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06-1107_SJC HOUSING INVESTORS, L.P._Agr of Restr. Covenants 1st AmdFIRST AMERICAN TITLE INSURANCE This Document w electronically recorded by NATIONAL COMMERCIAL SERVANY DlorWalk B ' LOS ANGELES OFFICE Recorded in Official Records, Orange County RECORDING REQUESTED BY: Tom Daly, Clerk -Recorder AND WHEN RECORDED RETURN TO: p/�N11IA 1111 11111 18.00 San Juan Capistrano Redevelopment Agenc� 2007000280313 08:00am 05101/07 32400 Paseo Adelanto a 79 A23 5 0.00 d oo 0.00 0.00 12.00 0.00 0.00 0.00 San Juan Capistrano, California 92675 ) } Attention: Agency Secretary ) m 0 This document is exempt from payment of a recording fee pursuant to Government Code Section 27383 pyo. of o FIRST AMENDMENT TO AGREEMENT OF RESTRICTIVE COVENANTS Z AFFECTING REAL PROPERTY O m U ofZ of THIS FIRST AMENDMENT TO AGREEMENT OF RESTRICTIVE COVENANTS AFFECTING REAL PROPERTY (the "Amendment") is made as of March 20, 2007, by and between the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic, of the State of California ("Agency"), and SAN JUAN CAPISTRANO HOUSING INVESTORS, L.P., a California limited partnership ("Developer"). RECITALS A. The Agency and the Developer have entered into an Agreement of Restrictive Covenants Affecting Real Property (the "Agreement"), dated as of November 30, 1995, and recorded in the Official Records of Orange County, California on December 21, 1995 as Document No. 19950568793. The Agreement restricts the use of certain real property located in the City of San Juan Capistrano, California, which is improved with a 112 unit residential housing project for senior citizens (the "Property"), and imposes certain requirements with respect to the income of tenants, maximum rent to be charged, and the maintenance and operation of the Property. B. The Property is a "senior citizen housing development" within the meaning of California Civil Code Section 51.3. C. The Agency and the Developer now desire to modify the Agreement with respect to the age restrictions applicable to the residents of the Property. NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Agency and the Developer hereby amend the Agreement as follows: 1. Definition of Senior Citizen. Section 1.21 of the Agreement is hereby amended to read as follows: "'Senior Citizen' means a person who is 55 years of age or older, as defined in California Civil Code Section 51.3 and as more particularly provided in Section 4.3 of this Agreement." Page 1 of 5 2. Senior Citizen Occupancy Restrictions. Section 4.3 of the Agreement is hereby revised to read as follows: "During the term of this Agreement, and subject to the requirements of applicable law, Owner shall restrict occupancy of all completed residential units in the Project (exclusive of units for on-site management and maintenance personnel) to 'Senior Citizens' and 'Qualified Permanent Residents' (as those terms are or may be defined in California Civil Code Section 51.3). Should the foregoing restrictions be declared unlawful or unenforceable by the decision of any court of competent jurisdiction or other applicable law, then in such event, Developer shall limit the use of any such units to such class of persons as may be required by said court decision or law, and in so doing, Developer shall be deemed to be in compliance with the provisions of this Agreement." 3. No Other Modifications. Except as provided in this Amendment, no other provision of the Agreement shall be modified or amended by this instrument. IN WITNESS WHEREOF, Agency and Developer have executed this Amendment as of the date set forth above. SAN JUAN CAPISTRANO REDEVELOPMENT A CY Ma ielsen, Chair erson ATTEST: R. Monahan, Agency Secretary Page 2 of 5 0 0 SAN JUAN CAPISTRANO HOUSING INVESTORS, L.P., a California limited partnership LINC Housing Corporation, a California nonprofit public benefit corporation, General Partner H t r L. Johnson, President Page 3 of 5 PUBLIC AGENCY FORM OF ACKNOWLEDGEMENT State of California ) County of Orange ) ss. City of San Juan Capistrano ) (Gov't Code 40814 & Civil Code 118 1) On April 6, 2007 before me, Margaret R. Monahan, Agency Secretary, personally appeared Mark Nielsen, personally known to me to be the persons 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 persons, or the entity upon behalf of which the persons acted, executed the instrument. (SEAL) WITNESS my hand and official seal. Monahan, Agency Secretary OPTIONAL Capacity Claimed by Signers Chairman Title Signers are Representing San Juan Capistrano Community Redevelopment Agency Description of Attached Document First Amendment to Aareement --d--- Restrictive Covenants Affecting Real Property Title or Type of Document STATE OF'CALIFORNIA ) ss. COUNTY OF- lecS ) On l w -4z M, l�t� before me, /C d�i�7ES%!Gt F �/Ihf�1 Notary Public, (Print Name of Notary Public) personally appeared J!� /-- personally known to me or- 1,ro ed to pw on the hada of satisfactory exidenne to be the person(t) whose name(* is4ua subscribed to the within instrument and acknowledged to me that hefsheAhey executed the same in his/heAh#i-r- authorized capacity(ies); and that by his/herfdteir signature(&} on the instrument the persons} or the entity upon behalf of which the person(&) acted, executed the instrument. KAMISHA L. SMITH Commission. #1610062 Notary Public• California Los Angeles County Mr comm. Etpme Septtmhv 20, 2009 WITNESS my hand and official seal. OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ❑ Individual ❑ Corporate Officer ❑ Partner(s) ❑ Limited ❑ General ❑ Attomey-In-Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is represen Name Of Person(s) Or Error! Unknown document property name. could prevent DOCUMENT uue yr iyp�-- - Number Of Pages Date Of Documents Signer(s) Other Than Named Above 0 DISPOSITION AND DEVELOPMENT AGREEMENT by and between SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY and SEASONS SENIOR APARTMENTS II, L.P. SD Table of Contents 100. DEFINITIONS 40 200. SALE OF THE SITE TO OWNER ........................................................ 201. Agreement to Purchase and Sell; Purchase Price....................................................................6 202. Escrow..........................................................................................................................6 202.1 Costs of Escrow..............................................................................................................7 202.2 Escrow Instructions........................................................................................................7 202.3 Authority of Escrow Agent.............................................................................................7 202.4 Closing..........................................................................................................................8 202.5 Closing Procedure...........................................................................................................8 203. Review of Title.......................................................................................................................8 204. Title Insurance........................................................................................................................9 205. Conditions of Closing.............................................................................................................9 205.1 Agency's Conditions of Closing.....................................................................................9 205.2 Owner's Conditions of Closing....................................................................................10 206. Physical and Environmental Condition of the Site...............................................................11 206.1 As -Is Condition; Exceptions.........................................................................................11 206.2 Physical and Environmental Investigation and Testing of Site....................................11 206.3 Release of Agency........................................................................................................11 206.4 Owner Precautions After Closing.................................................................................12 206.5 Owner Indemnity..........................................................................................................12 300. AGENCY FINANCIAL ASSISTANCE....................................................................................12 301. Agency Loan........................................................................................................................12 302. Repayment of Agency Loan.................................................................................................12 303. Security for Agency Loan.....................................................................................................13 304. Disbursement of Agency Loan.............................................................................................13 305. Subordination........................................................................................................................13 306. Assumption........................................................................................................................13 400. DEVELOPMENT OF THE HOUSING PROJECT....................................................................13 401. Development of the Housing Project....................................................................................13 402. Development Plans...............................................................................................................14 403. Construction Contract...........................................................................................................14 404. Timing of Development of the Housing Project...................................................................14 405. City and Other Governmental Permits..................................................................................14 406. Certificate of Completion.....................................................................................................15 407. Insurance........................................................................................................................15 407.1 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance .... 15 407.2 Damage or Destruction Due to Cause Not Required to be Covered by Insurance ....... 16 408. Indemnity........................................................................................................................16 409. Entry by the Agency.............................................................................................................16 410. Compliance With Laws.........................................................................................................17 0 Table of Contents (continued) 0 411. Prevailing Wages.................................................................................... 500. FINANCING OF THE DEVELOPMENT OF THE HOUSING PROJECT Page 17 18 501. Agency Approval of Financing Plan.....................................................................................18 502. Financing Sources.................................................................................................................18 503. Tax Credit Equity..................................................................................................................19 504. Required Submissions...........................................................................................................19 505. Holder Performance of Development of the Housing Project..............................................19 506. Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure ...........................20 507. Failure of Holder to Complete Development.............................................................:..........20 508. Right of Agency to Cure Mortgage or Deed of Trust Default..............................................21 509. Subordination of Affordability Covenants............................................................................21 600. OPERATION OF HOUSING 601. Number of Affordable Units.................................................................................................21 602. Duration of Affordability Requirements...............................................................................22 603. Selection of Tenants..............................................................................................................22 604. Household Income Requirements.........................................................................................22 605. Affordable Rent....................................................................................................................22 606. Marketing Program...............................................................................................................22 607. Design and Occupancy of Senior Units................................................................................23 608. Relationship to Tax Credit Requirements.............................................................................23 609. Maintenance........................................................................................................................23 610. Management Plan; Property Management............................................................................23 611. Capital Reserve Requirements..............................................................................................24 612. Operating Budget and Reserve.............................................................................................24 613. Social Services......................................................................................................................25 614. Prohibited Uses.....................................................................................................................25 615. Non -Discrimination Covenants............................................................................................25 616. Monitoring and Recordkeeping............................................................................................26 617. Regulatory Agreement..........................................................................................................26 618. Inclusionary Housing Requirements.....................................................................................26 700. DEFAULT AND REMEDIES ............... 701. Events of Default..................................................................................................................27 702. Remedies........................................................................................................................27 703. Force Majeure.......................................................................................................................27 704. Termination by Agency........................................................................................................27 705. Termination by the Owner .................. 706. Attorneys' Fees ................... 707. Remedies Cumulative......... 708. Waiver of Terms and Conditions....... .............................................................. 28 ..............................................................28 0 0 Table of Contents (continued) Page 800. GENERAL PROVISIONS..........................................................................................................29 801. Time........................................................................................................................29 802. Notices........................................................................................................................29 803. Representations and Warranties of Owner............................................................................29 804. Agency Representations........................................................................................................30 805. Limitation Upon Change in Ownership, Management and Control of the Owner...............30 806. Non -Liability of Officials and Employees of Agency..........................................................32 807. Relationship Between Agency and Owner...........................................................................32 808. Agency Approvals and Actions............................................................................................32 809. Counterparts........................................................................................................................32 810. Integration........................................................................................................................32 811. Real Estate Brokerage Commission......................................................................................33 812. Titles and Captions...............................................................................................................33 813. Interpretation........................................................................................................................33 814. No Waiver........................................................................................................................33 815. Modifications........................................................................................................................33 816. Severability........................................................................................................................33 817. Computation of Time ............................................................................................................33 818. Legal Advice........................................................................................................................33 819. Time of Essence............................................................................:.......................................34 820. Cooperation........................................................................................................................34 821. Conflicts of Interest...............................................................................................................34 M 0 0 DISPOSITION AND DEVELOPMENT AGREEMENT THIS DISPOSITION AND DEVELOPMENT AGREEMENT (the "Agreement") is entered into as of November 7, 2006 by and between the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership (the "Owner"). RECITALS A. The Agency has entered into a Purchase Agreement and Escrow Instructions with Ortega Land Company, LLC, dated November 7, 2006 (the "Purchase Agreement"), to acquire approximately 1.2 acres of real property located at the northwest comer of Rancho Viejo Road and Paseo Espada in the City of San Juan Capistrano (the "Site"). B. The Agency has established a Low and Moderate Income Housing Fund (the "Housing Fund") for the purpose of increasing, improving and preserving the community's supply of housing for low and moderate income persons at an affordable housing cost. The Site has been, or will be, purchased with Housing Fund money. C. By this Agreement, and subject to the terms and conditions herein, the Agency desires to acquire and convey the Site to the Owner, and to provide financial assistance to Owner in the form of a loan (the "Agency Loan") for the cost of the acquisition of the Site and a portion of the cost of development of an approximately thirty-eight (38) unit rental senior housing development thereon (the "Housing Project"). The Owner desires to acquire the Site with the assistance of the Agency and the Agency Loan, and to construct and operate the Housing Project thereon. D. It is the intent of the parties to maximize the leverage of Agency funds by making every effort to secure sources of non -local subsidies for the Housing Project. Accordingly, this Agreement requires the Owner to attempt to obtain federal 9% Tax Credits for the Housing Project (and provides for the parties to determine whether to pursue an alternate financing strategy if such federal 9% Tax Credits are not available). In addition to Tax Credits, the Agreement requires the Owner to also diligently pursue an allocation of funding for the Housing Project from the County of Orange and the Affordable Housing Program of the Federal Home Loan Bank. E. The conveyance of the Site, the making of the Agency Loan and the development and operation of the Housing Project pursuant to this Agreement is in the vital and best interest of the City and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. The income and rent restrictions provided for hereunder are intended to satisfy the requirements of Health and Safety Code Section 33413(b). NOW, THEREFORE, the parties hereto agree as follows: 100. DEFINITIONS "Act" means the Community Redevelopment Law of the State of California, Health and Safety Code Section 33000, et seq., as the same may from time to time be amended. "ADA" shall mean the Americans with Disabilities Act of 1990,42 U.S.C. § 12101, et seq., 0 0 as the same may from time to time be amended "Affordability Period" shall mean the duration of the affordable housing requirements which are set forth in this Agreement and the Regulatory Agreement, as set forth in Section 602 hereof. "Affordable Rent" shall have the meaning set forth in Health and Safety Code Section 50053, as further defined in Section 605 hereof. "Agency" means the San Juan Capistrano Redevelopment Agency, a public body, corporate and politic. "Agency Loan" means the loan from the Agency to the Owner pursuant to Section 301 hereof. "Agreement" means this Disposition and Development Agreement between Agency and the Owner. "Annual Project Revenue" shall mean all gross income and all revenues of any kind from the Housing Project in a calendar year, including without limitation, Rent, Section 8 housing assistance payments, if any, late charges, vending machine income, and any other revenues of whatever kind or nature from the Housing Project, except that interest on security deposits and required reserves, and the proceeds of loans, refinancings, condemnation, insurance claims, and partner capital contributions, shall not be considered Annual Project Revenue. "Best Knowledge" means the actual knowledge of the party's employees and agents who manage the Site or have participated in the preparation of this Agreement, and all documents and materials in the possession of such party, and shall not impose a duty of investigation. "Capital Replacement Reserve" means the account which is described in Section 611 hereof. "Certificate of Completion" means the document which evidences the Owner's satisfactory completion of the development of the Housing Project, as set forth in Section 406 hereof, substantially in the form of Attachment No. 9 hereto. "City" means the City of San Juan Capistrano, California, a California municipal corporation. The City is not a party to this Agreement and shall have no obligations hereunder. "Conditions Precedent" means the conditions precedent to the conveyance of the Site, as set forth in Sections 205.1 and 205.2 hereof. "Consumer Price Index" shall mean the Consumer Price Index published by the Bureau of Labor Statistics of the U.S. Department of Labor for Urban Wage Earners and Clerical Workers, Los Angeles -Riverside -Orange County, California (1982-84=100) "All Items." In the event the compilation and/or publication of the Consumer Price Index shall be transferred to any other governmental department, bureau or agency or shall be discontinued, then the index most nearly the same as the Consumer Price Index shall be used to make such calculation as determined by the Agency. "County" shall mean the County of Orange, California. 2 0 0 "Debt Service" means regularly scheduled payments of principal and interest made in a calendar year pursuant to the approved financing obtained for the development and ownership of the Housing Project which is senior in lien priority to the Agency Loan, but excluding payments made pursuant to the Promissory Note. "Default" means the failure of a party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 701 hereof. "Deferred Developer Fees" shall mean any deferred developer fee allowable under the financing which has been approved by the Agency pursuant to Section 501 hereof. "Developer" means Simpson Housing Solutions, LLC, a Colorado limited liability company, and its permitted successors and assigns. "Development Plans" means those plans and drawings to be submitted to City for its approval, pursuant to Section 402 hereof. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders, and decrees of the United States, the state, the County, the City, or any other political subdivision in which the Housing Project is located, and of any other political subdivision, agency, or instrumentality exercising jurisdiction over the Owner or the Housing Project. "Hazardous Materials" means any substance, material, or waste which is or becomes regulated by any local governmental authority, the County, the State of California, regional governmental authority, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903) or (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq. Notwithstanding the foregoing, "Hazardous Materials" shall not include such products in quantities as are customarily used in the construction, maintenance, development or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Housing Project, including without limitation alcohol, aspirin, tobacco and saccharine. "Housing Fund" means the Agency's Low and Moderate Income Housing Fund, established 0 0 pursuant to Health and Safety Code Section 33334.3 "Housing Project" means the multifamily apartment complex to be developed and operated by the Owner as provided herein. "Housing Units" means the individual apartment units within the Housing Project to be developed and operated by the Owner. "Legal Description" means the description of the Site which is attached hereto as Attachment No. I and incorporated herein. "Lender" means each of the responsible financial lending institutions or persons or entities approved by the Agency in its reasonable discretion, which provide construction loans or permanent loans for the development or operation of the Housing Project, as set forth in Section 501 hereof. "Lender's Title Policy" means the policy of title insurance to be issued to the Agency pursuant to Section 204 hereof. "Lower Income Household" shall mean a household earning not greater than that percentage of Orange County area median income, adjusted for household size, which is set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50079.5. "Management Plan" is defined in Section 610 hereof. "Marketing Program" is defined in Section 606. "Notice" shall mean a notice in the form prescribed by Section 802 hereof. "Operating Expenses" shall mean actual, reasonable and customary (for comparable affordable senior rental housing developments in Orange County) costs, fees and expenses directly incurred, paid, and attributable to the operation, maintenance and management of the Housing Project in a calendar year, which are in accordance with the Operating Budget approved by the Agency pursuant to Section 612 hereof, including: painting, cleaning, repairs, alterations, landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal property taxes, assessments, insurance, security, advertising and promotion, janitorial services, cleaning and building supplies, purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings which are not paid from the capital replacement reserve, fees and expenses of property management, fees and expenses of accountants, attorneys and other professionals, the cost of social services in accordance with Section 613 hereof, repayment of any completion or operating loans made to Owner by its partners or the Developer, and other actual, reasonable and customary operating costs and capital costs which are directly incurred and paid by the Owner, but which are not paid from the Operating Reserve or other reserve accounts. The Operating Expenses shall not in any event include expenses not related to the operation of the Housing Project, including without limitation, depreciation, amortization, and accrued principal and interest expense on deferred payment debt. "Operating Reserve" means the account which is described in Section 612 hereof. "Outside Date" is defined in Section 202.4 hereof. El 0 0 "Owner" means Seasons Senior Apartments II, L.P., a California limited partnership, and its permitted successors and assigns. "Owner's Title Policy" means the policy of title insurance to be issued to the Owner pursuant to Section 204 hereof. "Partnership Agreement" means the agreement which sets forth the terms of the limited partnership formed by Owner to be the assignee of Owner's interests hereunder, as such agreement may be amended from time to time. "Property Manager" means the manager of the Housing Project, as set forth in Section 610 hereof. "Purchase Agreement" means the Purchase Agreement and Escrow Instructions between the Agency and Ortega Land Company, LLC, dated November 7, 02006; as such agreement may be amended. "Purchase Price" means the price to be paid by Owner for the Conveyance of the Site, as provided in Section 201 hereof. "Qualified Permanent Residents" is defined in Section 607. "Redevelopment Plan" means the redevelopment plan for the Agency's Central Redevelopment Project, as it may be amended from time to time. "Regulatory Agreement" shall mean the Regulatory Agreement which is to be recorded as an encumbrance to the Housing Project in a form which is attached hereto as Attachment No. 10 and incorporated herein, in accordance with Section 617 hereof. "Rent" shall mean the total of monthly payments by the tenants of a Housing Unit for use and occupancy for the Housing Unit and facilities associated therewith, including a reasonable allowance for utilities for an adequate level of service, as defined in 25 California Code of Regulations §6918. "Reserve Deposits" shall mean any payments to the Capital Replacement Reserve account and Operating Reserve account pursuant to Sections 611 and 612 hereof. "Residual Receipts" shall mean, for each calendar year, Annual Project Revenue less the sum of (i) Operating Expenses, (ii) Debt Service, (iii) Reserve Deposits, (iv) Deferred Developer Fees, and (v) a partnership management fee to the managing general partner of Owner, and/or a general partner asset management fee payable to one or more of the general partners of the Owner, and/or a limited partner asset management fee payable to one or more of the limited partners of Owner, and an annual audit fee, in such amounts which are set forth in the Financing Plan which is approved by the Agency; provided, however, that if such calculation results in a negative number, Residual Receipts shall be zero for that year. "Schedule of Performance" means that certain Schedule of Performance attached hereto as Attachment No. 7 and incorporated herein, which sets forth the time for performing the various obligations of this Agreement. 0 0 "Scope of Development" means that certain Scope of Development attached hereto as Attachment No. 8 and incorporated herein, which describes the scope, amount, and quality of the development of the Housing Project by the Owner pursuant to the terms and conditions of this Agreement. "Senior Citizens" is defined in Section 607. "Site" means that certain approximately 1.2 acres of real property located at the northwest corner of Rancho Viejo Road and Paseo Espada in the City, as described in the Legal Description and depicted on the Site Map. "Site Map" means the map of the Housing Project which is attached hereto as Attachment No. 2 and incorporated herein. "Substantial Damage" is defined in Section 407.2 hereof. "Tax Credits" shall mean Low Income Housing Tax Credits granted pursuant to Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Sections 50199, et seg. "Tax Credit Rules" means Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq., as the foregoing may be amended from time to time, and the rules and regulations implementing the foregoing. "Tax Credit Regulatory Agreement" shall mean the regulatory agreement which may be required to be recorded against the Housing Units with respect to the issuance of Tax Credits, as set forth in Section 608 hereof. "TCAC" means the California Tax Credit Allocation Committee, the allocating agency for Tax Credits in California. "Very Low Income Household" shall mean a household earning not greater than the applicable percentage of Orange County area median income, adjusted for household size, as set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50105. 200. SALE OF THE SITE TO OWNER 201. Agreement to Purchase and Sell; Purchase Price. The Agency agrees to acquire the Site pursuant to the terms of the Purchase Agreement and to sell the Site to the Owner, and the Owner agrees to purchase the Site from the Agency, in accordance with and subject to all of the terms, covenants, and conditions of this Agreement, for the sum of Two Million Five Hundred Ten Thousand Dollars ($2,510,000) (the "Purchase Price"). The Purchase Price is equal to or greater than the fair market value of the Site, as determined by an appraisal performed by a certified appraiser. 202. Escrow. Within the time set forth in the Schedule of Performance, the Parties shall open escrow ("Escrow") with First American Title Company in its Los Angeles County office or with another escrow company mutually satisfactory to both Parties (the "Escrow Agent'). 6 0 0 202.1 Costs of Escrow. Owner and Agency shall each pay their portion of the premium for the Title Policies as set forth in Section 204 hereof, the Agency shall pay the documentary transfer taxes due with respect to the Conveyance of the Site, and the parties shall each pay one-half of all other usual fees, charges, and costs which arise from Escrow. 202.2 Escrow Instructions. This Agreement constitutes the joint escrow instructions of Owner and Agency, and Escrow Agent to whom these instructions are delivered is hereby empowered to act under this Agreement. The Parties hereto agree to execute and deliver such documents (in recordable form as required), pay or deposit such funds, and to do all such acts consistent with their respective obligations hereunder as may be reasonably necessary to close this Escrow in the shortest possible time, and in any event on or before the date set forth in the Schedule of Performance. All funds received in the Escrow shall be deposited with other escrow funds in a general escrow account(s) and may be transferred to any other such escrow trust account in any State or National Bank doing business in the State. All disbursements shall be made by check from such account. If in the opinion of Escrow Agent or either Party it is necessary or convenient in order to accomplish the Closing of this transaction, such Party may require that the Parties sign supplemental escrow instructions; provided that if there is any inconsistency between this Agreement and the supplemental escrow instructions, then the provisions of this Agreement shall control. The Parties agree to execute such other and further documents as may be reasonably necessary, helpful or appropriate to effectuate the provisions of this Agreement. Escrow Agent is instructed to release Agency's and Owner's escrow closing statements to both Parties. 