property from the lien, operation, and effect of the Senior Loan Documents. The Subordinate Mortgagee hereby waives to the fullest extent permitted by law, all equitable or other rights it may have (i) in connection with the release of all or any portion of the Mortgaged Property, (ii) to require the separate sale of any portion of the Mortgaged Property, (iii) to require the Senior Mortgagee to exhaust its remedies against all or any portion of the Mortgaged Property or any combination of portions of the Mortgaged Property or any other collateral for the Senior Indebtedness, or (iv) to require the Senior Mortgagee to proceed against the Borrower, any other party that may be liable for any of the Senior Indebtedness (including any general partner of the Borrower if the Borrower is a partnership), all or any portion of the Mortgaged Property or combination of portions of the Mortgaged Property or any other collateral, before proceeding against all or such portions or combination of portions of the Mortgaged Property as the Senior Mortgagee determines. The Subordinate Mortgagee waives to the fullest extent permitted by law any and all benefits under California Civil Code Sections 2845, 2849 and 2850. The Subordinate Mortgagee hereby expressly consents to and authorizes, at the option of the Senior Mortgagee, the sale, either separately or together, of all or any portion of the Mortgaged Property. The Subordinate Mortgagee acknowledges that without notice to the Subordinate Mortgagee and without affecting any of the provisions of this Agreement, the Senior Mortgagee may (i) extend the time for or waive any payment or performance under the Senior Loan Documents; (ii) modify or amend in any respect any provision of the Senior Loan Documents; and (iii) modify, exchange, surrender, release and otherwise deal with any additional collateral for the Senior Indebtedness. (g) If any party other than the Borrower (including the Senior Mortgagee) acquires title to any of the Mortgaged Property pursuant to a foreclosure of, or trustee's sale or other exercise of any power of sale under, the Senior Mortgage conducted in accordance with applicable law, the lien, operation, and effect of the Subordinate Mortgage and other Subordinate Documents automatically will terminate with respect to such Mortgaged Property. 6. Miscellaneous Provisions. (a) In the event of any conflict or inconsistency between the terms of the Subordinate Documents and the terms of this Agreement, the terms of this Agreement will control. (b) This Agreement will be binding upon and will inure to the benefit of the respective legal successors and permitted assigns of the parties to this Agreement. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 11 Summercrest Apartments No other party will be entitled to any benefits under this Agreement, whether as a third -party beneficiary or otherwise. (c) This Agreement does not constitute an approval by the Senior Mortgagee of the terms of the Subordinate Documents. (d) Each notice, request, demand, consent, approval or other communication (collectively, "notices," and singly, a "notice") which is required or permitted to be given pursuant to this Agreement will be in writing and will be deemed to have been duly and sufficiently given if (i) personally delivered with proof of delivery thereof (any notice so delivered will be deemed to have been received at the time so delivered), or (ii) sent by a national overnight courier service (such as FedEx) designating earliest available delivery (any notice so delivered will be deemed to have been received on the next Business Day following receipt by the courier), or (iii) sent by United States registered or certified mail, return receipt requested, postage prepaid, at a post office regularly maintained by the United States Postal Service (any notice so sent will be deemed to have been received on the date of delivery as confirmed by the return receipt), addressed to the respective parties as follows: (i) Notices intended for the Senior Mortgagee will be addressed to: Citibank, N.A. c/o Berkadia Commercial Mortgage LLC 118 Welsh Road P.O. Box 8-9 Horsham, Pennsylvania 19044 Attention: Servicing — Account Manager Telephone: (215) 328-3866 Facsimile: (215) 328-3478 (ii) Notices intended for the Subordinate Mortgagee will be addressed to: Community Development Commission - Housing Authority of the City of National City 140 East 12th Street, Suite B National City, CA 91950 Attn: Executive Director Any party, by notice given pursuant to this Section, may change the person or persons and/or address or addresses, or designate an additional person or persons or an additional address or addresses, for its notices, but notice of a change of address will only be effective upon receipt. Neither party will refuse or reject delivery of any notice given in accordance with this Section. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 12 Summercrest Apartments (e) Nothing in this Agreement or in any of the Senior Loan Documents or Subordinate Documents will be deemed to constitute the Senior Mortgagee as a joint venturer or partner of the Subordinate Mortgagee. (f) Upon notice from the Senior Mortgagee from time to time, the Subordinate Mortgagee will execute and deliver such additional instruments and documents, and will take such actions, as are required by the Senior Mortgagee in order to further evidence or effectuate the provisions and intent of this Agreement. (g) This Agreement will be governed by the laws of the State in which the Land is located. (h) If any one or more of the provisions contained in this Agreement, or any application thereof, will be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein, and any other application thereof, will not in any way be affected or impaired thereby. (i) The term of this Agreement will commence on the date of this Agreement and will continue until the earliest to occur of the following events: (i) the payment of all of the Senior Indebtedness; provided that this Agreement will be reinstated in the event any payment on account of the Senior Indebtedness is avoided, set aside, rescinded or repaid by the Senior Mortgagee as described in Section 2(e) of this Agreement, (ii) the payment of all of the Subordinate Indebtedness other than by reason of payments which the Subordinate Mortgagee is obligated to remit to the Senior Mortgagee pursuant to this Agreement, (iii) the acquisition by the Senior Mortgagee or by a third party purchaser, of title to the Mortgaged Property pursuant to a foreclosure of, deed in lieu of foreclosure, or trustee's sale or other exercise of a power of sale or similar disposition under, the Senior Mortgage; or (iv) with the prior written consent of the Senior Mortgagee, without limiting the provisions of Section 5(d), the acquisition by the Subordinate Mortgagee of title to the Mortgaged Property subject to the Senior Mortgage pursuant to a foreclosure, or a deed in lieu of foreclosure, of (or the exercise of a power of sale under) the Subordinate Mortgage. {j) No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder will operate as a waiver thereof, nor will any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under this Agreement. (k) Each party to this Agreement acknowledges that in the event any party fails to comply with its obligations hereunder, the other parties will have all rights available at law and in equity, including the right to obtain specific performance of the obligations of such defaulting party and injunctive relief. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 13 Summercrest Apartments (1) Nothing in this Agreement is intended, nor will it be construed, to in any way limit the exercise by the Subordinate Mortgagee of its governmental powers (including but not limited to police, regulatory and taxing powers) with respect to the Borrower or the Mortgaged Property to the same extent as if it were not a party to this Agreement or the transactions contemplated by this Agreement. (m) This Agreement may be assigned at any time by the Senior Mortgagee to any subsequent holder of the Senior Note. (n) This Agreement may be amended, changed, modified, altered or terminated only by a written instrument or written instruments signed by the parties to this Agreement. (o) This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. [Signature and acknowledgment pages follow] Subordination Agreement (CME and Portfolio) — Governmental Entity Page 14 Summercrest Apartments IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written. STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO SENIOR MORTGAGEE: CITIBANK, N.A. By: Name: Bryan : arker Title: Vice President ) ) ss. On December 4(, 2013 before me, T' 0'. 066KOe. , Notary Public, personally appeared Bryan Barker, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he,/she executed the same in his/her authorized capacity, and that by his/her- signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. ignature of Notary Pu . is (Seal) TRtNA O DONOHOE Commission 0 20,4907 Notify Public • Caiitornia San Francisco County Comm. es Oct 11, 201 7 Subordination Agreement (CME and Portfolio)* Governmental Entity Page 15 SUBORDINATE MORTGAGEE: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY ACTING IN ITS CAPACITY AS THE HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY By: Brad Raulston, Executive Director App ed as to Form: By: STATE OF CALIFORNIA COUNTY OF SAN DIEGO is tua Silva General sel ) ss. On December j8 , 20 Noe me, r,�f M-"*""�" , Notary Public, personally appeared sue,.. , w i o proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/sye executed the same in his/yr authorized capacity, and that by his/h¢r signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand a n official seal. tic Signatur of • ary P bi ANGEt1TA MARCHANTE COMM. a 2046693 C NOTARY PUSLIC.CA MANIA z SAN DIEGO COUNTY My Comm, Exp. October 25, 2017 (Seal) Subordination Agreement (CME and Portfolio) — Governmental Entity Page 16 CONSENT OF BORROWER The Borrower hereby acknowledges receipt of a copy of this Subordination Agreement, dated December /9, 2013, by and between CITIBANK, N.A. and the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY acting in its capacity as the Housing Authority of the City of National City and consents to the agreement of the parties set forth in this Agreement. SUMMERCREST APARTMENTS, LP, a Delaware limited partnership By: AOF Summercrest LLC, a Delaware limited liability company Its: Managing General Partner By: AOF / Pacific Affordable Housing Corp., a California nonprofit public benefit corporation Its: Sole Member By. Name: Phili . edy Title: Vi P. sident By: Summercrest Apartments Co -General Partner, LLC, a Delaware limited liability company Its: Co -General Partner By: BLF Holdings, LLC, a Washington limited liability company Its: Sole Member By: The Brian L. Fitterer Revocable Trust, a California trust Its: Sole Member By: COUNTERPART Name: Brian L. Fitterer Title: Trustee Subordination Agreement (CME and Portfolio) - Governmental Entity Page 17 CONSENT OF BORROWER The Borrower hereby acknowledges receipt of a copy of this Subordination Agreement, dated December /9, 2013, by and between CITIBANK, N.A. and the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY acting in its capacity as the Housing Authority of the City of National City and consents to the agreement of the parties set forth in this Agreement. SUMMERCREST APARTMENTS, LP, a Delaware limited partnership By: AOF Summercrest LLC, a Delaware limited liability company Its: Managing General Partner By: AOF / Pacific Affordable Housing Corp., a California nonprofit public benefit corporation Its: Sole Member By: COUNTERPART Name: Philip J. Kennedy Title: Vice President By: Summercrest Apartments Co -General Partner, LLC, a Delaware limited liability company Its: Co -General Partner By: BLF Holdings, LLC, a Washington limited liability company Its: Sole Member By: The Brian L. Fitterer Rev. .le Trust, a California trust Its: Sole Me b-r By: Na e: rian L. Fitterer Title: Trustee Subordination Agreement (CME and Portfolio) — Governmental Entity Page 17 STATE OF CALIFORNIA COUNTY OF d Pirt/G-t.: } ) ss. On December /3, 2013 before me, . 4k7ZOitJ 1 • 1 /2/17A-/ , Notary Public, personally appeared Philip J. Kennedy, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that Ri Ishe executed the same inkier authorized capacity, and that b 4 er signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Jb1br7 J. JA_Aer-) Signature of Notary Public \S IkkTE OF CALIFORNIA CO ' Y OF On Dece personally ap be the person he/she executed instrument the pe instrument. SHARON T. TRAN E COMM. #1961874 m t1 �'.�?.'n ',Y Notary Pubik.Catifomia ORANGE COUNTY (Seal) ) ss. er _, 2013 before me, , Notary Public, eared Brian L. Fitterer, who proved to me on the basis of satisfactory evidence to ose name is subscribed to the within instrument and acknowledged to me that e same in his/her authorized capacity, and that by his/her signature on the n, or the entity upon behalf of which the person acted, executed the I certify under PENAL OF PERJURY under the laws of the State of California that the foregoing paragraph is true a correct. WITNESS my hand and official Signature of Notary Public 1. Subordination Agreement (CME and Portfolio) - Governmental Entity Summercrest Apartments (Seal) Page 18 ATE OF CALIFORNIA COU TY OF On Dece personally a be the person he/she executed instrument the pe instrument. ) ss. ber _, 2013 before me, , Notary Public, eared Philip J. Kennedy, who proved to me on the basis of satisfactory evidence to hose name is subscribed to the within instrument and acknowledged to me that e same in his/her authorized capacity, and that by his/her signature on the n, or the entity upon behalf of which the person acted, executed the I certify under PENALT OF PERJURY under the laws of the State of California that the foregoing paragraph is true an. correct. WITNESS my hand and official se Signature of Notary Public STATE OF CALIFORNIA COUNTY OF ‘)/6/7 ) ss. (Seal) On December /7 , 2013 before me, ik Z gx, , Notary Public, personally appeared Brian L. Fitterer, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. J ture of otary Public Subordination Agreement (CME and Portfolio) — Governmental Entity Summercrest Apartments Page 18 EXHIBIT A LEGAL DESCRIPTION Real property in the City of National City, County of San Diego, State of California, described as follows: THAT PORTION OF THE EAST HALF OF THE NORTHWEST QUARTER OF QUARTER SECTION 106 OF RANCHO DE LA NACION, IN THE CITY OF NATIONAL CITY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 166 ON FILE IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF THE NORTHWEST QUARTER OF SAID QUARTER SECTION IN THE CENTER LINE OF A PUBLIC STREET, 80.00 FEET WIDE, RUNNING THENCE SOUTH 71°11'05" WEST (RECORD SOUTH 71° WEST) ALONG THE NORTHERLY LINE OF SAID QUARTER SECTION A DISTANCE OF 665.03 FEET (RECORD 660.00 FEET MORE OR LESS) TO THE NORTHEAST CORNER OF THE LAND DESCRIBED IN DEED TO HERMAN TO CROW RECORDED IN BOOK 498, PAGE 474 OF DEEDS, SAID POINT BEING ALSO THE NORTHWEST CORNER OF THE SAID EAST HALF OF THE NORTHWEST QUARTER OF SECTION 106; THENCE SOUTHERLY ALONG THE WESTERLY LINE OF SAID EASTERLY HALF OF THE NORTHWEST QUARTER OF QUARTER SECTION 106, SOUTH 18°36'22" EAST (RECORD SOUTH 19° EAST), 440.00 FEET TO THE SOUTHERLY LINE OF THE NORTHERLY 440.00 FEET OF SAID QUARTER SECTION, BEING ALSO THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID WESTERLY LINE SOUTH 18°36'22" EAST (RECORD SOUTH 19° EAST), 701.30 FEET TO AND ALONG THE EASTERLY BOUNDARY OF THE LAND DESCRIBED IN DEED TO O.A. STAUDE, RECORDED IN BOOK 714, PAGE 411 OF DEEDS TO THE NORTHERLY LINE OF THE SOUTHERLY 179.00 FEET OF SAID NORTHWEST QUARTER; THENCE EASTERLY ALONG SAID NORTHERLY LINE NORTH 71°20'35" EAST, 663.37 FEET TO A POINT ON THE EASTERLY LINE OF SAID NORTHWEST QUARTER OF QUARTER SECTION 106; THENCE NORTHERLY ALONG SAID EASTERLY LINE NORTH 18°31'23" WEST (RECORD NORTH 19° WEST), 208.95 FEET; THENCE LEAVING SAID LINE SOUTH 71 ° 16'22" WEST, 30.00 FEET; THENCE NORTHERLY PARALLEL WITH THE EASTERLY LINE OF SAID NORTHWEST QUARTER OF QUARTER SECTION 106, NORTH 18°31'23" WEST, 302.50 FEET; THENCE NORTH 71°16'22" EAST, 30.00 FEET TO A POINT ON THE EASTERLY LINE OF SAID NORTHWEST QUARTER OF QUARTER SECTION 106; THENCE NORTHERLY ALONG SAID LINE NORTH 18°31'23" WEST, 191.68 FEET TO THE SOUTHERLY LINE OF THE NORTHERLY 440.00 FEET OF SAID QUARTER SECTION; THENCE SOUTH 71°11'05" WEST, 664.39 FEET TO THE TRUE POINT OF BEGINNING. APN: 558-010-45-00 Subordination Agreement (CME and Portfolio) — Governmental Entity Page 19 Summercrest Apartments First American Title Company NUS - 4349486-50 DOC 7t 2013-0735297 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Community Development Commission - Housing Authority of the City of National City 140 East 12th Street, Suite B National City, CA 91950 Attn: Executive Director JAN 0 8 2014 DEC 24, 2013 8:00 AM OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE Ernest J. Dronenburg, Jr., COUNTY RECORDER FEES: 88.00 WAYS: 4 DA: 1 PAGES: 9 1111111 IIIII 1110 IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII 11111111 Free Recording Requested per Government Code Sec. 6103 ASSIGNMENT AND ASSUMPTION OF DECLARATION OF COVENANTS AND RESTRICTIONS (TENANT RESTRICTIONS) AND DEED OF TRUST THIS ASSIGNMENT AND ASSUMPTION OF DECLARATION OF COVENANTS AND RESTRICTIONS AND DEED OF TRUST ("Assignment"), made as December 18, 2013, by and between PLAZA MANOR PRESERVATION, L.P., a California limited partnership ("Assignor") and SUMMERCREST APARTMENTS, L.P., a Delaware limited partnership ("Assignee"). RECITALS A. Assignor and Assignee have entered into that certain Real Estate Purchase Agreement, dated as of September 9, 2013 ("Agreement"), for the purchase and sale of certain real property known as the Summercrest Apartments located at 2721 Plaza Boulevard in the City of National City, County of San Diego, California ("Property"). B. The Assignor and Assignee are requesting the consent of the CDC -HA to this Assignment as required by: (i) Section 17 of that certain Declaration of Covenants and Restrictions (Tenant Restrictions) ("Declaration") dated December 18, 2001, and executed by Assignor (as "Declarant") and recorded June 19, 2002, in the office of the County Recorder of San Diego County, California as Document Number 2002-0518422; and (ii) that certain Project Deed of Trust ("Deed of Trust") dated December 18, 2001, and executed by Assignor (as "Trustor") and recorded June 19, 2002, in the office of the County Recorder of San Diego County, California as Document Number 2002-0518423. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee agree as follows: 1. Assignment of Obligations Under Declaration and Deed of Trust. Assignor hereby assigns to Assignee all of its rights, interests, benefits and privileges and all of its obligations in and under the Declaration, as Declarant thereunder, and Deed of Trust, as Trustor thereunder, and Assignee hereby accepts such assignment. 1 2. Assumption of Obligations. By acceptance of this Assignment, Assignee hereby assumes and agrees to perform and to be bound by all of the terms, covenants, conditions and obligations of Assignor, as Declarant, under the Declaration, and as Trustor, under the Deed of Trust for the benefit of the City of National City. This assumption shall have application only to those obligations under the Declaration or Deed of Trust arising after the transfer of the Property to Assignee. 3. Mortgagee Protection. Notwithstanding anything herein to the contrary, no violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in the Declaration shall defeat or render invalid or in any way impair the lien or charge of any provision of that certain deed Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California) among Summercrest Apartments, LP, a Delaware limited liability company, First American Title Insurance Company as Deed of Trust Trustee, and Citibank, N.A., a national banking association as Beneficiary as assigned by Beneficiary to the Federal Home Loan Mortgage Corporation pursuant to Assignment of Security Instrument, both of even date herewith (as assigned, the "Freddie Mac Deed of Trust"). The Declaration shall be subordinate to the Freddie Mac Deed of Trust, notwithstanding the prior recordation of the Declaration. 4. Successors and Assigns. This Assignment shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, heirs and legatees of the respective parties hereto. 5. Governing Law. This Assignment shall be governed by, interpreted under, and construed and enforceable with, the laws of the State of California. IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the date first written above. ASSIGNOR: 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 limite company, Its Managin By: Name: William A. Witte Title: President lity er By: Las Palmas Foundation, a California nonprofit public benefit corporation, Its General Partner COUNTERPART By: Name: Joseph Michaels, President [SIGNATURES CONTINUED ON FOLLOWING PAGE] 2 2. Assumption of Obligations. By acceptance of this Assignment, Assignee hereby assumes and agrees to perform and to be bound by all of the terms, covenants, conditions and obligations of Assignor, as Declarant, under the Declaration, and as Trustor, under the Deed of Trust for the benefit of the City of National City. This assumption shall have application only to those obligations under the Declaration or Deed of Trust arising after the transfer of the Property to Assignee. 3. Mortgagee Protection. Notwithstanding anything herein to the contrary, no violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in the Declaration shall defeat or render invalid or in any way impair the lien or charge of any provision of that certain deed Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California) among Summercrest Apartments, LP, a Delaware limited liability company, First American Title Insurance Company as Deed of Trust Trustee, and Citibank, N.A., a national banking association as Beneficiary as assigned by Beneficiary to the Federal Home Loan Mortgage Corporation pursuant to Assignment of Security Instrument, both of even date herewith (as assigned, the "Freddie Mac Deed of Trust"). The Declaration shall be subordinate to the Freddie Mac Deed of Trust, notwithstanding the prior recordation of the Declaration. 4. Successors and Assigns. This Assignment shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, heirs and legatees of the respective parties hereto. 