202.3 Authority of Escrow Agent. Escrow Agent is authorized to, and shall: (a) Pay and charge the Agency and Owner for their portions of the premium of the Title Policies and any endorsements thereto as set forth in Section 204 and any amount necessary to place title to the Site in the Condition of Title provided for in Section 203 of this Agreement. (b) Pay and charge Agency and Owner for any escrow fees, charges, and costs payable in accordance with Section 202.1 of this Agreement. (c) Disburse funds and deliver and record the Grant Deed when both the Owner's Conditions Precedent and the Agency's Conditions Precedent have been fulfilled or waived in writing by the benefited Party or Parties. (d) Do such other actions as necessary, including, without limitation, obtaining the Title Policies, to fulfill its obligations set forth in this Agreement and to close the transactions contemplated hereby. (e) Within the discretion of Escrow Agent, direct the Agency and the Owner to execute and deliver any instrument, affidavit, and statement, and to perform any act reasonably necessary to comply with the provisions of FIRPTA and any similar state act and regulation promulgated thereunder. Agency agrees to execute a Certificate of Non -Foreign Status by individual transferor and/or a Certification of Compliance with Real Estate Reporting Requirement of the 1986 Tax Reform Act as may be required by Escrow Agent, on the form to be supplied by Escrow Agent. (f) Prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099-5 form, and be responsible for withholding taxes, if any such forms are provided for or required by law. 0 0 202.4 Closing. The Conveyance of the Site shall close (the "Closing") within thirty (30) business days after the Parties' satisfaction (or written waiver, as the case may be) of all of the Agency's and Owner's Conditions Precedent to Closing as set forth in Section 205 hereof, and in no event later than the latest date for closing applicable to the Tax Credit allocation for the Housing Project, if an allocation is obtained (the "Outside Date"). The "Closing" shall mean the time and day the Grant Deed is filed for record with the County Recorder. The "Closing Date" shall mean the day on which the Closing occurs. follows: 202.5 Closing Procedure. Escrow Agent shall close the Escrow for the Site as (a) Record the Grant Deed, Deed of Trust and Regulatory Agreement; (b) Deliver to the Agency the Promissory Note; (c) Deliver and record any loan or financing documents as may be requested by the Owner or its construction lender (if applicable); (d) Instruct the Title Company to deliver the Owner's Title Policy to the Owner and the Lender's Title Policy to the Agency; (e) File any informational reports required by Internal Revenue Code Section 6045(e), as amended, and any other applicable requirements; and (f) Deliver the FIRPTA Certificate, if any, to the Owner; and (g) Forward to both the Owner and the Agency a separate accounting of all funds received and disbursed for each Party and copies of all executed and recorded or filed documents deposited into Escrow, with such recording and filing date and information endorsed thereon. 203. Review of Title. Within the time set forth in the Schedule of Performance, the Agency shall cause First American Title Company or another title company mutually agreeable to both parties (the "Title Company"), to deliver to the Owner a preliminary title report or reports (collectively, the "Title Report") with respect to the title to the Site, together with legible copies of the documents underlying the exceptions ("Exceptions") set forth in the Title Report. The Owner shall have the right to reasonably approve or disapprove the Exceptions; provided, however, that the Owner hereby approves the following Exceptions: (a) The Redevelopment Plan, and (b) The lien of any non -delinquent property taxes and assessments (to be prorated as of the Closing Date). The Owner shall have thirty (30) days from the date of its receipt of the Title Report to give written Notice to the Agency and Escrow Agent of the Owner's approval or disapproval of any of such Exceptions set forth in the Title Report, within its reasonable discretion. Owner's failure to provide Notice of its approval of the Title Report within such time limit shall be deemed approval of the Title Report. If the Owner delivers Notice to the Agency of its disapproval of any Exceptions in the Title Report, the Agency shall have the right, but not the obligation, to elect to remove any disapproved Exceptions within thirty (30) days after receiving written Notice of the Owner's disapproval or to deliver Notice to the Owner providing assurances satisfactory to the Owner within 0 0 said time period that such Exception(s) will be removed on or before the Closing. If the Agency cannot or does not elect to remove any of the disapproved Exceptions within that period, the Owner shall have fifteen (15) days after the expiration of such thirty (30) day period to either give the Agency written Notice that the Owner elects to proceed with the purchase of the Site subject to the disapproved Exceptions or to give the Agency written Notice that the Owner elects to terminate this Agreement and the Owner's failure to give timely written Notice shall be deemed as an election to terminate this Agreement. Fee simple title subject only to the Exceptions to title approved by the Owner as provided herein shall hereinafter be referred to as the "Condition of Title." The Owner shall have the right to approve or disapprove any further Exceptions reported by the Title Company after the Owner has approved the Condition of Title for the Site (which are not created by the Owner). The Agency shall not voluntarily create any new exceptions to title following the Date of Agreement. 204. Title Insurance. Concurrently with recordation of the Grant Deed conveying title to the Site to the Owner, the Title Company shall (a) issue to the Owner, at the Owner's election, a CLTA or ALTA owner's policy of title insurance (the "Owner's Title Policy"), together with such endorsements as are reasonably requested by the Owner, insuring that the title to the conveyed Site is vested in the Owner in the Condition of Title approved by the Owner as provided in Section 203 of this Agreement, and (b) issue to the Agency an ALTA lender's policy of title insurance, together with such endorsements as are reasonably requested by the Agency (the "Lender's Title Policy") insuring the priority of the lien of the Agency's Deed of Trust (the Owner's Title Policy and the Lender's Title Policy are referred to collectively herein as the "Title Policies"). The Title Company shall provide the Agency with a copy of the Title Policies. The Agency shall pay for the portion of the Owner's Title Policy equal to the premium for a CLTA owner's policy in the amount of the Purchase Price, and Owner shall pay the premium for the Lender's Title Policy, any additional costs of the Owner's Policy, including the cost of any endorsements thereto, and the cost of a survey (if required by the Owner and/or the Title Company). 205. Conditions of Closing. The Closing of the Conveyance of the Site is conditioned upon the satisfaction (or written waiver by the benefited Party or Parties in its or their sole and absolute discretion) of the following terms and conditions within the times designated below: 205.1 Agency's Conditions of Closing. The Agency's obligation to proceed with the Closing of the Conveyance of the Site is subject.to the fulfillment or waiver by Agency of each and all of the conditions precedent (a) through (i), inclusive, described below (the "Agency's Conditions Precedent"), which are solely for the benefit of the Agency, and which shall be fulfilled or waived by the time periods provided for herein (provided, however, that if the reason for the failure of any of the following conditions is due to an Agency Default, such failure shall not be deemed to constitute the failure of the Agency's Conditions Precedent): (a) No Default. At the Closing, the Owner shall not be in material Default in any of its obligations set forth in this Agreement and all representations and warranties of Owner contained herein shall be true and correct in all material respects. (b) Execution of Documents. The Owner shall have executed the Promissory Note, Deed of Trust, Regulatory Agreement and any other documents required to be executed by the Owner hereunder, and delivered such documents into Escrow. (c) Payment of Funds. Prior to the Close of Escrow, the Owner shall have paid the cash portion of the closing costs that is the Owner's responsibility. 0 0 0 (d) Lender's Title Policy. The Title Company shall have unconditionally committed to issue the Lender's Title Policy to the Agency, in accordance with Section 204 hereof. (e) Design Approvals. Owner shall have obtained approval of the Development Plans required for the Housing Project as described in Section 402 hereof. (f) Land Use Approvals. Owner shall have obtained approval of each and all of the land use approvals for the Housing Project and the Site as described in Section 405 hereof. (g) Construction Contract. Owner shall have provided to the Agency a signed copy of the contract between the Owner and one or more general contractors for the construction of the development, certified by the Owner to be true and correct copies thereof, and the Agency shall have approved such contractor or contractors. (h) Insurance. The Owner shall have provided proof of insurance as required by Section 407 hereof. (i) Financing. The Agency shall have approved the Financing Plan as provided in Section 501 hereof, the construction financing and equity contributions which are required for the acquisition of the Site and the development of the Housing Project shall be available to the Owner, and all Tax Credits required for the development of the Housing Project shalt have been allocated. To the extent said financing consists of a third party loan or loans, said loan or loans have closed and funded or shall be ready to close and fund upon the Closing. 205.2 Owner's Conditions of Closing. Owner's obligation to proceed with the purchase of the Site is subject to the fulfillment or waiver by Owner of each and all of the conditions precedent (a) through (g), inclusive, described below (the "Owner's Conditions Precedent"), which are solely for the benefit of Owner, and which shall be fulfilled or waived by the time periods provided for herein (provided, however, that if the reason for the failure of any of the following conditions is due to a Owner Default, such failure shall not be deemed to constitute the failure of the Owner's Conditions Precedent): (a) No Default. At the Closing, the Agency shall not be in material Default in any of its obligations set forth in this Agreement and all representations and warranties of Agency contained herein shall be true and correct in all material respects. (b) Execution of Documents. The Agency shall have executed the Grant Deed and the Regulatory Agreement and any other documents required to be executed by the Agency hereunder, and delivered such documents into Escrow. (c) Owner's Title Policy. The Title Company shall have unconditionally committed to issue the Owner's Title Policy to the Owner, in accordance with Section 204 hereof. (d) Design Approvals. Owner shall have obtained approval of the Development Plans required for the Housing Project as described in Section 402 hereof. (e) Land Use Approvals. Owner shall have obtained approval of each and all of the land use approvals for the Housing Project and the Site as described in Section 405 hereof. (f) Environmental Condition. Owner shall not have elected to terminate this Agreement due to the environmental condition of the Site pursuant to Section 206 hereof. 10 0 0 (g) Financing. The Owner shall have approved the amount of the Agency Loan as determined in the Financing Plan, construction financing and equity contributions which are required for the acquisition of the Site and the development of the Housing Project shall be available to the Owner, and all Tax Credits required for the development of the Housing Project shall have been allocated. To the extent said financing consists of a third party loan or loans, said loan or loans have closed and funded or shall be ready to close and fund upon the Closing. 206. Physical and Environmental Condition of the Site. 206.1 As -Is Condition; Exceptions. Except as set forth herein, the Site shall be conveyed to the Owner in an "as is" physical and environmental condition, with no warranty, express or implied, by the Agency as to the condition of any existing improvements, the soil, its geology, the presence of known or unknown faults or Hazardous Materials or toxic substances, and it shall be the sole responsibility of the Owner at its expense to investigate and determine the physical and environmental conditions. If the physical or environmental condition is not in all respects entirely suitable for the use or uses to which the Site will be put, the Owner may terminate this Agreement pursuant to Section 704 hereof. If the Owner approves the physical and environmental condition of the Site and accepts the Conveyance of the Site, then it shall be the sole responsibility and obligation of the Owner to take such action as may be necessary to place the physical and environmental conditions of the Site in a condition entirely suitable for the purposes set forth in this Agreement. 206.2 Physical and Environmental Investigation and Testing of Site. The Owner shall have the right, at its sole cost and expense, subject to the requirements of the Purchase Agreement, to engage its own environmental consultant (the "Environmental Consultant") and other consultants to make such investigations of the Site as the Owner deems necessary, including any "Phase I" and/or "Phase II" environmental investigations of the Site, soils, geotechnical and other testing of the Site, and the Agency shall promptly be provided a copy of all reports and test results provided to the Owner by the Environmental Consultant (collectively, the "Environmental Report"). The Owner shall reasonably approve or disapprove of the physical and environmental condition of the Site within the time set forth in the Schedule of Performance. The Owner's failure to deliver written Notice of its approval within such time limit shall be deemed disapproval of the physical and environmental condition of the Site. 206.3 Release of Agency. The Owner hereby waives, releases and discharges forever the Agency and the City, and their respective employees, officers, agents and representatives, from all present and future claims, demands, suits, legal and administrative proceedings and from all liability for damages, losses, costs, liabilities, fees and expenses, present and future, arising out of or in any way connected with the physical and environmental condition of the Site, any Hazardous Materials on or under the Site, or the existence of Hazardous Materials contamination due to the generation of Hazardous Materials from the Site, however they came to be placed there, except that arising out of the negligence or misconduct of the Agency or City or their respective employees, officers, agents or representatives. The Owner acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." 11 0 As such relates to this Section 206.3, the Owner hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code. 206.4 Owner Precautions After Closing. Upon the Closing, the Owner shall take all necessary but reasonable precautions to prevent the release into the environment of any Hazardous Materials which are located in, on or under the Site which have been conveyed to the Owner, except as may be provided otherwise by applicable Governmental Requirements. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, the Owner shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. 206.5 Owner Indemnity. Upon the Closing, the Owner agrees to indemnify, defend and hold the Agency harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, reasonable attorneys' fees), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from the Site which occurs during the period of the Owner's ownership thereof, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Site which occurs during the period of the Owner's ownership of the Site. This indemnity shall include, without limitation, any damage, liability, fine, penalty, or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. At the request of the Owner, the Agency shall cooperate with and assist the Owner in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that the Agency shall not be obligated to incur any expense in connection with such cooperation or assistance. 300. AGENCY FINANCIAL ASSISTANCE 301. Agency Loan. The Agency hereby agrees to loan to Owner an amount not less than Three Million Three Hundred Ninety -Four Thousand Dollars ($3,394,000) (the "Agency Loan"), subject to the terms and conditions set forth in this Agreement, and subject further to the terms and conditions set forth within the documents and instruments executed by the Owner in connection with this transaction. The exact amount of the Agency Loan shall be reasonably determined by the Agency in accordance with an economic analysis of the Housing Project to be performed by the Agency prior to Closing in connection with the Agency's approval of the Financing Plan, as set forth in Section 501 hereof. In no event, however, shall the Agency be obligated to approve an Agency Loan amount of more than Four Million Nine Hundred Thousand Dollars ($4,900,000). The amount of the Agency Loan may also be increased as provided in Section 411 hereof. The Agency shall not be obligated to loan more of its Low and Moderate Income Housing Funds than the amount permitted pursuant to Health and Safety Code Section 33334.4(b). Any additional funds necessary to make the Agency Loan shall be provided from other funds of the Agency, or grants which the Agency receives. 302. Repayment of Agency Loan. The Owner's obligation to repay the Agency Loan shall be set forth in the Promissory Note in the form of Attachment No. 4 attached hereto, which is 12 incorporated herein. The Promissory Note shall be for a term of fifty-five (55) years from the date of the City's issuance of a certificate of occupancy for the Housing Project, and shall bear interest at the rate of three percent (3%) per annum, compounded annually, commencing upon the date of the Promissory Note. The Promissory Note shall be payable from fifty percent (501/6) of the "Residual Receipts" of the Housing Project, after payment of (i) Operating Expenses, (ii) Debt Service which is senior to the Promissory Note, (iii) deposits to required reserve accounts ("Reserve Deposits"), (iv) Deferred Developer Fee payments which are paid within ten years of completion of construction of the Housing Project, (v) a partnership management fee to the managing general partner of Owner, and/or a general partner asset management fee payable to one or more of the general partners of the Owner, and/or a limited partner asset management fee payable to one or more of the limited partners of Owner, and an annual audit fee, in such amounts which are set forth in the Financing Plan which is approved by the Agency, until the Promissory Note has been paid in full; provided, however, that if such calculation results in a negative number, Residual Receipts shall be zero for that year. In the event that the Owner obtains other approved financing from the County or other sources which also required payment from Residual Receipts, the Agency shall negotiate with such other lender to allocate the Residual Receipts to repayment of both loans in an amount proportionate to the relative amount of such loans or in another equitable manner mutually agreeable to the parties. The Owner shall annually, on or before March 31 of each year, commencing in the year after the issuance of the certificate of occupancy for the Housing Project, submit to the Agency a Residual Receipts Report, in the form attached hereto as Attachment No. 6 and incorporated herein, which shall provide the basis for the Owner's payment of Residual Receipts to the Agency. The Note shall be non-recourse to the Owner. 303. Security for Agency Loan. The Promissory Note shall be secured by a Deed of Trust to be recorded as an encumbrance to the Site owned by the Owner substantially in the form of Attachment No. 5 attached hereto, which is incorporated herein. 304. Disbursement of Agency Loan. The proceeds of the Agency Loan shall be disbursed first for the payment of the Purchase Price of the Site, second to pay for the cost of governmental permits and fees required in connection with the construction of the Housing Project, and third to pay for or reimburse the Owner for Owner's actually incurred predevelopment expenses, including architectural services, environmental studies, traffic studies, land appraisal, and land acquisition consultant fees, and governmental fees and permit costs, which shall be disbursed concurrently with the Agency's Conveyance of the Site to the Owner. In the event that there are any Agency Loan proceeds remaining after payment of the foregoing, such proceeds shall be disbursed for costs of construction of the Housing Project, conditioned upon delivery of contractor invoices to Agency and Agency approval of the items of construction for which such disbursement is requested. 305. Subordination. The Deed of Trust shall be made subordinate to the deed of trust for the primary construction financing which is approved by the Agency pursuant to Section 501 hereof. The lien priority of the Agency Deed of Trust and the other financing shall be as set forth in the Financing Plan which is approved by the Agency. 306. Assumption. The Promissory Note shall not be assumable by successors and assigns of Owner except for those successors approved or permitted pursuant to Section 805 hereof. 400. DEVELOPMENT OF THE HOUSING PROJECT 401. Development of the Housing Project. The Owner agrees to construct and develop the Housing Project substantially in accordance with the Scope of Development which is attached hereto as Attachment No. 8 and incorporated herein, all applicable local codes, development 13 0 C� standards, ordinances and zoning ordinances in effect at the time of project completion, and the Development Plans which are approved by the City pursuant to Section 402 hereof. The Housing Project shalt generally consist of a multifamily apartment complex with thirty-eight (38) apartment units, a thirty-eight (38) space off-street parking lot, and associated landscaping and common areas. Any funds necessary to complete the development of the Housing Project shall be obtained by the Owner, in accordance with the Financing Plan approved by the Agency hereunder. 402. Development Plans. The Owner shall submit to the City such plans, materials and drawings describing the development of the Housing Project (collectively, the "Development Plans") which may be required by the City with respect to any permits and entitlements which are required to be obtained to develop the Housing Project. Owner, on or prior to the date set forth in the Schedule of Performance (subject to force majeure pursuant to Section 703 hereof), shall further submit to the City such plans for the development of the Housing Project as required by the City in order for Owner to obtain building permits for such development work. Within thirty (30) days after the City's disapproval or conditional approval of such plans, Owner shall revise the portions of such plans identified by the City as requiring revisions and resubmit the revised plans to the City. The City shall have all rights to review and approve or disapprove all Development Plans and other required submittals in accordance with the City Municipal Code, and nothing set forth in this Agreement shall be construed as the City's approval of any or all of the Development Plans. Any and all change orders or revisions required by the City and its inspectors which are required under the Municipal Code and all other applicable Uniform Codes (e.g. Building, Plumbing, Fire, Electrical, etc.) and under other applicable laws and regulations shall be included by the Owner in its Development Plans and other required submittals and shall be completed during the development of the Housing Project. The Agency and the City shall not be responsible either to the Owner or to third parties in any way for any defects in the Development Plans, nor for any structural or other defects in any work done according to the approved Development Plans, nor for any delays reasonably caused by the review and approval processes established by this Section 402. 403. Construction Contract. Owner shall enter into a contract with one or more general contractors reasonably acceptable to the Agency for the construction of the Housing Project. The construction contract(s) shall be reasonably acceptable to the Agency. The Agency's approval of the general contractor and the construction contract shall not be unreasonably withheld, conditioned or delayed. 404. Timing of Development of the Housing Project. The Owner hereby covenants and agrees to commence the development of the Housing Project within the time set forth in the Schedule of Performance, which is attached hereto as Attachment No. 7 and incorporated herein (subject to force majeure pursuant to Section 703 hereof). The Owner further covenants and agrees to diligently prosecute to completion the development of the Housing Project in accordance with the approved Development Plans and to file a Notice of Completion pursuant to California Civil Code Section 3093 within the time set forth in the Schedule of Performance. 405. City and Other Governmental Permits. Before commencement of the development of the Housing Project, the Owner shall secure or cause its contractor to secure any and all permits and land use entitlements which may be required by the City or any other governmental agency affected by such construction, including without limitation a General Plan Amendment to affordable family/senior housing designation, Architectural Control application, Zone Variance, and grading and building permits. The Owner shall pay all necessary fees and timely submit to the City final drawings with final corrections to obtain such permits, and the staff of the Agency will, without obligation to incur liability or expense therefor, use its best efforts to expedite the City's issuance of building permits and certificates of occupancy for construction that meets the requirements of the 14 City Code, and all other applicable laws and regulations. 406. Certificate of Completion. Promptly after the completion of the development of the Housing Project in conformity with this Agreement (as reasonably determined by the Agency Executive Director or his or her designee), upon the written request of the Owner, the Agency shall furnish the Owner with a Certificate of Completion (substantially in the form attached hereto as Attachment No. 9) which evidences and determines the satisfactory completion of the development of the Housing Project in accordance with this Agreement. The issuance and recordation of the Certificate of Completion with respect to the Housing Project shall not supersede, cancel, amend or limit the continued effectiveness of any obligations relating to the maintenance, or uses, or payment of monies, or any other obligations, except for the obligation to complete the development of the Housing Project or applicable portion thereof as of the time of the issuance of the Certificate of Completion. 407. Insurance. The Owner shall take out and maintain or shall cause its contractor to take out and maintain until the issuance of the Certificate of Completion pursuant to this Agreement, (a) a comprehensive general liability policy in the amount of not less than Two Million Dollars ($2,000,000) combined single limit policy, (b) a comprehensive automobile liability policy in not less than the amount of One Million Dollars ($1,000,000) combined single limit, and (c) a policy of all-risk property insurance in an amount not less than one hundred percent (100%) of the full insurable value of the Housing Project owned by the Owner. The required amount of insurance shall be subject to increases as the Agency may reasonably require from time to time, but not more frequently than every twelve (12) months. Such policies shall protect the Owner and Agency from claims for such damages, and be issued by an insurance carrier qualified to do business in the State of California. Such policy or policies shall be written on an occurrence form. The Owner shall also furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that Owner and any contractor with whom it has contracted for the performance of work on the Housing Project or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. Prior to the commencement of the construction of the Housing Project, the Owner shall furnish a certificate of insurance countersigned by an authorized agent of the insurance carrier setting forth the general provisions of the insurance coverage. This countersigned certificate shall name the Agency and its officers, agents, and employees as additionally insured parties under the policy, and the certificate shall be accompanied by a duly executed endorsement evidencing such additional insured status, which shall be provided as a separate endorsement attached to the certificate. The certificate and separate endorsement by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify the Agency of any material change, cancellation or termination of the coverage at least ten (10) days in advance of the effective date of any such material change, cancellation or termination, and to notify the Agency within ten (10) days of Owner's failure to pay any premium when due. Coverage provided hereunder by the Owner shall be primary insurance and not be contributing with any insurance maintained by the Agency, and the policy shall contain such an endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of the Agency. The required certificate shall be furnished by the Owner prior to the commencement of the development of the Housing Project. 407.1 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance. Subject to Section 407.2 below, if during the period of the development, any portion of the Housing Project shall be totally or partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against by Owner, Owner shall promptly proceed to obtain insurance proceeds and take all steps necessary to begin reconstruction and, immediately upon receipt of insurance proceeds, to promptly and diligently commence the repair or replacement of the Housing Project to substantially the same condition as the Housing Project is required to be 15 0 0 developed pursuant to this Agreement, if and to the extent the insurance proceeds are sufficient to cover the actual cost of repair, replacement, or restoration, and Owner shall complete the same as soon as possible thereafter so that the Housing Project can be occupied in accordance with this Agreement. Subject to force majeure delays pursuant to Section 703 hereof, in no event shall the repair, replacement, or restoration period exceed one (1) year from the date Owner obtains insurance proceeds unless Agency's Executive Director, in his or her reasonable discretion, approves a longer period of time. Agency shall cooperate with Owner, at no expense to Agency, in obtaining any governmental permits required for the repair, replacement, or restoration. If, however, the then - existing laws of any other governmental agencies with jurisdiction over the Housing Project do not permit the repair, replacement, or restoration, Owner may elect not to repair, replace, or restore the Housing Project by giving notice to Agency (in which event Owner will be entitled to all insurance proceeds but Owner shall be required to remove all debris from the applicable portion of the Housing Project) or Owner may reconstruct such other improvements on the site of the destroyed Housing Project as are consistent with applicable land use regulations and approved by the City, Agency, and the other governmental agency or agencies with jurisdiction. 407.2 Damage or Destruction Due to Cause Not Required to be Covered by Insurance. If during the period of construction any portion of the Housing Project is completely destroyed or substantially damaged by a casualty for which Owner is not required to (and has not) insured against, then Owner shall not be required to repair, replace, or restore such improvements and may elect not to do so by providing Agency with written notice of election not to repair, replace, or restore within ninety (90) days after such substantial damage or destruction. In such event, Owner shall concurrently repay to the Agency a pro rata portion of the Agency Loan attributable to the destroyed Housing Units. As used in this Section 407.2, "substantial damage" caused by a casualty not required to be (and not) covered by insurance shall mean damage or destruction which is fifteen percent (151/6) or more of the replacement cost of the improvements comprising the Housing Project. In the event Owner does not timely elect not to repair, replace, or restore the Housing Project as set forth in the first sentence of this Section 407.2, Owner shall be conclusively deemed to have waived its right not to repair, replace, or restore the Housing Project and thereafter Owner shall promptly commence and complete the repair, replacement, or restoration of the damaged or destroyed Housing Project in accordance with Section 407.1 above. 408. Indemnity. Owner shall, at its expense, defend, indemnify, and hold harmless the Agency and its officers, agents, employees and representatives harmless from any and all losses, liabilities, claims, lawsuits, causes of action, judgments, settlements, court costs, attorneys' fees, and other legal expenses, costs of evidence of title, costs of evidence of value, and other damages of whatsoever nature arising out of or in connection with, or relating in any manner to any act or omission of Owner or its agents, employees, contractors and subcontractors of any tier and employees thereof in connection with or arising from Owner's performance or nonperformance of its obligations under this Agreement, Owner's ownership or operation of the Housing Project, or the development of the Housing Project, or challenges to the approval, validity, applicability, interpretation or implementation of this Agreement or the California Environmental Quality Act approvals made in connection therewith, except that arising from the negligence or misconduct of the Agency or its officers, agents, employees or representatives. 409. Entry by the Agency. Owner shall permit the Agency, through its officers, agents or employees, at all reasonable times, upon not less than three (3) days prior written notice from Agency to the Owner (but subject to tenants' rights of possession), to enter onto the Housing Project and inspect the work of development of the Housing Project to determine that the same is in conformity with the Development Plans and all the requirements hereof. The Agency shall conduct the entry and inspections in a manner that causes the least possible disturbance to the work in 16 0 0 progress or the operation of the Housing Project. If the Agency disturbs the Housing Project in the course of such entry and inspection, the Agency shall, following the entry and inspection, restore the Housing Project to the condition it was in immediately prior to the entry and inspection. Owner acknowledges that the Agency is under no obligation to supervise, inspect, or inform Owner of the progress of construction, and Owner shall not rely upon the Agency therefor. Any inspection by the Agency is entirely for its purposes in determining whether Owner is in compliance with this Agreement and is not for the purpose of determining or informing Owner of the quality or suitability of construction. Owner shall rely entirely upon its own supervision and inspection in determining the quality and suitability of the materials and work, and the performance of architects, subcontractors, and material suppliers. Agency's rights hereunder are subject to the rights of tenants in possession. 410. Compliance With Laws. The Owner shall cavy out the design, development and operation of the Housing Project in conformity with all applicable laws, including all applicable state labor standards, City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. The Owner shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Housing Project, subject to the Owner's right to contest in good faith any such taxes, and to the Owner's rights to request exemption under California Revenue and Taxation Code Section 214. The Owner may apply for and receive any exemption from the payment of property taxes or assessments on any interest in or to the Housing Project without the prior approval of the Agency. 411. Prevailing Wages. Owner and its contractors and subcontractors shall comply with Labor Code Section 1720, et seg., and its implementing regulations, regarding the payment of prevailing wages (the "Prevailing Wage Law") with regard to the construction of the Housing Project and the development of the Site, to the extent such sections are applicable to the construction of the Housing Project and the development of the Site. Although the parties believe that the Prevailing Wage Law is not applicable herein because the Site is being sold to the Owner at its appraised fair market value, and because the Agency's participation in the Housing Project that would otherwise qualify as "paid for in whole or in part out of public funds" is public funding in the form of a below- market interest rate loan for a project in which occupancy of at least 40 percent of the units is restricted for at least 20 years, by regulatory agreement, to individuals or families earning no more than 80 percent of the area median income, pursuant to the exception set forth in Labor Code Section 1720(c)(6)(E), Owner shall be solely responsible for determining and effectuating compliance with the Prevailing Wage Law, and the Agency makes no representation as to the applicability or non - applicability of the Prevailing Wage Law to the Housing Project, or any part thereof. In the event that the parties later determine, as a result of the final resolution of pending litigation or a precedential determination of the Department of Industrial Relations, that prevailing wages are required to be paid in connection with the construction of the Housing Project and development of the Site, the Owner shall seek an allocation of additional Tax Credits to reflect the additional cost of construction of the Housing Project, and the Agency shall increase the amount of the Agency Loan to the amount required to comply with the Prevailing Wage Law. Owner releases from liability, and agrees to indemnify, protect, defend and hold harmless the Agency and its officers, employees, contractors and agents, with counsel reasonably acceptable to the Agency, from and against any and all loss, liability, damage, claim, cost, expense and/or "increased costs" (including reasonable attorneys fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction, and/or operation of the Housing Project, including, without limitation, any and all public works (as defined by applicable law), results or 17 �J 0 arises in any way from any of the following: (1) the noncompliance by Owner of the Prevailing Wage Law; (2) the implementation of Labor Code Section 1781, as the same may be amended from time to time, or any other similar law; and/or (3) failure by Owner to provide any required disclosure or identification as required by Labor Code Section 1781, as the same may be amended from time to time, or any other similar law. It is agreed by the parties that, in connection with the development of the Housing Project, including, without limitation, any and all public works (as defined by applicable law), Owner shall bear all risks of payment or non-payment of prevailing wages under California law and/or the implementation of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. "Increased costs," as used in this Section 411, shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be amended from time to time. The foregoing indemnity shall survive termination of this Agreement and shall continue after completion of the development of the Housing Project by the Owner. 500. FINANCING OF THE DEVELOPMENT OE THE HOUSING PROJECT. 501. Agency Approval of Financing Plan. Prior to the Closing the Owner shall submit to the Agency for its reasonable approval a Financing Plan within the time set forth in the Schedule of Performance, which contains: (i) an acquisition and development budget for the Housing Project, (ii) a sources and uses analysis for the period of the development, including an analysis of the additional subsidized financing which is necessary from other public bodies, the proposed amount of the Agency Loan, and required Deferred Developer Fees, (iii) a sources and uses analysis from the date of the origination of the permanent loan, if any, including an analysis of the additional subsidized financing which is necessary from other public entities, an increase in the amount of the Agency Loan, and required Deferred Developer Fees, (iv) a 30 year cash flow analysis of the Housing Project from the date of the completion of the Housing Project, (v) an operating budget for the Housing Project, including without limitation the Operating Reserve and Capital Replacement Reserve, (vi) all fees and obligations proposed to be payable prior to the payment of Residual Receipts, (vii) the proposed allocation of Residual Receipts between the repayment of the Agency Loan, the repayment of other loans, and retention by the Owner, (viii) the lien priority of all forms of financing, and (ix) all underlying assumptions for each of the above. The Owner shall also submit to the Agency for its reasonable approval any revisions to the Financing Plan. 502. Financing Sources. It is the intent of the parties to maximize the leverage of Agency funds by making every effort to secure sources of non -local subsidies for the Housing Project. Accordingly, the Owner shall submit up to three applications to the California Tax Credit Allocation Committee ("TCAC") for competitive federal 9% Tax Credits in the first three allocation rounds which occur after the date of this Agreement as may be necessary to secure an allocation of federal 9% Tax Credits for the Housing Project (in the event that the Developer submits its first application in 2007 prior to obtaining land use entitlements for the Housing Project, which application is not expected to receive the maximum number of points reasonably available to the Housing Project, such application will not count as one of the three applications to TCAC hereunder). The Owner and Agency shall also determine the feasibility and economic effect of applying for state Tax Credits in association with the federal Tax Credit application. In the event that the Owner applies for and does not receive an allocation of federal 9% Tax Credits in any of the first three allocation rounds, the Owner and the Agency shall meet and confer to determine whether (i) the Owner should make further applications for federal 9% Tax Credits, or (ii) the Owner should pursue an alternative financing strategy of multifamily housing bond financing and federal 4% Tax Credits, or (iii) the Parties should terminate this Agreement. The Owner shall also diligently pursue an allocation of funds from the County of Orange and the Affordable Housing Program of the Federal Home Loan Bank. Upon completion of construction of the Housing Project, the Owner shall cause its accountants to perform a final audit of the costs of development of the Housing Project in accordance 18 0 0 with the requirements of the Tax Credits (the "Audit"). If the Audit determines that the total sources of permanent financing for the Housing Project (including long-term permanent debt and equity) exceed the total development cost for the Housing Project (including, without limitation, all hard and soft costs and all off-site improvements required in connection with the development of the Housing Project), the Owner shall pay to the Agency an amount equal to such excess, which amount shall be applied to the repayment of the Agency Loan. 503. Tax Credit Equity. The following requirements must be satisfied in order for the equity financing for Tax Credit funding to be approved by the Agency pursuant to Section 501 (which requirements may be waived in the Agency's sole and absolute discretion): (a) The equity investment of the limited partners of the limited partnership shall not be less than the approximate prevailing price for Tax Credits at such time, as determined by the Owner and reasonably acceptable to the Agency, taking into consideration all relevant factors such as timing of required payments and amount of the Tax Credits. (b) The identity of the managing general partner, other general partners, syndicator and initial limited partners of the limited partnership shall be reasonably acceptable to the Agency. (c) The Developer or its affiliates shall be entitled to a developer fee from the financing of not greater than the developer fee as approved by the Agency in the Financing Plan. The parties acknowledge that the Deferred Developer Fee may be required to be deferred until after the completion and commencement of operation of the Housing Project in order to ensure that sufficient funds are available for the costs of construction and operation of the Housing Project. 504. Required Submissions. Owner shall submit the following documents as evidence of financing: (a) a copy of a loan commitment(s) or approval(s) obtained by the Owner from unrelated financial institutions for the mortgage loan or loans for construction and permanent financing, subject to such lenders' reasonable, customary and normal conditions and terms, (b) a limited partnership agreement or funding commitment letter from the equity investors in the Housing Project which demonstrates that Owner has sufficient funds for such construction, and that such funds have been committed to such construction, and a current financial statement of Owner and Owner's other sources of equity capital, (c) a copy of a preliminary reservation letter from TCAC notifying the Owner that an allocation of Tax Credits has been reserved for the construction of the Housing Project, (d) a copy of documentation relating to other affordable housing subsidy programs from which the Owner has applied to obtain financial subsidies, and (e) other documentation reasonably satisfactory to Agency as evidence of other sources of capital, all of which together are sufficient to demonstrate that the Owner has adequate funds, together with the proceeds of any other financing to construct and complete the Housing Project. 505. Holder Performance of Development of the Housing Project. The holder of any mortgage or deed of trust for construction financing authorized by this Agreement shall not be 19 9 0 obligated by the provisions of this Agreement to develop the Housing Project or any portion thereof, or to guarantee such construction or completion; nor shall any covenant or any other provision in this Agreement be construed so to obligate such holder. 506. Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure. With respect to any mortgage or deed of trust granted by Owner as provided herein, whenever Agency may deliver any notice or demand to Owner with respect to any breach or default by the Owner hereunder or under any other document executed pursuant to this Agreement, Agency shall at the same time deliver to each holder of record of any mortgage or deed of trust authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights granted by Agency are concerned) have the right, but not the obligation, at its option, within thirty (30) days after the receipt of the notice, to cure or remedy or commence to cure or remedy and thereafter to pursue with due diligence the cure or remedy of any such default and to add the cost thereof to the mortgage debt and the lien of its mortgage. Nothing contained in this Agreement shall be deemed to permit or authorize any construction lender to undertake or continue the construction or completion of the development of the Housing Project, or any portion thereof (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed Owner's obligations to Agency by written agreement reasonably satisfactory to Agency. The construction lender, in that event, must agree to complete, or cause to be completed by a party which is reasonably acceptable to the Agency, in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates. Any such construction lender (or assignee approved by the Agency) properly completing such improvement shall be entitled, upon compliance with the requirements of Section 406 of this Agreement, to a Certificate of Completion. It is understood that a construction lender (or assignee approved by the Agency) shall be deemed to have satisfied the thirty (30) day time limit set forth above for commencing to cure or remedy a Owner default which requires title and/or possession of the Housing Project (or portion thereof), if and to the extent any such holder (or assignee approved by the Agency) has within such thirty (30) day period commenced proceedings to obtain title and/or possession and thereafter the holder diligently pursues such proceedings to completion and cures or remedies the default. Owner's limited partner shall be entitled to receive the same written notice of default as provided to the Owner, and Owner's limited partner shall have the right, but not the obligation, to cure any Owner default within the same cure period and on the same terms as provided to the Owner. Notice to the Owner's limited partner shall be given as provided in Section 802 of this Agreement. 507. Failure of Holder to Complete Development. In any case where, ninety (90) days after the holder of any construction loan mortgage or deed of trust creating a lien or encumbrance upon the Housing Project or any part thereof receives a notice from Agency of a default by Owner in completion of construction of any of the development under this Agreement, and such holder has not exercised the option to perform the development or cause the development to be performed as set forth in Section 506, or if it has exercised the option but has defaulted hereunder and failed to timely cure such default, Agency may purchase the mortgage or deed of trust by payment to the holder of the amount of the unpaid construction loan mortgage or deed of trust debt, including principal and interest and all other sums secured by the mortgage or deed of trust. If the possession of the Housing Project or any part thereof has vested in the holder, Agency, if it so desires, shall be entitled to a conveyance from the construction lender to Agency upon payment to the holder of an amount equal to the sum of the following: (a) The unpaid construction loan mortgage or deed of trust debt at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings); 20 i n L� (b) All expenses with respect to foreclosure including reasonable attomeys' fees; (e) The net expense, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of the Housing Project or part thereof; (d) The costs of any improvements made by such holder (or assignee approved by the Agency) pursuant to the requirements of this Agreement or as otherwise approved by the Agency; (e) An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the construction loan mortgage or deed of trust debt and such debt had continued in existence to the date of payment by Agency; and (f) Any prepayment charges imposed by the construction lender pursuant to its loan documents and agreed to by the Owner. 508. Right of Agency to Cure Mortgage or Deed of Trust Default. In the event of a loan agreement, promissory note, mortgage or deed of trust default or breach by the Owner, or a default under the terms of Owner's partnership agreement, Owner shall immediately deliver to Agency a copy of any default notice pertaining thereto. If the holder of any loan agreement, promissory note, mortgage or deed of trust has not exercised its option to construct prior to the issuance of the Certificate of Completion, pursuant to Section 406 hereof, Agency shall have the right but not the obligation to cure the default of such loan agreement, promissory note, mortgage, deed of trust or partnership agreement. The Agency shall likewise have the right but no obligation to cure any partnership agreement default. In such event, Agency shall be entitled to reimbursement from the Owner of all proper costs and expenses incurred by Agency in curing such default. Agency shall also be entitled to a lien upon the Housing Project to the extent of such costs and disbursements. Any such lien shall be junior and subordinate to the mortgages or deeds of trust approved pursuant to Section 501. 509. Subordination of Affordability Covenants. In the event that the Agency finds that an economically feasible method of financing for the construction and operation of the Housing Project, without the subordination of the affordable housing covenants as may be set forth in this Agreement and the Regulatory Agreement, is not reasonably available, the Agency shall make the affordable housing covenants set forth in this Agreement and the Regulatory Agreementjunior and subordinate to the deeds of trust and other documents required in connection with the construction and permanent financing for the Housing Project approved pursuant to Section 501. Any subordination agreement entered into by the Agency shall contain written commitments which the Agency finds are reasonably designed to protect Agency's investment in the event of Default, such as any of the following: (a) a right of Agency to cure a default on the senior loan prior to foreclosure, (b) a right of Agency to negotiate with the lender after notice of default from the lender and prior to foreclosure, and (c) an agreement that if prior to foreclosure of the loan, Agency takes title to the property and cures the default on the senior loan, the lender will not exercise any right it may have to accelerate the senior loan by reason of the transfer of title to Agency, and (d) a right of Agency to acquire the Housing Project from the Owner at any time after a material default on the senior loan. 600. OPERATION OF HOUSING 601. Number of Affordable Units. Owner agrees to make available, restrict occupancy to, and rent Twenty -Eight (28) of the Housing Units to Very Low Income Households, and Ten (10) of the Housing Units to Lower Income Households, all at an Affordable Rent. One of the Housing 21 0 0 Units may be reserved for the on-site property manager, provided that such property manager meets the income requirements provided for such unit. 602. Duration of Affordability Requirements. The Housing Units shall be subject to the requirements of this Article 600 for fifty-five (55) years from the date of the City's issuance of a certificate of occupancy for the Housing Project. The duration of this requirement shall be known as the "Affordability Period." 603. Selection of Tenants. Owner shall be responsible for the selection of tenants for the Housing Units in compliance with lawful and reasonable criteria, as set forth in the Regulatory Agreement and the Management Plan which is required to be submitted and approved by the Agency pursuant to Section 610 hereof. 604. Household Income Requirements. Following the initial lease -up of the Housing Units, and annually thereafter, the Owner shall submit to Agency, at Owner's expense, a summary of the income, household size and rent payable by each of the tenants of the Housing Units. At the Agency's request, the Owner shall also provide to the Agency completed income computation and certification forms, in a form reasonably acceptable to the Agency, for any such tenant or tenants. Owner shall obtain, or shall cause to be obtained by the Property Manager, a certification from each household leasing an Affordable Unit demonstrating that such household is a Very Low Income Household or Lower Income Household, as applicable, and meets the eligibility requirements established for the Housing Unit. Owner shall verify, or shall cause to be verified by the Property Manager, the income certification of the household. 605. Affordable Rent. The maximum Monthly Rent chargeable for the Affordable Units shall be annually determined in accordance with the following requirements. The Monthly Rent for the Affordable Units to be rented to Very Low Income Households shall not exceed one -twelfth (1/12) of thirty percent (30%) of fifty percent (50%) of Orange County Median Income for a family of a size appropriate to the unit. The Monthly Rent for the Affordable Units to be rented to Lower Income Households shall not exceed one -twelfth (1/12) of thirty percent (30%) of sixty percent (60%) of Orange County Median Income for a family of a size appropriate to the unit. For purposes of this Agreement, "Monthly Rent" means the total of monthly payments for (a) use and occupancy of each Affordable Unit and land and facilities associated therewith, (b) any separately charged fees or service charges assessed by the Owner which are required of all tenants, other than security deposits, (c) a reasonable allowance for an adequate level of service of utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuels, but not including telephone service, and (d) possessory interest, taxes or other fees or charges assessed for use of the land and facilities associated therewith by a public or private entity other than Owner. In the event that all utility charges are paid by the landlord rather than the tenant, no utility allowance shall be deducted from the rent. For purposes of this Agreement, "family of a size appropriate to the unit" means two persons for a one -bedroom unit, and three persons for a two-bedroom unit. 606. Marketing Program. Each Affordable Unit shall be leased to tenants selected by the Owner who meet all of the requirements provided herein. Owner shall prepare and obtain Agency's approval, which approval shall not be unreasonably withheld, of a marketing program for the leasing of the Affordable Units at the Housing Project (the "Marketing Program"). The Marketing Program shall require the Owner to give priority notice to tenants of other affordable housing projects in the 22 0 0 City. The leasing of the Affordable Units shall thereafter be marketed in accordance with the Marketing Program as the same may be amended from time to time with Agency's prior written approval, which approval shall not unreasonably be withheld. Owner shall provide Agency with periodic reports with respect to the leasing of the Affordable Units. The Agency agrees to exercise reasonable efforts to assist Owner in connection with the implementation of the Marketing Program; provided, however, Agency shall not be under any obligation to incur any out-of-pocket expenses in connection therewith. 607. Design and Occupancy of Senior Units. Owner shall restrict occupancy of all Housing Units to "Senior Citizens" and "Qualified Permanent Residents" (as those terms are or may be defined in California Civil Code Section 51.3). California Civil Code Section 51.3 presently provides as follows: At least one person in residence in each dwelling unit must be a Senior Citizen, and other residents in the same dwelling unit who are not Senior Citizens must be Qualified Permanent Residents. Temporary guests of a Senior Citizen or Qualified Permanent Resident shall be allowed for a period of not more than sixty (60) days in any twelve (12) month period. Upon the death, dissolution of marriage, hospitalization or other prolonged absence of the Senior Citizen in a dwelling unit, any Qualified Permanent Resident who has continuously resided in the dwelling unit with such Senior Citizen shall be permitted to continue as a resident of that dwelling unit. "Permitted Health Care Residents" (as that term is or may be defined in California Civil Code Section 51.3) shall be permitted to occupy any dwelling unit during any period that such person is actually providing live-in, long-term or hospice health care to a Senior Citizen tenant or Qualified Permanent Resident tenant for compensation. Notwithstanding the foregoing, however, in the event that the Owner in its sole discretion elects to provide one of the Housing Units for residency by an on-site manager, the manager's unit shall not be required by this Agreement to be restricted to Senior Citizens and Qualified Permanent Residents. 608. Relationship to Tax Credit Requirements. Notwithstanding any other provisions of this Agreement, to the extent that the regulatory agreement executed by the Owner as a requirement of receiving the Tax Credits (the "Tax Credit Regulatory Agreement") is less restrictive with respect to the requirements applicable to tenant selection, tenant income levels and unit rent levels than as provided in this Agreement and the Regulatory Agreement, this Agreement and the Regulatory Agreement shall control. 609. Maintenance. The Owner shall maintain the Housing Project or cause it to be maintained in a decent, safe and sanitary manner, and in accordance with the standard of maintenance of first class senior apartment units within Orange County, California. If at any time Owner fails to maintain the Housing Project in accordance with this Agreement and such condition is not corrected within five days after written notice from the Agency with respect to graffiti, debris, and waste material, or thirty days after written notice from the Agency with respect to general maintenance, landscaping and building improvements, then the Agency, in addition to whatever remedy it may have at law or at equity, shall have the right to enter upon the applicable portion of the Housing Project and perform all acts and work necessary to protect, maintain, and preserve the Housing Project, and to attach a lien upon the Housing Project, or to assess the Housing Project, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the Agency and/or costs of such cure, including a reasonable administrative charge, which amount shall be promptly paid by Owner to the Agency upon demand. 610. Management Plan; Property Management. The Owner shall submit for the reasonable approval of the Agency a "Management Plan" which sets forth in detail the Owner's property management duties, a tenant selection process in accordance with Section 603 hereof, a security system and crime prevention program, the procedures for the collection of rent, the 23 0 0 procedures for eviction of tenants, the rules and regulations of the Housing Project and manner of enforcement, a standard lease form, an Operating Budget, the identity of the manager of the Housing Project (the "Property Manager"), the social services program to be provided pursuant to Section 613 hereof, and other matters relevant to the management of the Housing Project. The management of the Housing Project shall be in compliance with the Management Plan which is approved by the Agency. If the Agency determines that the performance of the Property Manager is deficient based upon the standards set forth in the Management Plan and in this Agreement, the Agency shall provide notice to the Owner of such deficiencies, and the Owner shall use its best efforts to correct such deficiencies. In the event that such deficiencies have not been cured within the time set forth in Section 701 hereof, the Agency shall have the right to require the Owner to immediately remove and replace the Property Manager with another property manager or property management company which is reasonably acceptable to the Agency, which is not related to or affiliated with the Owner, and which has not less than five (5) years experience in property management, including significant experience managing housing facilities of the size, quality and scope of the Housing Project. 611. Capital Reserve Requirements. The Owner shall also, or cause the Property Manager to, annually set aside an amount of Two Hundred Fifty Dollars ($250) per Housing Unit (or such larger amount as may be required by TCAC or a Housing Project lender), from the gross rents received from the Housing Project, into a separate interest-bearing trust account in the name of the Owner (the "Capital Replacement Reserve"); provided, however, to the extent the Owner is required by any lender to maintain a separate account to hold deposits for capital reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be adjusted annually by the Consumer Price Index (or such larger amount as may be required by TCAC or a Housing Project lender). Funds in the Capital Replacement Reserve shall be used for capital replacements to the Housing Project fixtures and equipment which are normally capitalized under generally accepted accounting principles. The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve the Owner of the obligation to undertake necessary capital repairs and improvements and to continue to maintain the Housing Project in the manner prescribed herein. Not less than once per year, Owner, at its expense, shall submit to the Agency an accounting for the Capital Replacement Reserve. Capital repairs to and replacement of the Housing Project shall include only those items with a long useful life, including without limitation the following: carpet and drape replacement; appliance replacement; exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement; asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; common area repainting, and uninsured losses due to casualties such as earthquakes. 612. Operating Budget and Reserve. The Owner shall submit to Agency on not less than an annual basis an operating budget for the Housing Project, which budget shall be subject to the written approval of the Agency Executive Director or designee, which approval shall not be unreasonably withheld, conditioned or delayed. The Owner shall, or shall cause the Property Manager to, set aside in a separate interest-bearing trust account in the Owner's name, commencing upon the rental of the Housing Units, the sum of Seventy -One Thousand Dollars ($71,000), or such larger amount as may be required by TCAC or a Housing Project lender (the "Operating Reserve"), and shall make further deposits from the Annual Project Revenue, to the extent available, to replenish the Operating Reserve to the amount existing in such account prior to the withdrawal of funds; provided, however, to the extent the Owner is required by any lender to maintain a separate account 24 0 0 to hold deposits for operating reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be retained in the Operating Reserve to cover shortfalls between Housing Project income and actual operating expenses, and emergency expenses (such as uninsured casualties), but shall in no event be used to pay for capital items properly payable from the Capital Replacement Reserve. Owner shall, not less than once per every twelve (12) months, submit to the Agency evidence reasonably satisfactory to the Agency of compliance herewith. 613. Social Services. At all times during the Affordability Period, Owner shall provide, or cause to be provided, activities and programs appropriate to the needs of the residents of the Housing Project, with the selection of such activities and programs to be determined by Owner in collaboration with the residents of the Housing Project and the adjacent senior housing development owned by an affiliate of the Owner. The specific types of social services to be provided shall be submitted to and approved by the Agency, and may be revised with the prior approval of the Agency, which approval shall not be unreasonably withheld. 614. Prohibited Uses. None of the Housing Units in the Housing Project shall at any time be utilized on a transient basis, nor shall the Housing Project or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium or rest home. 615. Non -Discrimination Covenants. Owner covenants by and for itself, its successors 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, religion, sex, marital status, familial status, disability, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Housing Project, nor shall Owner itself or any person claiming under or through it, 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 Housing Project. The Owner shall refrain from restricting the rental, sale or lease of the Housing Project on the basis of race, color, creed, religion, sex, marital status, familial status, disability, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (i) 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, familial status, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself 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 land herein conveyed. The foregoing covenants shall run with the land." (ii) 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: "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, familial status, disability, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure 25 0 0 or enjoyment of the premises herein leased nor shall the lessee himself or herself, 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." (iii) In contracts: "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, familial status, disability, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself 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 of the premises." The covenants established in this Section 615 shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency and its successors and assigns, and shall remain in effect in perpetuity. 616. Monitoring and Recordkeeping. Throughout the Affordability Period, Owner shall comply with all applicable recordkeeping and monitoring requirements set forth in Health and Safety Code Section 33418 and shall annually complete and submit to Agency a report, prior to April 15 of each year, which includes the name, address, income and age of each occupant of an Affordable Unit, identifying the bedroom count and Monthly Rent for such Affordable Unit. Agency agrees that the Owner may submit reporting forms prepared and submitted in connection with the Tax Credits, to the extent those forms contain the information required hereunder. Representatives of the Agency shall be entitled to enter the Housing Project, upon at least seventy-two (72) hours prior written notice, to monitor compliance with this Agreement, to inspect the records of the Housing Project, and to conduct an independent audit or inspection of such records. The Owner agrees to cooperate with the Agency in making the Housing Project available for such inspection or audit. Owner agrees to maintain records in businesslike manner, and to maintain such records for the term of this Agreement. 