5. Governing Law. This Assignment shall be governed by, interpreted under, and construed and enforceable with, the laws of the State of California. IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the date first written above. ASSIGNOR: 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: COUNTEF P t Fi ti Name: William A. Witte Title: President By: Las Palmas Foundation, a California nonprofit pu' 'c be ; fit corp ' General ' . �' eriiir By: /.. Name. Wseph ichae1s, President [SIG URES CONTINUED ON FOLLOWING PAGE] 2 ASSIGNEE: SUMMERCREST APARTMENTS, L.P., a Delaware limited partnership, By: AOF Summercrest LLC, a Delaware limited liability company, Its Managing General Partner By: AOF/Pacific Affordable Housing Corp., a California nonprofit public benefit corporation, Its Sole Member By: Name. Title: By: Summercrest Apartments Co -General Partner, LLC, a Delaware limited liability company, Its Co -General Partner By: BLF Holdings, LLC, a Washington limited liability company, Its Sole Member By: The Brian L. Fitterer Revocable Trust, a California Trust, Its Sole Member COUNTERPART By: Name: Title: ASSIGNEE: SUMMERCREST APARTMENTS, L.P., a Delaware limited partnership, By: AOF Summercrest LLC, a Delaware limited liability company, Its Managing General Partner By: AOF/Pacific Affordable Housing Corp., a California nonprofit public benefit corporation, Its Sole Member COUNTERPART By: Name: Title: By: Summercrest Apartments Co -General Partner, LLC, a Delaware limited liability company, Its Co -General Partner By: BLF Holdings, LLC, a Washington limited liability company, Its Sole Member By: The Brian L. Fitterer Revocable Trust, a Californi yTrusl, Its Sole Member By: Nam Title: ACKNOWLEDGMENT State of California ) County of Drr,�\�e ) On Dewirvvke tf l� In 3 , before me, (-7Cat , a Notary Public, personally appeared \i,R\ \ i ray) . Its (The , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are- subscribed to the within instrument and acknowledged to me that he/shc/they executed the same in his/her-/theif. authorized capacity(ies), and that by his/her/their signature(s)- on the instrument the person(s}, or the entity upon behalf of which the person(s)- acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS rxt'v hand and official seal. Notary Public GAIL P. FEE Commission # 1917108 Notary Public - California i Z Orange County Comm. Expires Jan 10, 2015 r 4 ACKNOWLEDGMENT State of California County of 504N Ole? On I Z/l11l 3 , before me, 1.. 1 vtispi fr. N ivt1GY , a Notary Public, personally appeared i C5e( M. NttGtiatts , who proved to me on the basis of satisfactory evidence to be the person(5 whose name(5)' is/a/e subscribed to the within instrument and acknowledged to me that he/sly/they executed the same in his/hi/th- authorized capacity(i , and that by his/hf/th4r signature(s') on the instrument the personO, or the entity upon behalf of which the personsslj acted, executed the instrument. 1 certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. I tt . W/, Notary Plic 5 LINDSAY A. WINTER Commission #t 1965483 Notary Public • California San Diego County M Comm. Ex.ires Jan 1, 2016 z State of.Cal4.fon+ia NE.01 1 P) - County of NEW Y°R)(-- ) ACKNOWLEDGMENT On 1 l/ 1 s 13 , before me, 1 v VIN , a Notary Public, personally appeared FtfILI P K EIN&O y , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. - l` I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNES1mv , nd and official seal. tary P'►.lic 4 1VI.. Notary Public - Stat07179 New York No.Qualified in Nevi York County NI Comm. Expires Aug. ACKNOWLEDGMENT State of California County ofQ/'&fig( On Dir:617&/" /''p/3 , before me, U/l Z. //U , a Notary Public, personally appeared ,jriG f . , ,/ll� , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. /-zed Notary Public 4 JULIE 1. PALO t: Commission • 1997238 Notary Public - California I 3 ' ' '4) Orange County _ _ _ _ ` Mr Comm. Exeins Nov 4, 2016 • First American Title Company NHS - 4349486-50 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Community Development Commission - Housing Authority of the City of National c4 140 East 12th Street, Suite B BAN Q $ National City, CA 91950 Attn: Executive Director DOC ## 2013-0735304 ID' IIIII 1111 1111 11111111111111111111 DEC 24, 2013 8:00 AM 111111111111 OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE Ernest J. Dronenburg, Jr., COUNTY RECORDER FEES: 0.00 PAGES: 8 1111111111111111111111111111111111111111111111111111111111111111111111111111111111111 Free Recording Requested per Government Code Sec. 6103 AMENDMENT TO DEED OF TRUST (Plaza Manor) THIS AMENDMENT TO DEED OF TRUST ("Amendment") is dated as of the 18`h day of December, 2013, by Summercrest Apartments, L.P., a Delaware limited partnership,("Trustor"), whose address is 19772 MacArthur Blvd., Suite 200, Irvine, California 92612, and First American Title Company ("Trustee") and the Community Development Commission of the City of National City acting in its capacity as the Housing Authority of the City of National City ("Beneficiary"), whose address is 140 East 12th Street, Suite B, National City, California 91950. RECITALS A. T-rustor's successor -in -interest, Plaza Manor Preservation, L.P., made that certain Project Deed of Trust, dated December 21, 2001, and recorded in the Office of the Recorder of San Diego County on June 19, 2002, as Instrument No. 2002-0518423 ("Deed of Trust"). Concurrently with the recordation of this Amendment, the Trustor is acquiring the "Property," as defined in the Deed of Trust, and is assuming the Deed of Trust. B. Concurrently with the recordation of this Amendment, the Trustor is repaying, in -full the "Note," as defined in the Deed of Trust. The Trustor and Beneficiary desire to amend the Deed of Trust, as set forth herein. In the event of any conflict between the Deed of Trust and this Amendment, the terms of this Amendment shall control. NOW, THEREFORE, in furtherance of the recitals stated above and the mutual covenants set forth below, Trustor and the Beneficiary hereby amend the Deed of Trust, and agree, promise and declare as follows: 1 1. Deletion of Paragraphs (1)-(4) on Pages 1 and 2. Under the heading "For the Purpose of Securing" on Page 1 and continuing onto Page 2 of the Deed of Trust: (i) the paragraphs numbered (1), (2), (3) and (4) are hereby deleted in their entireties; and (ii) paragraph (5) (on Page 2 of the Deed of Trust) is renumbered as (1). Therefore, following the heading "For the Purpose of Securing," there shall be only one paragraph, which shall provide as follows: (1) The performance of each agreement and covenant of Trustor under that certain Declaration of Covenants, Conditions and Restrictions ("Restrictions" or "Declaration," the terms being synonymous) of even date herewith and recorded concurrently herewith affecting the Property. 2. Confirmation of Obligations. Except to the extent modified by this Amendment, Trustor hereby confirms each of the covenants, agreements and obligations of Trustor set forth in the Deed of Trust. 3. General Provisions. (a) Severability. If any provision of this Amendment is deemed to be invalid or unenforceable by a court of competent jurisdiction, that provision shall be severed from the rest of this Amendment and the remaining provisions shall continue in full force and effect. (b) Recitals Incorporated. The Recitals to this Amendment are hereby incorporated into this Amendment by this reference. (c) No Affect on Priority. The parties agree that this Amendment is not in any way intended to, and does not, affect any of the terms, conditions or priority of the Declaration, or any other document executed in connection with any of the foregoing, nor enforcement of the same, except as specifically set forth herein. (d) Counterparts. This Amendment may be executed in any number of counterparts and, as so executed, the counterparts shall constitute one and the same agreement. The parties agree that each such counterpart is an original and shall be binding upon all the parties, even though all of the parties are not signatories to the same counterpart. (e) Conflicts. In the event of any conflict between the Deed of Trust and this Amendment, this Amendment shall control. (f) Capacity and Authority. All individuals signing this Amendment for a party which is a corporation, partnership, limited liability company or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the other parties hereto that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing. [SIGNATURES ON FOLLOWING PAGES] 2 TRUSTOR: SUMMERCREST APARTMENTS, L.P., a Delaware limited partnership, By:AOF Summercrest LLC, a Delaware limited liability company, Its: Managing General Partner By:AOF/Pacific Affordable Housing Corp., a California nonprofit public benefit corporation Its: Sole Member By: Name: Title: By: Summercrest Apartments Co -General Partner, LLC a Delaware limited liability company Its: Co -General Partner By:BLF Holdings, LLC, a Washington limited liability company Its: Sole Member By: The Brian L. Fitterer Revocable Trust, a California Trust Its: Sole Member By: COUNTERFART ERFART Name: Title: [SIGNATURES CONTINUED ON FOLLOWING PAGE] TRUSTOR: SUMMERCREST APARTMENTS, L.P., a Delaware limited partnership, By: AOF Summercrest LLC, a Delaware limited liability company, Its: Managing General Partner By: AOF/Pacific Affordable Housing Corp., a California nonprofit public benefit corporation Its: Sole Member By: COUNTERPART Name: Title: By: Summercrest Apartments Co -General Partner, LLC a Delaware limited liability company Its: Co -General Partner By:BLF Holdings, LLC, a Washington limited liability company Its: Sole Member By:The Brian L. Fitterer Revocab e Trust, a California Trust Its: Sole Me .per Na Title: [SIGNATURES CONTINUED ON FOLLOWING PAGE] BENEFICIARY: Community Development Commission of the City of National City acting in its capacity as the Housing Authority of the City of National City By: Brad Raulston, Executive Director ved as to Form: itua Silva General i .1�se1 4 �ACKNOWLEDGMENT State of C-al-i€ertha N 1 , A V° 124 ) Yo ) County of /V1..- W 4-- ) On ` Z Jf5 , 2013, e ore njc,, j V;r1N 4/1/(--( , notary public, personally a peared ` '-1 I1-I J.y- t7)N who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. it1�w '/ -1 � I certify under penalty of perjury under the laws of the State of Qca that the foregoing paragraph is true and correct. WITNESS my hid and official seal. Signature 1 1USTIN VINCI Notary Public . State of New York No. 01V16207179 Qualified in New York County My Comm. Expires Aug. 15, 2017 (Seal) 5 ACKNOWLEDGMENT State of California County ofOrCen Q ��(,f/1 ' �li%!l On �(rr�t?1 / , 2013, before me, , notary public, personally appeared /3i'iar L ,%.-- who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature z. z W JULIE 1. PALO Commission 9 1997238 Notary Public - California Orange County My Comm. Expires Nov 4. 2018 (Seal) 5 ACKNOWLEDGMENT State of California County of 5,+-,I) IZP On Decem64' it , 2013, before me, pn- I" A`k' "'""^k -- , notary public, personally appeared gr....A of f'.Sorw, ..,„ 1 Sir who proved to me on the basis of satisfactory evidence to be the person(4 whose names is/a subscribed to the within instrument and acknowledged to me that he/s1€/thy executed the same in his/l j'r/tl it authorized capacity(iO, and that by his/yr/thiiir signature(s5 on the instrument the person , or the entity upon behalf of which the person(j acted, executed the instrument. I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature ��-�._ ANGELITA MARCHANTE COMM. # 2046693 NOTARY PUBLIC .CALIFORNIA SAN DIEGO COUNTY My Comm. Exp. October 25, 2017 J (Seal) 5 RESOLUTION NO. 2013 — 20 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A SUBORDINATION AGREEMENT AND AN AMENDMENT TO THE PROJECT DEED OF TRUST SECURING THE DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR 372 AFFORDABLE RENTAL UNITS AT 2721 PLAZA BOULEVARD IN NATIONAL CITY WHEREAS, Summercrest Apartments, also known as Plaza Manor, located at 2721 Plaza Boulevard is being sold to Affordable Housing Associates, LLC, ("Buyer") for $46,250,000; and WHEREAS, in 2001, the Community Development Commission ("CDC -HA") made a loan for $500,000 from the HOME Investment Partnerships Program and the Low and Moderate Income Fund to Plaza Manor Preservation, LP, ("Seller") to assist the Seller in the rehabilitation the 372-unit complex; and WHEREAS, the CDC -HA loan is owed an outstanding balance of approximately $481,341.26, and the Buyer has requested to pay off the loan completely through Escrow; and WHEREAS, the Buyer has secured commitment on a new mortgage loan to complete the purchase of property from Citibank ("Lender") for $33,000,000; and WHEREAS, in order to provide the loan, the Lender requires the subordination of the Project Deed of Trust ("Deed of Trust") that currently secures the Declaration of Covenants, Conditions, and Restrictions ("Declaration") which restricts the affordability of units as stated in said Declaration through April 15, 2032; and WHEREAS, since the Deed of Trust secures both the loan that will be paid off through Escrow and the Declaration, an Amendment will be made to the Deed of Trust reflecting the full satisfaction of the loan but continuing to secure the Declaration; and WHEREAS, the Buyer will execute an Assignment and Assumption of the affordability restrictions and other performance requirements of said Declaration as part of the Escrow Instructions provided by the CDC -HA. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission -Housing Authority of the City of National City hereby authorizes the Executive Director to execute a Subordination Agreement, an Amendment to the Project Deed of Trust securing the Declaration of Covenants, Conditions and Restrictions, and other Escrow related documents as necessary. After being recorded by the County of San Diego, said Subordination Agreement and Amendment to the Deed of Trust will be on file in the office of the City Clerk. [Signature page to follow} RESOLUTION NO. 2013 — 20 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A SUBORDINATION AGREEMENT AND AN AMENDMENT TO THE PROJECT DEED OF TRUST SECURING THE DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR 372 AFFORDABLE RENTAL UNITS AT 2721 PLAZA BOULEVARD IN NATIONAL CITY WHEREAS, Summercrest Apartments, also known as Plaza Manor, located at 2721 Plaza Boulevard is being sold to Affordable Housing Associates, LLC, ("Buyer") for $46,250,000; and WHEREAS, in 2001, the Community Development Commission ("CDC -HA") made a loan for $500,000 from the HOME Investment Partnerships Program and the Low and Moderate Income Fund to Plaza Manor Preservation, LP, ("Seller") to assist the Seller in the rehabilitation the 372-unit complex; and WHEREAS, the CDC -HA loan is owed an outstanding balance of approximately $481,341.26, and the Buyer has requested to pay off the loan completely through Escrow; and WHEREAS, the Buyer has secured commitment on a new mortgage loan to complete the purchase of property from Citibank ("Lender") for $33,000,000; and WHEREAS, in order to provide the loan, the Lender requires the subordination of the Project Deed of Trust ("Deed of Trust") that currently secures the Declaration of Covenants, Conditions, and Restrictions ("Declaration") which restricts the affordability of units as stated in said Declaration through April 15, 2032; and WHEREAS, since the Deed of Trust secures both the loan that will be paid off through Escrow and the Declaration, an Amendment will be made to the Deed of Trust reflecting the full satisfaction of the loan but continuing to secure the Declaration; and WHEREAS, the Buyer will execute an Assignment and Assumption of the affordability restrictions and other performance requirements of said Declaration as part of the Escrow Instructions provided by the CDC -HA. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission -Housing Authority of the City of National City hereby authorizes the Executive Director to execute a Subordination Agreement, an Amendment to the Project Deed of Trust securing the Declaration of Covenants, Conditions and Restrictions, and other Escrow related documents as necessary. After being recorded by the County of San Diego, said Subordination Agreement and Amendment to the Deed of Trust will be on file in the office of the City Clerk. [Signature page to follow} Resolution No. 2013 — Page Two PASSED and ADOPTED this 17th day of Decemb_,s► 013. ATTEST: Leslie Deese, Secretary PROVED AS TO FORM: audia CDC G citua Silva I Counsel on Morrison, Chairman Passed and adopted by the Community Development Commission — Housing Authority of the City of National City, California, on December 17, 2013 by the following vote, to - wit: Ayes: Boardmembers Cano, Morrison, Natividad, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Chairman, Housing Authority Kam= „„ lue- Secretary, Housing Authority By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2013-20 of the Community Development Commission — Housing Authority of the City of National City, California, passed and adopted on December 17, 2013. Secretary, Housing Authority By: Deputy CITY OF NATIONAL CITY, CALIFORNIA COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY COUNCIL AGENDA STATEMENT 1EETING DATE: December 17, 2013 AGENDA ITEM NO.18 ITEM TITLE: Resolution of the Community Development Commission- Housing Authority of the City of National City authorizing the Executive Director to execute a Subordination Agreement and an Amendment to the Project Deed of Trust securing the Declaration of Covenants, Conditions, and Restrictions for 372 affordable rental units at 2721 Plaza Boulevard in National City PREPARED BY: Carlos Aguirre, Community Dev. Manager'EPARTMENT: PHONE: 619 336-4391 EXPLANATION: Summercrest Apartments, also known as Plaza Manor, located at 2721 Plaza Blvd is being sold to Affordable Housing Associates, L.L.C. ("Buyer") for $46,250,000. In 2001, the Community Development Commission ("CDC - HA") made a loan for $500,000 from the HOME Investment Partnerships Program and the Low and Moderate Income Fund to Plaza Manor Preservation, L.P. ("Seller") to assist the Seller in the rehabilitation the 372-unit complex. The CDC -HA loan is owed an outstanding balance of approximately $481,341.26. The Buyer has requested to pay off the loan completely through Escrow. The Buyer is has secured commitment on a new mortgage loan to complete the purchase of property from Citibank ("Lender") for $33,000,000. In order to provide the loan, the Lender requires the subordination of the Project Deed of Trust ("Deed of Trust") that currently secures the Declaration of Covenants, Conditions, and Restrictions ("Declaration") which restricts the affordability of units as stated in said Declaration through April 15, 2032. Since 'he Deed of Trust secures both the loan that will be paid off through Escrow and the Declaration, an Amendment swill be made to the Deed of Trust reflecting the full satisfaction of the loan but continuing to secure the Declaration. The Buyer will execute an Assignment and Assumption of the affordability restrictions and other performance requirements of said Declaration as part of the Escrow Instructions provided by the CDC -HA. Housing, Grants, & Asset APPROVED BY: FINANCIAL STATEMENT: ACCOUNT NO. APPROVED: APPROVED: Finance MIS There is no fiscal impact for the CDC -HA by executing the Subordination Agreement and Amendment to the Project Deed of Trust ENVIRONMENTAL REVIEW: Entering into the subordination agreement is exempt from environmental review. ORDINANCE: INTRODUCTION: FINAL ADOPTION: STAFF RECOMMENDATION: Staff recommends the adoption of a resolution to execute the Subordination Agreement and Amend the Project Deed of Trust. BOARD / COMMISSION RECOMMENDATION: There is no board or commission recommendation required for the Subordination Agreement. 4TTACHMENTS: 1. Subordination Agreement 2. Amendment to the Deed of Trust 3. Assignment and Assumption 4. Escrow Instructions 5. Declaration of Covenants, Conditions, & Restrictions 6. Real Estate Purchase Agreement • a -moo Attachment No. 6 (14) Any private or governmental inspection report (REAC, MOR, etc.) relating to the Property; (1 S)..w The .,,t�tility Mils fnr. the Prorrrty .fr r_.th.P. na,st_...C+?c.. (f),ratPnriar ., .> .... 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) LIHPRHA Plan of Action; (35) LIHPRHA Use Agreement; (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; 11 Summercrest 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(A), 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, losses, 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. 12 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 "thsa' roved' Service Contracts'' PP ).�13uye's'faiture 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 ail 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 Iater 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 Summercrest 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 x a` isapprove+ rciffio s excep�y prove+ 'aception that` 5e fei ias agree Lo�remove) — m 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 Purchost- 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 premium for 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 Summercrest v3 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. C►uNrugCusts; rrurativus anti uepostts: (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) Delinquent 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 w .. Seller pursuant to loan documents, the 1-IA1' Contractor other project dom cuents 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 CalHFA Regulatory Agreement (unless the Ca1HFA 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 is 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 Summcrcrest v3 Attachment No. 6 Agreement or the completion of the Transaction as contemplated by this Agreement; (3) exe pt it r corisemSreyii r'eu urtuer' Service`' Coritracts;'. tilki`— Contract Approval and Ca1HFA 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 I -IUD, 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 Form 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. 17 Summercrest 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 Ievied 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 l0(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 laws 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(1)), 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 l9 Summcrcrest 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, 11quldator 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 1IUD-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 -governmental 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 setter representation, warranty, or covenant set forth 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 sue.; 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 Summcrcrest 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 THE 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, directors, 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 the 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 WITI1 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 51183.5(e) OR CALIFORNIA PUBLIC RESOURCES CODE §§ 2621.9(0, 2694(f) OR 4136(0 OR ANY REPLACEMENT OR SUCCESSOR STATUTE THERETO THAT BUYER MAY NOW OR HEREAVIER 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 22 Summercrest 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 AFFEC FED HIS OR HER SE! I LEMENT 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: 1116 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 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 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 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 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 Summeracst 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 provi s: �v�rwrMY +• r..,:....,._., .+,ram,., 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 SE1"ILEMENT 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. Sell Buyer: .Y%tI ,. (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 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 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 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 Summacrest v3 23 Attachment No. 6 IN CONNECTION WITH TI IE F=OREGOING,.