617. Regulatory Agreement. The requirements of this Agreement which are applicable after the conveyance of the Site to the Owner are set forth in the "Regulatory Agreement' which is attached hereto as Attachment No. 10 and incorporated herein. The execution of the Regulatory Agreement is a condition precedent to the Closing, as set forth in Section 205.1 hereof. 618. Inclusionary Housing Requirements. The income and rent restrictions provided for hereunder are intended to satisfy the requirements of Health and Safety Code Section 33413(b). 0 0 700. DEFAULT AND REMEDIES 701. Events of Default. An event of "Default" shall occur under this Agreement when there shall be a material breach of any condition, covenant, warranty, promise or representation contained in this Agreement and such breach shall continue for a period of thirty (30) days after written notice thereof to the defaulting party without the defaulting party curing such breach, or if such breach cannot reasonably be cured within such thirty (30) day period, commencing the cure of such breach within such thirty (30) day period and thereafter diligently proceeding to cure such breach as soon as reasonably possible, but in no event later than ninety (90) days from the date of the original written notice. However, that if a different period or notice requirement is specified for any particular breach under any other paragraph of this Agreement, the specific provision shall control. 702. Remedies. The occurrence of any event of Default shall give the nondefaulting party the right to proceed with any and all remedies set forth in this Agreement and/or the documents executed pursuant to this Agreement, including an action for damages, an action or proceeding at law or in equity to require the defaulting party to perform its obligations and covenants under this Agreement and/or the documents executed pursuant to this Agreement or to enjoin acts or things which may be unlawful or in violation of the provisions of this Agreement and/or the documents executed pursuant to this Agreement, and the right to terminate this Agreement. In addition, the occurrence of any event of Default by Owner will relieve the Agency of any obligation to perform hereunder, including without limitation to make or continue the Agency Loan, and the right to cause all indebtedness of the Owner to the Agency under this Agreement and the Promissory Note, together with any accrued interest thereon, to become immediately due and payable. 703. Force Majeure. Subject to the party's compliance with the notice requirements as set forth below, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays or defaults are due to causes beyond the control and without the fault of the party claiming an extension of time to perform, which may include, without limitation, the following: war, acts of terrorism, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, assaults, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, materials or tools, acts or omissions of the other party, or acts or failures to act of any public or governmental entity (except that the Agency's acts or failure to act shall not excuse performance of the Agency hereunder). An extension of the time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. 704. Termination by Agency. In the event that Agency is not in Default under this Agreement, and: (a) One or more of the Agency's Conditions Precedent to Closing is not satisfied on or before the time set forth in the Schedule of Performance, and such Condition Precedent is not satisfied after notice and an opportunity to cure as provided in Section 701 hereof, and such failure is not caused by Agency; or (b) Owner is otherwise in default of this Agreement and fails to cure such default within the time set forth in Section 701 hereof; or (c) Owner has applied for but not received an allocation of federal 9% Tax 27 0 0 Credits in each of the first three allocation rounds occurring after the date of this Agreement, and the parties have not agreed upon an alternate financing structure pursuant to Section 502 hereof; or (d) Agency has disapproved the Financing Plan submitted by the Owner pursuant to Section 501 hereof within the time set forth in the Scope of Development; then this Agreement and any rights of Owner or any assignee or transferee with respect to or arising out of this Agreement shall, at the option of Agency, be terminated by Agency by written notice thereof to Owner. From the date of the written notice of termination of this Agreement by Agency to Owner and thereafter this Agreement shall be deemed terminated, the Agency shall not be obligated to make any further payments of the Agency Loan, repayment of the Promissory Note shall be accelerated, and there shall be no further rights or obligations between the parties, except that if the Owner is in default hereunder the Agency, after delivery of notice and expiration of the cure period provided in Section 701 hereof, may pursue any remedies it has at law or equity. 705. Termination by the Owner. In the event that the Owner is not in Default under this Agreement and (a) One or more of the Owner's Conditions Precedent to Closing is not satisfied on or before the time set forth in the Schedule of Performance, and such Condition Precedent is not satisfied after notice and an opportunity to cure as provided in Section 701 hereof, and such failure is not caused by Owner; or (b) Agency does not tender the Site in the manner and condition and by the date provided in this Agreement, or (c) In the event of any Default of any material provision of this Agreement by Agency prior to the Closing which is not cured within the time set forth in Section 701 hereof, or (d) Owner disapproves the physical or environmental condition of the Site pursuant to Section 206.2 hereof; or (e) Owner has applied for but not received an allocation of federal 9% Tax Credits in each of the first three allocation rounds occurring after the date of this Agreement, and the parties have not agreed upon an alternate financing structure pursuant to Section 502 hereof; and any such failure is not cured within the applicable time period after written demand by the Owner, then this Agreement may, at the option of the Owner, be terminated by Notice thereof to Agency. From the date of the Notice of termination of this Agreement to Agency and thereafter, this Agreement shall be deemed terminated and there shall be no further rights or obligations between the parties, except that if the Agency is in default hereunder the Owner, after delivery of notice and expiration of the cure period provided in Section 701 hereof, may pursue any remedies it has at law or equity. The Agency shall have no obligation upon such termination to convey the Site to the Owner, and the Agency may convey the Site to any other party in the Agency's sole and absolute discretion. 706. Attorneys' Fees. In addition to any other remedies provided hereunder or available pursuant to law, if either party brings an action or proceeding to enforce, protect or establish any right or remedy hereunder or under any of the documents executed pursuant to this Agreement, the prevailing party shall be entitled to recover from the other party its costs of suit, including without limitation expert witness fees, and reasonable attorneys' fees. 70V r� 707. Remedies Cumulative. No right, power, or remedy given to the Agency by the terms of this Agreement is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the Agency by the terns of any such instrument, or by any statute or otherwise against Owner and any other person. 708. Waiver of Terms and Conditions. The Agency may, in its sole discretion, waive in writing any of the terms and conditions of this Agreement. Waivers of any covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. 800. GENERAL PROVISIONS 801. Time. Time is of the essence in this Agreement. 802. Notices. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below, or at any other address as that party may later designate by Notice: Owner: SEASONS SJC II, L.P., 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention : Legal Department With Copy to Multi -Housing Investments, LLC Limited Partner: 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention : Legal Department Agency: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director Such addresses may be changed by notice to the other party given in the same manner as provided above. 803. Representations and Warranties of Owner. Owner hereby represents and warrants to the Agency as follows: (a) Organization. Owner is a limited partnership validly existing and in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted. (b) Authority of Owner. Owner has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Promissory Note, Deed of Trust, Regulatory Agreement, and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and 29 0 • to perform and observe the terms and provisions of all of the above. (c) Valid Binding Agreements. This Agreement, the Grant Deed, Promissory Note, Deed of Trust and the Regulatory Agreement and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of Owner enforceable against it in accordance with their respective terns. (d) Pending Proceedings. Owner is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Owner, threatened against or affecting Owner or the Housing Project, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Owner, materially affect Owner's ability to perform its obligations hereunder. 804. Agency Representations. The Agency represents and warrants to the Owner as follows: (a) Authority. The Agency is a public body, corporate and politic, which hag been authorized to transact business pursuant to action of the City. The Agency has full right, power and lawful authority to acquire and convey the Site as provided herein, and the execution, performance and delivery of this Agreement by the Agency has been fully authorized by all requisite actions on the part of the Agency. (b) FIRPTA. The Agency is not a "foreign person". within the parameters of FIRPTA or any similar state statute, or is exempt from the provisions of FIRPTA or any similar state statute, or the Agency has complied and will comply with all the requirements under FIRPTA or any similar state statute. (c) No Conflict. The Agency's execution, delivery and performance of its obligations set forth in this Agreement will not constitute a default or a breach under any contract, agreement or order to which the Agency is a party or by which it is bound. (d) No Litigation. To the Agency's Actual Knowledge, there is no threatened or pending litigation against the Agency challenging the validity of this Agreement or any of the actions proposed to be undertaken by the Agency or Owner pursuant to this Agreement. "Actual knowledge," as used herein, shall not impose a duty of investigation, and shall be limited to the actual knowledge of the Agency's employees and agents who have participated in the preparation of this Agreement and the acquisition and management of the Site. 805. Limitation Upon Change in Ownership, Management and Control of the Owner (a) Prohibition. The identity and qualifications of Owner as an experienced and successful developer and operator of affordable senior rental housing developments are of particular concern to the Agency. It is because of this identity and these qualifications that the Agency has entered into this Agreement with the Owner. No voluntary or involuntary successor in interest of the Owner shall acquire any rights or powers under this Agreement by assignment or otherwise, nor shall Owner make any total or partial sale, transfer, conveyance, encumbrance to secure financing, assignment or lease of the whole or any part of the Housing Project without the prior written approval of the Agency pursuant to Subparagraph (c) hereof, except as expressly set forth herein, which approval shall not be unreasonably withheld. 30 0 (b) Permitted Transfers. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of an assignment or transfer of this Agreement, the Agency Loan, the Regulatory Agreement, or conveyance of the Housing Project or any part thereof pursuant to subparagraph (c) of this Section 805, shall not be required in connection with any of the following (the "Permitted Transfers"): (i) Subject to the restrictions of Sections 601 through 618 of this Agreement and the Regulatory Agreement, the lease of Housing Units to qualified tenants. (ii) Assignment for financing purposes, subject to such financing being considered and approved by the Agency pursuant to Section 501 hereof. (iii) Transfer of the Housing Project or partnership interests of the Owner to (A) Multi -Housing Investments, LLC, Simpson Housing Solutions, LLLP, Simpson Housing Solutions, LLC (each a "Simpson Entity" and collectively "Simpson Entities"), or (B) an entity which has a Simpson Entity as a general partner, managing member or controlling shareholder, or (C) an entity whose general partner, managing member or controlling shareholder has a Simpson Entity as its general partner, managing member or controlling shareholder, or (D) an entity in which a Simpson Entity is a "controlling person" (as defined in Section 20(a) of the Securities Exchange Act of 1934, as amended. (iv) The removal and replacement of Owner's general partner, provided that the removed general partner is replaced by (A) a Simpson Entity, or (B) an entity which has a Simpson Entity as a general partner, managing member or controlling shareholder, or (C) an entity whose general partner, managing member or controlling shareholder has a Simpson Entity as its general partner, managing member or controlling shareholder, or (D) an entity in which a Simpson Entity is a "controlling person" (as defined in Section 20(a) of the Securities Exchange Act of 1934, as amended. (v) Transfer of the Housing Project or partnership interests in the Owner's limited partnership to the nonprofit general partner at the end of the fifteen year Tax Credits initial compliance period. In the event of an assignment by Owner pursuant to subparagraph (iii) or (iv) not requiring the Agency's prior approval, Owner nevertheless agrees that at least thirty (30) days prior to such assignment or transfer it shall give written notice to Agency of such assignment or transfer. (c) Agency Consideration of Requested Transfer. The Agency agrees that it will not unreasonably withhold approval of a request made pursuant to this Section 805, provided (a) the Owner delivers written notice to the Agency requesting such approval, and (b) the proposed assignee or transferee possesses comparable operational experience and capability, and comparable net worth and resources, as the proposed transferor or assignor, and (c) the assignee or transferee assumes the obligations of the Owner under this Agreement in a form which is reasonably acceptable to the Agency. Such notice shall be accompanied by evidence regarding the proposed assignee's or purchaser's qualifications and experience and its financial commitments and resources sufficient to enable the Agency to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 805(c) and other criteria as reasonably determined by the Agency. The Agency shall approve or disapprove the request within thirty (30) days of its receipt of the Owner's notice and all information and materials required herein. In no event, however, shall the Agency be obligated to approve the assignment or transfer of the Agency Loan, Promissory Note or Deed of Trust pursuant to this Section 805, except to an approved transferee or assignee of the Owner's rights in and to the 31 0 Housing Project. 0 (d) Amendment of Owner's Partnership Agreement. Owner may amend its Partnership Agreement, from time to time, without first providing notice to or securing Agency's consent to: (i) correct scrivener's errors; (ii) make such agreement consistent with other provisions of the loan documents; (iii) bring such agreement into compliance with the requirements of TCAC or any successor agency or Section 42 of the Internal Revenue Code of 1986, as amended, or the California Debt Limit Allocation Committee or any successor agency and the provisions of Section 103 and 142 of the Internal Revenue Code and the regulations promulgated thereunder; (iii) comply with the decision of any court of competent jurisdiction; (iv) vary the allocation of items of profit, loss, credit and deduction, the distribution of available cash or net cash flow; (v) effect changes required to comply with other provisions of the loan documents as such may be modified; (vi) effect changes in the Owner's partners; and (vii) make other changes which do not affect the enforceability of this Agreement, the liability of the signatories thereto or otherwise violate any provision of this Agreement. (e) Successors and Assigns. This Agreement shall run with the land, and all of the terms, covenants and conditions of this Agreement shall be binding upon the Owner and the permitted successors and assigns of the Owner. Whenever the term "Owner" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided. 806. Non -Liability of Officials and Employees of Agency. No member, official or employee of Agency or the City shall be personally liable to Owner or any successor in interest, in the event of any Default or breach by Agency or for any amount which may become due to Owner or its successors, or on any obligations under the terms of this Agreement. 807. Relationship Between Agency and Owner. It is hereby acknowledged that the relationship between Agency and Owner is not that of a partnership or joint venture and that Agency and Owner shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, Agency shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Housing Project. 808. Agency Approvals and Actions. The Agency shall maintain authority of this Agreement and the authority to implement this Agreement through the Agency's Executive Director (or his duly authorized representative). The Executive Director shall have the authority to make approvals, issue interpretations, waive provisions, execute documents, make and execute further agreements and/or enter into amendments of this Agreement on behalf of the Agency so long as such actions do not materially or substantially change the uses or development permitted on the Housing Units, or materially or substantially add to the costs incurred or to be incurred by the Agency as specified herein, and such interpretations, waivers and/or amendments may include extensions of time to perform as specified in the Schedule of Performance. All other material and/or substantive interpretations, waivers, or amendments shall require the consideration, action and written consent of the Agency Board. 809. Counterparts. This Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. This Agreement is executed in three (3) originals, each of which is deemed to be an original. 810. Integration. This Agreement contains the entire understanding between the parties relating to the transaction contemplated by this Agreement. All prior or contemporaneous 32 0 0 agreements, understandings, representations and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. This Agreement includes Attachment Nos. 1 through 10, which together with the Agreement constitute the entire understanding and agreement of the parties, notwithstanding any previous negotiations or agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. 811. Real Estate Brokerage Commission. Agency and Owner each represent and warrant to the other that no broker or finder is entitled to any commission or finder's fee in connection with this transaction, and Owner and Agency agree to defend and hold harmless the each other from any claim to any such commission or fee resulting from any action on its part. 812. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. Reference to section numbers are to sections in this Agreement, unless expressly stated otherwise. 813. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though preparedjointly by both parties. 814. No Waiver. A waiver by either party of a breach of any of the covenants, conditions or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. 815. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 816. Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 817. Computation of Time. The time in which any act is to be done under this Agreement is computed by excluding the first day and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 818. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 33 0 9 819. Time of Essence. Time is expressly made of the essence with respect to the performance by Agency and Owner of each and every obligation and condition of this Agreement. 820. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. 821. Conflicts of Interest. No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. 34 0 0 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year set forth above. DEVELOPER: SEASONS SENIOR APARTMENTS II, L.P., , a California limited partnership By: Affordable Multi -Family, LLC, a Colorado limited liability Company, its General Partner By: omas Enckson Its: Senior Vice President AGENCY: SAN JUAN-CAPISY#ANO REDEVELOPMENT AGENCY, a bli, corporate and politic ATTEST: Joe Mar a et R. Monahan, Agency Secretary A OVED AS TO FORM: Stradli Yocc4arlson & Rauth Jon Go z. AQencv Counsel 35 0 ATTACHMENT NO. 1 LEGAL DESCRIPTION 0 That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages 1 through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages 1 through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Attachment No. 1-1 Attachment No. &! L ATTACHMENT NO.3 RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO: ) Documentary Transfer Tax: $ Based on Full Value of Real Property Conveyed 0 This document is exempt from payment of a recording fee pursuant to government Code Section 27383. GRANT DEED For valuable consideration, receipt of which is hereby acknowledged, The SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), effective as of , 2006, hereby grants to SEASONS SENIOR APARTMENTS II,LP, a California limited partnership ("Owner"), the real property described in Exhibit A attached hereto and incorporated herein, subject to the existing easements, restrictions and covenants of record described there, and the requirements of the Disposition and Development Agreement between the parties, dated as of November 7, 2006. ATTEST: Margaret R. Monahan, Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth, Jon Goetz, Agency Special Counsel AGENCY: SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic Joe Soto, Chairman Attachment No. 3-1 EXHIBIT "A" LEGAL DESCRIPTION OF SITE That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages 1 through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages 1 through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Exhibit A 0 0 STATE OF CALIFORNIA COUNTY OF On personally appeared ❑ personally known to me -or- ss. before me, , Notary Public, (Print Name of Notary Public) F-1 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. WITNESS my hand and official seal. OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer ❑ Partner(s) ❑ Limited ❑ General Attomey-In-Fact Trustee(s) Guardian/Conservator Other: Signer is representing: Name Of Person(s) Or Entity(ies) DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Number Of Pages Date Of Documents Signer(s) Other Than Named Above 0 0 0 ATTACHMENT NO. 4 PROMISSORY NOTE ,200 San Juan Capistrano, California FOR VALUE RECEIVED, SEASONS SENIOR APARTMENTS Il, L.P., a California limited partnership (the "Borrower"), promises to pay to the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), or order, at the Agency's office at 32400 Paseo Adelanto, San Juan Capistrano, California 92675, or such other place as the Agency may designate in writing, the sum of Dollars ($ (the "Note Amount"), in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts. 1. Agreement. This Promissory Note (the "Note") is given in accordance with that certain Disposition and Development Agreement executed by the Agency and Borrower, dated as of , 2006 (the "Agreement"). The rights and obligations of the Borrower and the Agency under this Note shall be governed by the Agreement and by the additional terms set forth in this Note. In the event of any inconsistencies between the terms of this Note and the terms of the Agreement or any other document related to the Note Amount, the terms of this Note shall prevail. 2. Interest. The Note Amount shall bear interest at the rate of three percent (3%) per annum, compounded annually, from the date hereof. 3. Repayment of Note Amount. The Note Amount shall be paid by the Borrower's annual payment to the Agency of an amount equal to Fifty Percent (50%) (or such other percentage if the re -allocation provisions of Section 302 of the Agreement apply) of the Residual Receipts (as defined below) from operation of the Housing Project (as defined in the Agreement), as determined by a residual receipts calculation from the operation of the Housing Project the preceding calendar year. Annual Residual Receipts payments shall be by the Borrower by cashier's check and shall be delivered on or before ninety (90) days after the end of the Owner's fiscal year, of each year during the term of this Note first following the date the Housing Project is placed in service, until the Note Amount and all unpaid interest thereon has been repaid in full. Any remaining portion of the Note Amount shall be due and payable on the fifty-fifth (55h) anniversary of the date of the City's issuance of a Certificate of Occupancy for the Housing Project. Notwithstanding the foregoing, the full Note Amount may be accelerated as set forth in Section 12 hereof. As used herein, "Annual Project Revenue" shall mean all gross income and all revenues of any kind from the Housing Project in a calendar year, including without limitation, Housing Project rents, Section 8 housing assistance payments, if any, late charges, vending machine income, and any other revenues of whatever kind or nature from the Housing Project, except that interest on security deposits and required reserves shall not be considered Annual Project Revenue. As used herein, "Debt Service" means regularly scheduled payments of principal and interest made in a calendar year pursuant to the financing approved pursuant to Section 501 of the Agreement which is obtained for the development and ownership of the Housing Project, which is senior in lien Attachment No. 4-1 which is obtained for the development and ownership of the Housing Project, which is senior in lien priority to the Agency Loan, but excluding payments made pursuant to this Note. As used herein, "Deferred Developer Fees" shall mean any deferred developer fee allowable under the financing approved by the Agency pursuant to Section 501 of the Agreement. As used herein, "Operating Expenses" shall mean actual, reasonable and customary (for comparable affordable senior rental housing developments in Orange County) costs, fees and expenses directly incurred, paid, and attributable to the operation, maintenance and management of the Housing Project in a calendar year, which are in accordance with the Operating Budget approved by the Agency pursuant to Section 612 of the Agreement, including: painting, cleaning, repairs, alterations, landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal property taxes, assessments, insurance, security, advertising and promotion, janitorial services, cleaning and building supplies, purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings which are not paid from the Capital Replacement Reserve, fees and expenses of property management, fees and expenses of accountants, attorneys and other professionals, the cost of social services in accordance with Section 613 of the Agreement, repayment of any completion or operating loans made to Borrower by its partners or the Developer (as defined in the Agreement), and other actual, reasonable and customary operating costs and capital costs which are directly incurred and paid by the Borrower, but which are not paid from the Operating Reserve or other reserve accounts. The Operating Expenses shall not in any event include expenses not related to the Housing Project's operations, including without limitation, depreciation, amortization, and accrued principal and interest expense on deferred payment debt. As used herein, "Reserve Deposits" shall mean and payments to the Capital Replacement Reserve account pursuant to Section 611 of the Agreement and the Operating Reserve account pursuant to Section 612 of the Agreement. As used herein, "Residual Receipts" shall mean Annual Project Revenue less the sum of (i) Operating Expenses, (ii) Debt Service, (iii) Reserve Deposits, (iv) Deferred Developer Fees, (v) a partnership management fee to the managing general partner of Owner, and/or a general partner asset management fee payable to one or more of the general partners of the Owner, and/or a limited partner asset management fee payable to one or more of the limited partners of Owner, and an annual audit fee, in such amounts which are set forth in the Financing Plan which is approved by the Agency, for each calendar year; provided, however, that if such calculation results in a negative number, Residual Receipts shall be zero for that year. On or before ninety (90) days after the end of the Owner's fiscal year, of each year commencing in the year of the issuance of a certificate of occupancy for the Housing Project, the Borrower shall annually provide the Agency a Residual Receipts report, in the form attached to the Agreement as Attachment No. 6, which shall describe in detail the Annual Project Revenue, Debt Service, Operating Expenses, Reserve Deposits, Asset Management Fees, Deferred Developer Fees, and Residual Receipts for that year. The Borrower shall also submit to the Agency, on or before ninety (90) days after the end of the Owner's fiscal year, of each year commencing in the year of the issuance of a certificate of occupancy for the Housing Project, annual financial statements with respect to the Housing Project that have been reviewed by an independent certified public accountant, together with an expressed written opinion of the certified public accountant that such financial statements present the financial position, results of operations, and cash flows fairly and in Attachment No. 4-2 0 0 accordance with generally accepted accounting principles. 4. Security. This Note is secured by a Deed of Trust (the "Deed of Trust") dated as of the same date as this Note. 5. Waivers a. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time at the Agency's sole discretion and that the Agency may accept security in consideration for any such extension or release any security for this Note at its sole discretion all without in any way affecting the liability of Borrower. b. No extension of time for payment of this Note made by agreement by the Agency with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part. C. The obligations of Borrower under this Note shall be absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reasons whatsoever. d. Borrower waives presentment, demand, notice of protest and nonpayment, notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the rights of interests in or to properties securing of this Note, and the benefit of any exemption under any homestead exemption laws, if applicable. C. No previous waiver and no failure or delay by Agency in acting with respect to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach, default, or failure or condition under this Note, the Deed of Trust or the obligations secured thereby. A waiver of any term of this Note, the Deed of Trust or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver. 6. Attorneys' Fees and Costs. Borrower agrees that if any amounts due under this Note are not paid when due, to pay in addition, all costs and expenses of collection and reasonable attorneys' fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed. 7. Joint and Several Obligation. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their heirs, successors and assigns. S. Amendments and Modifications. This Note may not be changed orally, but only by an amendment in writing signed by Borrower and by the Agency. 9. Agency May Assign. Agency may, at its option, assign its right to receive payment under this Note without necessity of obtaining the consent of the Borrower. 10. Borrower Assignment Prohibited. In no event shall Borrower assign or transfer Attachment No. 4-3 0 0 any portion of this Note without the prior express written consent of the Agency, which consent shall not unreasonably be withheld, except pursuant to a transfer which is permitted or approved under Section 805 of the Disposition and Development Agreement. 11. Terms. Any terms not separately defined herein shall have the same meanings as set forth in the Agreement. 12. Acceleration and Other Remedies. Upon: (a) the occurrence of an event of Default as defined in the Agreement, or (b) Borrower selling, contracting to sell, giving an option to purchase, conveying, leasing, further encumbering, mortgaging, assigning or alienating the Borrower's interest in the Housing Project (other than (i) financing approved by the Agency or otherwise permitted pursuant to Section 501 of the Agreement, (ii) leasing of individual Housing Units to tenants in the ordinary course of business, or (iii) a purchase option and/or right of first refusal granted to Borrower's general partner(s) or affiliates thereof), whether directly or indirectly, whether voluntarily or involuntarily or by operation of law, or any interest in the Housing Project, or suffering its title, or any interest in the Housing Project to be divested, whether voluntarily or involuntarily, without the consent of the Agency or as otherwise approved or permitted under the Disposition and Development Agreement, Agency may, at Agency's option, declare the outstanding principal amount of this Note, together with the then accrued and unpaid interest thereon and other charges hereunder, and all other sums secured by the Deed of Trust, to be due and payable immediately, and upon such declaration, such principal and interest and other sums shall immediately become and be due and payable without demand or notice, all as further set forth in the Deed of Trust. All costs of collection, including, but not limited to, reasonable attorneys' fees and all expenses incurred in connection with protection of, or realization on, the security for this Note, may be added to the principal hereunder, and shall accrue interest as provided herein. Agency shall at all times have the right to proceed against any portion of the security for this Note in such order and in such manner as such Agency may consider appropriate, without waiving any rights with respect to any of the security. Any delay or omission on the part of the Agency in exercising any right hereunder, under the Agreement or under the Deed of Trust shall not operate as a waiver of such right, or of any other right. No single or partial exercise of any right or remedy hereunder or under the Agreement or any other document or agreement shall preclude other or further exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of any sum payable hereunder, or part thereof, after the due date of such payment shall not be a waiver of Agency's right to either require prompt payment when due of all other sums payable hereunder or to declare an event of Default for failure to make prompt or complete payment. 13. Successors and Assigns. Whenever "Agency" is referred to in this Note, such reference shall be deemed to include the San Juan Capistrano Redevelopment Agency and its successors and assigns, including, without limitation, any subsequent assignee or holder of this Note. All covenants, provisions and agreements by or on behalf of Borrower, and on behalf of any makers, endorsers, guarantors and sureties hereof which are contained herein shall inure to the benefit of the Agency and Agency's successors and assigns. 14. Miscellaneous. Time is of the essence hereof. This Note shall be governed by and construed under the laws of the State of California except to the extent Federal laws preempt the laws of the State of California. Borrower irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange or the United States District Court of the Central District of California, as Agency hereof may deem appropriate, in connection Attachment No. 4-4 LJ n with any legal action or proceeding arising out of or relating to this Note. Borrower also waives any objection regarding personal or in rem jurisdiction or venue. 15. No Personal Liability. In the event of any default under the terms of this Note or the Deed of Trust, the sole recourse of the Agency for any and all such defaults shall be by judicial foreclosure or by the exercise of the trustee's power of sale, and Borrower and its partners shall not be personally liable for the payment of this Note or for the payment of any deficiency established after judicial foreclosure or trustee's sale; provided, however, that the foregoing shall not in any way affect any rights the Agency may have (as a secured party or otherwise) hereunder or under the Agreement or Deed of Trust to recover directly from Borrower any amounts secured by the Deed of Trust, or any funds, damages or costs (including without limitation reasonable attorneys' fees and costs) incurred by Agency as a result of fraud, misrepresentation or waste (it shall not be waste if Borrower does not repair or restore the Housing Project after any destruction, damage or partial condemnation notwithstanding the availability of insurance or condemnation proceeds), and any costs and expenses incurred by the Agency in connection therewith (including without limitation reasonable attorneys' fees and costs). 16. Notice and Cure Rights of Borrower's Limited Partner. The provisions of Section 506 of the Agreement as they relate to the notice to and cure rights of the Borrower's limited partner are incorporated herein by this reference. SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership M Attachment No. 4-5 n U ATTACHMENT NO. 5 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director r� u This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383 DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING THIS DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING ("Deed of Trust"), made as of ,200 is entered into by and between SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership ("Trustor"), ("Trustee"), and the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (`Beneficiary"). ARTICLE 1. GRANT INTRUST 1.1 GRANT. For the purposes of and upon the terms and conditions in this Deed of Trust, Trustor irrevocably grants, conveys and assigns to Trustee, IN TRUST FOR THE BENEFIT OF BENEFICIARY, WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, all of Trustor's right, title and interest, whether now owned or hereafter acquired, in and to that certain real property located in the City of San Juan Capistrano, County of Orange, State of California, described on Exhibit A attached hereto (the "Real Property"), including, but not necessarily limited to, (i) Trustor's interest in the Real Property, (ii) all buildings and other improvements and fixtures now or hereafter located on the Real Property, including, but not limited to, all apparatus, equipment, and appliances used in the operation or occupancy of the Real Property, it being intended by the parties that all such items shall be conclusively considered to be a part of the Real Property, whether or not attached or affixed to the Real Property (collectively, the "Improvements"); (iii) all development rights or credits, air rights, water, water rights and water stock related to the Real Property or the Improvements (the Real Property and the Improvements are collectively referred to herein as the "Property"); (iv) all minerals, oil and gas, and other hydrocarbon substances in, on or under the Property, (v) all appurtenances, easements, rights and rights of way appurtenant or related to the Property; (vi) all interest or estate which Trustor may hereafter acquire in any of the property described above; and (vii) all additions and accretions to, and the proceeds of, any of the foregoing (all of the foregoing being collectively referred to as the "Subject Property"). The listing of specific rights or property shall not be interpreted as a limit of general terms. Attachment No. 5-1 9 0 1.2 ADDRESS. The subject property is located at 'San Juan Capistrano, California. However, neither the failure to designate an address nor any inaccuracy in the address designated shall affect the validity or priority of the lien of this Deed of Trust on the Subject Property as described on Exhibit A. ARTICLE 2. OBLIGATIONS SECURED 2.1 OBLIGATIONS SECURED. Trustor makes this grant and assignment for the purpose of securing the following obligations ("Secured Obligations"): a. Payment to Beneficiary of all sums at any time owing under that certain Promissory Note ("Note") of even date herewith, in the principal amount of Dollars ($ executed by Trustor and payable to the order of Beneficiary, as lender; and b. Payment and performance of all covenants and obligations of Trustor under that certain "Disposition and Development Agreement" between Trustor and Beneficiary, of even date herewith; and C. Payment and performance of all covenants and obligations of Trustor under this Deed of Trust; and d. Payment and performance of all future advances and other obligations that the then owner of all or part of the Subject Property may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when such future advance or obligation is evidenced by a writing which recites that it is secured by this Deed of Trust; and e. All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced, including, without limitation: (i) modifications of the required principal payment dates or interest payment dates or both, as the case may be, deferring or accelerating payment dates wholly or partly; or (ii) modifications, extensions or renewals at a different rate of interest whether or not in the case of a note, the modification, extension or renewal is evidenced by a new or additional promissory note or notes. 2.2 OBLIGATIONS. The term "obligations" is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all principal, interest, prepayment charges (if any), late charges, other charges, and loan fees at any time accruing or assessed on any of the Secured Obligations. 2.3 INCORPORATION. All terms of the Secured Obligations and the documents evidencing such obligations are incorporated herein by this reference. Any and all persons or entities who may have or acquire an interest in the Subject Property shall be deemed to have notice of the terms of the Secured Obligations and to have notice, if provided therein, that: (a) the Note may permit borrowing, repayment and re -borrowing so that repayments shall not reduce the amounts of the Secured Obligations; and (b) the rate of interest on one or more Secured Obligations may vary from time to time. Attachment No. 5-2 0 ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS 3.1 ASSIGNMENT. Trustor hereby irrevocably assigns to Beneficiary, subject to any prior assignment to Trustor's lenders, all of Trustor's right, title and interest in, to and under: (a) all leases and subleases of the Subject Property or any portion thereof, all licenses and agreements relating to the management, leasing or operation of the Subject Property or any portion thereof, and all other agreements of any kind relating to the use or occupancy of the Subject Property or any portion thereof, whether now existing or entered into after the date hereof ("Leases"); and (b) the rents, issues, deposits and profits of the Subject Property, including, without limitation, all amounts payable and all rights and benefits accruing to Trustor under the Leases ("Payments"). The term "Leases" shall also include all guarantees of and security for the lessees' performance thereunder, and all amendments, extensions, renewals or modifications thereto which are permitted hereunder. This is a present and absolute assignment, not an assignment for security purposes only, and Beneficiary's right to the Leases and Payments is not contingent upon, and may be exercised without possession of, the Subject Property. 3.2 GRANT OF LICENSE. Beneficiary confers upon Trustor a license ("License"), subject to any prior license conferred upon Trustor's lenders, to collect and retain the Payments as they become due and payable, until the occurrence of a Default (as hereinafter defined). Upon a Default, the License shall be automatically revoked and Beneficiary may collect and apply the Payments pursuant to Section 6.4 without notice and without taking possession of the Subject Property. Trustor hereby irrevocably authorizes and directs the lessees under the Leases to rely upon and comply with any notice or demand by Beneficiary for the payment to Beneficiary of any rental or other sums which may at any time become due under the Leases, or for the performance of any of the lessees' undertakings under the Leases, and the lessees shall have no right or duty to inquire as to whether any Default has actually occurred or is then existing hereunder. Trustor hereby relieves the lessees from any liability to Trustor by reason of relying upon and complying with any such notice or demand by Beneficiary. 3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable Assignment shall not cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible or liable for the control, care, management or repair of the Subject Property or for performing any of the terms, agreements, undertakings, obligations, representations, warranties, covenants and conditions of the Leases; or (c) responsible or liable for any waste committed on the Subject Property by the lessees under any of the Leases or any other parties; for any dangerous or defective condition of the Subject Property; or for any negligence in the management, upkeep, repair or control of the Subject Property resulting in loss or injury or death to any Lessee, licensee, employee, invitee or other person or entity. Beneficiary shall not directly or indirectly be liable to Trustor or any other person or entity as a consequence of: (i) the exercise or failure to exercise any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii) the failure or refusal of Beneficiary to perform or discharge any obligation, duty or liability of Trustor arising under the Leases. 3.4 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that as of the date of this Deed of Trust there are no existing Leases. 3.5 COVENANTS. Trustor covenants and agrees at Trustor's sole cost and expense to: (a) perform the obligations of lessor contained in the Leases and enforce by all available remedies performance by the lessees of the obligations of the lessees contained in the Leases; (b) exercise Attachment No. 5-3 0 11 Trustor's best efforts to lease all of the condominium units within the Subject Property at all times upon the completion of construction of the Improvements; (c) deliver to Beneficiary fully executed, counterpart copies of each and every Lease if requested to do so; and (d) execute and record such additional assignments of any Lease or specific subordinations of any Lease to the Deed of Trust, in form and substance acceptable to Beneficiary, as Beneficiary may request. Trustor shall not, without Beneficiary's prior written consent, except as otherwise permitted pursuant to the Disposition and Development Agreement: (i) enter into any Leases after the date of this Assignment except leases in the ordinary course of Trustor's business and on the lease form approved by Beneficiary; (ii) execute any other assignment relating to any of the Leases, except pursuant to the terms of any construction and/or permanent financing approved by Beneficiary; (iii) discount any rent or other sums due under the Leases or collect the same in advance, other than to collect rent one (1) month in advance of the time when it becomes due; (iv) terminate, modify or amend any of the terms of the Leases or in any manner release or discharge the lessees from any obligations thereunder except in the ordinary course of Trustor's business; (v) consent to any assignment or subletting by any lessee; or (vi) subordinate or agree to subordinate any of the Leases to any other deed of trust or encumbrance, except as required to obtain financing for the Subject Property. Any such attempted action in violation of the provisions of this Section 3.5 shall be null and void. Without in any way limiting the requirement of Beneficiary's consent hereunder, any sums received by Trustor in consideration of any termination (or the release or discharge of any lessee) modification or amendment of any Lease shall be applied to reduce the outstanding Secured Obligations and any such sums received by Trustor shall be held in trust by Trustor for such purpose. 3.6 ESTOPPEL CERTIFICATES. Within thirty (30) days after written request by Beneficiary, Trustor shall deliver to Beneficiary and to any party designated by Beneficiary estoppel certificates executed by Trustor, in recordable form, certifying (if such be the case): (a) that the foregoing assignment and the Leases are in full force and effect; (b) the date of each lessee's most recent payment of rent; (c) that there are no defenses or offsets outstanding, or stating those claimed by Trustor under the foregoing assignment or the Leases, as the case may be; and (d) any other information reasonably requested by Beneficiary. ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING 4.1 SECURITY INTEREST. Trustor hereby grants and assigns to Beneficiary, as of the effective date of the Disposition and Development Agreement, a security interest, to secure payment and performance of all of the Secured Obligations, in all of the following described personal property in which Trustor now or at any time hereafter has any interest (collectively, the "Collateral"): All goods, building and other materials, supplies, work in process, equipment, machinery, fixtures, furniture, furnishings, signs and other personal property, wherever situated, which are or are to be incorporated into, used in connection with, or appropriated for use thereon, (i) the Real Property described on Exhibit A attached hereto and incorporated by reference herein (to the extent the same are not effectively made a part of the Real Property pursuant to Section 1.1 above) or (ii) the improvements constructed or to be constructed on the Subject Property, as described in the Disposition and Development Agreement between Trustor and Beneficiary, dated , 2006 which real property and improvements are, pursuant to Section 1.1 above, collectively referred to herein, along with the other property described in Section 1.1 above, as the Subject Property); together with all rents, issues, Attachment No. 5-4 0 0 deposits and profits of the Subject Property (to the extent, if any, they are not subject to Article III); all inventory, accounts, cash receipts, deposit accounts, accounts receivable, contract rights, general intangibles, chattel paper, instruments, documents, notes, drafts, letters of credit, insurance policies, insurance and condemnation awards and proceeds, any other rights to the payment of money, trade names, trademarks and service marks arising from or related to the Subject Property or any business now or hereafter conducted thereon by Trustor; all permits consents, approvals, licenses, authorizations and other rights granted by, given by or obtained from, any governmental entity with respect to the Subject Property; all deposits or other security now or hereafter made with or given to utility companies by Trustor with respect to the Subject Property; all advance payments of insurance premiums made by Trustor with respect to the Subject Property; all plans, drawings and specifications relating to the Subject Property; all loan funds held by Beneficiary, whether or not disbursed; all funds deposited with Beneficiary pursuant to any loan agreement; all reserves, deferred payments, deposits, accounts, refunds, cost savings and payments of any kind related to the Subject Property or any portion thereof; together with all replacements and proceeds of, and additions and accessions to, any of the foregoing; together with all books, records and files relating to any of the foregoing. As to all of the above described personal property which is or which hereafter becomes a "fixture" under applicable law, this Deed of Trust constitutes a security agreement and a fixture filing under Sections 9105, 9313 and 9402(6) of the California Uniform Commercial Code, as amended or recodified from time to time, and is acknowledged and agreed to be a "construction mortgage" under such Sections. Trustor is the "debtor" and Beneficiary is the "secured party". Beneficiary's security interest in the Collateral shall be junior and subject to the prior security interest of Trustor's lender(s) for the Subject Property. 4.2 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that: (a) Trustor has, or will have, good title to the Collateral; (b) Trustor has not previously assigned or encumbered the Collateral, and no financing statement covering any of the Collateral has been delivered to any other person or entity except to construction and permanent lenders approved by Beneficiary or otherwise permitted under the Disposition and Development Agreement; and (c) Trustor's principal place of business is located at the address shown in Section 7.8. 4.3 RIGHTS OF BENEFICIARY. In addition to Beneficiary's rights as a "secured party" under the California Uniform Commercial Code, as amended or recodified from time to time ("UCC"), Beneficiary may, but shall not be obligated to, at any time without notice and at the expense of Trustor: (a) give notice to any person or entity of Beneficiary's rights hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and preserve the Collateral or any rights or interests of Beneficiary therein; (c) inspect the Collateral; and (d) endorse, collect and receive any right to payment of money owing to Trustor under or from the Collateral. Notwithstanding the above, in no event shall Beneficiary be deemed to have accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Beneficiary shall make an express written election of said remedy under UCC §9505, or other applicable law. 4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the occurrence of a Default (hereinafter defined) under this Deed of Trust, then in addition to all of Beneficiary's rights as a "secured party" under the UCC or otherwise at law: Attachment No. 5-5 0 0 a. Beneficiary may (i) upon written notice, require Trustor to assemble any or all of the Collateral and make it available to Beneficiary at a place designated by Beneficiary; (ii) without prior notice, enter upon the Subject Property or other place where any of the Collateral may be located and take possession of, collect, sell, and dispose of any or all of the Collateral, and store the same at locations acceptable to Beneficiary at Truster's expense; (iii) sell, assign and deliver at any place or in any lawful manner all or any part of the Collateral and bid and become purchaser at any such sales; and b. Beneficiary may, for the account of Trustor and at Trustor's expense: (i) operate, use, consume, sell or dispose of the Collateral as Beneficiary deems appropriate for the purpose of performing any or all of the Secured Obligations; (ii) enter into any agreement, compromise, or settlement, including insurance claims, which Beneficiary may deem desirable or proper with respect to any of the Collateral; and (iii) endorse and deliver evidences of title for, and receive, enforce and collect by legal action or otherwise, all indebtedness and obligations now or hereafter owing to Trustor in connection with or on account of any or all of the Collateral. Notwithstanding any other provision hereof, Beneficiary shall not be deemed to have accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Trustor shall make an express written election of said remedy under UCC §9505, or other applicable law. 4.5 POWER OF ATTORNEY. Trustor hereby irrevocably appoints Beneficiary as Trustor's attomey-in-fact (such agency being coupled with an interest), and as such attorney-in-fact Beneficiary may, without the obligation to do so, in Beneficiary's name, or in the name of Trustor, prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve any of Beneficiary's security interests and rights in or to any of the Collateral, and, upon a Default hereunder, take any other action required of Trustor; provided, however, that Beneficiary as such attomey-in-fact shall be accountable only for such funds as are actually received by Beneficiary. 4.6 POSSESSION AND USE OF COLLATERAL. Except as otherwise provided in this Section, or any other Loan Documents (as defined in the Disposition and Development Agreement), so long as no Default exists under this Deed of Trust, Trustor may possess, use, move, transfer or dispose of any of the Collateral in the ordinary course of Trustor's business and in accordance with the Disposition and Development Agreement. ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES 5.1 TITLE. Trustor represents and warrants that, except as disclosed to Beneficiary in a writing which refers to this warranty, Trustor lawfully holds and possesses valid title to the Subject Property without limitation on the right to encumber, and that this Deed of Trust is a first and prior lien on the Subject Property. 5.2 TAXES AND ASSESSMENTS. Subject to Trustor's right to in good faith contest payment of taxes and claim exemptions pursuant to California Health and Safety Code Section 214, Trustor shall pay prior to delinquency all taxes, assessments, levies and charges imposed by any public or quasi -public authority or utility company which (i) are or which may become a lien upon or cause a loss in value of the Subject Property or any interest therein, or (ii) are required to be paid by Attachment No. 5-6 0 0 Trustor. Trustor shall also pay prior to delinquency all taxes, assessments, levies and charges imposed by any public authority upon Beneficiary by reason of its interest in any Secured Obligation or in the Subject Property, or by reason of any payment made to Beneficiary pursuant to any Secured Obligation; provided, however, Trustor shall have no obligation to pay taxes which may be imposed from time to time upon Beneficiary and which are measured by and imposed upon Beneficiary's net income. 5.3 TAX AND INSURANCE IMPOUNDS. Following a Default by Trustor, at Beneficiary's option and upon its demand and subject to the impound requirements of any of the Senior Obligations, Trustor, shall, until all Secured Obligations have been paid in full, pay to Beneficiary monthly, annually or as otherwise directed by Beneficiary an amount estimated by Beneficiary to be equal to: (a) all taxes, assessments and levies imposed by any public or quasi - public authority or utility company which are or may become a lien upon the Subject Property and will become due for the tax year during which such payment is so directed; and (b) premiums for fire, other hazard and mortgage insurance next due. If Beneficiary determines that any amounts paid by Trustor are insufficient for the payment in full of such taxes, assessments, levies and/or insurance premiums, Beneficiary shall notify Trustor of the increased amounts required to pay all amounts due, whereupon Trustor shall pay to Beneficiary within thirty (30) days thereafter the additional amount as stated in Beneficiary's notice. All sums so paid shall not bear interest, except to the extent and in any minimum amount required by law; and Beneficiary shall, unless Trustor is otherwise in Default hereunder or under any Secured Obligation, apply said funds to the payment of, or at the sole option of Beneficiary release said funds to Trustor for the application to and payment of, such sums, taxes, assessments, levies, charges, and insurance premiums. Upon Default by Trustor hereunder or under any Secured Obligation, Beneficiary may apply all or any part of said sums to any Secured Obligation and/or to cure such Default, in which event Trustor shall be required to restore all amounts so applied, as well as to cure any other events or conditions of Default not cured by such application. Upon assignment of this Deed of Trust, Beneficiary shall have the right to assign all amounts collected and in its possession to its assignee whereupon Beneficiary and its Trustee shall be released from all liability with respect thereto. Within ninety-five (95) days following full repayment of the Secured Obligations (other than full repayment of the Secured Obligations as a consequence of a foreclosure or conveyance in lieu of foreclosure of the liens and security interests securing the Secured Obligations) or at such earlier time as Beneficiary may elect, the balance of all amounts collected and in Beneficiary's possession shall be paid to Trustor and no other party shall have any right or claim thereto. 5.4 PERFORMANCE OF SECURED OBLIGATIONS. Trustor shall promptly pay and perform each Secured Obligation when due. 5.5 LIENS, ENCUMBRANCES AND CHARGES. Trustor shall immediately discharge any lien not approved by Beneficiary in writing that has or may attain priority over this Deed of Trust, subject to the requirements of the Disposition and Development Agreement with respect to mechanic's liens. Trustor shall pay when due all obligations secured by or reducible to liens and encumbrances which shall now or hereafter encumber or appear to encumber all or any part of the Subject Property or any interest therein, whether senior or subordinate hereto. 5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS. a. The following (whether now existing or hereafter arising) are, in the amount Attachment No. 5-7 0 0 not to exceed any sums then owing under the Disposition and Development Agreement and Note, all absolutely and irrevocably assigned by Trustor to Beneficiary and, at the request of Beneficiary, shall be paid directly to Beneficiary, subject to the rights of the holders of Senior Obligations: (i) all awards of damages and all other compensation payable directly or indirectly by reason of a condemnation or proposed condemnation for public or private use affecting all or any part of, or any interest in, the Subject Property; (ii) all other claims and awards for damages to, or decrease in value of, all or any part of, or any interest in, the Subject Property; (iii) all proceeds of any insurance policies payable by reason of loss sustained to all or any part of the Subject Property; and (iv) all interest which may accrue on any of the foregoing. Subject to applicable law, and without regard to any requirement contained in Section 5.7(d), Beneficiary may at its discretion apply all or any of the proceeds it receives to its expenses in settling, prosecuting or defending any claim and may apply the balance to the Secured Obligations in any order, and/or Beneficiary may release all or any part of the proceeds to Trustor upon any conditions Beneficiary may impose. Beneficiary may commence, appear in, defend or prosecute any assigned claim or action and may adjust, compromise, settle and collect all claims and awards assigned to Beneficiary;rop vided, however, in no event shall Beneficiary be responsible for any failure to collect any claim or award, regardless of the cause of the failure. b. At its reasonable option, Beneficiary may permit insurance or condemnation proceeds held by Beneficiary to be used for repair or restoration but may condition such application upon reasonable conditions, including, without limitation: (i) the deposit with Beneficiary of such additional funds which Beneficiary determines are needed to pay all costs of the repair or restoration, (including, without limitation, taxes, financing charges, insurance and rent during the repair period); (ii) the establishment of an arrangement for lien releases and disbursement of funds acceptable to Beneficiary; (iii) the delivery to Beneficiary of plans and specifications for the work, a contract for the work signed by a contractor acceptable to Beneficiary, a cost breakdown for the work and a payment and performance bond for the work, all of which shall be acceptable to Beneficiary; and (iv) the delivery to Beneficiary of evidence acceptable to Beneficiary (aa) that after completion of the work the income from the Subject Property will be sufficient to pay all expenses and debt service for the Subject Property; (bb) of the continuation of Leases acceptable to and required by Beneficiary; (cc) that upon completion of the work, the size, capacity and total value of the Subject Property will be at least as great as it was before the damage or condemnation occurred; (dd) that there has been no material adverse change in the financial condition or credit of Trustor since the date of this Deed of Trust; and (ee) of the satisfaction of any additional conditions that Beneficiary may reasonably establish to protect its security. Trustor hereby acknowledges that the conditions described above are reasonable, and, if such conditions have not been satisfied within thirty (30) days of receipt by Beneficiary of such insurance or condemnation proceeds, then Beneficiary may apply such insurance or condemnation proceeds to pay down principal of the Secured Obligations in such order and amounts as Beneficiary in its sole discretion may choose. 5.7 MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY. Trustor covenants, subject to the provisions of the Disposition and Development Agreement: (a) to insure the Subject Property against such risks as Beneficiary may reasonably require and, at Beneficiary's request, to provide evidence of such insurance to Beneficiary, and to comply with the requirements of any insurance companies insuring the Subject Property; (b) to keep the Subject Property in good condition and repair; (c) not to remove or demolish the Subject Property or any part thereof, not to alter, restore or add to the Subject Property and not to initiate or acquiesce in any change in any zoning or other land classification which affects the Subject Property without Attachment No. 5-8 0 0 Beneficiary's prior written consent; (d) to complete or restore promptly and in good and workmanlike manner the Subject Property, or any part thereof which may be damaged or destroyed, without regard to whether Beneficiary elects to require that insurance proceeds be used to reduce the Secured Obligations as provided in Section 5.6; (e) to comply with all laws, ordinances, regulations and standards, and all covenants, conditions, restrictions and equitable servitudes, whether public or private, of every kind and character which affect the Subject Property and pertain to acts committed or conditions existing thereon, including, without limitation, any work, alteration, improvement or demolition mandated by such laws, covenants or requirements; (f) not to commit or permit waste of the Subject Property (it shall not be waste if Trustor does not repair or restore the Subject Property after any destruction, damage or partial condemnation notwithstanding the availability of insurance or condemnation proceeds); and (g) to do all other acts which from the character or use of the Subject Property may be reasonably necessary to maintain and preserve its value. 5.8 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At Trustor's sole expense, Trustor shall protect, preserve and defend the Subject Property and title to and right of possession of the Subject Property, the security hereof and the rights and powers of Beneficiary and Trustee hereunder against all adverse claims. Trustor shall give Beneficiary and Trustee prompt notice in writing of the assertion of any claim, of the filing of any action or proceeding, of the occurrence of any damage to the Subject Property and of any condemnation offer or action. 5.9 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF TRUSTEE. Trustee accepts this trust when this Deed of Trust is recorded. From time to time upon written request of Beneficiary and presentation of this Deed of Trust or a certified copy thereof for endorsement, and without affecting the personal liability of any person or entity for payment of any indebtedness or performance of any obligations secured hereby, Trustee may, without liability therefor and without notice: (a) reconvey all or any part of the Subject Property; (b) consent to the making of any map or plat thereof, and (c) join in any grant of easement thereon, any declaration of covenants and restrictions, or any extension agreement or any agreement subordinating the lien or charge of this Deed of Trust. Except as may be required by applicable law, Trustee or Beneficiary may from time to time apply to any court of competent jurisdiction for aid and direction in the execution of the trust hereunder and the enforcement of the rights and remedies available hereunder, and may obtain orders or decrees directing or confirming or approving acts in the execution of said trust and the enforcement of said remedies. Trustee has no obligation to notify any party of any pending sale or any action or proceeding, including, without limitation, actions in which Trustor, Beneficiary or Trustee shall be a party unless held or commenced and maintained by Trustee under this Deed of Trust. Trustee shall not be obligated to perform any act required of it hereunder unless the performance of the act is requested in writing and Trustee is reasonably indemnified and held harmless against loss, cost, liability or expense. 