- f3UYE:R D(. tf llER1;I3Y,. =k iw'INUi..Y'A.'4b WITH l}IE :ADVICE OF COUNSEL OF BUYER'S SELECTION, WAIVE, RELEASE AND DISCHARGE ANY CLAIMS UNDER OR PURSUANT TO CALIFORNIA CIVIL CODE §f 102.13, CALIFORNIA Cft)VERNMENT CODE §§ 8589.3(e), 8589.4(e) OR 51 183.5(e) OR CALIFORNIA PUBLIC RESOURCES CODE §§ 2621.9(t), 2694(f) OR 4136(I) OR ANY REPLACEMENT OR SUCCESSOR STATUTE (HERETO THAT BUYER MAY NOW OR HEREAFTER HAVE OR HAVE HAD WCri-i 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 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 MATERIALi,Y AFFECTED ILLS OR HER SETTLEMENT WITH THE DEBTOR. Buyer understands fully the statutory language of Section 1 542 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('Q shall survive the ('losing. Buyer and Seller each have separately initialed this provision to indicate its agreement to such wai ver. Seller: Buyer: (I)) Survival. The representations and warranties in .Sections• 10(4) and 10(8) will survive (;lose of Escrow, hut 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 reco%.er from Seller with respect to a third -party ?3 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 wetile temiination`heteof;` and if, ii.otvtitnstanaing``sncn nreacn or a representation; "buyer 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, casement, 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 Summcrcrest v3 Attachment No. 6 (E) Seller shall terminate as of the Closing Date all Disapproved Service Contracts which Seiler has agreed to terminate prior to the Closing pursuant to the terms of Section 7(D). (1) - Selfif' Ilan Witrcaffi.TfdalariSri�na'lfe `Eo"its$ liraftfiner cons sfelitwilh 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 of Section 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) Liquidated Damages. IF BUYER FAILS TO PURCHASE THE PROPERTY IN VIOLATION OF THIS AGREEMENT, THE PARTIES HAVE DETERMINED AND AGREED THAT THE 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 AND EXCLUSIVE REMEDY, MAY TERMINATE ITS OBLIGATION TO COMPLETE THE TRANSACTION AND, UPON SO DOING, WILL BE EN LT f LED TO RECEIVE THE DEPOSIT AS LIQUIDATED DAMAGES. BY PLACING THEIR INITIALS BELOW, BUYER AND SELLER ACKNOWLEDGE THEIR AGREEMENT TO THIS 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 Summ cleat 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 iN i EA1), 1 'V TENOED t U :UNS t i 1 U 1E LiQUii)A'I ED )AicAA( S 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. BUYER'S INITIALS: r (B) Buyer's Remedy. If Seller breaches a representation or warranty in Section /0(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). SELLER'S INITIALS: (I -Le) (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 harmless 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 Summercrest v3 Attachment No. 6 1 AND EXCLUSIVE REMEDY SHALL BE THE RECEIPT OF THE ABOVE REFERENCED rr UM r ,TQU1E &TE.D TA xM n OES , , P A VA,lFATT , TO CFI 1 PR. (lF TI-TR ABOVE REFERENCED SUM IS NOT INTENDED AS A FORFEITURE OR PENALTY, BUT INSTEAD, 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. � BUYER'S INITIALS: / SELLER'S INITIAL 1 (B) Buyer's Remedy. I Seller breaches a representation or w• IF 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 harmless 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 Summercnest v3 Attachment No. 6 12. Remedies. LY-..a.<v ..r.T+ 4 sMvvakrrtf'-•Mar.Ig..w�yle'......,rv.y.at•:riR.1s....,rrtf'IY+M�"tMYF .:..i4.a•.r•4�'.G4+Nr.Wr..a.n••bell,1.34, .rMYr:: (A) Liquidated Damages. IF BUYER FAILS TO PURCHASE T1I[ PROPERTY IN VIOLATION OF THIS AGREEMENT. THE PARTIES HAVE DETERMINED AND AGREED THAT THE ACTUAL AMOUNT OF DAMAGES THAT WOULD BE SUSTAINED BY SELLER AS A RESULT OF SUCH BUYER'S DEFAULT UNDER 'TFI'S AGREEMENT IS DIFFICULT OR IMPOSSIBLE To ASCERTAIN AND THAT IN SUCH EVENT SELLER, AS ITS SOLE AND EXCLUSIVE REMEDY. MAY TERMINATE ITS OBLIGATION TO COMPLETE 'ITIE TRANSACTION AND, UPON SO DOING, WILL f3E ENTITLED TO RECEIVE THE DEPOSIT AS LIQUIDATED DAMAGES. BY PLACING THEIR INITIALS BELOW, BUYER AND SELLER ACKNOWLEDGE THEIR AGREEMENT '1'O THIS 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 AND EXCLUSIVE REMEDY SHALL I3E THE RECEIPT OF THE ABOVE REFERENCED SUM AS LIQUIDATED DAMAGES. PAYMENT TO SELLER OF THE ABOVE REFERENCED SUM 1S NOT INTENDED AS A FORFEITURE OR PENALTY, t3UI' INSTEAD, 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) FIERBEN OR IN THE SECTION 42 INDEMNIFICATION AGREEMENT, OR SELLER'S RIGHTS TO ANY ATTORNEYS' FEES OR COSTS RECOVERABLE 13Y 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 (I) tenninate 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 fbr Seller's failure in perfomiance (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 he 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 !7tT ). (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 he limited. \un,rni 14rta . a 26 Attachment No. 6 14. Possession. Seller will deliver possession of the Property to Buyer at the time of Close of Escrow, ^-sabjc ttcr.( g ofterimtrarioe"ix° s t''e1 t$fiedli ''themit ii%eiftei 'itttiogM` 1`i3W- and (B) the Permitted Exceptions. 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 (1) 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, windstorm, 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 taken by eminent domain or any proceedings for the taking by eminent domain of all or a material part of the Property is commenced, 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. 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 Summererest v3 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 g respect to all uncollected condemnation •roceeds (in either case, net ofroceeds allocable to loss a use owe l ropertyror lee pert �� wig e o Ong ate and costs mcurre oy elier in 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 Iitigation 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 Summcrcrest 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(D) 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 Summcrcrest r3 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 inaemnityurraer the retatea provision and may enforce 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 parties 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. (1) 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. (J) 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 Seller, 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 Summcrcrest v3 Attachment No. 6 notwithstanding the 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 Iaws; (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 31 Summercrest v3 Attachment No. 6 EN WITNESS WHEREOF, the parties hereto have executed this Real Estate Purchase Agreement as of the Effective Date. Sumrnercrest v3 50056113 9 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 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-I Joseph Michaels, President Attachment No. 6 IN WITNESS WHEREOF, the parties hereto have executed this Real Estate Purchase Swnrnercrcu v3 &0,1411i2 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 Jos ichaels, President S - 1 Attachment No. 6 INNER: AFFORDABLE IOUSING ASSOCIATES, 1.1,C, a Calitinnia Jim' ed IiabiIiiycompany. By: Name: 12--;4`eftet Title: Managing Member S - RESOLUTION NO. 2013 — RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A SUBORDINATION AGREEMENT AND AN AMENDMENT TO THE PROJECT DEED OF TRUST SECURING THE DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR 372 AFFORDABLE RENTAL UNITS AT 2721 PLAZA BOULEVARD IN NATIONAL CITY WHEREAS, Summercrest Apartments, also known as Plaza Manor, located at 2721 Plaza Boulevard is being sold to Affordable Housing Associates, LLC, ("Buyer") for $46,250,000; and WHEREAS, in 2001, the Community Development Commission ("CDC -HA") made a loan for $500,000 from the HOME Investment Partnerships Program and the Low and Moderate Income Fund to Plaza Manor Preservation, LP, ("Seller") to assist the Seller in the rehabilitation the 372-unit complex; and WHEREAS, the CDC -HA loan is owed an outstanding balance of approximately $481,341.26, and the Buyer has requested to pay off the loan completely through Escrow; and WHEREAS, the Buyer has secured commitment on a new mortgage loan to complete the purchase of property from Citibank ("Lender") for $33,000,000; and WHEREAS, in order to provide the loan, the Lender requires the subordination of the Project Deed of Trust ("Deed of Trust") that currently secures the Declaration of Covenants, Conditions, and Restrictions ("Declaration") which restricts the affordability of units as stated in said Declaration through April 15, 2032; and WHEREAS, since the Deed of Trust secures both the loan that will be paid off through Escrow and the Declaration, an Amendment will be made to the Deed of Trust reflecting the full satisfaction of the loan but continuing to secure the Declaration; and WHEREAS, the Buyer will execute an Assignment and Assumption of the affordability restrictions and other performance requirements of said Declaration as part of the Escrow Instructions provided by the CDC -HA. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission -Housing Authority of the City of National City hereby authorizes the Executive Director to execute a Subordination Agreement, an Amendment to the Project Deed of Trust securing the Declaration of Covenants, Conditions and Restrictions, and other Escrow related documents as necessary. After being recorded by the County of San Diego, said Subordination Agreement and Amendment to the Deed of Trust will be on file in the office of the City Clerk. [Signature page to follow) Resolution No. 2013 — Page Two PASSED and ADOPTED this 17th day of December, 2013. Ron Morrison, Chairman ATTEST: Brad Raulston, Secretary APPROVED AS TO FORM: Claudia Gacitua Silva CDC General Counsel RESOLUTION NO. 2013 — 20 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A SUBORDINATION AGREEMENT AND AN AMENDMENT TO THE PROJECT DEED OF TRUST SECURING THE DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR 372 AFFORDABLE RENTAL UNITS AT 2721 PLAZA BOULEVARD IN NATIONAL CITY WHEREAS, Summercrest Apartments, also known as Plaza Manor, located at 2721 Plaza Boulevard is being sold to Affordable Housing Associates, LLC, ("Buyer") for $46,250,000; and WHEREAS, in 2001, the Community Development Commission ("CDC -HA") made a loan for $500,000 from the HOME Investment Partnerships Program and the Low and Moderate Income Fund to Plaza Manor Preservation, LP, ("Seller") to assist the Seller in the rehabilitation the 372-unit complex; and WHEREAS, the CDC -HA loan is owed an outstanding balance of approximately $481,341.26, and the Buyer has requested to pay off the loan completely through Escrow; and WHEREAS, the Buyer has secured commitment on a new mortgage loan to complete the purchase of property from Citibank ("Lender") for $33,000,000; and WHEREAS, in order to provide the loan, the Lender requires the subordination of the Project Deed of Trust ("Deed of Trust") that currently secures the Declaration of Covenants, Conditions, and Restrictions ("Declaration") which restricts the affordability of units as stated in said Declaration through April 15, 2032; and WHEREAS, since the Deed of Trust secures both the loan that will be paid off through Escrow and the Declaration, an Amendment will be made to the Deed of Trust reflecting the full satisfaction of the loan but continuing to secure the Declaration; and WHEREAS, the Buyer will execute an Assignment and Assumption of the affordability restrictions and other performance requirements of said Declaration as part of the Escrow Instructions provided by the CDC -HA. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission -Housing Authority of the City of National City hereby authorizes the Executive Director to execute a Subordination Agreement, an Amendment to the Project Deed of Trust securing the Declaration of Covenants, Conditions and Restrictions, and other Escrow related documents as necessary. After being recorded by the County of San Diego, said Subordination Agreement and Amendment to the Deed of Trust will be on file in the office of the City Clerk. [Signature page to follow} Resolution No. 2013 — Page Two PASSED and ADOPTED this 17th day of December 013. on Morrison, Chairman ATTEST: Leslie Deese, Secretary PROVED AS TO FORM: ''audia t.. citua Silva CDC G,. I Counsel Passed and adopted by the Community Development Commission — Housing Authority of the City of National City, California, on December 17, 2013 by the following vote, to - wit: Ayes: Boardmembers Cano, Morrison, Natividad, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Chairman, Housing Authority Secretary, Housing Authority By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2013-20 of the Community Development Commission — Housing Authority of the City of National City, California, passed and adopted on December 17, 2013. Secretary, Housing Authority By: Deputy CITY OF NATIONAL CITY, CALIFORNIA COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY COUNCIL AGENDA STATEMENT 1EETING DATE: Aloe December 17, 2013 Caox'2,-Sa yoy-' - a AGENDA ITEM NO. ]8 ITEM TITLE: Resolution of the Community Development Commission- Housing Authority of the City of National City authorizing the Executive Director to execute a Subordination Agreement and an Amendment to the Project Deed of Trust securing the Declaration of Covenants, Conditions, and Restrictions for 372 affordable rental units at 2721 Plaza Boulevard in National City ,�Qa// Housing, Grants, & Asset PREPARED BY: Carlos Aguirre, Community Dev. Manager(DEPARTMENT: 11anagement PHONE: 619 336-4391 APPROVED BY: EXPLANATION: Summercrest Apartments, also known as Plaza Manor, located at 2721 Plaza Blvd is being sold to Affordable Housing Associates, L.L.C. ("Buyer") for $46,250,000. In 2001, the Community Development Commission ("CDC - HA") made a loan for $500,000 from the HOME Investment Partnerships Program and the Low and Moderate Income Fund to Plaza Manor Preservation, L.P. ("Seller") to assist the Seller in the rehabilitation the 372-unit complex. The CDC -HA loan is owed an outstanding balance of approximately $481,341.26. The Buyer has requested to pay off the loan completely through Escrow. The Buyer is has secured commitment on a new mortgage loan to complete the purchase of property from Citibank ("Lender") for $33,000,000. In order to provide the loan, the Lender requires the subordination of the Project Deed of Trust ("Deed of Trust") that currently secures the Declaration of Covenants, Conditions, and Restrictions ("Declaration") which restricts the affordability of units as stated in said Declaration through April 15, 2032. Since 'he Deed of Trust secures both the loan that will be paid off through Escrow and the Declaration, an Amendment swill be made to the Deed of Trust reflecting the full satisfaction of the loan but continuing to secure the Declaration. The Buyer will execute an Assignment and Assumption of the affordability restrictions and other performance requirements of said Declaration as part of the Escrow Instructions provided by the CDC -HA. FINANCIAL STATEMENT: APPROVED: Finance ACCOUNT NO. APPROVED: MIS There is no fiscal impact for the CDC -HA by executing the Subordination Agreement and Amendment to the Project Deed of Trust ENVIRONMENTAL REVIEW: Entering into the subordination agreement is exempt from environmental review. ORDINANCE: INTRODUCTION: FINAL ADOPTION: STAFF RECOMMENDATION: Staff recommends the adoption of a resolution to execute the Subordination Agreement and Amend the Project Deed of Trust. BOARD / COMMISSION RECOMMENDATION: There is no board or commission recommendation required for the Subordination Agreement. 1TTACHMENTS: 1. Subordination Agreement 2. Amendment to the Deed of Trust 3. Assignment and Assumption 4. Escrow Instructions 5. Declaration of Covenants, Conditions, & Restrictions 6. Real Estate Purchase Agreement • Attachment No. 6 (14) Any private or governmental inspection report (REAC, MOR, etc.) relating to the Property; (151. ....... ...: .:... .. :: :The hi(lc fnr the .Property. fM ,th. ^.. S,. AV ()Mli'rubtr 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) LIHPRHA Plan of Action; (35) LIHPRHA Use Agreement; (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; 11 Summercrest 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(A), 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, losses, 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. 12 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 Disapproved 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 Summercrest 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 u —al 4f)isa prow" xcepltons (exceptay isappmver xception t at el er ..tas agree to 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 premium for 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 Summeraest v3 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. t,tusYug Costs, r rurauous" anti Deposits. (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 1 1:59 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) Delinquent 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 Setter pursuant to` loan documents, the'I-1AP contractor 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 CaIHFA Regulatory Agreement (unless the Ca1HFA 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 is 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 for ctmsein[s .,requiftd utid r ' Servite, CotiitaCts - RAP Contract Approval and Ca1HFA 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 CaIHFA 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 Form 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. 17 Summcrcrest 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 laws 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 IS 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(1)), 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 Summcrcresi 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, liquidator, assignee, trustee, sequestrator`or other similar officialor 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 FIUD-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 -governmental 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 Summercrcst 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 Setter representation,warranty, or covenant set forth 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 sue.; 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 Summcrcrest 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 THE 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, directors, 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, chores 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 the 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 WITII 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 51183.5(e) OR CALIFORNIA PUBLIC RESOURCES CODE §§ 2621.9(0, 2694(0 OR 4136(f) OR ANY REPLACEMENT OR SUCCESSOR STATUTE THERETO THAT BUYER MAY NOW OR HEREAFTER 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 22 Summercrest 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: .,,bt �--. ---' yG E lcr i,E'AS } i) M S NM' F'XTE .iMg' WITILH ,4 '' 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 SE11"LEMENT 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: UL..�' 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 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 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 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 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 Summctcrcst 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 rovi 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 SEF1'LEMENT 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. (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 Iiable 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 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 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 Summercrest v3 23 Attachment No. 6 IN C ONNECTTON WI'fll .TTiE FoR (orNo, t3l1YER QOES,�fi,!~.11bBY, tCut7V4'(NC'iI..Y 4AV17 �til"I EI THE .ADVICE O COUNSEL OF BUYER'S SELECTION, WAIVE, RELEASE AND DISCHARGE ANY CLAIMS UNDER OR PURSUANT TO CALIFORNIA CIVIL, CODE §l102.13, CALIFORNIA GOVERNMENT CODE §§ 8589.3(e), R589.4(e) OR 51183.5(e) OR CALIFORNIA PUBLIC RESOURCES CODE §§ 2621.9(1), 26940) OR 4136(f) OR ANY REPLACEMENT (.)R SUCCESSOR STATUTE. THERETO 'MAT BUYER MAY NOW OR HEREAFTER HAVE. OR HAVE HAD WITH RESPECT" 'U) ANY DISCLOSURES MADE BY OR ON BEHALF OF SF'LLER. Except tier 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 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 M(.1ST HAVE MATERIALLY AFFECTED MS OR HER SETTLEMENT WITH THE DEBTOR. Buyer understands billy 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 I0(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 /0(C). Notwithstanding anything to the contrary contained in this Agreement, the provisions of this Section IO(C) shall survive the (losing. Buyer and Seller each have separately initialed this provision to indicate its agreement to such waiver. Buyer: _.. (1)) Survival. The representations and warranties in .Sections 10(4) and 10(B) will survive Close of Escrow, but only for a period of six (6) months, and no claim shall he 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 recok.er from Seller with respect to a third -party 23 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 the termination`nereor;° ana'ir, riotWitnstanoing 'Stith "nreacii ot a representation, 'Buyer 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) SelIer 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 Summcrcrest v3 Attachment No. 6 (E) Seller shall terminate as of the Closing Date all Disapproved Service Contracts which Seller has agreed to terminate prior to the Closing pursuant to the terms of Section 7(D). .'",'., ,�..- ..:,_ >, —( i . effdnf artffeltr ofCi i'tihrifYi kMbT `e'iTdf "s irk a iliiiner consi e M fIr—,x q— .. " 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) Liquidated Damages. IF BUYER FAILS TO PURCHASE THE PROPERTY IN VIOLATION OF THIS AGREEMENT, THE PARTIES HAVE DETERMINED AND AGREED THAT THE 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 AND EXCLUSIVE REMEDY, MAY TERMINATE ITS OBLIGATION TO COMPLETE THE TRANSACTION AND, UPON SO DOING, WILL BE EN ITI LED TO RECEIVE THE DEPOSIT AS LIQUIDATED DAMAGES. BY PLACING THEIR INITIALS BELOW, BUYER AND SELLER ACKNOWLEDGE THEIR AGREEMENT TO THIS 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 Smmmercrest 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 iiVS 1 EAD; is IN Eiv UEli i u UUNS't i i U i h; LIQUIDA'I EllDAMAGES 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. BUYER'S INITIALS: SELLER'S INITIALS: (I -Le (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 harmless 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 Summercrest v3 Attachment No. 6 AND EXCLUSIVE REMEDY SHALL BE THE RECEIPT OF THE ABOVE REFERENCED et.UM ,tip L QUtrr_ TErD TA,A 4 n rPQ . AA V'A41NT TO CM 1 FR. OF TI-4F. AROVF REFERENCED SUM IS NOT INTENDED AS A FORFEITURE OR PENALTY, BUT INSTEAD, IS IN 1 ENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION12 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: l SELLER'S INITIAL Ilk_ (B) Buyer's Remedy. I Seller breaches a representation or w. IF 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 (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 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 harmless 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 Summcrcrest v3 Attachment No. 6 12. Remedies. •.