5.10 COMPENSATION; EXCULPATION; INDEMNIFICATION. a. Trustor shall pay Trustee's fees and reimburse Trustee for expenses in the administration of this trust, including attorneys' fees. Trustor shall pay to Beneficiary reasonable compensation for services rendered concerning this Deed of Trust, including without limit any statement of amounts owing under any Secured Obligation. Beneficiary shall not directly or indirectly be liable to Trustor or any other person or entity as a consequence of (i) the exercise of the rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii) the failure or refusal of Beneficiary to perform or discharge any obligation or liability of Trustor under any agreement related Attachment No. 5-9 0 0 to the Subject Property or under this Deed of Trust; or (iii) any loss sustained by Trustor or any third party resulting from Beneficiary's failure to sell, lease or sublease the Subject Property after a Default (hereinafter defined) or from any other act or omission of Beneficiary in managing the Subject Property after a Default, unless the loss is caused by the gross negligence or willful misconduct of Beneficiary, and no such liability shall be asserted against or imposed upon Beneficiary, and all such liability is hereby expressly waived and released by Trustor. b. Subject to the provisions of Section 6.8 hereof, Trustor indemnifies Trustee and Beneficiary against, and holds Trustee and Beneficiary harmless from, all losses, damages, liabilities, claims, causes of action, judgments, court costs, attorneys' fees and other legal expenses, cost of evidence of title, cost of evidence of value, and other expenses which either may suffer or incur: (i) by reason of this Deed of Trust; (ii) by reason of the execution of this trust or in performance of any act required or permitted hereunder or by law; (iii) as a result of any failure of Trustor to perform Trustor's obligations; or (iv) by reason of any alleged obligation or undertaking on Beneficiary's part to perform or discharge any of the representations, warranties, conditions, covenants or other obligations contained in any other document related to the Subject Property, unless the loss is caused by the gross negligence or willful misconduct of Trustee or Beneficiary, as applicable. The above obligation of Trustor to indemnify and hold harmless Trustee and Beneficiary shall survive the release and cancellation of the Secured Obligations and the release and reconveyance or partial release and reconveyance of this Deed of Trust. Notwithstanding the foregoing, however, under no circumstances shall these indemnity obligations of Trustor include any obligation for payment of punitive damages assessed against Beneficiary or Trustee or their officers, employees, agents or representatives. C. Trustor shall pay all amounts and indebtedness arising under this Section 5.10 immediately upon demand by Trustee or Beneficiary together with interest thereon from the date the indebtedness arises at the rate of interest then applicable to the principal balance of the Note as specified therein. 5.11 SUBSTITUTION OF TRUSTEES. From time to time, by a writing, signed and acknowledged by Beneficiary and recorded in the Office of the Recorder of the County in which the Subject Property is situated, Beneficiary may appoint another trustee to act in the place and stead of Trustee or any successor. Such writing shall set forth any information required by law. The recordation of such instrument of substitution shall discharge Trustee herein named and shall appoint the new trustee as the trustee hereunder with the same effect as if originally named Trustee herein. A writing recorded pursuant to the provisions of this Section 5.11 shall be conclusive proof of the proper substitution of such new Trustee. 5.12 DUE ON SALE OR ENCUMBRANCE. If the Subject Property or any interest therein shall be sold, assigned, leased, subleased, transferred (including, without limitation, through sale or transfer of a majority or controlling interest of the corporate stock or general partnership interests or nonprofit public benefit corporation interests of Trustor), mortgaged, collaterally assigned, or further encumbered (other than leases of individual condominium units within the Improvements), whether directly or indirectly, whether voluntarily, involuntarily or by operation of law, without the prior written consent of Beneficiary, or without otherwise being approved or permitted pursuant to the Disposition and Development Agreement, THEN Beneficiary, in its sole discretion, may declare all Secured Obligations immediately due and payable. Attachment No. 5-10 5.13 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY. Without notice to or the consent, approval or agreement of any persons or entities having any interest at any time in the Subject Property or in any manner obligated under the Secured Obligations ("Interested Parties"), Beneficiary may, from time to time, release any person or entity from liability for the payment or performance of any Secured Obligation, take any action or make any agreement extending the maturity or otherwise altering the terms or increasing the amount of any Secured Obligation, or accept additional security or release all or a portion of the Subject Property and other security for the Secured Obligations. None of the foregoing actions shall release or reduce the personal liability of any of said Interested Parties, or release or impair the priority of the lien of this Deed of Trust upon the Subject Property. 5.14 RECONVEYANCE. Upon Beneficiary's written request, and upon surrender to Trustee for cancellation of this Deed of Trust or a certified copy thereof and any note, instrument, or instruments setting forth all obligations secured hereby, Trustee shall reconvey, without warranty, the Subject Property or that portion thereof then held hereunder. To the extent permitted by law, the reconveyance may describe the grantee as "the person or persons legally entitled thereto" and the recitals of any matters or facts in any reconveyance executed hereunder shall be conclusive proof of the truthfulness thereof. Neither Beneficiary nor Trustee shall have any duty to determine the rights of persons or entities claiming to be rightful grantees of any reconveyance. When the Subject Property has been fully reconveyed, the last such reconveyance shall operate as a reassignment of all future rents, issues and profits of the Subject Property to the person or persons legally entitled thereto. 5.15 SUBROGATION. Beneficiary shall be subrogated to the lien of all encumbrances, whether released of record or not, paid in whole or in part by Beneficiary pursuant to this Deed of Trust or by the proceeds of any loan secured by this Deed of Trust. 5.16 RIGHT OF INSPECTION. Beneficiary, its agents and employees, may enter the Subject Property at any reasonable time for the purpose of inspecting the Subject Property and ascertaining Trustor's compliance with the terms hereof. ARTICLE 6. DEFAULT PROVISIONS 6.1 DEFAULT. For all purposes hereof, the term "Default" shall mean (a) at Beneficiary's option, the failure of Trustor to make any payment of principal or interest on the Note or to pay any other amount due hereunder or under the Note when the same is due and payable, within ten (10) days after receipt of written notice from Beneficiary; or (b) the failure of Trustor to perform any non -monetary obligation hereunder, or the failure to be true of any representation or warranty of Trustor contained herein and the continuance of such failure for thirty (30) days after notice from Beneficiary (or such longer grace period as may be provided pursuant to the Disposition and Development Agreement for such failure or the existence of any default under the Disposition and Development Agreement), or if it is not reasonably practicable to cure or remedy such failure within such thirty (30) day period, then Trustor shall not be deemed to be in default if Trustor shall commence such cure within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 6.2 RIGHTS AND REMEDIES. At any time after Default, Beneficiary and Trustee shall each have all the following rights and remedies: Attachment No. 5-11 0 0 a. With or without notice, to declare all Secured Obligations immediately due and payable; b. With or without notice, and without releasing Trustor from any Secured Obligation, and without becoming a mortgagee in possession, to cure any breach or Default of Trustor and, in connection therewith, to enter upon the Subject Property and do such acts and things as Beneficiary or Trustee deem necessary or desirable to protect the security hereof, including, without limitation: (i) to appear in and defend any action or proceeding purporting to affect the security of this Deed of Trust or the rights or powers of Beneficiary or Trustee under this Deed of Trust; (ii) to pay, purchase, contest or compromise any encumbrance, charge, lien or claim of lien which, in the sole judgment of either Beneficiary or Trustee, is or may be senior in priority to this Deed of Trust, the judgment of Beneficiary or Trustee being conclusive as between the parties hereto; (iii) to obtain insurance; (iv) to pay any premiums or charges with respect to insurance required to be carried under this Deed of Trust; or (v) to employ counsel, accountants, contractors and other appropriate persons. C. To commence and maintain an action or actions in any court of competent jurisdiction to foreclose this instrument as a mortgage or to obtain specific enforcement of the covenants of Trustor hereunder, and Trustor agrees that such covenants shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purposes of any suit brought under this subparagraph, Trustor waives the defense of (aches and any applicable statute of limitations; d. To apply to a court of competent jurisdiction for and obtain appointment of a receiver of the Subject Property as a matter of strict right and without regard to the adequacy of the security for the repayment of the Secured Obligations, the existence of a declaration that the Secured Obligations are immediately due and payable, or the filing of a notice of default, and Trustor hereby consents to such appointment; e. To enter upon, possess, manage and operate the Subject Property or any part thereof, to take and possess all documents, books, records, papers and accounts of Trustor or the then owner of the Subject Property, to make, terminate, enforce or modify Leases of the Subject Property upon such terms and conditions as Beneficiary deems proper, to make repairs, alterations and improvements to the Subject Property as necessary, in Trustee's or Beneficiary's sole judgment, to protect or enhance the security hereof; f. To execute a written notice of such Default and of its election to cause the Subject Property to be sold to satisfy the Secured Obligations. As a condition precedent to any such sale, Trustee shall give and record such notice as the law then requires. When the minimum period of time required by law after such notice has elapsed, Trustee, without notice to or demand upon Trustor except as required by law, shall sell the Subject Property at the time and place of sale fixed by it in the notice of sale, at one or several sales, either as a whole or in separate parcels and in such manner and order, all as Beneficiary in its sole discretion may determine, at public auction to the highest bidder for cash, in lawful money of the United States, payable at time of sale. Neither Trustor nor any other person or entity other than Beneficiary shall have the right to direct the order in which the Subject Property is sold. Subject to requirements and limits imposed by law, Trustee may from time to time postpone sale of all or any portion of the Subject Property by public announcement at such time and place of sale. Trustee shall deliver to the purchaser at such sale a deed conveying Attachment No. 5-12 0 0 the Subject Property or portion thereof so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person or entity, including Trustee, Trustor or Beneficiary may purchase at the sale; g. To resort to and realize upon the security hereunder and any other security now or later held by Beneficiary concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken non judicial proceedings, or both, and to apply the proceeds received upon the Secured Obligations all in such order and manner as Trustee and Beneficiary, or either of them, determine in their sole discretion. h. Upon sale of the Subject Property at any judicial or non judicial foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its sole and absolute discretion) all or any portion of the Secured Obligations. In determining such credit bid, Beneficiary may, but is not obligated to, take into account all or any of the following: (i) appraisals of the Subject Property as such appraisals may be discounted or adjusted by Beneficiary in its sole and absolute underwriting discretion; (ii) expenses and costs incurred by Beneficiary with respect to the Subject Property prior to foreclosure; (iii) expenses and costs which Beneficiary anticipates will be incurred with respect to the Subject Property after foreclosure, but prior to resale, including, without limitation, costs of structural reports and other due diligence, costs to carry the Subject Property prior to resale, costs of resale (e.g. commissions, attorneys' fees, and taxes), costs of any hazardous materials clean-up and monitoring, costs of deferred maintenance, repair, refurbishment and retrofit, costs of defending or settling litigation affecting the Subject Property, and lost opportunity costs (if any), including the time value of money during any anticipated holding period by Beneficiary; (iv) declining trends in real property values generally and with respect to properties similar to the Subject Property; (v) anticipated discounts upon resale of the Subject Property as a distressed or foreclosed property; (vi) the fact of additional collateral (if any), for the Secured Obligations; and (vii) such other factors or matters that Beneficiary (in its sole and absolute discretion) deems appropriate. In regard to the above, Trustor acknowledges and agrees that: (w) Beneficiary is not required to use any or all of the foregoing factors to determine the amount of its credit bid; (x) this Section does not impose upon Beneficiary any additional obligations that are not imposed by law at the time the credit bid is made; (y) the amount of Beneficiary's credit bid need not have any relation to any loan -to -value ratios previously discussed between Trustor and Beneficiary; and (z) Beneficiary's credit bid may be (at Beneficiary's sole and absolute discretion) higher or lower than any appraised value of the Subject Property. 6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS. After deducting all costs, fees and expenses of Trustee, and of this trust, including, without limitation, cost of evidence of title and attorneys' fees in connection with sale and costs and expenses of sale and of any judicial proceeding wherein such sale may be made, Trustee shall apply all proceeds of any foreclosure sale: (a) to payment of all sums expended by Beneficiary under the terms hereof and not then repaid, with accrued interest at the rate of interest specified in the Note to be applicable on or after maturity or acceleration of the Note; (b) to payment of all other Secured Obligations; and (c) the remainder, if any, to the person or persons legally entitled thereto. 6.4 APPLICATION OF OTHER SUMS. All sums received by Beneficiary under Section 6.2 or Section 3.2, less all costs and expenses incurred by Beneficiary or any receiver under Section 6.2 or Section 3.2, including, without limitation, attorneys' fees, shall be applied in payment of the Secured Obligations in such order as Beneficiary shall determine in its sole discretion; Attachment No. 5-13 9 0 provided, however, Beneficiary shall have no liability for funds not actually received by Beneficiary. 6.5 NO CURE OR WAIVER. Neither Beneficiary's nor Trustee's nor any receiver's entry upon and taking possession of all or any part of the Subject Property, nor any collection of rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other security or proceeds of other security, or other sums, nor the application of any collected sum to any Secured Obligation, nor the exercise or failure to exercise of any other right or remedy by Beneficiary or Trustee or any receiver shall cure or waive any breach, Default or notice of default under this Deed of Trust, or nullify the effect of any notice of default or sale (unless all Secured Obligations then due have been paid and performed and Trustor has cured all other defaults), or impair the status of the security, or prejudice Beneficiary or Trustee in the exercise of any right or remedy, or be construed as an affirmation by Beneficiary of any tenancy, lease or option or a subordination of the lien of this Deed of Trust. 6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEYS' FEES. Trustor agrees to pay to Beneficiary immediately and without demand all costs and expenses incurred by Trustee and Beneficiary pursuant to Section 6.2 (including, without limitation, court costs and attorneys' fees, whether incurred in litigation or not) with interest from the date of expenditure until said sums have been paid at the rate of interest then applicable to the principal balance of the Note as specified therein. In addition, Trustor shall pay to Trustee all Trustee's fees hereunder and shall reimburse Trustee for all expenses incurred in the administration of this trust, including, without limitation, any attorneys' fees. 6.7 POWER TO FILE NOTICES AND CURE DEFAULTS. Trustor hereby irrevocably appoints Beneficiary and its successors and assigns, as its attomey-in-fact, which agency is coupled with an interest, (a) to execute and/or record any notices of completion, cessation of labor, or any other notices that Beneficiary deems appropriate to protect Beneficiary's interest, (b) upon the issuance of a deed pursuant to the foreclosure of this Deed of Trust or the delivery of a deed in lieu of foreclosure, to execute all instruments of assignment or further assurance with respect to the Leases and Payments in favor of the grantee of any such deed, as may be necessary or desirable for such purpose, (c) to prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve Beneficiary's security interests and rights in or to any of the Collateral, and (d) upon the occurrence of an event, act or omission which, with notice or passage of time or both, would constitute a Default, Beneficiary may perform any obligation of Trustor hereunder; provided, however, that: (i) Beneficiary as such attorney-in-fact shall only be accountable for such funds as are actually received by Beneficiary; and (ii) Beneficiary shall not be liable to Trustor or any other person or entity for any failure to act under this Section. 6.8 NO PERSONAL LIABILITY. In the event of any default under the terms of the Note or this Deed of Trust, the sole recourse of the Beneficiary for any and all such defaults shall be by judicial foreclosure or by the exercise of the trustee's power of sale, and Trustor and its partners shall not be personally liable for the payment of the Note or for the payment of any deficiency established after judicial foreclosure or trustee's sale; provided, however, that the foregoing shall not in any way affect any rights the Beneficiary may have (as a secured party or otherwise) hereunder or under the Agreement or Note to recover directly from Trustor any amounts secured by this Deed of Trust, or any funds, damages or costs (including without limitation reasonable attorneys' fees and costs) incurred by Beneficiary as a result of fraud, misrepresentation or waste (provided that it shall Attachment No. 5-14 0 0 not be waste if Trustor does not repair or restore the Subject Property after any destruction, damage or partial condemnation, notwithstanding the availability of insurance or condemnation proceedings), and any costs and expenses incurred by Beneficiary in connection thereof (including without limitation reasonable attorneys' fees and costs). ARTICLE 7. MISCELLANEOUS PROVISIONS 7.1 NO MERGER. No merger shall occur as a result of Beneficiary's acquiring any other estate in, or any other lien on, the Subject Property unless Beneficiary consents to a merger in writing. If both the lessor's and lessee's estate under any lease or any portion thereof which now or hereafter constitutes a part of Subject Property shall at any time become vested in one owner, this Deed of Trust and the lien created hereby shall not be destroyed or terminated by application of the doctrine of merger unless Beneficiary so elects as evidenced by recording a written declaration so stating, and, unless and until Beneficiary so elects, Beneficiary shall continue to have and enjoy all of the rights and privileges of Beneficiary as to the separate estates. In addition, upon the foreclosure of the lien created by this Deed of Trust on the Subject Property pursuant to the provisions hereof, any leases or subleases then existing and affecting all or any portion of the Subject Property shall not be destroyed or terminated by application of the law of merger or as a matter of law or as a result of such foreclosure unless Beneficiary or any purchaser at such foreclosure sale shall so elect. No act by or on behalf of Beneficiary or any such purchaser shall constitute a termination of any lease or sublease unless Beneficiary or such purchaser shall give written notice thereof to such tenant or subtenant. 7.2 WAIVER OF MARSHALLING RIGHTS. Trustor, for itself and for all parties claiming through or under Trustor, and for all parties who may acquire a lien on or interest in the Subject Property, hereby waives all rights to have the Subject Property and/or any other property, including, without limitation, the Collateral, which is now or later may be security for any Secured Obligation ("Other Property") marshaled upon any foreclosure of this Deed of Trust or on a foreclosure of any other security for any of the Secured Obligations. Beneficiary shall have the right to sell, and any court in which foreclosure proceedings may be brought shall have the right to order a sale of, the Subject Property and any or all of the Collateral or Other Property as a whole or in separate parcels, in any order that Beneficiary may designate. 7.3 RULES OF CONSTRUCTION. When the identity of the parties or other circumstances make it appropriate the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. The term "Subject Property" means all and any part of the Subject Property and any interest in the Subject Property. 7.4 SUCCESSORS IN INTEREST. The terms, covenants, and conditions herein contained shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto; provided, however, that this Section 7.4 does not waive or modify the provisions of Section 5.12. 7.5 EXECUTION IN COUNTERPARTS. This Deed of Trust may be executed in any number of counterparts, each of which, when executed and delivered to Beneficiary, will be deemed to be an original and all of which, taken together, will be deemed to be one and the same instrument. Attachment No. 5-15 0 0 7.6 CALIFORNIA LAW. This Deed of Trust shall be construed in accordance with the laws of the State of California, except to the extent that Federal law preempts the laws of the State of California. 7.7 INCORPORATION. Exhibit A and Schedule 1, all as attached, ate incorporated into this Deed of Trust by this reference. 7.8 NOTICES. All notices or other communications required or permitted to be given pursuant to the provisions of this Deed of Trust shall be in writing and shall be considered as properly given if delivered personally or sent by first class U.S. mail, postage prepaid, except that notice of a Default may be sent by certified mail, return receipt requested, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon receipt at the addresses set forth below. For purposes of notice, the addresses of the parties shall be: Trustor: Seasons Senior Apartments II, L.P. 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention: Legal Department With Copy to Multi -Housing Investments, LLC Limited Partner: 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention: Legal Department Beneficiary: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director Trustee: Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days notice to the other party in the manner set forth hereinabove. Trustor shall forward to Beneficiary, without delay, any notices, letters or other communications delivered to the Subject Property or to Trustor naming Beneficiary, "Lender" or the "Construction Lender" or any similar designation as addressee, or which could reasonably be deemed to affect the construction of the Improvements or the ability of Trustor to perform its obligations to Beneficiary under the Note. 7.10 NOTICE AND CURE RIGHTS OF TRUSTOR'S LIMITED PARTNER. The provisions of Section 506 of the Disposition and Development Agreement as they relate to the notice to and cure rights of the Trustor's limited partner are incorporated herein by this reference. Attachment No. 5-16 0 0 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year set forth above. SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership 0 (ALL SIGNATURES MUST BE ACKNOWLEDGED) Attachment No. 5-17 0 0 7.6 CALIFORNIA LAW. This Deed of Trust shall be construed in accordance with the laws of the State of California, except to the extent that Federal laws preempt the laws of the State of California. 7.7 INCORPORATION. Exhibit A and Schedule 1, all as attached, are incorporated into this Deed of Trust by this reference. 7.8 NOTICES. All notices or other communications required or permitted to be given pursuant to the provisions of this Deed of Trust shall be in writing and shall be considered as properly given if delivered personally or sent by first class U.S. mail, postage prepaid, except that notice of a Default may be sent by certified mail, return receipt requested, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon receipt at the addresses set forth below. For purposes of notice, the addresses of the parties shall be: Trustor: SEASONS SJC II, L.P., 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention : Legal Department With Copy to Multi -Housing Investments, LLC Limited Partner: 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention : Legal Department Beneficiary: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director Trustee: Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days notice to the other party in the manner set forth hereinabove. Trustor shall forward to Beneficiary, without delay, any notices, letters or other communications delivered to the Subject Property or to Trustor naming Beneficiary, "Lender" or the "Construction Lender" or any similar designation as addressee, or which could reasonably be deemed to affect the construction of the Improvements or the ability of Trustor to perform its obligations to Beneficiary under the Note. 7.10 NOTICE AND CURE RIGHTS OF TRUSTOR'S LIMITED PARTNER. The provisions of Section 506 of the Disposition and Development Agreement as they relate to the notice to and cure rights of the Trustor's limited partner are incorporated herein by this reference. Attachment No. 5-16 0 0 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year set forth above. SEASONS SJC Il, L.P., , a California limited partnership (ALL SIGNATURES MUST BE ACKNOWLEDGED) Attachment No. 5-17 0 EXHIBIT A 0 DESCRIPTION OF SUBJECT PROPERTY That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages 1 through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages 1 through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Exhibit A-1 I STATE OF CALIFORNIA I COUNTY OF I On , before me, ss. (Print Name of Notary Public) , Notary Public, personally appeared ❑ personally known to me -or- F1 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent I fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer ritle(s) ❑ Parmer(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Of Pages Date Of Documents Signer(s) Other Than Named Above 0 0 ATTACHMENT NO.6 FORM OF RESIDUAL RECEIPTS REPORT San Juan Capistrano Redevelopment Agency Housing Project Residual Receipts Report for the Year Ending Date Prepared Please complete the following information and execute the certification at the bottom of this form. Annual Proiect Revenue Please report Annual Project Revenue for the year ending on the following lines: Rent Payments (including Section 8 tenant assistance payments, if any) (1) Interest Income (do not include interest income from replacement and operating reserves nor interest income on tenant security deposits) Additional Income Related to Project Operations (for example, vending machine income, tenant forfeited deposits, laundry income not paid to the residents' association) Total Annual Project Revenue (Add lines 1, 2, and 3) Operative Expenses Please report Operating Expenses incurred in relation to the operations of the Project for the year ending on the following lines: Operating and Maintenance Expenses Utilities Property management Expenses and On -Site Staff Payroll Administrative Expenses Incurred by Project Property Taxes Insurance Other Expenses Related to Operations of the Project Please list these expenses: (2) (3) (5) $ (6) $ (7) $ (8) $ (9) $ (10) $ (11) $ 0 0 Total Annual Operating Expenses (12) (Add lines 5, 6, 7, 8, 9, 10, and 11) Net Operating Income (Subtract Line 12 from Line 4) (13) $ Do not include expense unrelated to the Project's operations, such as depreciation, amortization, accrued principal and interest expense on deferred payment debt, or capital expenditures. Additional Cash Flow Payments Obligated Debt Service Payments (as approved by the Agency and other parties (14) that may have such approval rights) Scheduled Deposits to Reserves (as approved by the Agency) (15) Additional Payment Obligations (such as partnership management fees, deferred (16) developer fees, or repayments on loans to partners, as approved by the Agency to have priority over Residual Receipt Payment to the Agency Total Additional Cash Flow Payments (Add lines 14, 15, and 16) (17) $ Residual Receipts for Year Ending (18) (Subtract Line 17 from Line 13) Percentage of Residual Receipts to be Paid to the Agency (as shown in the (19) Promissory Note by and between the Agency and Borrower dated Amount Payable to the Agency (Multiply Line 18 by Line 19) (20) The amount payable to the Agency listed on Line 2 is subject to payment according to the terms of the Promissory Note by and between the Agency and Borrower dated . If Line 20 is $0.00 or negative, you owe nothing to the Agency this year. If Line 20 is a positive number, remit check payable to and attach to this report. Exhibit D-2 0 0 Computation of Residual Receipts for the Year Ending The following certification should be executed by the Executive Director or Chief Financial Officer of the Borrower, or the Managing General Partner of the Borrower. I certify that the information provided in this form is true, accurate, and correct in all respects. ME (Print Name) (Title) Exhibit D-3 Date ATTACHMENT NO.7 SCHEDULE OF PERFORMANCE NOTES: I . Days are calendar days unless specifically noted as business days. 2. The Agency and the Developer may, by mutual written agreement, amend or modify any item contained herein or the date for performance. The Executive Director of the Agency is hereby authorized to approve minor amendments as set forth in this Schedule of Performance on behalf of the Agency. Any amendments deemed major shall be submitted to the Agency Board of Directors for consideration. 3. The City is not a party to the Agreement and is not bound by the times set forth herein. GENERAL I Execution of this Agreement. This Agreement Not less than five (5) calendar days prior to shall be executed by the Developer and a copy the Agency's consideration of the of the executed Agreement shall be sent to the Agreement, but in no event later than Agency. 11/15/06. 2 Execution of Agreement by Agency. After the Within seven (7) calendar days after Agreement has been approved, the Agency shall approval of this agreement by the Agency. execute the Agreement. FINANCING 3 Approval of Developer's Preliminary Financing Concurrent with approval of this Agreement. Plan. Agency shall approve, conditionally approve, or disapprove the Developer's Preliminary Financing Plan as required by the Agreement. 4 Approval of Changes to Developer's Developer shall submit changes on an as Preliminary Financing Plan. Developer shall warranted basis and the Agency shall have submit and Agency shall review and approve, thirty (30) calendar days to respond. conditionally approve, or disapprove changes to the Financing Plan and the Construction Cost Budget. 5 Submission of Application for HOME/AHP Not later than the scheduled closing of Funding (as applicable). The Developer and escrow on the site and close of construction City shall submit application for HOME grant financing funds. 6 Submission of 9% Tax Credit Application. Not later than the tax credit application Developer shall complete and submit an round following final City Council and application for Federal 9% Tax Credits Planning Commission project approval Attachment No. 7-1 0 0 Attachment No. 7-2 including approval of the general plan amendment and zone change application. 7 Submittal of Final Financing_ Plan. Developer Not less than forty-five (45) calendar days shall submit a Final Financing Plan and prior to the scheduled closing of escrow on Construction Budget as required by Section 501 the Site and close of construction financing. of the Agreement, including copies of all commitment letters and conditions of approval and demonstrating sufficient debt and equity commitments required to complete the Project in accordance with the Scope of Development. 8 Approval of Final Financing_ Plan. Agency Within twenty-one (2 1) calendar days after shall approve, conditionally approve, or receipt of complete financing plan from disapprove Financing Plan. Developer and prior to the Close of Escrow. GRADING & IMPROVEMENTS 9 Approval of Plans. Developer shall have Prior to commencement of grading. approved plans for site grading, utilities and public improvements. 10 CEOA/NEPA approval (as applicable). Prior to commencement of grading. Developer shall receive authorization from City/State to proceed with site grading 11 Site Work Contract. Developer shall submit Within seven (7) calendar days after final contract to complete site work approval of this agreement by the Agency. Attachment No. 7-2 L 0 BUILDING APPROVALS 12 Submission of Preliminary Construction Within one hundred and twenty (120)days Drawings to Agency/City. The Developer shall following Federal 9% Tax Credit Award. submit preliminary construction drawings, public improvement plans, landscape plans, and such other documents as may be reasonably required by the City for review and evaluation with respect to the construction of the Housing Complex pursuant to Section 402. Developer may submit these plans to the Agency and City concurrently for plan check. 13 Agency Approval of Preliminary Construction Not later than thirty (30) calendar days after Drawings. Agency shall approve, conditionally submission and acceptance as complete. approve, or disapprove preliminary construction plans. 14 City Plan Check Approval. City shall complete City shall provide comments on first plan its building plan check approval. check within 15 business days of submittal. Developer shall provide revisions to first plan check comments within 15 business days of receipt of comments. The City and Developer shall respond within 10 business days thereafter for each additional plan check round. 15 Completion of Building Plan Check and Upon satisfaction of all conditions of Issuance of Construction Permits. City shall approval for buildings, public improvement, issue construction permits. landscape and/or other required reviews and payment of all required building permit and development impact fees. 16 Submission of Certificates of Insurance. Prior to the commencement of construction. Developer shall submit Certificates of Insurance to Agency in accord with Section 306 of this Agreement. Attachment No. 7-3 0 ESCROW FOR PURCHASE OF LAND 17 Open Escrow. Agency will open escrow to sell land to Thirty (30) days prior to the Developer. submission of the Developer's first application for tax credits. 