>•:. ..rn•n.r-.+waw rw.ir,e-.::x.a:.c-,..:. r;r •.: u<w.sxvs.awe,.,.vw,,wa•.-er..+. w;..,-..•.;......:,-xs.: (A) Liquidated Damages. IF BUYER FAILS TO PURCHASE TILE PROPERTY IN VIOLATION OF 'MIS AGREEMENT, THE PARTIES HAVE DETERMINED ANI) AGREED THAT TFIE 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 T() ASCERTAIN AND THAT IN SUCH EVENT SELLER, AS iTS SOLE AND EXCLUSIVE REMEDY. MAY TERMINATE ITS OBLIGATION TO COMPLETE THE TRANSACTION AND, UPON SO DOING, WILL BE ENTITLED TO RECEIVE THE DEPOSIT AS LIQUIDATED DAMAGES. BY PLACING THEIR INITIALS BELOW, BUYER AND SELLER ACKNOWLEDGE TFEEIR AGREEMENT To THIS 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 AND EXCLUSIVE REMEDY SHALL I3E 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' INSTEAD, IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 12 SHALL LIMIT ANY RECOVirRY 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) L yer's_Rcmedy. If Seller breaches a representation or warranty in Section 1O(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 (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 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 ohliEtations hereunder, Buyer and Seller shall each he 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(0. (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. 26 Attachment No. 6 14. Possession. Seller will deliver possession of the Property to Buyer at the time of Close of Escrow, -- rt(' S oft art ri ►mossestle tir eti rr'tijeTerint i meditr ✓ oxerifEmitarr ..".'� ,.— and (B) the Permitted Exceptions. 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 (1) 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, windstorm, 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 taken by eminent domain or any proceedings for the taking by eminent domain of all or a material part of the Property is commenced, 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. 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 Surmmercrest v3 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 ofproceeds allocable to loss a use of a Prroperty or ie period" u inclos ng Lraate and costsincome y ell re in <r> 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(D) 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 inaemnity under the reiatea provision and may enforce 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 parties 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. (1) 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. (J) 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 Seller, 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 Summcrurest v3 Attachment No. 6 notwithstanding the 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. c. (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 31 Summcrcrest 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- ' 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-1 summcrcres! v3 50056113 9 Joseph Michaels, President Attachment No. 6 IN WITNESS WHEREOF, the parties hereto have executed this Real Estate Purchase Agreement as of the Effective fla „ . 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 B : Jos ichaels, Presi Attachment No. 6 BUYER: AFF014DA13LE MUSING ASSOCIATES, a Calitbmia Um' ed Iiabiliiycornpany. 13y: Name: Title: Managing Member S - RESOLUTION NO. 2013 — RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A SUBORDINATION AGREEMENT AND AN AMENDMENT TO THE PROJECT DEED OF TRUST SECURING THE DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR 372 AFFORDABLE RENTAL UNITS AT 2721 PLAZA BOULEVARD IN NATIONAL CITY WHEREAS, Summercrest Apartments, also known as Plaza Manor, located at 2721 Plaza Boulevard is being sold to Affordable Housing Associates, LLC, ("Buyer") for $46,250,000; and WHEREAS, in 2001, the Community Development Commission ("CDC -HA") made a loan for $500,000 from the HOME Investment Partnerships Program and the Low and Moderate Income Fund to Plaza Manor Preservation, LP, ("Seller") to assist the Seller in the rehabilitation the 372-unit complex; and WHEREAS, the CDC -HA loan is owed an outstanding balance of approximately $481,341.26, and the Buyer has requested to pay off the loan completely through Escrow; and WHEREAS, the Buyer has secured commitment on a new mortgage loan to complete the purchase of property from Citibank ("Lender") for $33,000,000; and WHEREAS, in order to provide the loan, the Lender requires the subordination of the Project Deed of Trust ("Deed of Trust") that currently secures the Declaration of Covenants, Conditions, and Restrictions ("Declaration") which restricts the affordability of units as stated in said Declaration through April 15, 2032; and WHEREAS, since the Deed of Trust secures both the loan that will be paid off through Escrow and the Declaration, an Amendment will be made to the Deed of Trust reflecting the full satisfaction of the loan but continuing to secure the Declaration; and WHEREAS, the Buyer will execute an Assignment and Assumption of the affordability restrictions and other performance requirements of said Declaration as part of the Escrow Instructions provided by the CDC -HA. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission -Housing Authority of the City of National City hereby authorizes the Executive Director to execute a Subordination Agreement, an Amendment to the Project Deed of Trust securing the Declaration of Covenants, Conditions and Restrictions, and other Escrow related documents as necessary. After being recorded by the County of San Diego, said Subordination Agreement and Amendment to the Deed of Trust will be on file in the office of the City Clerk. [Signature page to follow} Resolution No. 2013 — Page Two PASSED and ADOPTED this 17th day of December, 2013. Ron Morrison, Chairman ATTEST: Brad Raulston, Secretary APPROVED AS TO FORM: Claudia Gacitua Silva CDC General Counsel Attachment No. 1 Freddie Mac Loan Number: 708202314 Property Name: Summercrest Apartments SUBORDINATION AGREEMENT (CME AND PORTFOLIO) GOVERNMENTAL ENTITY (Revised 5-25-2012) THIS SUBORDINATION AGREEMENT ("Agreement") is entered into this day of December, 2013, by and between (i) CITIBANK, N.A., a national banking association ("Senior Mortgagee") and (ii) COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY acting in its capacity as the Housing Authority of the City of National City ("Subordinate Mortgagee"). RECITALS A. Summercrest Apartments, L.P., a Delaware limited partnership ("Borrower") is the owner of certain land located in San Diego County, California, described in Exhibit A hereto ("Land"). The Land is or will be improved with a multifamily rental housing project ("Improvements"). B. The Senior Mortgagee has made or is making a loan to the Borrower in the original principal amount of $33,000,000 ("Senior Loan") upon the terms and conditions of a certain Multifamily Loan and Security Agreement dated the date hereof between the Senior Mortgagee and the Borrower ("Senior Loan Agreement") in connection with the Mortgaged Property. The Senior Loan is secured by a Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated the date hereof ("Senior Mortgage") encumbering the Land, the Improvements and related personal and other property described in the Senior Mortgage and defined therein as the "Mortgaged Property." C. Subordinate Mortgagee is the holder of a certain Declaration of Covenants and Restrictions (Tenant Restrictions) ("Regulatory Agreement") dated December 18, 2001, and executed by Plaza Manor Preservation, L.P. and recorded June 19, 2002, in the office of the County Recorder of San Diego County, California as Document Number 2002- 0518422 and assumed by Borrower pursuant to a certain Assignment and Assumption of Declaration of Covenants and Restrictions and Deed of Trust dated December and recorded or intended to be recorded in the office of the County Recorder of San Diego County, California (the "Assumption Agreement"), which Regulatory Agreement is secured by that certain Project Deed of Trust encumbering all or a portion of the Mortgaged Property. ("Subordinate Mortgage") dated December 18, 2001, and 12603564-v3 Attachment No. 1 executed by Plaza Manor Preservation, L.P. and recorded June 19, 2002, in the office of the County Recorder of San Diego County, California as Document Number 2002- 0518423, as assumed by Borrower pursuant to the Assumption Agreement. D. The Senior Mortgage will be recorded in the office of the County Recorder of San Diego County, California ("Recording Office"). E. The execution and delivery of this Agreement is a condition of Senior Mortgagee's making of the Senior Loan and the Borrower's granting of the Subordinate Mortgage. NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Defined Terms. The following terms, when used in this Agreement (including, as appropriate, when used in the above recitals), will have the following meanings. (a) The terms "Condemnation," "Imposition Deposits," "Impositions," "Leases," "Rents" and "Restoration," as well as any term used in this Agreement and not otherwise defined in this Agreement, will have the meanings given to those terms in the Senior Loan Agreement. (b) "Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency, composition, restructuring, dissolution, liquidation, receivership, assignment for the benefit of creditors, or custodianship action or proceeding under any federal or state law with respect to the Borrower, any guarantor of any of the Senior Indebtedness, any of their respective properties, or any of their respective partners, members, officers, directors, or shareholders. (c) "Borrower" means all persons or entities identified as "Borrower" in the first Recital of this Agreement, together with their successors and assigns, and any other person or entity who acquires title to the Mortgaged Property after the date of this Agreement; provided that the term "Borrower" will not include the Senior Mortgagee in the event that the Senior Mortgagee may acquire title to the Mortgaged Property. (d) "Casualty" means the occurrence of damage to or loss of all or any portion of the Mortgaged Property by fire or other casualty. (e) "Enforcement Action" means any of the following actions taken by or at the direction of the Subordinate Mortgagee: the acceleration of all or any part of the Subordinate Indebtedness, the advertising of or commencement of any foreclosure or trustee's sale proceedings, the exercise of any power of sale, the acceptance of a deed or assignment in lieu of foreclosure or sale, the collecting of Rents, the obtaining of or seeking of the appointment of a receiver, the seeking of default interest, the taking of possession or control of any of the Mortgaged Property, the commencement of any suit or other legal, administrative, or arbitration Subordination Agreement (CME and Portfolio) — Governmental Entity Page 2 Attachment No. 1 (1) (g) proceeding based upon any Subordinate Documents, the exercising of any banker's lien or rights of set-off or recoupment, or the exercise of any other remedial action against the Borrower, any other party liable for any of the Subordinate Indebtedness or obligated under any of the Subordinate Documents, or the Mortgaged Property. "Enforcement Action Notice" means a written notice from the Subordinate Mortgagee to the Senior Mortgagee, given following one or more Subordinate Mortgage Default(s) and the expiration of any notice or cure periods provided for such Subordinate Mortgage Default(s) in the Subordinate Documents, setting forth in reasonable detail the Subordinate Mortgage Default(s) and the Enforcement Actions proposed to be taken by the Subordinate Mortgagee. "Loss Proceeds" means all monies received or to be received under any insurance policy, from any condemning authority, or from any other source, as a result or any Condemnation or Casualty. (h) "Senior Indebtedness" means the "Indebtedness" as defined in the Senior Loan Agreement. (i) "Senior Loan Documents" means the "Loan Documents" as defined in the Senior Loan Agreement. (j) "Senior Mortgage Default" means any act, failure to act, event, condition, or occurrence which constitutes, or which with the giving of notice or the passage of time, or both, would constitute, an "Event of Default" as defined in the Senior Loan Agreement. (k) "Senior Mortgagee" means the "Lender" as defined in the Senior Mortgage. When any other person or entity becomes the legal holder of the Senior Note, such other person or entity automatically will become the Senior Mortgagee. (1) (m) "Senior Note" means the promissory note or other evidence of the Senior Indebtedness referred to in the Senior Loan Agreement and any replacement of the Senior Note. "Subordinate Indebtedness" means all sums evidenced or secured or guaranteed by, or otherwise due and payable to the Subordinate Mortgagee pursuant to, the Subordinate Documents. (n) "Subordinate Documents" means the Subordinate Mortgage, the Regulatory Agreement and all other documents at any time evidencing, securing, guaranteeing, or otherwise delivered in connection with the Subordinate Indebtedness, as the same may be amended from time to time. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 3 Attachment No. 1 (0) "Subordinate Mortgage Default" means any act, failure to act, event, condition, or occurrence which allows (but for any contrary provision of this Agreement), or which with the giving of notice or the passage of time, or both, would allow (but for any contrary provision of this Agreement), the Subordinate Mortgagee to take an Enforcement Action. (p) "Subordinate Mortgagee" means the person or entity named as such in the first paragraph of this Agreement. 2. Subordination of Subordinate Indebtedness. (a) The Subordinate Indebtedness is and will at all times continue to be subject and subordinate in right of payment to the prior payment in full of the Senior Indebtedness. (b) The Subordinate Mortgagee acknowledges that a Subordinate Mortgage Default constitutes a Senior Mortgage Default. Accordingly, upon the occurrence of a Subordinate Mortgage Default, the Subordinate Mortgagee will be deemed to have actual knowledge of a Senior Mortgage Default. (c) If (i) the Subordinate Mortgagee receives any payment, property, or asset of any kind or in any form on account of the Subordinate Indebtedness (including, without limitation, any proceeds from any Enforcement Action) after a Senior Mortgage Default of which the Subordinate Mortgagee has actual knowledge (or is deemed to have actual knowledge as provided in 2(b) above) or has been given notice, or (ii) the Subordinate Mortgagee receives, voluntarily or involuntarily, by operation of law or otherwise, any payment, property, or asset in or in connection with any Bankruptcy Proceeding, such payment, property, or asset will be received and held in trust for the Senior Mortgagee. The Subordinate Mortgagee will promptly remit, in kind and properly endorsed as necessary, all such payments, properties, and assets to the Senior Mortgagee. The Senior Mortgagee will apply any payment, asset, or property so received from the Subordinate Mortgagee to the Senior Indebtedness in such order, amount (with respect to any asset or property other than immediately available funds), and manner as the Senior Mortgagee will determine in its sole and absolute discretion. (d) Without limiting the complete subordination of the Subordinate Indebtedness to the payment in full of the Senior Indebtedness, in any Bankruptcy Proceeding, upon any payment or distribution (whether in cash, property, securities, or otherwise) to creditors (i) the Senior Indebtedness will first be paid in full in cash before the Subordinate Mortgagee will be entitled to receive any payment or other distribution on account of or in respect of the Subordinate Indebtedness, and (ii) until all of the Senior Indebtedness is paid in full in cash, any payment or distribution to which the Subordinate Mortgagee would be entitled but for this Agreement (whether in cash, property, or other assets) will be made to the Senior Mortgagee. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 4 Attachment No. 1 (e) The subordination of the Subordinate Indebtedness will continue in the event that any payment under the Senior Loan Documents (whether by or on behalf of the Borrower, as proceeds of security or enforcement of any right of set-off or otherwise) is for any reason repaid or returned to the Borrower or its insolvent estate, or avoided, set aside or required to be paid to the Borrower, a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law. In such event, the Senior Indebtedness or part thereof originally intended to be satisfied will be deemed to be reinstated and outstanding to the extent of any repayment, return, or other action, as if such payment on account of the Senior Indebtedness had not been made. 3. Subordination of Subordinate Documents. (a) Each of the Subordinate Documents is, and will at all times remain, subject and subordinate in all respects to the liens, terms, covenants, conditions, operations, and effects of each of the Senior Loan Documents. (b) The subordination of the Subordinate Documents and of the Subordinate Indebtedness will apply and continue notwithstanding (i) the actual date and time of execution, delivery, recording, filing or perfection of each of the Senior Loan Documents and of each of the Subordinate Documents, and (ii) the availability of any collateral to the Senior Mortgagee, including the availability of any collateral other than the Mortgaged Property. (c) By reason of, and without in any way limiting, the full subordination of the Subordinate Indebtedness and the Subordinate Documents provided for in this Agreement, all rights and claims of the Subordinate Mortgagee under the Subordinate Documents in or to the Mortgaged Property or any portion thereof, the proceeds thereof, the Leases thereof, the Rents, issues and profits therefrom, and the Loss Proceeds payable with respect thereto, are expressly subject and subordinate in all respects to the rights and claims of the Senior Mortgagee under the Senior Loan Documents in or to the Mortgaged Property or any portion thereof, the proceeds thereof, the Leases thereof, the Rents, issues and profits therefrom and the Loss Proceeds payable with respect thereto. (d) If the Subordinate Mortgagee, by indemnification, subrogation or otherwise, will acquire any lien, estate, right or other interest in any of the Mortgaged Property, that lien, estate, right or other interest will be fully subject and subordinate to the receipt by the Senior Mortgagee of payment in full of the Senior Indebtedness, and to the Senior Loan Documents, to the same extent as the Subordinate Indebtedness and the Subordinate Documents are subordinate pursuant to this Agreement. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 5 t Attachment No. 1 4. Additional Representations and Covenants. (a) The Subordinate Mortgagee represents and warrants each of the following: (i) The Subordinate Mortgagee is now the owner and holder of the Subordinate Documents. (ii) The Subordinate Documents are now in full force and effect. (iii) The Subordinate Documents have not been modified or amended. (iv) To the actual knowledge of the Subordinate Mortgagee, as of the date of this Agreement, no Subordinate Mortgage Default has occurred. (v) None of the rights of the Subordinate Mortgagee under any of the Subordinate Documents are subject to the rights of any third parties, by way of subrogation, indemnification or otherwise. (b) Without the prior written consent of the Senior Mortgagee in each instance, the Subordinate Mortgagee will not do any of the following: (i) Amend, modify, waive, extend, renew or replace any provision of any of the Subordinate Documents. (ii) Pledge, assign, transfer, convey, or sell any interest in the Subordinate Indebtedness or any of the Subordinate Documents. (iii) Take any action which has the effect of increasing the Subordinate Indebtedness. (iv) Appear in, defend or bring any action to protect the Subordinate Mortgagee's interest in the Mortgaged Property. (v) Take any action concerning environmental matters affecting the Mortgaged Property, except as otherwise set forth in Section 5, below. (c) The Subordinate Mortgagee will deliver to the Senior Mortgagee a copy of each default notice received or delivered by the Subordinate Mortgagee pursuant to the Subordinate Documents or in connection with the Subordinate Indebtedness, simultaneously with the Subordinate Mortgagee's delivery or receipt of such notice. The Senior Mortgagee will deliver to the Subordinate Mortgagee in the manner required in Section 5(b) a copy of each notice of a Senior Mortgage Default delivered to the Borrower by the Senior Mortgagee. Neither giving nor failing to give a notice to the Senior Mortgagee or Subordinate Mortgagee pursuant to this Section 4(c) will affect the validity of any notice given by the Senior Mortgagee or Subordinate Mortgagee to the Borrower, as between the Subordination Agreement (CME and Portfolio) — Governmental Entity Page 6 Attachment No. 1 Borrower and such of the Senior Mortgagee or the Subordinate Mortgagee as provided the notice to the Borrower. (d) Without the prior written consent of the Senior Mortgagee in each instance, the Subordinate Mortgagee will not commence, or join with any other creditor in commencing, any Bankruptcy Proceeding. In the event of a Bankruptcy Proceeding, the Subordinate Mortgagee will not vote affirmatively in favor of any plan of reorganization or liquidation unless the Senior Mortgagee has also voted affirmatively in favor of such plan. In the event of any Bankruptcy Proceeding, the Subordinate Mortgagee will not contest the continued accrual of interest on the Senior Indebtedness, in accordance with and at the rates specified in the Senior Loan Documents, both for periods before and for periods after the commencement of such Bankruptcy Proceedings. (e) [Intentionally Omitted]. (f) All requirements pertaining to insurance under the Subordinate Documents (including requirements relating to amounts and types of coverages, deductibles and special endorsements) will be deemed satisfied if the Borrower complies with the insurance requirements under the Senior Loan Documents and of the Senior Mortgagee. All original policies of insurance required pursuant to the Senior Loan Documents will be held by the Senior Mortgagee. Nothing in this Section 4(f) will preclude the Subordinate Mortgagee from requiring that it be named as a mortgagee and loss payee, as its interest may appear, under all policies of property damage insurance maintained by the Borrower with respect to the Mortgaged Property, provided such action does not affect the priority of payment of Loss Proceeds, or that the Subordinate Mortgagee be named as an additional insured under all policies of liability insurance maintained by the Borrower with respect to the Mortgaged Property. (g) In the event of a Condemnation or a Casualty, all of the following provisions will apply: (i) The rights of the Subordinate Mortgagee (under the Subordinate Documents or otherwise) to participate in any proceeding or action relating to a Condemnation or a Casualty, or to participate or join in any settlement of, or to adjust, any claims resulting from a Condemnation