18 Title Exceptions. The Developer shall submit to the Within thirty (30) calendar days Agency its written approval or disapproval of the after the Developer receives the exceptions to title per Section 203. Agency shall Preliminary Title Report from the respond in accordance with Section 203. Agency. 19 Final Environmental Release. Developer shall complete Within sixty (60) calendar days after physical and environmental investigation of the Site and Opening of Escrow. provide a written release to the Agency. 20 Deposit of Documents into Escrow. Not less than three (3) business days The Agency and Developer shall execute and deposit prior to Close of Escrow. with Escrow the Regulatory Agreement, the Agency Loan Promissory Note, the Agency Loan Deed of Trust and such other documents required to be recorded at the Close of Escrow. 21 Close of Escrow. The Close of Escrow shall occur as Within thirty (30) calendar days specified in Section 205 of this agreement. after Agency and Developer have complied with all conditions precedent to closing as stated in Section 205 of this Agreement, CONSTRUCTION 22 Commencement of Construction. Developer shall Within one hundred fifty (150) commence Construction of building and common area calendar days after Federal 9% Tax improvements. Credit Award, if all City project approvals are obtained prior to the Tax Credit Application, otherwise no later than two hundred and seventy (270) days after Federal 9% Tax Credit Award. 23 Completion of Construction. Developer shall complete Not later than the last day of the Construction of the buildings and all site and off-site second calendar year after Federal improvements in accordance with all conditional 9% Tax Credit Award. approvals. 24 Certificate of Completion. Developer shall request and Upon written request from Agency shall issue a Release of Construction Covenants Developer and a determination by (Attachment No. 6) for completion of the Construction of the Agency that all conditions of the the Housing Complex per Section 311. Agreement have been satisfied. Attachment No. 7-4 r1 u ATTACHMENT NO.8 SCOPE OF DEVELOPMENT SEASONS SENIOR APARTMENTS II, SAN JUAN CAPISTRANO, CA Location The proposed site for the Seasons Senior Apartments II is located at the corner of Paseo Espada and Rancho Viejo Road in San Juan Capistrano, California. The usable site is approximately 1.3 acres. Housin¢ tune The development will be an 38 -unit senior apartment community. Architectural Goals The award-winning KTGY Architects are designing the project. Careful consideration will be given to designing a project that meets the demands of affordability, yet has the architectural amenities to present itself as a quality market rate comparable apartment community. The Seasons phase one will serve as the architectural model for phase II. The Project The project will consist of one two-story building. Construction will be Type V, wood -frame construction, with clay tile roofs, stucco exterior and wood trim and accents. The design will be a Mediterranean style consistent with phase I. The balconies and patios will be framed and covered. The unit mix will be as follows: Number of_u_ nits Bedrooms _ Unit size 30 1 552 ft' 8 2 778 fr Parking will be consistent with City requirements, and will allo0 for 38 spaces. Phase II will offer residents shaded outdoor seating and community laundry facilities. All of the existing shared amenities of Phase I will be available to the residents of Phase II. Existing amenities include Community Room, Pool, and Spa. Management staff for Phase I will be responsible for management duties over Phase I1. Attachment No. 8-1 n Unit Amenities All units will feature: n U • covered interior entrances • plush carpeting in living areas • vinyl flooring in kitchens and baths • vertical blinds throughout • individually controlled heating • kitchen appliances including, range, refrigerator, dishwasher and disposal • cable television available • smoke alarms Proiect Amenities All common areas shall be professionally planned and decorated. Amenities will include: • Entry lobby with designer flooring, seating and decor • Elevator • Community laundry room Exterior common areas shall include: • Shaded outdoor seating area Attachment No. 8-2 ATTACHMENT NO.9 RECORDING REQUESTED BY: AND WHEN RECORDED MAIL TO: �J This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. CERTIFICATE OF COMPLETION THIS CERTIFICATE OF COMPLETION (the "Certificate") is hereby made as of , 200_, by the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), in favor of SAN JUAN CAPISTRANO HOUSING INVESTORS Il, LP, a California limited partnership (the "Owner"). RECITALS A. The Agency and the Owner have entered into an Disposition and Development Agreement dated as of , 2006 (the "Agreement"), which Agreement provides for the development of a Housing Project on certain real property situated in the City of San Juan Capistrano, California, and more particularly described on Exhibit "A" attached hereto and made a part hereof by this reference (the "Development of the Housing Project"). As required in the Agreement, the Agency shall furnish the Owner with a Certificate of Completion upon completion of the Development of the Housing Project, which Certificate shall be in such form as to permit it to be recorded in the Orange County Recorder's Office. B. The Agency has conclusively determined that the Development of the Housing Project required by the Agreement to be made to the Housing Project has been satisfactorily completed. NOW, THEREFORE, the Agency hereto certifies as follows: 1. As provided in the Agreement, the Agency does hereby certify that the Development of the Housing Project has been fully and satisfactorily performed and completed in accordance with the Agreement. 2. After the recordation of this Certificate, any person or entity then owning or thereafter purchasing, or otherwise acquiring any interest in the Housing Project will not (because of such ownership, purchase, or acquisition) incur any obligation or liability under the Agreement, except that such party shall be bound by any and all of the covenants, conditions, and restrictions which survive such recordation. 3. This Certificate is not a notice of completion as referred to in Section 3093 of the Attachment No. 9-1 0 California Civil Code. 0 4. The recitals above are incorporated in full as part of the substantive text of this Release. IN WITNESS WHEREOF, the Agency has executed this Certificate as of the date set forth above. ATTEST: Margaret R. Monahan, Agency Secretary SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic Joe Soto, Chairman APPROVED FOR RECORDING: SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership Attachment No. 9-2 Exhibit "A" LEGAL DESCRIPTION OF PROPERTY That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages 1 through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages 1 through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Exhibit A-1 0 STATE OF CALIFORNIA ss. COUNTY OF ORANGE On before me, , Notary Public, not Nameo otary Public) 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 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer Title(s) ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Emity(ies) DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Number Of Pages Date Of Document Signer(s) Other Than Named Above 0 ATTACHMENT NO. 10 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director 0 This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383 REGULATORY AGREEMENT THIS REGULATORY AGREEMENT (the "Agreement") is entered into as of ,200—, by and between the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership (the "Owner"). RECITALS A. Owner has acquired from the Agency certain real property located within the City of San Juan Capistrano, as particularly described in the Legal Description attached hereto as Exhibit A, which is incorporated herein by reference (the "Site"). B. Owner desires to construct a thirty-eight (38) unit multifamily affordable senior housing development on the Site (the "Housing Project"), and to make available and rent the apartment units within the Housing Project (the "Housing Units') for low and very low income persons at an affordable rent. C. Owner and Agency have entered into a Disposition and Development Agreement (the "DDA") dated as of November 7, 2006. Subject to the terms and conditions therein, the Owner has agreed to acquire the Site and construct and operate the Housing Project, the Agency has agreed to provide financial assistance to Owner, and the Owner has agreed to make available and lease twenty- eight (28) of the Housing Units to Very Low Income Households, and ten (10) of the Housing Units to Lower Income Households, all at an Affordable Rent (as those terms are defined herein). The execution and recording of this Agreement is a requirement of the DDA. NOW, THEREFORE, the parties hereto agree as follows: 1. Number of Affordable Units. Owner agrees to make available, restrict occupancy to, and rent twenty-eight (28) of the Housing Units to Very Low Income Households, and ten (10) of the Housing Units to Lower Income Households, all at an Affordable Rent. One of the Housing Units may be reserved for the on-site property manager, provided that such property manager meets the income requirements provided for such unit. Attachment No. 10-1 0 0 2. Duration of Affordability Requirements. The Housing Units shall be subject to the requirements of this Agreement for fifty-five (55) years from the date of the City's issuance of a final certificate of occupancy for the Housing Project. The duration of this requirement shall be known as the "Affordability Period." 3. Selection of Tenants. Owner shall be responsible for the selection of tenants for the Housing Units in compliance with lawful and reasonable criteria, as set forth in the Regulatory Agreement and the Management Plan which is required to be submitted and approved by the Agency pursuant to Section 10 hereof. 4. Household Income Requirements. Following the initial lease -up of the Housing Units, and annually thereafter, the Owner shall submit to Agency, at Owner's expense, a summary of the income, household size and rent payable by each of the tenants of the Housing Units. At the Agency's request, the Owner shall also provide to the Agency completed income computation and certification forms, in a form reasonably acceptable to the Agency, for any such tenant or tenants. Owner shall obtain, or shall cause to be obtained by the Property Manager, a certification from each household leasing an Affordable Unit demonstrating that such household is a Very Low Income Household or Lower Income Household, as applicable, and meets the eligibility requirements established for the Housing Unit. Owner shall verify, or shall cause to be verified by the Property Manager, the income certification of the household. 5. Affordable Rent. The maximum Monthly Rent chargeable for the Affordable Units shall be annually determined in accordance with the following requirements. The Monthly Rent for the Affordable Units to be rented to Very Low Income Households shall not exceed one -twelfth (1/12) of thirty percent (30%) of fifty percent (50%) of Orange County Median Income for a family of a size appropriate to the unit. The Monthly Rent for the Affordable Units to be rented to Lower Income Households shall not exceed one -twelfth (1/12) of thirty percent (30%) of sixty percent (60%) of Orange County Median Income for a family of a size appropriate to the unit. For purposes of this Agreement, "Monthly Rent" means the total of monthly payments for (a) use and occupancy of each Affordable Unit and land and facilities associated therewith, (b) any separately charged fees or service charges assessed by the Owner which are required of all tenants, other than security deposits, (c) a reasonable allowance for an adequate level of service of utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuels, but not including telephone service, and (d) possessory interest, taxes or other fees or charges assessed for use of the land and facilities associated therewith by a public or private entity other than Owner. In the event that all utility charges are paid by the landlord rather than the tenant, no utility allowance shall be deducted from the rent. For purposes of this Agreement, "family of a size appropriate to the unit" means two parsons for a one -bedroom unit, and three persons for a two-bedroom unit. 6. Marketing Program. Each Affordable Unit shall be leased to tenants selected by the Owner who meet all of the requirements provided herein. Owner shall prepare and obtain Agency's approval, which approval shall not be unreasonably withheld, of a marketing program for the leasing of the Affordable Units at the Housing Project (the "Marketing Program"). The Marketing Program shall require the Owner to give priority notice to tenants of other affordable housing projects in the City. The leasing of the Affordable Units shall thereafter be marketed in accordance with the Marketing Program as the same may be amended from time to time with Agency's prior written Attachment No. 10-2 0 0 approval, which approval shall not unreasonably be withheld. Owner shall provide Agency with periodic reports with respect to the leasing of the Affordable Units. The Agency agrees to exercise reasonable efforts to assist Owner in connection with the implementation of the Marketing Program; provided, however, Agency shall not be under any obligation to incur any out-of-pocket expenses in connection therewith. 7. Design and Occupancy of Senior Units. Owner shall restrict occupancy of all Housing Units to "Senior Citizens" and "Qualified Permanent Residents" (as those terms are or may be defined in California Civil Code Section 51.3). California Civil Code Section 51.3 presently provides as follows: At least one person in residence in each dwelling unit must be a Senior Citizen, and other residents in the same dwelling unit who are not Senior Citizens must be Qualified Permanent Residents. Temporary guests of a Senior Citizen or Qualified Permanent Resident shall be allowed for a period of not more than sixty (60) days in any twelve (12) month period. Upon the death, dissolution of marriage, hospitalization or other prolonged absence of the Senior Citizen in a dwelling unit, any Qualified Permanent Resident who has continuously resided in the dwelling unit with such Senior Citizen shall be permitted to continue as a resident of that dwelling unit. "Permitted Health Care Residents" (as that term is or may be defined in California Civil Code Section 51.3) shall be permitted to occupy any dwelling unit during any period that such person is actually providing live in, long term or hospice health care to a Senior Citizen tenant or Qualified Permanent Resident tenant for compensation. Notwithstanding the foregoing, however, in the event that the Owner in its sole discretion elects to provide one of the Housing Units for residency by an on-site manager, the manager's unit shall not be required by this Agreement to be restricted to Senior Citizens and Qualified Permanent Residents. 8. Relationship to Tax Credit Requirements. Notwithstanding any other provisions of this Agreement, to the extent that the regulatory agreement executed by the Owner as a requirement of receiving the Tax Credits (the "Tax Credit Regulatory Agreement") is less restrictive with respect to the requirements applicable to tenant selection, tenant income levels and unit rent levels than as provided in this Agreement and the DDA, this Agreement and the DDA shall control. 9. Maintenance. The Owner shall maintain the Housing Project or cause it to be maintained in a decent, safe and sanitary manner, and in accordance with the standard of maintenance of first class senior apartment units within Orange County, California. If at any time Owner fails to maintain the Housing Project in accordance with this Agreement and such condition is not corrected within five days after written notice from the Agency with respect to graffiti, debris, and waste material, or thirty days after written notice from the Agency with respect to general maintenance, landscaping and building improvements, then the Agency, in addition to whatever remedy it may have at law or at equity, shall have the right to enter upon the applicable portion of the Housing Project and perform all acts and work necessary to protect, maintain, and preserve the Housing Project, and to attach a lien upon the Housing Project, or to assess the Housing Project, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the Agency and/or costs of such cure, including a reasonable administrative charge, which amount shall be promptly paid by Owner to the Agency upon demand. 10. Management Plan; Property Management. The Owner shall submit for the reasonable approval of the Agency a "Management Plan" which sets forth in detail the Owner's property management duties, a tenant selection process in accordance with Section 6 hereof, a security system and crime prevention program, the procedures for the collection of rent, the procedures for eviction of tenants, the rules and regulations of the Housing Project and manner of Attachment No. 10-3 0 0 enforcement, a standard lease form, an operating budget, the identity of the manager of the Housing Project (the "Property Manager"), the social services program to be provided pursuant to Section 13 hereof, and other matters relevant to the management of the Housing Project. The Management Plan shall require the Owner to adhere to a fair lease and grievance procedure and provide a plan for tenant participation in management decisions. The management of the Housing Project shall be in compliance with the Management Plan which is approved by the Agency. If the Agency determines that the performance of the Property Manager is deficient based upon the standards set forth in the Management Plan and in this Agreement, the Agency shall provide notice to the Owner of such deficiencies, and the Owner shall use its best efforts to correct such deficiencies. In the event that such deficiencies have not been cured within the time set forth in Section 701 of the DDA, the Agency shall have the right to require the Owner to immediately remove and replace the Property Manager with another property manager or property management company which is reasonably acceptable to the Agency, which is not related to or affiliated with the Owner, and which has not less than five (5) years experience in property management, including significant experience managing housing facilities of the size, quality and scope of the Housing Project. 11. Capital Reserve Requirements. The Owner shall also, or cause the Property Manager to, annually set aside an amount of Two Hundred Fifty Dollars ($250) per Housing Unit (or such larger amount as may be required by TCAC or a Housing Project lender), from the gross rents received from the Housing Project, into a separate interest-bearing trust account in the name of the Owner (the "Capital Replacement Reserve"); provided, however, to the extent the Owner is required by any lender to maintain a separate account to hold deposits for capital reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be adjusted annually by the Consumer Price Index (or such larger amount as may be required by TCAC or a Housing Project lender). Funds in the Capital Replacement Reserve shall be used for capital replacements to the Housing Project fixtures and equipment which are normally capitalized under generally accepted accounting principles. The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve the Owner of the obligation to undertake necessary capital repairs and improvements and to continue to maintain the Housing Project in the manner prescribed herein. Not less than once per year, Owner, at its expense, shall submit to the Agency an accounting for the Capital Replacement Reserve. Capital repairs to and replacement of the Housing Project shall include only those items with a long useful life, including without limitation the following: carpet and drape replacement; appliance replacement; exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement; asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; common area repainting, and uninsured losses due to casualties such as earthquakes. 12. Operating Budget and Reserve. The Owner shall submit to Agency on not less than an annual basis an operating budget for the Housing Project, which budget shall be subject to the written approval of the Agency Executive Director or designee, which approval shall not be unreasonably withheld, conditioned or delayed. The Owner shall, or shall cause the Property Manager to, set aside in a separate interest-bearing trust account in the Owner's name, commencing upon the rental of the Housing Units, the sum of Seventy -One Thousand Dollars ($71,000), or such larger amount as may be required by TCAC or a Housing Project lender (the "Operating Reserve"), Attachment No. 10-4 0 E and shall make further deposits from the Annual Project Revenue, to the extent available, to replenish the Operating Reserve to the amount existing in such account prior to the withdrawal of funds; provided, however, to the extent the Owner is required by any lender to maintain a separate account to hold deposits for operating reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be retained in the Operating Reserve to cover shortfalls between Housing Project income and actual operating expenses, and emergency expenses (such as uninsured casualties), but shall in no event be used to pay for capital items properly payable from the Capital Replacement Reserve. Owner shall, not less than once per every twelve (12) months, submit to the Agency evidence reasonably satisfactory to the Agency of compliance herewith. 13. Social Services. At all times during the Affordability Period, Owner shall provide, or cause to be provided, activities and programs appropriate to the needs of the residents of the Housing Project, with the selection of such activities and programs to be determined by Owner in collaboration with the residents of the Housing Project and the adjacent senior housing development owned by an affiliate of the Owner. The specific types of social services to be provided shall be submitted to and approved by the Agency, and may be revised with the prior approval of the Agency, which approval shall not be unreasonably withheld. 14. Prohibited Uses. None of the Housing Units in the Housing Project shall at any time be utilized on a transient basis, nor shall the Housing Project or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium or rest home. 15. Non Discrimination Covenants. Owner covenants by and for itself, its successors 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, religion, sex, marital status, familial status, disability, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Housing Project, nor shall Owner itself or any person claiming under or through it, 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 Housing Project. The Owner shall refrain from restricting the rental, sale or lease of the Housing Project on the basis of race, color, creed, religion, sex, marital status, familial status, disability, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (i) 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, familial status, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself 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 land herein conveyed. The foregoing covenants shall run with the land." (ii) 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 Attachment No. 10-5 0 0 her, and this lease is made and accepted upon and subject to the following conditions: "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, familial status, disability, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, 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." (iii) In contracts: "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, familial status, disability, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself 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 of the premises." The covenants established in this Section 15 shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency and its successors and assigns, and shall remain in effect in perpetuity. 16. Monitoring and Recordkeeping. Throughout the Affordability Period, Owner shall comply with all applicable recordkeeping and monitoring requirements set forth in Health and Safety Code Section 33418 and shall annually complete and submit to Agency a report, prior to April 15 of each year, which includes the name, address, income and age of each occupant of an Affordable Unit, identifying the bedroom count and Monthly Rent for such Affordable Unit. Agency agrees that the Owner may submit reporting forms prepared and submitted in connection with the Tax Credits, to the extent those forms contain the information required hereunder. Representatives of the Agency shall be entitled to enter the Housing Project, upon at least seventy-two (72) hours prior written notice, to monitor compliance with this Agreement, to inspect the records of the Housing Project, and to conduct an independent audit or inspection of such records. The Owner agrees to cooperate with the Agency in making the Housing Project available for such inspection or audit. Owner agrees to maintain records in businesslike manner, and to maintain such records for the term of this Agreement. 17. Compliance With Laws and DDA. The Owner shall cavy out the design, development and operation of the Housing Project in conformity with the DDA and all applicable laws, including all applicable state labor standards, City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. 18. Duty to Prevent Hazardous Material Contamination. During the development and operation of the Housing Project, the Owner shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment on or under the Site. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. The Owner shall notify the Agency, and provide to the Agency a copy or copies, of any notices of Attachment No. 10-6 0 0 violation, notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements and reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous Materials and underground tanks, and the Owner shall report to the Agency, as soon as possible after each incident, any unusual, potentially important incidents in the event of a release of any Hazardous Materials into the environment. For purposes of this Section 18, "Governmental Requirements" shall mean all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the City, or any other political subdivision in which the Housing Project is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Agency, the Owner or the Housing Project. For purposes of this Section 18, "Hazardous Materials" means any substance, material, or waste which is or becomes, regulated by any local governmental authority, the State of California, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §§6901, et seq. (42 U.S.C. §6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§9601, et seq. Notwithstanding the foregoing, "Hazardous Materials" shall not include such products in quantities as are customarily used in the construction, maintenance, Rehabilitation or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Housing Project, including without limitation alcohol, aspirin, tobacco and saccharine. 19. Successors and Assigns. This Agreement shall run with the land, and all of the terms, covenants and conditions of this Agreement shall be binding upon the Owner and the Agency and the permitted successors and assigns of the Owner and the Agency. Whenever the term "Owner," or "Agency" is used in this Agreement, such term shall include any other successors and assigns as herein provided. 20. No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the Agency and its successors and assigns, and Owner and its successors and assigns, and no other person or persons shall have any right of action hereon. 21. Partial Invalidity. If any provision of this Agreement shall be declared invalid, Attachment No. 10-7 0 0 illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. 22. Governing Law. This Agreement and the documents and other instruments given pursuant hereto shall be construed in accordance with and be governed by the laws of the State of California. Any references herein to particular statutes or regulations shall be deemed to refer to successor statutes or regulations, or amendments thereto. 23. Amendment. This Agreement may not be changed orally, but only by agreement in writing signed by Owner and the Agency. IN WITNESS WHEREOF, the parties hereto have executed this Regulatory Agreement effective as of the date and year set forth above. ATTEST: Margaret R. Monahan, Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Jon Goetz, Agency Counsel SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership LN AGENCY: SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic Joe Soto, Chairman Attachment No. 10-8 Exhibit "A" LEGAL DESCRIPTION OF PROPERTY That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages 1 through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages 1 through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Exhibit A-1 0 STATE OF CALIFORNIA COUNTY OF ORANGE On personally appeared ❑ personally known to me -or- 11 ss. before me, , Notary Public, not Name of Notary Public) ❑ 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer Title(s) ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Persons) Or Entity(ies) DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Number Of Pages Date Of Document Signer(s) Other Than Named Above 0 • CRA 11/7/2006 • CRA AGENDA REPORT E1 TO: Dave Adams, Executive Director 9v - FROM: Douglas D. Dumhart, Economic Development Manager SUBJECT: Consideration of Land Acquisition and Funding for the Addition of 38 New Units to the Seasons Senior Affordable Apartment Complex on the Corner of Paseo Espada and Rancho Viejo Road - (Seasons Phase 11) (APN 666- 241-07) (City Council Priority #4a.) RECOMMENDATION: 1.) Open the Public Hearing and receive testimony on the proposed Purchase and Sale Agreement and Disposition Development Agreement to facilitate the addition of 38 new units to the Seasons Apartment complex; and, 2.) Upon conclusion of the Public Hearing make a motion, to approve the Purchase and Sale Agreement by and between the Agency and Buie/Stoddard Properties for the acquisition of APN # 666-241-07; and, • 3.) Upon approval of the Purchase and Sale Agreement make a motion, to adopt a Resolution approving the Disposition and Development Agreement by and between the Agency and Seasons SJC 11, L.P., containing the Terms for the addition of 38 new units to the Seasons Senior Affordable Apartment Complex (Seasons Phase II). SUMMARY: The owner (Buie/Stoddard Properties, hereinafter "Buie") of the vacant parcel located at the northwest comer of Rancho Viejo Road and Paseo Espada and immediately south and adjacent to the Seasons Senior Affordable Apartment complex has offered to sell its property to the Community Redevelopment Agency ("Agency") for the purpose of developing additional affordable housing. Redevelopment Agency staff has approached the owner of the adjacent affordable senior's apartment complex (Seasons SJC 11, LP, hereinafter "Seasons") about the possibility of constructing additional senior apartments adjacent to their existing facility. Seasons has indicated a desire to expand their operations. Seasons has prepared a concept plan that identifies the ability to create 30 — one bedroom and 8 — two bedroom units for a total of 38 new affordable apartments, as well as 38 off-street parking spaces on the approximately 1.2 acre vacant parcel. • Since the proposed project would essentially be an addition to an existing complex, there are operational and development efficiencies that make the project more Agenda Item Paqe 2 November 7, 2006 desirable than a stand-alone project. The additional 38 units would have access to the existing Seasons amenities (i.e., swimming pool, spa, and social room) and the new units would be managed by the existing on-site manager thereby, eliminating the need for an additional manager's unit and leasing office. To that end, staff and Seasons have prepared a concept plan and the terms and conditions for a 38 -unit expansion of the Seasons Senior Affordable Apartments. Staff has evaluated the merits of the concept and has concluded the proposal warrants consideration by the City Council and Agency Board of Directors at this time. BACKGROUND: On February 24, 2006, the Agency received an offer to sell the vacant parcel on the corner of Rancho Viejo Road and Paseo Espada (Hereinafter "Property") for an addition to the adjacent Senior Housing project from Buie. The offer letter is provided as Attachment 1 to this report. Agency staff engaged Seasons in discussion for a possible future expansion. Seasons prepared a concept plan and development pro -forma for evaluation. The concept plan is provided as Attachment 2. The Agency performed an independent financial review of Season's proposed development pro -forma. Results of this analysis are summarized in the Financial Considerations section below. The Agency also conducted an appraisal of the Property which determined a market value as high density affordable seniors housing at $2.51 M. The results of the appraisal were shared with Buie. Buie concurred with the appraised value of the property and established the $2.51 M value as their asking price. Land acquisition terms and conditions Agency staff and counsel have prepared for the Board of Directors consideration a Purchase and Sale Agreement for the acquisition of the property. The Purchase and Sale Agreement is provided as Attachment 3. Below is a summary of the proposed deal points between the Agency and Buie for the Agency's purchase of approximately 1.2 acres of unimproved real property located at the northwest corner of Rancho Viejo Road and Paseo Espada, APN 666-241-07 (the "Site"). The Agency intends to resell the Site to Seasons, for the expansion of its existing senior affordable apartment complex (the "Project"). 1. Purchase Price. $2,510,000. The purchase price (less the amount of the Deposit) will be payable in full at the close of escrow. 2. Deposit. $100,000. The Deposit will be refundable until the expiration of a 45 -day due diligence period, and then will become non-refundable. 3. Due Diligence. Agency, Seasons and their consultants will be entitled to access the Site prior to the close of escrow to conduct environmental, soils, geotechnical and other tests and inspections. Seller will make available to the Agency and Seasons for their review all studies, reports, tests and other information in its 11 • Agenda Item Page 3 0 November 7. 2006 possession relating to the condition of the Site, but without warranty of completeness or accuracy by the Seller. 4. Conditions to Closing. • Agency and Seasons have executed a Disposition and Development Agreement (the "DDA") for the sale of the Site to Seasons and Seasons development of the Project on the Site. • Agency has issued tax allocation bonds with sufficient proceeds to fund the purchase price and any Agency grant or loan required under the DDA. • Agency and Seasons have approved the physical and environmental condition of the Site. Agency and Seasons have approved the title condition of the Site. The Site is vacant, and there are no persons with a right to occupy the Site. 5. Escrow Closing. The escrow will close upon satisfaction of the closing • conditions, but no later than December 22, 2006. 