or a Casualty, will be and remain subordinate in all respects to the Senior Mortgagee's rights under the Senior Loan Documents with respect thereto, and the Subordinate Mortgagee will be bound by any settlement or adjustment of a claim resulting from a Condemnation or a Casualty made by the Senior Mortgagee. (ii) All Loss Proceeds will be applied either to payment of the costs and expenses of Restoration or to payment on account of the Senior Subordination Agreement (CME and Portfolio) — Governmental Entity Page 7 Attachment No. 1 Indebtedness, as and in the manner determined by the Senior Mortgagee in its sole discretion. (iii) In the event the Senior Mortgagee applies or releases Loss Proceeds for the purposes of Restoration of the Mortgaged Property, the Subordinate Mortgagee will release for such purpose all of its right, title and interest, if any, in and to such Loss Proceeds. If the Senior Mortgagee holds Loss Proceeds, or monitors the disbursement thereof, the Subordinate Mortgagee will not do so. Nothing contained in this Agreement will be deemed to require the Senior Mortgagee to act for or on behalf of the Subordinate Mortgagee in connection with any Restoration or to hold or monitor any Loss Proceeds in trust for or otherwise on behalf of the Subordinate Mortgagee, and all or any Loss Proceeds may be commingled with any funds of the Senior Mortgagee. (iv) If the Senior Mortgagee elects to apply Loss Proceeds to payment on account of the Senior Indebtedness, and if the application of such Loss Proceeds results in the payment in full of the entire Senior Indebtedness, any remaining Loss Proceeds held by the Senior Mortgagee will be paid to the Subordinate Mortgagee unless another party has asserted a claim to the remaining Loss Proceeds. (h) The Subordinate Mortgagee will enter into attornment and non -disturbance agreements with all tenants under commercial or retail Leases, if any, to whom the Senior Mortgagee has granted attornment and non -disturbance, on the same terms and conditions given by the Senior Mortgagee. (i) Regardless of any contrary provision in the Subordinate Documents, the Subordinate Mortgagee will not collect payments for the purpose of escrowing for any cost or expense related to the Mortgaged Property or for any portion of the Subordinate Indebtedness. (j) Within 10 days after request by the Senior Mortgagee, the Subordinate Mortgagee will furnish the Senior Mortgagee with a statement, duly acknowledged and certified setting forth the then -current amount and terms of the Subordinate Indebtedness, confirming that there exists no default under the Subordinate Documents (or describing any default that does exist), and certifying to such other information with respect to the Subordinate Indebtedness as the Senior Mortgagee may request. (k) The Senior Mortgagee may amend, waive, postpone, extend, renew, replace, reduce or otherwise modify any provisions of the Senior Loan Documents without the necessity of obtaining the consent of or providing notice to the Subordinate Mortgagee, and without affecting any of the provisions of this Agreement. Notwithstanding the forgoing, Senior Mortgagee may not modify any provision of the Senior Loan Documents that increases the Senior Indebtedness, except for Subordination Agreement (CME and Portfolio) — Governmental Entity Page 8 Attachment No. 1 increases in the Senior Indebtedness that result from advances made by the Senior Mortgagee to protect the security or lien priority of the Senior Mortgagee under the Senior Loan Documents or to cure defaults under the Subordinate Documents. 5. Default Under Loan Documents. (a) For a period of 90 days following delivery to the Senior Mortgagee of an Enforcement Action Notice, the Senior Mortgagee will have the right to cure any Subordinate Mortgage Default, provided if such Subordinate Mortgage Default is a non -monetary default and is not capable of being cured within such 90-day period and the Senior Mortgagee has commenced and is diligently pursuing such cure to completion, the Senior Mortgagee will have such additional period of time as may be required to cure such Subordinate Mortgage Default or until such time, if ever, as the Senior Mortgagee (i) discontinues its pursuit of any cure and/or (ii) delivers to the Subordinate Mortgagee the Senior Mortgagee's written consent to the Enforcement Action described in the Enforcement Action Notice. The Senior Mortgagee will not have any obligation whatsoever to cure any Subordinate Mortgage Default. The Senior Mortgagee will not be subrogated to the rights of the Subordinate Mortgagee under the Subordinate Documents by reason of the Senior Mortgagee having cured any Subordinate Mortgage Default. However, the Subordinate Mortgagee acknowledges that all amounts advanced or expended by the Senior Mortgagee in accordance with the Senior Loan Documents or to cure a Subordinate Mortgage Default will be added to and become a part of the Senior Indebtedness and will be secured by the lien of the Senior Mortgage. (b) The Senior Mortgagee will deliver to the Subordinate Mortgagee a copy of any notice sent by the Senior Mortgagee to the Borrower of a Senior Mortgage Default within 5 Business Days of sending such notice to the Borrower. Failure of the Senior Mortgagee to send notice to the Subordinate Mortgagee will not prevent the exercise of the Senior Mortgagee's rights and remedies under the Senior Loan Documents. The Subordinate Mortgagee will have the right, but not the obligation, to cure any monetary Senior Mortgage Default within 30 days following the date of such notice; provided, however, that the Senior Mortgagee will be entitled during such 30-day period to continue to pursue its remedies under the Senior Loan Documents. The Subordinate Mortgagee may have up to 90 days from the date of the notice to cure a non -monetary Senior Mortgage Default if, during such 90-day period, the Subordinate Mortgagee keeps current all payments required by the Senior Loan Documents. In the event that such a non -monetary Senior Mortgage Default creates an unacceptable level of risk relative to the Mortgaged Property, or Senior Mortgagee's secured position relative to the Mortgaged Property, as determined by the Senior Mortgagee in its sole discretion, then the Senior Mortgagee may exercise during such 90-day period all available rights and remedies to protect and preserve the Mortgaged Property and the Rents, revenues and other proceeds from the Mortgaged Property. The Subordinate Mortgagee will not be subrogated to the rights of the Senior Mortgagee under the Senior Loan Documents by reason of the Subordinate Mortgagee having cured any Senior Mortgage Default. However, the Subordination Agreement (CME and Portfolio) — Governmental Entity Page 9 Attachment No. 1 Senior Mortgagee acknowledges that all amounts paid by the Subordinate Mortgagee to the Senior Mortgagee to cure a Senior Mortgage Default will be deemed to have been advanced by the Subordinate Mortgagee pursuant to, and will be secured by the lien of, the Subordinate Mortgage. Notwithstanding anything in this Section 5(b) to the contrary, the Subordinate Mortgagee's right to cure any Senior Mortgage Default will terminate immediately upon the occurrence of any Bankruptcy Proceeding. (c) In the event of a Subordinate Mortgage Default, the Subordinate Mortgagee will not commence any Enforcement Action until 90 days after the Subordinate Mortgagee has delivered to the Senior Mortgagee an Enforcement Action Notice with respect to such Enforcement Action, provided that during such 90-day period or such longer period as provided in Section 5(a), the Subordinate Mortgagee will be entitled to seek specific performance to enforce covenants and agreements of the Borrower relating to income, rent, or affordability restrictions contained in the Regulatory Agreement, subject to the Senior Mortgagee's right to cure a Subordinate Mortgage Default set forth in Section 5(a). The Subordinate Mortgagee may not commence any other Enforcement Action, including but not limited to any foreclosure action under the Subordinate Documents, until the earlier of (i) the expiration of such 90-day period or such longer period as provided in Section 5(a) or (ii) the delivery by the Senior Mortgagee to the Subordinate Mortgagee of the Senior Mortgagee's written consent to such Enforcement Action by the Subordinate Mortgagee. The Subordinate Mortgagee acknowledges that the Senior Mortgagee may grant or refuse consent to the Subordinate Mortgagee's Enforcement Action in the Senior Mortgagee's sole and absolute discretion. At the expiration of such 90-day period or such longer period as provided in Section 5(a) and, subject to the Senior Mortgagee's right to cure set forth in Section 5(a), Subordinate Mortgagee may commence any Enforcement Action. Any Enforcement Action on the part of the Subordinate Mortgagee will be subject to the provisions of this Agreement. The Subordinate Mortgagee acknowledges that the provisions of this Section 5(c) are fair and reasonable under the circumstances, that the Subordinate Mortgagee has received a substantial benefit from the Senior Mortgagee having granted its consent to the Subordinate Mortgage, and that the Senior Mortgagee would not have granted such consent without the inclusion of these provisions in this Agreement. (d) The Senior Mortgagee may pursue all rights and remedies available to it under the Senior Loan Documents, at law, or in equity, regardless of any Enforcement Action Notice or Enforcement Action by the Subordinate Mortgagee. No action or failure to act on the part of the Senior Mortgagee in the event of a Subordinate Mortgage Default or commencement of an Enforcement Action will constitute a waiver on the part of the Senior Mortgagee of any provision of the Senior Loan Documents or this Agreement. (e) In the event that the Enforcement Action taken by the Subordinate Mortgagee is the appointment of a receiver for any of the Mortgaged Property, all of the Rents, Subordination Agreement (CME and Portfolio) — Governmental Entity Page 10 Attachment No. 1 issues, profits and proceeds collected by the receiver will be paid and applied by the receiver solely to and for the benefit of the Senior Mortgagee until the Senior Indebtedness will have been paid in full. (f) The Subordinate Mortgagee hereby expressly consents to and authorizes the release by the Senior Mortgagee of all or any portion of the Mortgaged Property from the lien, operation, and effect of the Senior Loan Documents. The Subordinate Mortgagee hereby waives to the fullest extent permitted by law, all equitable or other rights it may have (i) in connection with the release of all or any portion of the Mortgaged Property, (ii) to require the separate sale of any portion of the Mortgaged Property, (iii) to require the Senior Mortgagee to exhaust its remedies against all or any portion of the Mortgaged Property or any combination of portions of the Mortgaged Property or any other collateral for the Senior Indebtedness, or (iv) to require the Senior Mortgagee to proceed against the Borrower, any other party that may be liable for any of the Senior Indebtedness (including any general partner of the Borrower if the Borrower is a partnership), all or any portion of the Mortgaged Property or combination of portions of the Mortgaged Property or any other collateral, before proceeding against all or such portions or combination of portions of the Mortgaged Property as the Senior Mortgagee determines. The Subordinate Mortgagee waives to the fullest extent permitted by law any and all benefits under California Civil Code Sections 2845, 2849 and 2850.] The Subordinate Mortgagee hereby expressly consents to and authorizes, at the option of the Senior Mortgagee, the sale, either separately or together, of all or any portion of the Mortgaged Property. The Subordinate Mortgagee acknowledges that without notice to the Subordinate Mortgagee and without affecting any of the provisions of this Agreement, the Senior Mortgagee may (i) extend the time for or waive any payment or performance under the Senior Loan Documents; (ii) modify or amend in any respect any provision of the Senior Loan Documents; and (iii) modify, exchange, surrender, release and otherwise deal with any additional collateral for the Senior Indebtedness. (g) If any party other than the Borrower (including the Senior Mortgagee) acquires title to any of the Mortgaged Property pursuant to a foreclosure of, or trustee's sale or other exercise of any power of sale under, the Senior Mortgage conducted in accordance with applicable law, the lien, operation, and effect of the Subordinate Mortgage and other Subordinate Documents automatically will terminate with respect to such Mortgaged Property. 6. Miscellaneous Provisions. (a) In the event of any conflict or inconsistency between the terms of the Subordinate Documents and the terms of this Agr_ eement, the terms of this Agreement will control. (b) This Agreement will be binding upon and will inure to the benefit of the respective legal successors and permitted assigns of the parties to this Agreement. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 11 Attachment No. 1 No other party will be entitled to any benefits under this Agreement, whether as a third -party beneficiary or otherwise. (c) This Agreement does not constitute an approval by the Senior Mortgagee of the terms of the Subordinate Documents. (d) Each notice, request, demand, consent, approval or other communication (collectively, "notices," and singly, a "notice") which is required or permitted to be given pursuant to this Agreement will be in writing and will be deemed to have been duly and sufficiently given if (i) personally delivered with proof of delivery thereof (any notice so delivered will be deemed to have been received at the time so delivered), or (ii) sent by a national overnight courier service (such as FedEx) designating earliest available delivery (any notice so delivered will be deemed to have been received on the next Business Day following receipt by the courier), or (iii) sent by United States registered or certified mail, return receipt requested, postage prepaid, at a post office regularly maintained by the United States Postal Service (any notice so sent will be deemed to have been received on the date of delivery as confirmed by the return receipt), addressed to the respective parties as follows: (i) Notices intended for the Senior Mortgagee will be addressed to: Citibank, N.A. c/o Berkadia Commercial Mortgage LLC 118 Welsh Road P.O. Box 8-9 Horsham, Pennsylvania 19044 Attention: Servicing — Account Manager Telephone: (215) 328-3866 Facsimile: (215) 328-3478 (ii) Notices intended for the Subordinate Mortgagee will be addressed to: Community Development Commission - Housing Authority of the City of National City 140 East 12th Street, Suite B National City, CA 91950 Attn: Executive Director Any party, by notice given pursuant to this Section, may change the person or persons and/or address or addresses, or designate an additional person or persons or an additional address or addresses, for its notices, but notice of a change of address will only be effective upon receipt. Neither party will refuse or reject delivery of any notice given in accordance with this Section. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 12 Attachment No. 1 (e) Nothing in this Agreement or in any of the Senior Loan Documents or Subordinate Documents will be deemed to constitute the Senior Mortgagee as a joint venturer or partner of the Subordinate Mortgagee. (f) Upon notice from the Senior Mortgagee from time to time, the Subordinate Mortgagee will execute and deliver such additional instruments and documents, and will take such actions, as are required by the Senior Mortgagee in order to further evidence or effectuate the provisions and intent of this Agreement. (g) This Agreement will be governed by the laws of the State in which the Land is located. (h) If any one or more of the provisions contained in this Agreement, or any application thereof, will be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein, and any other application thereof, will not in any way be affected or impaired thereby. (i) The term of this Agreement will commence on the date of this Agreement and will continue until the earliest to occur of the following events: (i) the payment of all of the Senior Indebtedness; provided that this Agreement will be reinstated in the event any payment on account of the Senior Indebtedness is avoided, set aside, rescinded or repaid by the Senior Mortgagee as described in Section 2(e) of this Agreement, (ii) the payment of all of the Subordinate Indebtedness other than by reason of payments which the Subordinate Mortgagee is obligated to remit to the Senior Mortgagee pursuant to this Agreement, (iii) the acquisition by the Senior Mortgagee or by a third party purchaser, of title to the Mortgaged Property pursuant to a foreclosure of, deed in lieu of foreclosure, or trustee's sale or other exercise of a power of sale or similar disposition under, the Senior Mortgage; or (iv) with the prior written consent of the Senior Mortgagee, without limiting the provisions of Section 5(d), the acquisition by the Subordinate Mortgagee of title to the Mortgaged Property subject to the Senior Mortgage pursuant to a foreclosure, or a deed in lieu of foreclosure, of (or the exercise of a power of sale under) the Subordinate Mortgage. (j) No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder will operate as a waiver thereof, nor will any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy under this Agreement. (k) Each party to this Agreement acknowledges that in the event any party fails to comply with its obligations hereunder, the other parties will have all rights available at law and in equity, including the right to obtain specific performance of the obligations of such defaulting party and injunctive relief. Subordination Agreement (CME and Portfolio) — Governmental Entity Page 13 Attachment No. 1 (1) Nothing in this Agreement is intended, nor will it be construed, to in any way limit the exercise by the Subordinate Mortgagee of its governmental powers (including but not limited to police, regulatory and taxing powers) with respect to the Borrower or the Mortgaged Property to the same extent as if it were not a party to this Agreement or the transactions contemplated by this Agreement. (m) This Agreement may be assigned at any time by the Senior Mortgagee to any subsequent holder of the Senior Note. (n) This Agreement may be amended, changed, modified, altered or terminated only by a written instrument or written instruments signed by the parties to this Agreement. (0) This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. [Signature and acknowledgment pages follow] Subordination Agreement (CME and Portfolio) — Governmental Entity Page 14 Attachment No. 1 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written. SENIOR MORTGAGEE: CITIBANK, N.A. By: Name: Bryan Barker Title: Vice President STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN FRANCISCO ) On December , 2013 before me, , Notary Public, personally appeared Bryan Barker, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public (Seal) Subordination Agreement (CME and Portfolio) — Governmental Entity Page 15 Attachment No. 1 SUBORDINATE MORTGAGEE: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY ACTING IN ITS CAPACITY AS THE HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY By: Brad Raulston, Executive Director Approved as to Form: By: Claudia Gacitua Silva General Counsel STATE OF CALIFORNIA ) ss. COUNTY OF SAN DIEGO On December , 2013 before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public (Seal) Subordination Agreement (CME and Portfolio) — Governmental Entity Page 16 Attachment No. 1 CONSENT OF BORROWER The Borrower hereby acknowledges receipt of a copy of this Subordination Agreement, dated December 2013, by and between CITIBANK, N.A. and the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY acting in its capacity as the Housing Authority of the City of National City and consents to the agreement of the parties set forth in this Agreement. SUMMERCREST APARTMENTS, LP, a Delaware limited partnership By: AOF Summercrest LLC, a Delaware limited liability company Its: Managing General Partner By: AOF / Pacific Affordable Housing Corp., a California nonprofit public benefit corporation Its: Sole Member By: Name: Philip J. Kennedy Title: Vice President By: Summercrest Apaitinents Co -General Partner, LLC, a Delaware limited liability company Its: Co -General Partner By: BLF Holdings, LLC, a Washington limited liability company Its: Sole Member By: The Brian L. Fitterer Revocable Trust, a California trust Its: Sole Member By: Name: Brian L. Fitterer Title: Trustee Subordination Agreement (CME and Portfolio) — Governmental Entity Page 17 Attachment No. 1 STATE OF CALIFORNIA COUNTY OF On December , 2013 before me, , Notary Public, personally appeared Philip J. Kennedy, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public (Seal) STATE OF CALIFORNIA COUNTY OF On December , 2013 before me, , Notary Public, personally appeared Brian L. Fitterer, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary Public (Seal) Subordination Agreement (CME and Portfolio) — Governmental Entity Page 18 Attachment No. 1 EXHIBIT A LEGAL DESCRIPTION Subordination Agreement (CME and Portfolio) — Governmental Entity Page 19 Attachment No. 2 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Community Development Commission - Housing Authority of the City of National City 140 East 12th Street, Suite B National City, CA 91950 Attn: Executive Director Free Recording Requested per Government Code Sec. 6103 AMENDMENT TO DEED OF TRUST (Plaza Manor) THIS AMENDMENT TO DEED OF TRUST ("Amendment") is dated as of the 18th day of December, 2013, by Summercrest Apartments, L.P., a Delaware limited partnership,("Trustor"), whose address is , and First American Title Company ("Trustee") and the Community Development Commission of the City of National City acting in its capacity as the Housing Authority of the City of National City ("Beneficiary"), whose address is 140 East 12th Street, Suite B, National City, California 91950. RECITALS A. Trustor's successor -in -interest, Plaza Manor Preservation, L.P., made that certain Project Deed of Trust, dated December 21, 2001, and recorded in the Office of the Recorder of San Diego County on June 19, 2002, as Instrument No. 2002-0518423 ("Deed of Trust"). Concurrently with the recordation of this Amendment, the Trustor is acquiring the "Property," as defined in the Deed of Trust, and is assuming the Deed of Trust. B. Concurrently with the recordation of this Amendment, the Trustor is repaying, in - full the "Note," as defined in the Deed of Trust. The Trustor and Beneficiary desire to amend the Deed of Trust, as set forth herein. In the event of any conflict between the Deed of Trust and this Amendment, the terms of this Amendment shall control. NOW, THEREFORE, in furtherance of the recitals stated above and the mutual covenants set forth below, Trustor and the Beneficiary hereby amend the Deed of Trust, and agree, promise and declare as follows: 1. Deletion of Paragraphs (1)-(4) on Pages 1 and 2. Under the heading "For the Purpose of Securing" on Page 1 and continuing onto Page 2 of the Deed of Trust: (i) the paragraphs numbered (1), (2), (3) and (4) are hereby deleted in their entireties; and (ii) paragraph (5) (on Page 2 of the Deed of Trust) is renumbered as (1). Therefore, following the heading "For the Purpose of Securing," there shall be only one paragraph, which shall provide as follows: 1 Attachment No. 2 (1) The performance of each agreement and covenant of Trustor under that certain Declaration of Covenants, Conditions and Restrictions ("Restrictions" or "Declaration," the terms being synonymous) of even date herewith and recorded concurrently herewith affecting the Property. 2. Confirmation of Obligations. Except to the extent modified by this Amendment, Trustor hereby confirms each of the covenants, agreements and obligations of Trustor set forth in the Deed of Trust. 3. General Provisions. (a) Severability. If any provision of this Amendment is deemed to be invalid or unenforceable by a court of competent jurisdiction, that provision shall be severed from the rest of this Amendment and the remaining provisions shall continue in full force and effect. (b) Recitals Incorporated. The Recitals to this Amendment are hereby incorporated into this Amendment by this reference. (c) No Affect on Priority. The parties agree that this Amendment is not in any way intended to, and does not, affect any of the terms, conditions or priority of the Declaration, or any other document executed in connection with any of the foregoing, nor enforcement of the same, except as specifically set forth herein. (d) Counterparts. This Amendment may be executed in any number of counterparts and, as so executed, the counterparts shall constitute one and the same agreement. The parties agree that each such counterpart is an original and shall be binding upon all the parties, even though all of the parties are not signatories to the same counterpart. (e) Conflicts. In the event of any conflict between the Deed of Trust and this Amendment, this Amendment shall control. (f) Capacity and Authority. All individuals signing this Amendment for a party which is a corporation, partnership, limited liability company or other legal entity, or signing under a power of attorney, or as a trustee, guardian, conservator, or in any other legal capacity, covenant to the other parties hereto that they have the necessary capacity and authority to act for, sign and bind the respective entity or principal on whose behalf they are signing. TRUSTOR: SUMMERCREST APARTMENTS, L.P., a Delaware limited partnership, By:AOF Summercrest LLC, a Delaware limited liability company, Its: Managing General Partner By: AOF/Pacific Affordable Housing Corp., a California nonprofit public benefit corporation 2 Attachment No. 2 Its: Sole Member By: Name: Title: By: Summercrest Apartments Co -General Partner, LLC a Delaware limited liability company Its: Co -General Partner By:BLF Holdings, LLC, a Washington limited liability company Its: Sole Member By:The Brian L. Fitterer Revocable Trust, a California Trust Its: Sole Member By: Name: Title: BENEFICIARY: Community Development Commission of the City of National City acting in its capacity as the Housing Authority of the City of National City By: Brad Raulston, Executive Director Approved as to Form: By: Claudia Gacitua Silva General Counsel 3 Attachment No. 2 State of California County of ACKNOWLEDGMENT On , 2013, before me, , notary public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) 4 Attachment No. 2 State of California County of ACKNOWLEDGMENT ) ) ) On , 2013, before me, , notary public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) 5 Attachment No. 2 State of California County of ACKNOWLEDGMENT ) ) ) On , 2013, before me, , notary public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under penalty of perjury under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) 6 Attachment No. 3 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Community Development Commission - Housing Authority of the City of National City 140 East 12th Street, Suite B National City, CA 91950 Attn: Executive Director Free Recording Requested per Government Code Sec. 6103 ASSIGNMENT AND ASSUMPTION OF DECLARATION OF COVENANTS AND RESTRICTIONS (TENANT RESTRICTIONS) AND DEED OF TRUST THIS ASSIGNMENT AND ASSUMPTION OF DECLARATION OF COVENANTS AND RESTRICTIONS AND DEED OF TRUST ("Assignment"), made as December , 2013, by and between PLAZA MANOR PRESERVATION, L.P., a California limited partnership ("Assignor") and SUMMERCREST APARTMENTS, L.P., a Delaware limited partnership ("Assignee"). RECITALS A. Assignor and Assignee have entered into that certain Real Estate Purchase Agreement, dated as of September 9, 2013 ("Agreement"), for the purchase and sale of certain real property known as the Summercrest Apartments located at 2721 Plaza Boulevard in the City of National City, County of San Diego, California ("Property"). B. The Assignor and Assignee is -are requesting the consent of the CDC -HA to this Assignment is being made as required under by: (i) Section 17 of that certain Declaration of Covenants and Restrictions (Tenant Restrictions) ("Declaration") dated December 18, 2001, and executed by Assignor (as "Declarant") and recorded June 19, 2002, in the office of the County Recorder of San Diego County, California as Document Number 2002-0518422; and (ii) that certain Project Deed of Trust ("Deed of Trust") dated December 18, 2001, and executed by Assignor (as "Trustor") and recorded June 19, 2002, in the office of the County Recorder of San Diego County, California as Document Number 2002-0518423. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee agree as follows: 1. Assignment of Obligations Under Declaration and Deed of Trust. Assignor hereby assigns to Assignee all of its rights, interests, benefits and privileges and all of its obligations in and under the Declaration, as Declarant thereunder, and Deed of Trust, as Trustor thereunder, and Assignee hereby accepts such assignment. National City Assignment - Summercrest 1 Attachment No. 3 2. Assumption of Obligations. By acceptance of this Assignment, Assignee hereby assumes and agrees to perform and to be bound by all of the terms, covenants, conditions and obligations of Assignor, as Declarant, under the Declaration, and as Trustor, under the Deed of Trust for the benefit of the City of National City. This assumption shall have application only to those obligations under the Declaration or Deed of Trust arising after the transfer of the Property to Assignee. 3. Mortgagee Protection. Notwithstanding anything herein to the contrary, no violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in the Declaration shall defeat or render invalid or in any way impair the lien or charge of any provision of that certain deed Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (California) among Summercrest Apartments, LP, a Delaware limited liability company, First American Title Insurance Company as Deed of Trust Trustee, and Citibank, N.A., a national banking association as Beneficiary as assigned by Beneficiary to the Federal Home Loan Mortgage Corporation pursuant to Assignment of Security Instrument, both of even date herewith (as assigned, the "Freddie Mac Deed of Trust"). The Declaration shall be subordinate to the Freddie Mac Deed of Trust, notwithstanding the prior recordation of the Declaration. 4. Successors and Assigns. This Assignment shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, heirs and legatees of the respective parties hereto. 5. Governing Law. This Assignment shall be governed by, interpreted under, and construed and enforceable with, the laws of the State of California. IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the date first written above. ASSIGNOR: 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: Name: William A. Witte Title: President National City Assignment - Summercrest 2 Attachment No. 3 By: Las Palmas Foundation, a California nonprofit public benefit corporation, Its General Partner By: Name: Joseph Michaels Title: President ASSIGNEE: SUMMERCREST APARTMENTS, L.P., a Delaware limited partnership, By: AOF Summercrest LLC, a Delaware limited liability company, Its Managing General Partner By: AOF/Pacific Affordable Housing Corp., a California nonprofit public benefit corporation, Its Sole Member By: Name: Title: By: Summercrest Apartments Co -General Partner, LLC, a Delaware limited liability company, Its Co -General Partner By: BLF Holdings, LLC, a Washington limited liability company, Its Sole Member By: The Brian L. Fitterer Revocable Trust, a California Trust, Its Sole Member By: Name: Title: National City Assignment - Summercrest 3 Attachment No. 3 On , before me, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Notary Public On , before me, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. National City Assignment - Summercrest 4 Attachment No. 3 Notary Public On , before me, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Notary Public On , before me, , a Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. National City Assignment - Summercrest 5 Attachment No. 3 Notary Public National City Assignment - Summercrest 6 Attachment No. 4 ESCROW INSTRUCTIONS (Plaza Manor Loan Repayment) December , 2013 TO: First American Title Company 1250 Corona Pointe Court, Suite 201 Corona, CA 92879 Attn: Order No. NHSC-4349486 (50) 1. Opening of Escrow. The Community Development Commission -Housing Authority of the City of National City ("CDC -HA") has been advised that Summercrest Apartments, L.P., a Delaware limited partnership ("Summercrest") has opened the above -referenced escrow ("Escrow") with First American Title Company ("Escrow Agent") and hereby authorize and instruct Escrow Agent as set forth herein. In the event any date, deadline or due date set forth in these Escrow Instructions falls on a day that is not a "business day," then such deadline or due date shall automatically be extended to the next business day. Any capitalized term that is not defined in these Escrow Instructions shall have the meaning set forth in the Grant Agreement, as defined below. In the event of a conflict between any term or provision of the Grant Agreement and any term or provision of these Escrow Instructions, the term or provision of these Escrow Instructions shall control. 2. Deposit of Documents. Enclosed herewith are the following documents: (a) Assignment and Assumption of Declaration of Covenants and Restrictions (Tenant Restrictions and Deed of Trust ("Assumption Agreement"), to be executed by the Purchaser and Plaza Manor Preservation, L.P., a California limited partnership. (b) Amendment to Deed of Trust (Plaza Manor) executed by the CDC -HA and to be executed by the Purchaser. (c) Subordination Agreement executed by the CDC -HA and to be executed by Citibank, N.A., a national banking association. 3. Conditions to Closing. Escrow Agent may close the Escrow as set forth in Section 4 of these 4 Escrow Instructions, when, and only when all conditions to Closing set forth in this Section 3 are satisfied: (a) All parties required to sign the Assumption Agreement, Amendment to Deed of Trust and Subordination Agreement have submitted original signature pages (notarized where necessary) to Escrow Agent. 1 Attachment No. 4 (b) Escrow Agent has received, and is prepared to deliver to the CDC -HA $ as payment -in -full of the "Note," as defined in the deed of trust, which is being amended by the Amendment to Deed of Trust. (c) Escrow Agent is prepared and obligated to issue or cause to be issued in the CDC - HA favor, a California Land Title Association lender's policy in the amount of $100,000.00, insuring that title to the property as defined in that certain Project Deed of Trust, dated December 21, 2001, and recorded in the Office of the Recorder of San Diego County on June 19, 2002, as Instrument No. 2002-0518423 ("Deed of Trust"), is vested in the Summercrest and that the Deed of Trust is an encumbrance against such property that is subject and subordinate only to: (i) the deed of trust and instruments securing a loan to Summercrest from Citibank, N.A., a national banking association, as more particularly set forth in the Subordination Agreement; and (ii) items 1, 3-16 and 18-19a shown as exceptions to coverage on that certain Preliminary Report, issued by you, Order Number NHSC-4349486 (50), dated July 31, 2013. 4. Procedure for Closing. Once all of the conditions set forth in Section 3, above, have been satisfied, Escrow Agent shall close the Escrow as set forth in this Section 4, by: (a) Recording the Assumption Agreement, Amendment to Deed of Trust and Subordination Agreement in the Office of the Recorder of San Diego County. (b) Issuing the California Land Title Association lender's policy described in Section 3(c), above, to the CDC -HA. (c) Disbursing $ to the CDC -HA. 5. Escrow Fees and Costs Paid by Summercrest. All Escrow fees and costs charged by the Escrow Agent for escrow services shall be paid by Summercrest. 6. Delivery of Funds, Instruments and Documents. All funds that are to be disbursed or delivered to the CDC -HA shall be delivered as provided in wiring instructions from the CDC -HA. All notices, instruments and documents that are to be delivered by Escrow Agent to the CDC -HA shall be personally delivered or mailed to the CDC -HA at: Community Development Commission - Housing Authority of the City of National City 140 East 12th Street, Suite B National City, CA 91950 Attn: Executive Director 7. Sole Instructions; Amendment. These Escrow Instructions constitute the complete and only escrow instructions of the CDC -HA and shall revoke and supersede any prior oral or written instructions Escrow Agent may have received from the CDC -HA. The CDC -HA may revoke, cancel, waive, amend, supplement or permit deviations from, any term or condition of these Escrow Instructions in writing or by email. Any purported oral revocation, cancellation, waiver, amendment, supplement or deviation of these Escrow Instructions, shall be ineffective and invalid. 2 Attachment No. 4 CDC -HA: Community Development Commission -Housing Authority of the City of National City By: Brad Raulston, Executive Director Approved as to Form: By: Claudia Gacitua Silva General Counsel 3 efiu NP 005887 RECORDING REQUESTED BY: COMMONWEALTH LAND TULE CO. NO CHARGE ON THIS DOCUMENT FOR THE BENEFIT OF A STATE AGENCY FORMED BY THE CITY OF NATIONAL CITY Recording Requested By: DETISCH & CHRISTENSEN 444 W. "C" Street, Suite 200 San Diego, CA 92101 And When Recorded Mail To: Attn: Executive Director Community Development Commission of the City of National City 140 East 12th Street, Suite B National City, California 91950 Attachment No. 5 DDC it 2002-0518422 JUN 1.9 , 2002 11: 23 AM OFFICIAL RECORDS SA! DID COUNTY RECORDER'S OFFICE GREGORY J. SMITH, COMP RECORDER FEES' 0.00 i 111101111 I DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS (TENANT RESTRICTION& THIS DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS (hereafter "Declaration") is made as of December 18, 2001, by PLAZA MANOR PRESERVATION, L.P., a California limited partnership, (hereinafter "DECLARANT") in connection with that certain parcel of real property ("PROPERTY") located in the City of National City, County of San Diego, California, described in Exhibit "A" attached hereto and incorporated herein by reference. RECITALS DECLARANT has acquired title to the PROPERTY with the aid of a Loan obtained from the Community Development Commission of the City of National City (hereafter the "CDC"), and intends to operate a three hundred seventy-two (372) unit project referred to as "Plaza Manor" as a very low and low income housing project. Concurrent with the recordation of this Declaration, the CDC is partially funding, by loan secured by deed of trust on the PROPERTY, the acquisition, rehabilitation and permanent financing of a Project described in the Owner Participation Agreement ("AGREEMENT" or "Loan Agreement" or "Owner Participation December 20, 2001 Plaza Manor CC&R1.122001.doc Attachment No. 5 005888 Agreement," the terms being synonymous) dated December 18, 2001. This loan is to assist DECLARANT in rehabilitating, maintaining and holding the PROPERTY and operating the PROJECT using federal HOME PROGRAM funds and local funds of the CDC. The Loan Agreement and Project Trust Deed by the CDC were conditioned in part upon the recordation of a document setting forth certain restrictions upon the use and sale of the PROPERTY. NOW, THEREFORE, DECLARANT hereby declares that the PROPERTY shall be subject to the covenants, conditions and restrictions set forth below: 1. Restrictive Covenants and Terms. DECLARANT agrees and covenants on behalf of itself and its successors and assigns, and each successor in interest to the PROPERTY, that at all times during the term of this Declaration set forth, three hundred seventy (370) of three hundred seventy-two (372) units of the PROJECT shall be set aside and reserved as "Affordable Units." As used herein, the term "Affordable Units" shall refer to those residential units in the PROJECT that are owned or held available strictly in accordance with the terms and conditions set forth below. Two (2) two bedroom units shall be set aside as Managers' Units. 2. Affordable Unit Restrictions. The following restrictions shall apply to the three hundred seventy-two (372) units. The units shall be rent and occupancy restricted in accordance with Section 8, TCAC/CDLAC, CHFA and HOME Program requirements. The restrictions set forth in the Table attached as Exhibit "1" hereto, hereinafter "Table," shall establish the rental rate, after the required reduction for utilities, and tenant income calculation criteria as follows: Maximum rents (Column 1); Unit Size and Type (Column 2); Number of Affordable Units (Column 3); and Limit in Income of Eligible Tenants based upon percentage of the Median Area Income (Column 4); Years of Restriction (Column 5); and Type of Unit (i.e. Section 8, TCAC/CDLAC and CHFA) (Column 6): "Eligible Tenants" are those tenants whose aggregate gross annual income does not exceed the respective percentages set forth in the table above of annual median income, as adjusted for family size. These units shall be the "Affordable Units." For purposes of this Declaration, the current annual median income shall be the median income defined by the Department of Housing and Urban Development (HUD) as the then current median income for the San Diego Standard Metropolitan Statistical Area, established periodically by HUD and published in the Federal Register, as adjusted for family size, and as shown on the Maximum Income/Affordable Rent Table attached as Exhibit "D-1." However, for the purpose of calculating maximum rents and deducting Dacmbcr 20. 2001 P1sza ManOr CC8c R5. 122001 .doc 2 Attachment No. 5 1 005889 for utilities, Exhibit "D-2" is attached. Both exhibits shall be deemed adjusted, from time to time, in accordance with any adjustments that are authorized by HUD or any successor agency. In the event HUD ceases to publish an established median income as aforesaid, the CDC may, in its sole discretion, use any other reasonably comparable method of computing adjustments in median income. Notwithstanding anything to the contrary herein, the rent and income restrictions set forth herein shall not be applicable until such time as the HUD Housing Assistance Contract is no longer in full force and effect. At that time, these rent and income restrictions shall be fully applicable and effective. The eligibility of each prospective tenant under the restrictions set forth in 1 above shall be certified by DECLARANT who shall submit such certification and all supporting documentation on forms acceptable to the CDC, in its sole discretion, for a determination of tenant eligibility, prior to tenant occupancy. No Affordable Unit (Section 8, TCAC/CDLAC, CHFA and HOME) may be rented to a prospective tenant or occupied by any person unless and until the CDC has determined that the prospective tenant or occupant is an eligible tenant (defined above) as determined in accordance with the provisions set forth below [Sections 3 through 14, inclusive], provided, however, that the failure of the CDC to timely act upon the submission within five (5) business days of submission shall be deemed an approval of such prospective tenant. 3. Affordable Marketing Plan Compliance. Eligible Tenants shall be any tenants, provided that DECLARANT has and continues to comply with the terms of its approved affirmative marketing plan and rents to those person(s) referenced in said approved plan, as may be amended from time to time, and as approved by the CDC. 4. Determination: Annual Requalification. The CDC's determination of eligibility shall be based upon an application completed by the prospective tenant (including backup documentation such as employment and income verification documents) in accordance with the CDC's normal procedures then in effect, and submitted by DECLARANT to the CDC for review and determination of eligibility. Failure of the CDC to respond within five (5) business days of submission of complete income information shall be deemed approval. Further, tenants shall be requalified as Eligible Tenants according to the above -described process annually. Such requalification process shall be performed by DECLARANT as part of the annual certification of DECLARANT's compliance as set forth in Paragraph 4 below. Failure by DECLARANT to timely comply with the tenant qualification and requalification process described in this Paragraph 3 shall constitute a material default under this Declaration. 3 December 20. 2001 Plaza Manor CC&Rs.122001.doc Attachment No. 5 00S890 5. DECLARANT Certification: Annual Recertification. Upon the completion of the PROJECT, the occurrence of which shall be determined by the CDC, in its sole discretion, and on the anniversary date thereof in each year of the term of this Declaration, DECLARANT shall certify to the CDC, under penalty of perjury, utilizing such forms and providing such backup documentation as the CDC may require, that DECLARANT is complying with all provisions of this DECLARATION. Failure to timely complete the annual certification process described in this Paragraph 4 shall constitute a material default under this DECLARATION. The CDC may resort to the remedies set forth in this DECLARATION upon such material default, as well as any and all other remedies available at law or in equity and/or contained in the CDC Loan, as defined in the Agreement (all terms that are undefined in this Declaration shall have the meaning as used in the AGREEMENT. 6. Operating and Replacement Reserves. The DECLARANT shall, during the time of the affordability of the PROJECT as referenced in this DECLARATION, maintain operating and replacement reserves for the PROJECT, pursuant to the terms of the Partnership Agreement and any requirements of the senior lenders, as approved by the CDC. Failure to maintain such reserves shall constitute a material default under the terms of this DECLARATION. For the purpose of this DECLARATION, operating reserves required under the terms of the CHFA loans shall be deemed acceptable during the term of the CHFA loans. In addition to the operating reserve, during the term of the DECLARATION, replacement revenues shall be maintained in an amount of not less than that required under the terms of the CHFA loans. These reserve amounts are subject to revision upward as determined by the Executive Director of the CDC, annually, based upon an increase in the consumer price index for the San Diego Metropolitan Area. The operating reserve shall be maintained in a separate account in anticipation of and as a contingency against unbudgeted and/or unforeseen expenses in the operation and maintenance of the Project. No disbursements from the operating reserve or replacement account(s) shall be made without the express written consent of the Executive Director of the CDC, or designee, which consent shall not be unreasonably withheld or denied. Annually, the sums required under the terms of the CHFA loans shall be set aside as a reserve for replacements. DECLARANT shall account to the CDC for any monies expended from the operating reserves and/or replacement account(s), in such form as approved by the CDC. After the CHFA loans are no longer outstanding, the amount of the replacement and operating reserves shall be determined by the Executive Director of the CDC, in his/her reasonable discretion, which approval shall not be unreasonably withheld. 4 December 20. 2001 PIaa Manor CC&Rs.122001.don Attachment No. 5 i Og5891. 7. Relationship with DECLARANT. The term "Eligible Tenant" shall not include DECLARANT or any individuals who are partners or shareholders in DECLARANT or in any entity having an interest in DECLARANT or in the PROPERTY, or officer, employee, agent or consultant of the owner, developer or sponsor, or otherwise violate applicable state or federal conflict regulations. 8. No Student Dependents. The term "Eligible Tenant" shall not include any student dependent as defined in the U.S. Internal Revenue Code, unless the taxpayer (upon whom the student in question is dependent) resides in the same dwelling unit. 9. Income of Co -tenants, etc. The income of all co -tenants and/or non- dependent occupants shall be taken into account in determining whether a household is an Eligible Tenant hereunder. 10. Over Income Tenants. In the event that a tenant who was properly certified as an Eligible Tenant at the commencement of such tenant's occupancy ceases to be eligible, for any reason other than a Tenant being over income, the DECLARANT shall give sixty (60) days written notice to such Tenant to vacate the Unit. The vacated Unit shall be rented to an Eligible Tenant. Notwithstanding anything to the contrary in this Declaration, no occupant of a HOME Program Affordable Unit or Affordable Unit who previously and properly qualified as an Eligible Tenant shall be evicted by DECLARANT because such occupant fails to requalify as an Eligible Tenant, because such occupant exceeds the income limits of Exhibit "D-2," as in the case of increased income, except as provided for in Section 92.252, as amended from time to time. Rather, the next available Unit shall be designated as a HOME Program Affordable Unit or Affordable Unit to replace the Unit of the occupant in question. Further, subject to the fair market limitations set forth in HOME Regulation 92.252, such occupant shall commence paying rent equal to thirty percent (30%) of such occupant's Adjusted Income (as that term is defined in 24 C.F.R. ' 813.102), effective from and after the date of such failure to requalify, as further described herein. The over income tenant shall continue to be considered as an "Eligible Tenant" until evicted, provided this continued occupancy complies with all applicable regulations. a. CDC Local Program Funds Only. Be given one hundred eighty (180) days notice to vacate the affordable unit, effective from and after the date of such failure to requalify (i.e., the re -certification date, provided the tenant was properly certified originally). During the time the over -income tenant resides in the Affordable Unit, the tenant shall continue to pay the restricted rent. The tenant shall continue to be 5 December 20, 2001 Plitt Minor CC&Rs.122001.Aoc Attachment No. 5 00S892. considered an "eligible tenant" until evicted, provided this continued occupancy complies with all applicable HOME Program requirements. b. HOME Program Funds Only. When a HOME Eligible Tenant's gross income exceeds the "Iow income" definition as defined in CFR 92.252(i), i.e., over eighty percent (80 %) of area median income, then the tenant shall commence paying rent equivalent to thirty percent (30%) of the Tenant's adjusted income, subject to the fair market rent ceiling as set forth in HOME Regulation 92.252(i) and the next available comparable sized and configured unit shall be designated as a HOME Affordable Unit. The tenant shall continue to be considered an "eligible tenant" until evicted, provided this continued occupancy otherwise complies with all applicable HOME Program requirements. c. HOME and CDC Local Funds. If residing in a HOME unit, shall be subject to the HOME provisions described above; the remaining units shall be subject to the CDC Local Funds provisions. d. HOME. CDC and Tax Credit Funds. When HOME, CDC and Tax Credit funds are involved, all units subject to the Tax Credit Program Rules and/or the Bond Regulatory Agreement shall be governed by the Tax Credit Provisions and the Bond Regulatory Agreement for so long as tax credits are involved. Thereafter, the HOME and CDC rules shall apply. 11. Bond and/or Tax Credit Program Funds Only. Be permitted to continue to reside in the assisted unit at the reduced rental rate, unless the over -income Tenant reaches one hundred and forty percent (140%) of the applicable income limit, whereupon the Tenant shall be given one hundred eighty (180) days notice to vacate the affordable unit, effective from and after the date of such income determination. The tenant shall continue to be considered an "eligible tenant" until evicted, provided this continued occupancy complies with all applicable tax -credit and/or bond requirements. 12. Accessibility Standards. DECLARANT represents and warrants that it will comply with all federal, state and local requirements and regulations concerning access to the units by the disabled and handicapped persons. 13. Physical Condition of Affordable Units. After completion of the PROJECT, DECLARANT shall continually maintain the Affordable Units and the landscaping and grounds in a condition which satisfies the Housing Quality Standards promulgated by HUD under its Section 8 Program, as such standards are interpreted Demnbc, 20. 2001 Plea Manor CC&Re.122001atoc 6 Attachment No. 5. 005893 and enforced by the CDC under its normal policies and procedures. The CDC shall have the right to inspect the Affordable Units from time to time, on reasonable notice and at reasonable times, in order to verify compliance with the foregoing maintenance covenant. Further, each Affordable Unit shall be requalified annually, as to the foregoing maintenance covenant, as part of the annual tenant requalification process described in Paragraph 4 above. Any failure to comply with Housing Quality Standards of an Affordable Unit shall be corrected by DECLARANT at DECLARANT's expense within thirty (30) days of the identification of such deficiency by the CDC. 14. CDC Monitoring Functions. It is contemplated that, during the term of this DECLARATION, the CDC will perform the following monitoring functions: (A) preparing and making available to DECLARANT any general information that the CDC possesses regarding income limitations and restrictions which are applicable to the Affordable Units; (B) reviewing the applications of prospective occupants of the Affordable Units, and determining eligibility of such persons as Eligible Tenants; (C) reviewing the documentation submitted by DECLARANT in connection with the annual certification process for Eligible Tenants described in paragraph 1 and 2 above; and (D) inspecting the Affordable Units to verify that they are being maintained in accordance with the terms of this DECLARATION above; (E) inspecting the Project to verify that the Property is being maintained in accordance with the approved Property Management Plan, as amended annually during the term of the Declaration. Notwithstanding the foregoing description of the CDC's functions, DECLARANT shall have no claim or right of action against the CDC based on any alleged failure to perform such function, except that DECLARANT may reasonably rely upon the CDC's tenant eligibility determination and shall not be liable to the CDC for any damages, as set forth in Loan Agreement, attributable to the CDC's sole negligence or wilful misconduct in conducting any such tenant eligibility determinations. 15. Designation of Affordable Units. The Affordable Units, described in the "Table of Rent and Income Restriction Criteria" (the "Table") will be initially designated as referenced in the Table, but shall be floating. Such designations may only be changed with the prior written consent of the CDC, which consent may be granted or withheld in the CDC's sole and absolute discretion, provided, however, that the units before and after the change in designation are of the same unit types, size, and features. 16. Compliance with Applicable Regulations. DECLARANT shall comply with all regulations, policies and procedures promulgated by H.U.D. including but not 7 paember 20, 2001 Plaza Manor CCdcRs.122001.doc i Attachment No. 5 005894 limited to the HOME Program Regulations as contained with the Owner Participation Agreement, which provisions are incorporated herein by reference, and by the CDC, in connection with the Loan which is being made to DECLARANT. DECLARANT's failure to so comply shall constitute a material default hereunder, entitling the CDC to the remedies set forth in Paragraph 23 below. 17. Successors Bound. DECLARANT covenants, for itself and its successors and assigns, not to sell, transfer, assign or otherwise dispose of ownership of the PROPERTY, unless the prospective purchaser, transferee or assignee expressly promises in writing to be bound by all of the provisions hereof, including the covenant in this Paragraph 13 to require successors to expressly assume the obligations herein. It is expressed acknowledged that the covenants and restrictions set forth herein shall survive any repayment of the CDC Loan referenced in the AGREEMENT. Further, the obligations of DECLARANT hereunder shall be deemed independent of DECLARANT's obligations under the Loan Agreement. 18. Maximum Rent To Be Collected by DECLARANT. In no event, shall the "Total Rent" including the portion paid by the Resident Tenant and any other person or entity, collected by DECLARANT for any rent restricted unit exceed the amount of rent set forth in the Table referenced in Section 1. Total Rent includes all payments made by the Resident Tenant and all subsidies received by the DECLARANT. In the case of persons receiving Section 8 benefits, who are Resident Tenants, the DECLARANT acknowledges that it shall not accept any subsidy or payment that would cause the Total Rent received for any restricted unit that exceeds the maximum rents allowed in the above -referenced Table, for any rent restricted unit. Should the DECLARANT receive Total Rent in excess of the allowable maximum rent set forth in the Table, DECLARANT agrees to immediately notify the AGENCY and reimburse the AGENCY for any such overpayment. Acceptance by DECLARANT or its successors in interest, of Total Rent in excess of the maximum rent set forth in the Table shall constitute a material breach of this DECLARATION, unless said excess rent is reimbursed to the AGENCY after receipt by DECLARANT of a ten (10) day notice from the AGENCY to the DECLARANT of the overpayment. 19. Loan Payments. If and when provided for in the NOTE, as defined in the AGREEMENT, the annual loan payments shall be made to the CDC. 20. Term. This Declaration and the covenants and restrictions contained herein shall be effective upon the earlier of April 15, 2002, or the completion of the 8 Doxmber 20, 2001 Plata Manor CC&Rs.122001.000 i Attachment No. 5 005895 rehabilitation of the units, and shall remain in full force and effect up through and including April 15, 2032. 21. Covenant Against Discrimination. DECLARANT covenants on behalf of itself and its successors and assigns, and each successor in interest to the PROPERTY, not to discriminate against any tenant or prospective tenant of the PROJECT on the basis of their race, age, sexual orientation, marital status, color, religion, sex, handicap, or national origin, or any other basis prohibited by law, as referenced in all applicable state, local and federal law, and the Loan Agreement and Loan Documents. 22. Conflicts of Interest. Interest of current or former members, officers or employees. DECLARANT represents and warrants that no member, officer, or employee of the DECLARANT, no member of the governing body of the locality in which the CDC was activated, and no other public official of such locality or Iocalities who exercises any functions or responsibilities with respect to this DECLARATION, shall, during his or her tenure, or for one year thereafter, have any interest direct or indirect, in this DECLARATION or the proceeds thereof. Any violation of this section may, at the option of the CDC, result in unilateral and immediate termination of this DECLARATION by the CDC. Further, the Contractor, who constructs the Project, agrees to comply with all of the Conflict of Interest provisions contained in 24 CFR 92.356. 23. Inspections. The CDC shall be entitled to review, inspect and approve, without liability, all of the construction being performed pursuant to the terms of the CDC Loan and the operation of the Project after the completion of the Project. All construction and management and maintenance of the Project shall be performed to the satisfaction of the CDC, without liability to the CDC for review and observation of the construction and/or the operation of the Project after completion. Any deficiencies in construction and/or management of the Project after completion, shall be corrected by the Contractor, and/or the DECLARANT, upon written notice from the CDC to the DECLARANT, prior to any additional funding of the Loan. If funding has been completed, then correction in deficiencies in construction and/or operation shall be accomplished within thirty (30) days of written notice from the CDC to the DECLARANT. 24. Records and reports. DECLARANT shall supply the CDC, annually, on November 15th of each year during the term of this DECLARATION, with such records and reports as are required and are requested by CDC to aid it in complying with the reports and record keeping provisions, terms and conditions of 24 CFR 92.508 9 Member 20, 200! Plaza Manor CC&Rs.122001.doc Attachment No. 5 OQSS9 and 92.509, as amended from time to time, and any and all other requirements of this DECLARATION. The records and reports include, but are not limited to the following: applicable; a. Amount of funds expended pursuant to the AGREEMENT; b. Eligible Tenant information, including yearly income verifications; c. Housing payments charged to resident tenants, to the extent d. On -site inspection results; e. Sale and resale information; f. Affirmative marketing records; g. Insurance policies and notices; h. Equal Employment Opportunity and Fair Housing records; i. Labor costs and records; j. An audited income and expense statement and balance sheets for DECLARANT; k. An audited income and expense statement and balance sheets for the PROJECT; 1. A Management Plan for the calendar year in which the report is prepared showing anticipated rental income, other income, expenses, anticipated repairs and replacements to the Project, timing of such repairs and replacements, maintenance of the Project, insurance maintained on behalf of the Project, and such other matters as the CDC shall require, in its sole discretion; m. Federal and State income tax returns for the calendar year, ending on the preceding December 31st; n. Annual analysis of reserves for repair and replacement; 10 9sttmlxr 20. 2001 Plaza Manor CC&Rs. t22001.doc Attachment No. 5 005897 o. Annual certification and representation regarding status of all loans, encumbrances and taxes; p. Annual statement regarding condition of the Property and disclosing any known defects and a proposed method of repairing the same; q• An OMB A-133 financial audit; r. A report or reports, certifying compliance with the terms and provisions of the Section 3 requirements, as set forth in the AGREEMENT and certifying compliance with the provisions of federal law as it relates to Section 3 whether or not specifically set forth in the AGREEMENT; and, s. Such other and further information and records as the CDC and/or HUD shall request in writing from the DECLARANT. The parties agree that a fee of $25.00 per day, per report and/or information is a reasonable estimation of the damages that will accrue to the CDC as a result of the failure of the DECLARANT to timely submit the required information and/or reports and that said fees shall be treated as liquidated damages by the parties, in anticipation of the damages that will be incurred by the CDC as a result of a breach by the DECLARANT. The parties further agree that it would be difficult, if not impossible, to determine the exact actual amount of damages suffered by the CDC in the event of a breach by the DECLARANT in the reporting requirements of this DECLARATION, including, but not limited to, Section 24 hereof. Notwithstanding the foregoing or anything to the contrary contained herein, the CDC shall give the DECLARANT prior written notice of any report and/or information that the DECLARANT has failed to provide the CDC pursuant to this Section 24 and the DECLARANT shall have ten (10) days to provide such report and/or information to the CDC prior to the assessment of any liquidated damages. 25. Participation. DECLARANT shall cause the fact that the CDC has provided funds to the Project to be referenced in all advertisement(s), press release(s), brochure(s), information sheet(s), and all Project Designation Placards placed on the Project site or other site(s), as approved in advance, by the CDC. The design, content and format of the press release(s), advertisement(s), information sheet(s), brochure(s), and Project Placard(s) are subject to the written approval of the Chief Executive Officer of the CDC. CDC, at its sole option, reserves the right to request, in writing, that the references to the participation of the CDC in the Project not be included in any, or all, 11 December 20. 2001 Plaza .Iz200I.6 Attachment No. 5 005898 advertisements, press releases, brochures, information sheets, and/or Project Designation Placards. 26. Enforcement. DECLARANT expressly agrees and declares that the CDC or any successor public agency is a proper party and shall have standing to initiate and pursue any and all actions or proceedings, at law or in equity, to enforce the provisions hereof and/or to recover damages for any default hereunder, notwithstanding the fact that such damages or the detriment arising from such default may have actually been suffered by some other person or the public at large. Further, the CDC, or any successor public agency, shall be the proper party to waive, relinquish, release or modify the rights, covenants, obligations or restrictions contained in or arising under this Declaration. 27. Attorney's Fees. In the event that any litigation for the enforcement or interpretation of this Declaration, whether an action at law or arbitration or any manner of non judicial dispute resolution to this Declaration by reason of the breach of any condition or covenant, representation or warranty in this Declaration, or otherwise arising out of this Declaration, the prevailing party in such action shall be entitled to recover from the other reasonable attorneys' fees to be fixed by the court which shall render a judgment, as well as the costs of suit. 28. Severability. In the event that any provision or covenant of this Declaration is held by a court of competent jurisdiction to be invalid or unenforceable, then it shall be severed from the remaining portions of this Declaration, which shall remain in full force and effect. 29. Covenants to Run With the Land. The covenants contained herein shall constitute "covenants running with the land," and shall bind the PROPERTY and every person having an interest therein during the term of this Declaration. DECLARANT agrees for itself and its successors that, in the event that, for any reason whatsoever, a court of competent jurisdiction determines that the foregoing covenants do not run with the land, such covenants shall be enforced as equitable servitudes against the PROPERTY. 30. Recordation. This Declaration shall be recorded in the Office of County Recorder of San Diego, California. 31. CDC Not Liable for Acts of Omissions of DECLARANT or Others. CDC shall in no way be liable for any acts or omissions of DECLARANT, any agent 12 Mamba 20.7/101 Phw Manor Cleats. 1220 1 AOc Attachment No. 5 i 005899 or contractor employed by DECLARANT, or any person furnishing labor and/or materials used in or related to the construction of said improvements. 32. Remedies. a. Contract governed by law of State of California. This Declaration, its performance, and all suits and special proceedings under this Declaration, shall be constituted in accordance with the laws of the State of California and Federal law, to the extent applicable. In any action, special proceeding, or other proceeding that may be brought arising out of, under or because of this Declaration, the laws of the State of California and the United States, to the extent applicable, shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which the action or special proceeding may be instituted. b. Standing, equitable remedies; cumulative remedies. DECLARANT expressly agrees and declares that the CDC, or any successor or public agency, shall be the proper party and shall have standing to initiate and pursue any and all actions or proceedings, at law or in equity, to enforce the provisions hereof and/or to recover damages for any default hereunder, notwithstanding the fact that such damages or the detriment arising from such a default may have actually been suffered by some other person or by the public at large. Further, DECLARANT expressly agrees that receivership, injunctive relief and specific performance are proper pre-trial and/or post -trial remedies hereunder, and that, upon any default, and to assure compliance with this Declaration. Nothing in this subparagraph, and no recovery to the CDC, shall restrict or limit the rights or remedies of persons or entities other than the CDC, against DECLARANT in connection with the same or related acts by DECLARANT. The remedies set forth in this Section are cumulative and not mutually exclusive, except the extent that their award is specifically determined to be duplicative by final order of a court of competent jurisdiction. c. Remedies at law for breach of tenant restrictions. In the event of any material default under the applicable terms of. this DECLARATION regarding restrictions on the operation and the transfer of the PROPERTY, the CDC shall be entitled to, in addition to any and all other remedies available at law or in equity: (i) declare the Loan to be all due and repayable; and (ii) recover compensatory damages. If the default in question involves the violation of the affordability and occupancy provisions above, the amount of 'such compensatory damages shall be the product of multiplying: (A) the number of months that the default in question has continued until the time of trial by (B) the result of subtracting (i) the rents properly chargeable 13 December 20, 2001 Pim Manor OC&Rs.122001.doe Attachment No 5 005900 hereunder for the Affordable Unit(s) in question from the amount actually charged. DECLARANT and the CDC agree that it would be extremely difficult or impracticable to ascertain the precise amount of actual damages accruing to the CDC as a result of such a default and that the foregoing formula is a fair and reasonable method of approximating such damages. The CDC shall be entitled to seek and to recover damages in separate actions for successive and separate breaches that may occur. Further, interest shall accrue on the amount of such damages from the date of the breach in question at the rate of seven percent (7 %) per annum or the maximum rate than allowed by law, whichever is less. Nothing in this Section shall preclude the award of exemplary damages as allowed by law. d. Expert witness, attorney's fees, and costs. The parties agree that the prevailing party in litigation for the breach and/or interpretation and/or enforcement of the terms of the Loan Agreement shall be entitled to their expert witness fees, if any, as part of their costs of suit, and reasonable attorneys' fees as may be awarded by the court, pursuant to California Code of Civil Procedure ("CCP") Section 1033.5 and any other applicable provisions of California law, including, without limitation, the provisions of CCP Section 998. 33. Mortgagees Protection. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Declaration shall defeat or render invalid or in any way impair the lien or charge of any permitted deed of trust recorded on the PROPERTY provided, however, that any subsequent owner of the PROPERTY shall be bound by the covenants, conditions, restrictions, limitations and provisions of this Declaration, whether such owner's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. 34. CDC's Approval of Property Manager. At all times during which these Restrictions are in full force and effect the Property shall be managed by a professional management company, as approved by the CDC, in its reasonable discretion. Further, at all times that these Restrictions are in force and effect, and CDC has served a thirty (30) day written notice of deficiencies in the Property management for the project, whether or not there has previously been a Property Management Company involved with the Project, which deficiencies have not been rectified by the DECLARANT, within the thirty (30) day period, or, if the deficiencies are not curable within thirty (30) days, if no cure has been commenced within thirty (30) days and prosecuted with diligence thereafter, then, CDC shall have the right, in its sole discretion, and upon thirty (30) days written notice: (i) to require the retention of a different professional property management firm to manage the Property; (ii) to approve, in advance and in December 20, 2001 Plaza Mawr CC&Rs.12200L.d6e 14 Attachment No. 5 00S901 writing, the retention of any such property management firm, including the terms of the contract governing such retention; and (iii) to require DECLARANT to terminate any such property management firm, provided that such termination shall comply with the termination provisions of the management contract in question. DECLARANT shall cooperate with the CDC to effectuate the CDC's rights. 35. CDC Approval of Management Plan. Prior to the funding of the CDC Loan, the DECLARANT shall submit to the CDC a detailed plan for the management of the Project, including the name and qualifications of the Property Manager, including references and experience of the Property Manager in managing projects similar to the Project for the approval of the CDC. The CDC shall approve or reject the Property Manager and Plan within seven (7) days after receipt of the same by the CDC. In the event that the CDC fails to object to the Property Manager and/or the Management Plan, they shall be deemed approved. Each year thereafter on November 15th, the DECLARANT shall submit a Management Plan for the Project for the following year. The Plan shall include details covering payment of expenses of the Project, physical condition of the Project, reserves for repair and replacement of the components of the Project, Project income and expenses and all other matters reasonably requested by the CDC. The Plan shall also set forth the services that will be provided for the tenants on the Property. Failure of the CDC to approve said Plan shall constitute a material default under the terms of this DECLARATION. 36. Lease Provisions. DECLARANT agrees that it will include in all of its leases and cause its successors in interest to include in all of their leases, those provisions set forth in Addendum to Lease attached hereto, the following provisions: a. Additional Lease Provisions/Annual Income Verification. TENANT agrees to, upon written request from the Landlord or the CDC, certify under penalty of perjury the accuracy of all information provided in connection with the examination or reexamination of annual income of the tenant's household. Further, tenant agrees that the annual income and other eligibility requirements are substantial and material obligations of the tenancy and that the tenant will comply promptly with all requests for information with respect to the tenancy from the landlord and/or the CDC. Further, tenant acknowledges that tenant's failure to provide accurate information regarding such requirements (regardless of whether such inaccuracy is intentional or unintentional) or the refusal to comply with the request for information with respect thereto, shall be deemed a violation of this lease provision, and a material breach of the tenancy and shall constitute cause for immediate termination of the tenancy. December 20, 2001 Plan Manor CC&Rs.122001.doe 15 Attachment No. 5 005902 b. Term of Lease for Restricted Units. TENANT has been made aware by Landlord that the unit being leased was assisted with Section 8, TCAC/CDLAC, HOME and/ or CHFA funds. A lease must be for a period of not less than one (1) year unless the parties agree by mutual agreement that the term of the lease be less. The LESSEE acknowledges by initialing in the space below that it has been made aware of these provisions. 37. HUD Requirements. During the time the Project is encumbered by a HUD insured deed of Trust or Use Agreement, the following provisions shall be effective: a. Superiority of HUD Provisions. Notwithstanding anything in this Declaration to the contrary, in the event any provision in this Declaration contradicts, modifies, or any in any way changes the terms of the Use Agreement, as amended, encumbering the Project, the terms of the Use Agreement, as amended, shall prevail and govern or if any provision of the Declaration limits the Secretary of Housing and Urban Development, his successors or assign and/or the Federal Housing Commission (Secretary), in his administration of the National Housing Act, as amended, or the regulations made pursuant thereto or the Use Agreement, as amended, this Declaration shall be deemed amended so as to comply with the Act, regulations, or Use Agreement, as amended, (FHA requirements). In the event of a conflict between the TCAC/CDLAC or CHFA requirements and FHA requirements, the conflict shall be resolved by the Secretary. b. Subordination. This Declaration, and the restrictions contained herein, shall be subordinate to all deeds of trust in favor of the United States of America acting by and through the Secretary of Housing and Urban Development ("HUD") and recorded in the Official Records of San Diego County, California, (the "HUD Deed of Trust") against the Property in connection with the Project and the Amended and Restated Use Agreement (the "Use Agreement") executed by and between the DECLARANT and HUD in connection with the Project, and recorded in said Official Records, and subordinate to the CHFA Note and Deed of Trust, the CHFA Regulatory Agreement, and the CHFA Second Deed of Trust, referenced in the CDC Loan Agreement, and notwithstanding anything in this Declaration to the contrary, the provisions of this Declaration shall be subordinate to the HUD Deed of Trust, if any, the HUD Use Agreement and any applicable HUD regulations. In the event of any conflicts between any of the provisions of this Declaration and the provisions of the HUD Deed of Trust, HUD Use Agreement or any applicable HUD regulations or requirements, the HUD Deed of Trust, HUD Use Agreement or HUD December20, 2001 PIm Minot CURL 122001.doc 16 Attachment No. 5 00S903 regulations shall control. Compliance by DECLARANT with such HUD requirements shall be deemed compliance with this Declaration. In the event of foreclosure under the HUD Deed of Trust, this Declaration and the provisions contained herein shall automatically terminate. 38. DECLARANT's Compliance With Health & Safety Code Section 33436. DECLARANT agrees to include the following nondiscrimination and non -segregation clauses required by Health & Safety Code Section 33436, in all leases, subleases, deeds, contracts, and other agreements affecting the Property, as applicable: (1) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed, nor shall the grantee or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises herein conveyed. The foregoing covenants shall run with the land." (2) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the leasing, December 20.2001 Plaza Manor CC12114.122001.doc 17 • Attachment No. 5 00S904 subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased." Further, pursuant to the provisions of Health & Safety Code Section 33436(c), the DECLARANT agrees that the provisions set forth in subparagraphs (1) and (2) above shall be binding upon and shall obligate the DECLARANT, their subcontractors and their successors and assigns concerning the Project and the Property, if the same is acquired from DECLARANT. 39. Time of the Essence. Time is of the essence of this DECLARATION and of each and every provision hereof. The waiver by CDC of any breach or breaches hereof shall not be deemed, nor shall the same constitute, a waiver of any subsequent breach or breaches. DECLARANT: PLAZA MANOR PRESERVATION, L.P., a California limited partnership GENERAL PARTNERS: Las Palmas Fou onprofit corporation By: Jo %h M. Michaels, President [Signatures continued on next page.] 18 Mang* 20.2001 Plea Manor CC&ks.122001.det Attachment No. 5' 005905 Plaza Manor Development Co., LLC, a California limited liability company By: The Nicholas Company, Inc., a Delaware corporation, managing mem ► fo By: William A. Witte CDC: COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY, a public agency By: George .. Waters, Chairman Approved as to Form: DETISCH & CHRISTENSEN By: Charles B. Christensen Special Counsel for the COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY Decanter 20. 2001 Plan Manor CC&Rs.122001.doc 19 Attachment No. 5 oosso6 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of Orange On April 22. 2002 before me, Gretna A. Harbin, Notary Public, personally appeared Joseph M. Michaels, personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that, by his signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. a a a A A C3RENIA A. HARBIN lr COMM. # 1243253 NOTARY PUBLIC-CALIFORNIA ORANGECOUNTY My Coma Expires Nov.23, 2003 G enia A. Harbin, Notary Public Description of Attached Document OPTIONAL DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS (TENANT RESTRICTIONS) Attachment No. 5 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of Orange 005907 On April 22, 2002 before me, Grenia A. Harbin, Notary Public, personally appeared William A. Witte, personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that, by his signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. s��":sc�, GRENIA A. HARBIN i (,; COMM. # 1243253 'O O: i . N NOTARY PUBLIC-CALFORNIA t 4� rj, ORANGE COUNTY N ► y Comm. Expk,s Nov.23, 2003 G nia A. Harbin, Notary Public OPTIONAL Description of Attached Document DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS (TENANT RESTRICTIONS) Attachment No. 5 State of California County of San Diego On ACKNOWLEDGMENT 005908 , 2001, before me, personally appeared, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument "DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS (TENANT RESTRICTIONS)" and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity on behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) 22 Dezember 20.200E Plaza Manor CC& n.12200t.doe Attachment No. 5 Exhibit "1" Table of Rent and Income Restrictions Criteria 23 Decemoa m. 2001 Plaza Manor CC&Rt.122O01,e oe Attachment No. 5 005910 Exhibit "1" TABLE OF RENT AND INCOME RESTRICTION CRITERIA 1 2 3 4 5 6 MAXIMUM INITIAL RENTS (NOTE: These rents include Declarant's payment of all utilities) UNIT SIZE/UNIT TYPE NO. OF AFFORDABLE UNITS ELIGIBLE TENANTS WHOSE INCOME DOES NOT EXCEED % MEDIAN AREA INCOME BELOW YEARS OF RESTRICTION TYPE OF UNIT [i.e., Section 8, TCAC/ CDLAC, and CHFA and HOME] $468 Efficiency 26 50% 30 Section 8 $468 Efficiency 58 60% 30 Section 8 $521 1 BR/1 BA 17 50% 30 Section 8 $521 1 BR/1 BA 39 60% 30 Section 8 $684 2 BR/1 BA 2 50% 30 HOME $684 2 BR/1 BA 40 50% 30 Section 8 $684 2 BR/ 1 BA 95 60% 30 Section 8 $748 2 BRJ 1.5 BA 10 50% 30 Section 8 $748 2 BR/1.5 BA 21 60% 30 Section 8 $838 3 BR/2 BA 2 50% 30 HOME **Not Restricted 3 BR/2 BA 2 N/A N/A N/A $838 3 BR/2 BA 18 50% 30 Section 8 $838 3 BR/2 BA 42 60% 30 Section 8 TOTAL 372 ** Managers' units Attachment No. 5 Exhibit "D-1" Rent Restrictions 24 o«.mau 20, 2001 Plaza Manor CC&Rs.12200I .doc /005911 Attachment No. 5 D cvmbcr 20, 2001 Plaza Manor CC&Rs.122001.doc Exhibit "D-2" Utility Restrictions 25 005912 1 SUMMARY OF CRL RENT RESTRICTIONS, 2001 CITY OF NATIONAL CITY Family Size Very Low Income At or Below 50% AMI Low Income Between 51% to 80% AMI Moderate Income Between 81% to 120% AMI 1 Person $19,900 $31,850 $47,800 2 Persons $22,750 $36,400 $54,600 3 Persons $25,600 $40,950 $61,450 4 Persons $28,450 $45,500 $68,300 5 Persons $30,750 $49,150 $73,750 (1) 2001 HUD income limits. Unit Size Very Low Income (30% of 50% AMI) Low Income (30% of 60% AMI) Moderate income (30% of 110% AMI) Studio $440 $539 $1,037 One Bedroom $511 $625 $1,193 Two Bedroom $559 $687 $1,327 Three Bedroom $620 $763 $1,474 Four Bedroom $651 $805 $1,573 (2) California Redevelopment Law (CRL) rents less appropriate Community Development Commission of the City of National Ci utility allowances. Prepared by: Keyser Marston Associates, Inc. Filename: i:Library Datalresidential\Exhibit D-1.xls112120/01; ema Attachment No. 6 REAL ESTATE PURCHASE AGREEMENT This Re•al Estate Purchase Agreement (this "Agreem•ent"), da•ted as of Septem• ber el2013 (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"). 1. Background. Seller is the owner ofa 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 auth ritties or 1 Summei-crest 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 yart 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-SIX MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($46, 250, 000.00). 4. Deposit. (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 2 Summercrest 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. (t3) Adaltlona Lepostt: tJiitess' ttii§—Kgreetnent"is terininatecl on or before the 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"). (F) 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 and/or 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 (ifany), 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 Summercrest 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 withliotd sueh 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 Financing. 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-33L000011 (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 information 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. 4 Summcrcrest v3 Attachment No. 6 (C) CaIHFA (Fannie Mae) Approval. Seller entered into that certain Regulatory Agreement, dated December 6, 2000, by and between Seller and the California Housing Finance Agency ("Ca1HFA"), 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 of June 1, 2002, by and between Seller and Ca1HFA, recorded on June 20, 2002, as Document No. 2002-05233684 in the Official Records of said County (as amended, the "Ca1HFA Regulatory Agreement"), which Ca1HFA Regulatory Agreement was assigned by Ca1HFA 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 Ca1HFA 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 Ca1HFA (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 Ca1HFA Regulatory Agreement, and all documents and information required in connection therewith (collectively, the "Ca1HFA Regulatory Agreement Assignment Packet"), and shall thereafter diligently pursue using commercially reasonable efforts the administrative processing by Ca1HFA (and, if required, by Fannie Mae) of the Ca1HFA Regulatory Agreement Assignment Packet and CalHFA'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 Ca1HFA 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 Ca1HFA 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) Ca1HFA's (and, if required, Fannie Mae's) approval of the transfer and conveyance of the Property to Buyer as required by the Ca1HFA Regulatory Agreement (the "CaIHFA Transfer Approval"). If Buyer has not secured HAP Contract Approval and Ca1HFA 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 CalHFA Transfer Approval that are reasonably likely in the 5 Summercrest v3 Attachment No. 6 future to significantly and negatively impact or decrease the financial performance of the Apartment Development. - (E)'. `. i CAL Consent. `"' buyer acknowledges that pursuant to ttiat. certain kegtiiafoty `" `" ` 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) HUD 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 may 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 Summercrest v3 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 _.:. :. .a ,}.:�.._... ,.—..< .-..�� ... ..,.. .. .M.ew-,., ..�^�esn. ... �, ..e.re!'Y.': ., +.�+s �i ., s�wu. 'a „a,,.�x•. rK obligations provided for elsewhere m this Agreement. (1) Buyer's timely payment of the Deposit, and the Additional Deposit; (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) below; and (6) Section 6(E) Buyer's timely payment of the closing costs set forth in Section 9 Buyer's delivery to Escrow of Buyer's Deliveries as set forth in 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 parties 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 summercrest v3 Attachment No. 6 (I) Seller's delivery to Escrow of Seller's Deliveries as set forth in Section b(D) below. (2) Selter's'representations and warranties set forth in this Ag eerrient 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 Summercrrst 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 aYtidavt for the benefit of the title 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 Ca1HFA 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 Permitted Exceptions; and d. Any encumbrance voluntarily imposed by Buyer. (H) Contracts, Leases, etc. Simultaneously with the Close of Escrow, 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 Summererest v3 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 transfer of the ifoperty and advising the`tennats ttiat Buyer has assumeds reponsibiliiy for Tenant , Deposits (as defined below) made by such tenants. (1) Section 42 Indemnification Agreement. Buyer acknowledges that Seller has developed, owned and operated the Apartment Development as a project intended to generate Iow-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 indernnitor described in Section 10.B.(2) below ("Indemnitor") to execute and deliver to Seller, the Section 42 Indemnification Agreement in the form 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) (4) year; (5) (6) (7) years; List of vacant units (employee/model); Financials — Trailing 12 and the three full years prior to the current 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 Sample Tenant Lease — currently used at the Property; Service Contracts & Leases; Site plan and floor plans (for all unit types); (11) All commercial 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 Surnmcrcrest v3 RESOLUTION NO. 2013 — 20 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION -HOUSING AUTHORITY OF THE CITY OF NATIONAL CITY AUTHORIZING THE EXECUTIVE DIRECTOR TO EXECUTE A SUBORDINATION AGREEMENT AND AN AMENDMENT TO THE PROJECT DEED OF TRUST SECURING THE DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR 372 AFFORDABLE RENTAL UNITS AT 2721 PLAZA BOULEVARD IN NATIONAL CITY WHEREAS, Summercrest Apartments, also known as Plaza Manor, located at 2721 Plaza Boulevard is being sold to Affordable Housing Associates, LLC, ("Buyer") for $46,250,000; and WHEREAS, in 2001, the Community Development Commission ("CDC -HA") made a loan for $500,000 from the HOME Investment Partnerships Program and the Low and Moderate Income Fund to Plaza Manor Preservation, LP, ("Seller") to assist the Seller in the rehabilitation the 372-unit complex; and WHEREAS, the CDC -HA loan is owed an outstanding balance of approximately $481,341.26, and the Buyer has requested to pay off the loan completely through Escrow; and WHEREAS, the Buyer has secured commitment on a new mortgage loan to complete the purchase of property from Citibank ("Lender") for $33,000,000; and WHEREAS, in order to provide the loan, the Lender requires the subordination of the Project Deed of Trust ("Deed of Trust") that currently secures the Declaration of Covenants, Conditions, and Restrictions ("Declaration") which restricts the affordability of units as stated in said Declaration through April 15, 2032; and WHEREAS, since the Deed of Trust secures both the loan that will be paid off through Escrow and the Declaration, an Amendment will be made to the Deed of Trust reflecting the full satisfaction of the loan but continuing to secure the Declaration; and WHEREAS, the Buyer will execute an Assignment and Assumption of the affordability restrictions and other performance requirements of said Declaration as part of the Escrow Instructions provided by the CDC -HA. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission -Housing Authority of the City of National City hereby authorizes the Executive Director to execute a Subordination Agreement, an Amendment to the Project Deed of Trust securing the Declaration of Covenants, Conditions and Restrictions, and other Escrow related documents as necessary. After being recorded by the County of San Diego, said Subordination Agreement and Amendment to the Deed of Trust will be on file in the office of the City Clerk. [Signature page to follow} Resolution No. 2013 — Page Two PASSED and ADOPTED this 17th day of Decemb 013. on Morrison, Chairman ATTEST: Leslie Deese, Secretary PROVED AS TO FORM: audia citua Silva CDC G I Counsel Passed and adopted by the Community Development Commission — Housing Authority of the City of National City, California, on December 17, 2013 by the following vote, to - wit: Ayes: Boardmembers Cano, Morrison, Natividad, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Chairman, Housing Authority LESLIE DEESE Secretary, Housing Authority By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2013-20 of the Community Development Commission — Housing Authority of the City of National City, California, passed and adopted on December 17, 2013. Secretary, Housing Authority By: Deputy