6. Title. Agency will receive an ALTA extended coverage owner's policy of title insurance at closing. 7. Closing Costs. The parties will each pay half of all escrow costs and recording fees. Seller will pay the cost of all documentary transfer taxes. Seller will pay the portion of the title insurance premium equal to the cost of a CLTA policy in the amount of the purchase price, and the Agency will be responsible for all additional costs thereof. 8. Environmental. There will be no releases or indemnification obligations with respect to hazardous materials on the Site. No party will waive any common law or statutory rights it may have against any other party or third persons arising from any hazardous materials on the Site. Disposition and Development Agreement Terms and Conditions Agency staff and counsel have prepared for the Board of Directors consideration of a DDA between the Agency and Seasons for the development of Seasons Phase 1138 - unit expansion. The Disposition and Development Agreement is provided as Attachment 4 to this report. Below is a summary of the DDA deal points: 1. Agency Acquisition of Site. The Agency does not currently own the Site. The owner of the property has offered the Site to the Agency for $2,510,000. The • Agency would acquire the Site through a negotiated purchase and sale agreement with Buie Stoddard Properties upon completion of a fair market value analysis. Agenda Item Paoe 4 November 7, 2006 2. Purchase Price. The Agency would resell the Site to Seasons for the same purchase price as it pays for the Site. The purchase price will be payable through the Agency Loan, as described below, and no cash payment will be due at the close of escrow. 3. Due Diligence. Seasons and its consultants will be entitled to access the Site prior to the close of escrow to conduct environmental, soils, geotechnical surveying and other tests and inspections. 4. Title. Seasons will receive an ALTA extended coverage owner's policy of title insurance. The Agency will pay the portion of the title insurance premium equal to the cost of a CLTA policy in the amount of the purchase price, and the Seasons will be responsible for all additional costs thereof. 5. Improvements. Seasons will construct a multifamily affordable housing development for senior citizens on the Site, consisting of a two story 38 unit apartment complex and 38 space off-street parking lot (the "Project"). The Project will be designed to meet the physical and social needs of senior citizens, and will contain all of the design elements for senior citizen housing developments which are required under Civil Code Section 51.2. The City's design criteria will be in accordance with those of Phase I. Extraordinary requirements will be paid for with additional soft financing. 6. Design Review. All plans and specifications will be reviewed in accordance with the City's normal design review process. The site currently has a General Plan Land Use Designation of General Commercial and will require a General Plan Amendment to Affordable Family/Senior Housing. In addition to the GPA, the project will require approval of an Architectural Control (AC) Application and Zoning concession for set -back: 7. Prevailing Wages. The parties intend that prevailing wages will not be required to be paid in connection with the construction of the Project. Based on precedential prevailing wage determinations of the Department of Industrial Relations currently in effect (but which are the subject of pending litigation), the allocation of Federal and/or State Low Income Housing Tax Credits to the Project would not require the payment of prevailing wages. The Agency assistance to the Project would consist only of a below-market interest rate loan to a project in which 40% or more of the housing units are restricted for at least 55 years to persons earning no more than 80% of area median income, which would qualify for the prevailing wage exemption set forth in Labor Code Section 1720(c)(6)(E). In the event that the parties later determine, as a result of the final resolution of pending litigation or a subsequent precedential determination of the Department of Industrial Relations, that prevailing wages are required to be paid for the construction of the Project, Seasons will seek an allocation of additional tax credits to reflect the additional cost of construction of the Project, and the Agency will loan to Seasons any additional funds that are necessary to comply with the prevailing wage requirement, as part of the Agency Loan described below. 8. Agency Loan. The Agency will loan to Seasons an amount equal to the 0 • Agenda Item November 7, 2006 Page 5 purchase price of the Site, plus the "gap" amount which cannot be obtained through other financing (the "Agency Loan"). The amount of the Agency Loan will be not less than the purchase price plus $884,000, which is the gap amount as determined by Keyser Marston Associates and will be not more than the purchase price plus $2,390,000, which is the gap amount as determined by the Developer. The actual amount of the Agency Loan will be reasonably determined by the Agency prior to the close of escrow for the sale of the Site to Seasons, based upon a new economic analysis of the Project financing to be performed at that time. The amount of the Agency Loan may be increased to pay prevailing wages, as described above. The full amount of the Agency Loan proceeds will be disbursed at the close of escrow to pay for governmental fees and to reimburse Seasons for certain predevelopment costs. The term of the Agency Loan will be [55 years] from the date of opening of the Project. Interest will accrue at the rate of [3%], compounded annually. Annual payments will be made equal to [50%] of the residual receipts of the Project, after payment of operating costs, debt service, reserve deposits, and other senior obligations. These are the current terms in Section 302 of the DDA. The remaining balance will be due upon the end of the term of the Agency Loan. Seasons will execute a non-recourse promissory note in the amount of the Agency Loan, which will be secured by a deed of trust recorded as an encumbrance to the Site. The deed of trust will be subordinate to approved construction and permanent financing. • 9. Source of Agency Funds. The Agency will use funds from its Low and Moderate Income Housing Fund, up to the maximum amount allowed for senior housing projects pursuant to the "proportionality" requirement of Health and Safety Code Section 33334.4. The Agency will obtain the balance of required funding from the City's Housing In -Lieu Fee Fund. The discretionary funds are to first be applied towards the Land acquisition. Any balance plus housing funds are to be applied towards government fees, predevelopment costs, and construction. 10. Developer Financing. Seasons will apply to the California Tax Credit Allocation Committee ("TCAC") for "9%" Federal and/or State Low Income Housing Tax Credits in the first funding allocation round in 2007 (if the developer submits to TCAC in 2007 as a "test' application, that won't count toward the three applications). Seasons will also seek other sources of subsidized financing for the Project, including a loan from the Affordable Housing Program of the Federal Home Loan Bank and a loan from the County of Orange. In the event that the Project approvals timeline is met and the Project does not receive an allocation of tax credits in the first TCAC funding allocation round in 2007, Seasons will resubmit in the next TCAC tax credit allocation round, and will resubmit in the next TCAC tax credit allocation round after that if an allocation of 9% tax credits is not obtained in the second application round. In the event that an allocation of 9% tax credits has not been obtained in the first three allocation rounds, the Agency and Seasons will meet and confer to determine whether Seasons should make further applications for 9% tax credits, or whether Season should pursue alternate financing, which may include multifamily bond financing and an allocation of "4%" Federal and/or State Low Income Housing Tax Credits. If after the meet and • confer process the parties cannot reach an agreement as to how Seasons should seek Agenda Item Pane 6 November 7, 2006 to finance the Project, either party may terminate the agreement. There will be no transfer of land and no closing until the Seasons has received an allocation of 9% credits, bonds or both satisfactory to Seasons in its sole and absolute discretion. 11. Income and Affordability Requirements. 10 of the apartment units in the Project will be restricted to Lower Income Households earning 60% or less of the area median income and 28 of the apartment units in the Project will be restricted to Very Low Income Households earning 50% or less of the area median income. Rents for the Low Income apartment units will be limited to 30% x 60% of area median income for a household size appropriate to the unit (2 for a one -bedroom unit and 3 for a two- bedroom unit). Rents for the Very Low Income apartment units would be limited to 30% x 50% of area median income for a household size appropriate to the unit. One of the units may be reserved for the on-site property manager of the Project, but only if income -qualified. 12. Operation and Management of Project. Seasons will submit a marketing plan and management plan for the Agency's approval. The Agency will have the right to require a change in the property manager for deficient performance, and will have the right to approve new property managers. The Agreement will require the maintenance of a capital reserve and operating reserve at specified levels. Seasons will be required to provide a program of social services appropriate to the residents of the Project, as approved by the Agency. The Project will be subject to minimum maintenance standards. The management and operation of the Project will be coordinated with the management and operation of Seasons existing, adjacent senior multifamily housing complex. 13. Age Limitations. The Project will comply with the senior housing requirements of California Civil Code Section 51.2 — 51.4 and the Federal Fair Housing Act. The parties intend that the Project will qualify as a "senior citizen housing development" under Civil Code Section 51.3, and that all residents will need to be at least 55 years old or be "qualified permanent residents" or "permitted health care residents." General Plan Housing Element Consistency The current General Plan designation for the property is "General Commercial" which provides for a variety of retail, office, and service-oriented business activities serving the local and regional market area. The Zoning for the property is Planned Community (PC) and is controlled by Comprehensive Development Plan (CDP 84-1). The CDP currently allows for multi -family senior affordable housing. The proposed project will require a General Plan Amendment to "Affordable Family/Senior housing" which provides for up to 25.0 dwelling units per acre. The proposed project will restrict all units for low and/or very -low income households for a period of 55 years. The Housing Element and City's Municipal Code allows a 25 percent affordable housing density bonus for eligible affordable housing projects. For a 1.2 acre site with an existing density of 25.0 dwelling units per acre, the applicant is allowed to develop 38 affordable units (i.e. 1.2 acres x 25 x 1.25%). 0 • • Agenda Item Page 7 Senate Bill (SB) 18. 2004 November 7, 2006 Senate Bill (SB)18 was signed into law in September 2004 with the main provision taking effect on March 1, 2005. SB 18 requires cities and counties to contact, and consult with, California Native American Tribes before adopting or amending a General Plan. SB 18 was codified in the Government Code Section 65352 et al. The intent of the legislations is to establish meaningful consultation between tribal governments and local governments at the earliest possible point in the planning process to avoid potential conflicts. The California Native American Heritage Commission (NAHC) has developed a list of tribes for local governments to contact. SB 18 requires the city provide the tribe with notice of a General Plan Amendment and an invitation for consultation. The tribe has 90 days to request a consultation. On August 21, 2006, the city has provided notice to three contacts for the Juaneno Band of Mission Indians provided by NAHC. The City received a request for consultation from the Juaneno Band of Mission Indians. On October 18, 2006, the city held its first consultation meeting. Affordability Covenant • An affordability covenant will be recorded by the Community Redevelopment Agency that will require all units to remain affordable for a minimum of 55 years. The affordability covenants will run with the land. This affordability period exceeds the City's General Plan and Municipal Code requirements. Regional Housing Needs Assessment Requirements The project proposes to income restrict all 38 units to lower and very -low income households. Up to ten (10) of the households will be low-income households with a gross annual income no greater than 60 percent of the Orange County median income as published annually. The remaining twenty-eight (28) units will be restricted to very - low income households with a gross annual income no greater than 50 percent of the Orange County median income as published annually. The General Plan Housing Element contains a goal for the construction of 164 very -low income units and 116 low-income units by June 30, 2008. This deadline for compliance was extended from the original compliance date of June 30, 2005. The proposed project will help meet the RHNA goal by providing 38 additional affordable units. State Law and Zonino Concessions State law requires the City to allow up to three zoning concessions from our City development standards for affordable housing projects that contain at least 15% very - low units. The proposed project would need only one concession. The current zoning • requires a 30 foot setback from the property line on Rancho Viejo Road. As conceptually configured a zoning concession to a twenty foot setback along this Agenda Item Paae 8 November 7. 2006 property line is necessary to maintain 38 units and 38 off-street parking spaces on the site. California Environmental Quality Act "CEQA" review Staff has conducted a preliminary review of this project for compliance with the California Environmental Quality Act (CEQA) pursuant to Section 15060 of the CEQA Guidelines. An Initial Study was prepared for the project per Section 15063 of the CEQA Guidelines with a determination of a Mitigated Negative Declaration. Although the project could have a significant effect on the environment, there will not be a significant effect in this case because all potentially significant effects have been adequately analyzed and potentially significant impacts have been avoided or mitigated pursuant to the Initial Study (IS) and Mitigated Negative Declaration (MND). In compliance with CEQA and the City's environmental procedures, the Mitigated Negative Declaration was published for a 20 -day public review period which started on October 13, 2006 and concluded on November 1, 2006. A copy of the IS and MND are attached to the City Council item on this matter. A copy of the CEQA documents has also been made available for public review at the Planning Department, City Clerk's Office, the Community Center, and the San Juan Capistrano Library. The proposed affordable housing project, Purchase and Sale Agreement, and Disposition and Development Agreement were presented to the Housing Advisory Committee (HAC) on August 30, 2006. The HAC unanimously approved an action to forward a recommendation to the City Council and Agency Board of Directors to approve the proposed affordable housing project. FINANCIAL CONSIDERATIONS: Seasons has estimated the cost of the proposed 38 -unit Phase II to be $10.3M inclusive of entitlements, land, permits, fees, and construction costs. The Agency's financial consultant (KMA) estimated the project costs at approximately $9.6M. Seasons has identified approximately $7.9M in total funding sources assuming the project is awarded 9% tax credits. KMA believes there is $8.7M in possible funding sources and thus a difference of opinion in the amount of Agency contribution necessary to make the project happen. Table 1 on the following page summarizes the estimated feasibility gap for the project as estimated by the Agency's financial consultant and Seasons. Seasons is adamant that they would need the Agency to contribute the land plus a $2.39M subordinated loan to make the project possible. The loan combined with the land acquisition price of $2.51 M represents a commitment of $4.9M from the Agency for 38 affordable units or $129,000 per unit. 0 • Agenda Item Paoe 9 November 7, 2006 Contained within the estimated costs are $300,000 allocated for the possible relocation of the existing Seasons driveway should it be determined necessary, and $1.5M for City development and permit fees. Should Seasons first phase driveway not need to be relocated the amount of the loan could be reduced to $2.09M. Thus the bulk of the loan needed from affordable housing monies will go towards City development and permit fees. The $129,000 per unit cost to the Agency for developing an affordable unit is reasonable given today's market conditions. The cost estimates are based on the concept plan and are subject to changes depending on conditions that arise in the entitlement process and the economy. To mitigate the difference of opinion in the amount of financial assistance needed for the project the Seasons has agreed to secure bids on the approved plans and specifications prior to determining the final loan amount. Source of Funds. The Agency's capital improvement fund budget includes $3,020,000 for affordable housing projects. The Agency will use funds from its 20% set-aside up to the maximum amount allowed for senior housing projects pursuant to the "proportionality" requirement of Health and Safety Code Section 33334.4. Based on the Agency's proportionality analysis documented in the most recent Implementation Plan, the Agency can spend up to $2,843,000 of Housing set-aside funds on age restricted projects from January 1, 2002 through December 31, 2014. The difference between the $4.9M in required assistance and $2.8M in proportionally available housing set-aside funds ($2.05M) and is recommended to be funded from City Housing In -lieu fees. These funds will be contributed to the Agency's low and moderate income (20% set-aside) housing fund for the on an as -needed basis. However the funds committed by this fund combined with the Agency's share of the project loan will not exceed $2.39M. 33433 Summary Resort California Health and Safety Code Section 33433 require the preparation of a summary report which sets forth certain details of the proposed Disposition and Development Agreement. The summary report must be made available for public inspection no later than the first publication of the Public Hearing notice. Staff has placed all supporting documents of file with the Planning Department, City Clerk's office, The Community Table 1 KMA Seasons Difference Construction Cost $9,623,000 $10,296,000 ($673,000) (Less) Total Funding sources ($8,739,000) ( $7,903,000) ($836,000) Financial Gap $884,000 $2,393,000 ($1,509,000) Per Unit $23,300 $63,000 ($39,700) Contained within the estimated costs are $300,000 allocated for the possible relocation of the existing Seasons driveway should it be determined necessary, and $1.5M for City development and permit fees. Should Seasons first phase driveway not need to be relocated the amount of the loan could be reduced to $2.09M. Thus the bulk of the loan needed from affordable housing monies will go towards City development and permit fees. The $129,000 per unit cost to the Agency for developing an affordable unit is reasonable given today's market conditions. The cost estimates are based on the concept plan and are subject to changes depending on conditions that arise in the entitlement process and the economy. To mitigate the difference of opinion in the amount of financial assistance needed for the project the Seasons has agreed to secure bids on the approved plans and specifications prior to determining the final loan amount. Source of Funds. The Agency's capital improvement fund budget includes $3,020,000 for affordable housing projects. The Agency will use funds from its 20% set-aside up to the maximum amount allowed for senior housing projects pursuant to the "proportionality" requirement of Health and Safety Code Section 33334.4. Based on the Agency's proportionality analysis documented in the most recent Implementation Plan, the Agency can spend up to $2,843,000 of Housing set-aside funds on age restricted projects from January 1, 2002 through December 31, 2014. The difference between the $4.9M in required assistance and $2.8M in proportionally available housing set-aside funds ($2.05M) and is recommended to be funded from City Housing In -lieu fees. These funds will be contributed to the Agency's low and moderate income (20% set-aside) housing fund for the on an as -needed basis. However the funds committed by this fund combined with the Agency's share of the project loan will not exceed $2.39M. 33433 Summary Resort California Health and Safety Code Section 33433 require the preparation of a summary report which sets forth certain details of the proposed Disposition and Development Agreement. The summary report must be made available for public inspection no later than the first publication of the Public Hearing notice. Staff has placed all supporting documents of file with the Planning Department, City Clerk's office, The Community Agenda Item November 7, 2006 Center, and the San Juan Capistrano Library as of October 19, 2006, PUBLIC NOTIFICATION: A notice of Public Hearing must be published fortwo successiveweeks priortothe hearing in a newspaper of general circulation. A Public Hearing notice has been published in the Orange County Register on October 19, 2006, and the Capistrano Valley News on October 26, and November 2, 2006, to meet the noticing requirements. The Public Hearing Notice has also been posted on the project site, and posted at three public locations. *Seasons SJC, LP *Buie/Stoddard Properties. *Received copies of the Agenda report. Open the Public Hearing and receive testimony on the proposed Purchase and Sale Agreement and Disposition Development Agreement to facilitate the addition of 38 new units to the Seasons Apartment complex. 2. Upon conclusion of the Public Hearing make a motion, to approve the Purchase and Sale Agreement by and between the Agency and Buie/Stoddard Properties for the acquisition of APN # 666-241-07. 3. Upon approval of the Purchase and Sale Agreement make a motion, to adopt a Resolution approving the Disposition and Development Agreement by and between the Agency and Seasons SJC, L.P., containing the Terms for the addition of 38 new units to the Seasons Senior Affordable Apartment Complex - (Seasons Phase II). Respectfully submitted, Dougla'; D. Dumhart Economic Development Manager Attachment 1. Buie Offer Letter 2. Concept Site Plan 3. Purchase and Sale Agreement 4. Disposition and Development Agreement 5. 33433 Report. 6. Resolution Approving a DDA with Seasons 0 Buie bmd6vd f'rnperli es. I1. 11260 11 Camino Real • 00 San Die go. Ca I i torn i a 92130 26;6 Telephone 858 ^941400 Vacsimile 859 294 2401 ho iesmdd"dgwo' cam i'Ki)PF_KI FS A neem ben o/ Se 3''T ST'72 CAR❑ —P' UP February 24, 2006 Douglas Dumhart Economic Development Manager City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675. RE: Request for Community Redevelopment Agency Participation APN. #666-241-07 Asking Price: $2,613,600 Dear Mr. Dumhart: Is An affiliate of Buie Stoddard Properties has recently acquired the Ortega Business Center properties that include the existing retail/office center, Ortega Equestrian Center, the office cottages project and two vacant parcels of approximately 18 gross acres. The two unimproved and underutilized parcels lie within the Redevelopment Project Area. We believe that together we can assist the community in eliminating blighting conditions, creating employment and affordable housing opportunities and providing necessary public infrastructure improvements which will improve the quality and aesthetics of the area. More specifically, approximately 1.2 acres of vacant land located at the intersection of Rancho Viejo Road and Paseo Espada (as shown in Exhibit #1) within the redevelopment agency jurisdiction is an ideal location for an addition to the existing Seniors Housing project that is immediately adjacent to our vacant site. Such a development would be consistent with the General Plan and the adopted Specific Plan for the area. Development of this site for that use would assist you in meeting your affordable housing allocation with up to 38 dwelling units. We are offering this property to the Agency for a fair market value of $ 2,613,600. Further, the 16.8 vacant acres as shown in Exhibit #2 also lies within the redevelopment agency jurisdiction. it is our intention to develop this property consistent with the adopted Specific Plan for the area. Unfortunately, this parcel has adverse physical and economic conditions which impair its feasibility for development. Should development occur it would further the goals of the General Plan by constructing much needed • stabilization to the existing creek bank, developing trail extensions, providing ATTACHMENT employment opportunities, and other goals of the Redevelopment Agency. We expect to add an additional $60 Million of assessed value to the project area. In order for us to develop the parcel shown in Exhibit #2 to its highest and best use, we will require Agency assistance in vacating certain City street improvements as well as the use of an excess parcel of municipal land. We believe a "Development and Disposition Agreement' would be the appropriate instrument to facilitate our mutual goals. Our desire would be to we acceptable for developing the to the City. -k towards a Memorandum of Understanding mutually 16.8 acre site concurrently with selling the 1.2 acre parcel We look forward to your response and should you have any questions, please call me. Respectfully, Robert M. Irish President Buie Stoddard Properties Enclosures: Exhibitl Exhibit 2 CC: Jeff Stoddard . Q C m A x 650-14 OATEGq H/ORMY 3 �— as• — I r ! . q r to DA sew• � oa .O� ` o N f t N t sp35dd / c a ae o mea I v m vGvd53 � f / \ g ZO I \\\ � • � i O aha ma OAOtltlY I a / m � • I so -15 '� ssal4 d z 0 m 1 'I u 0 ATTACHMENT: EK 0 ATTACHMENT: PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS ORTEGA LAND COMPANY LLC, a California limited liability company "SELLER" And SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic "BUYER" First American Title Insurance Company (Mission Viejo) Escrow No. 1963617 31198] 4 ATTACHMENT 0 0 • TABLE OF CONTENTS Paee ARTICLEI Recitals....................................................................................................:................1 ARTICLE Definitions................................................................................................................1 ARTICLE3 Agreement Of Sale...................................................................................................3 ARTICLE 4 Buyer's Deliveries To Escrow Holder......................................................................4 ARTICLE 5 Seller's Deliveries To Escrow Holder.......................................................................5 ARTICLE 6 Conditions Precedent, Waiver And Termination......................................................5 ARTICLE 7 Pre -Closing Obligations_ .................. ............_ -...................... 6 ARTICLE8 The Closing..............................................................................................................8 ARTICLE 9 Proration, Fees And Costs......................................................................................10 ARTICLE 10 Distribution Of Funds And Documents..................................................................10 • ARTICLE I I Possession And inspection.....................................................................................11 ARTICLE 12 Warranties, Representations And Disclaimer.........................................................1 I ARTICLE 13 Delivery Of Documents, Liquidated Damages For Buyers Breach And Buyers Remedies For Seller's Breach....................................................................15 ARTICLE 14 Assignment By Buyer.............................................................................................17 ARTICLE15 Notices....................................................................................................................18 ARTICLE 16 Escrow Provisions..................................................................................................19 ARTICLE 17 General Provisions..................................................................................................20 • EXHIBITS "1" Description of Property "2" Seller's Grant Deed 113" Certificate of Acceptance "4" Certificate of Non -Foreign Status -i- 311987 4 PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS This PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS ("Agreement"), is dated as of September 1, 2006, and is entered into between ORTEGA LAND COMPANY LLC, a California limited liability company ("Seller"), and SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic ("Buyer"). This Agreement is entered into with reference to the recitals set forth in Article I and constitutes (i) a contract of purchase and sale between the parties, and (ii) escrow instructions to Escrow Halder, the consent of which appears at the end of this Agreement. Subject to the terms and conditions of this Agreement, Buyer will hand to Escrow Holder the Purchase Price in the amount and in the manner provided below, and any additional funds and instruments required from Buyer, to enable Escrow Holder to comply with these instructions, which Escrow Holder is to use on or before the Closing Date when Escrow Holder can perform pursuant to Articles 8, 9 and 10. ARTICLE 1 Recitals 1.1 The Property. Seller is currently the owner of fee title to the Property (defined in Article 2 and described on "Exhibit 1"). 1.2 Agreement of Sale. The City (defined in Article 2) has informed Seller that unless Seller agrees to sell the Property to the City, to the Buyer or to a developer designated by Buyer for the purpose of constructing affordable housing for senior citizens, the City would initiate acquisition proceedings to acquire the Property, including noticing and considering a resolution of necessity to acquire the Property by eminent domain. Based on the foregoing, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller, pursuant to the terns and conditions of this Agreement. 1.3 Disposition by Buyer. Buyer and the Developer intend to negotiate and enter into a disposition and development agreement pursuant to which, after the Close of this Escrow: (a) Buyer will convey the Property to the Developer; (b) the Developer will acquire the Property from Buyer; and (c) the Developer will construct affordable multifamily housing development for senior citizens. As more fully set forth in Section 17.15, the Developer is not a third party beneficiary of this Agreement and has no rights pursuant to this Agreement. ARTICLE 2 Definitions 2.1 Definitions. Unless the context otherwise indicates, whenever used in this Agreement: "Approved DDA" is defined in Section 7.4. "Cash" means (i) currency; or (ii) a check(s), currently dated, payable to Escrow Holder and honored upon presentation for payment; or (iii) if Escrow Holder requires, funds wite- transferred or otherwise deposited into Escrow Holder's general escrow account(s). "City" means the City of San Juan Capistrano, California, a municipal corporation. -1- 3119974 • • "Close of Escrow" means the date Seller's Grant Deed and other documents are filed for record. "Closing Date" means the earlier of (a) 10 days after the Approved DDA has been established pursuant to Section 7.4 and the Bonds have been issued pursuant to Section 7.5; or (b) December 20, 2006. "Contingency Date" means 45 days after the Escrow Opening Date. "DDA" is defined in Section 7.4. "Deposit" means $100,000.00 in Cash. "Developer" means a developer selected by Buyer to (a) acquire the Property from Buyer after the Close of Escrow; and (b) construct an affordable multifamily housing development for senior citizens on the Property. "Escrow" means the escrow created by this Agreement. "Escrow Holder" means the Mission Viejo, California office of First American Title Insurance Company. The telephone number and telecopier number for Escrow Holder are set forth in Article 15. "Escrow Opening Date" means the date Escrow Holder signs the "Consent of Escrow Holder" attached to this Agreement. • "General and Special Real Estate Taxes" means all charges evidenced by the secured tax bill relating to the Property issued by the Tax Collector of the county in which the Property is situated, including, but not limited to, amounts allocated to (i) county or City general governmental purposes; (ii) bonded indebtedness of the county or City; (iii) bonded or other indebtedness and operating expenses of any school, college, sewer, water, irrigation, hospital, library, utility, county service or other district; and (iv) any other lawful purpose. LJ "Hazardous Materials" means flammable materials, explosives, hazardous wastes, petroleum products, friable asbestos, toxic chemicals and other related substances and related materials, including, but not limited to, those substances defined as "hazardous substances", "hazardous materials" or "toxic substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §1801, el seq.; the Resource Conservation & Recovery Act, 42 U.S.C. §6901, et seq.; and also including those substances defined as "hazardous wastes" in §25117 of the California HEALTH & SAFETY CODE or as "hazardous substances" in §25316 of the California HEALTH & SAFETY CODE; in the regulations adopted and publications promulgated pursuant to all such federal and state laws; and those chemicals to which reference is made in the Safe Drinking Water & Toxic Enforcement Act of 1986, §25249.5, et seq. of the California HEALTH & SAFETY CODE. "Party" or "Parties" means Buyer or Seller, or both, as the context indicates. "Preliminary Title Report" means a Preliminary Title Report covering the Property prepared by the Title Insurer and dated as of a date not more than 30 days before the Escrow Opening Date. -2- 311987_4 "Property" means that certain real property described on "Exhibit 1", together with all of the right, title and interest of Seller, if any, in all rights, privileges, easements and appurtenances thereto. The Property does not include any personal property. "Seller's Grant Deed" means the form of grant deed attached to this Agreement as "Exhibit 2". "Seller's Knowledge" or "Knowledge Seller has" or "Knowledge Seller obtains" or similar variations means the then -current actual knowledge (as opposed to implied, inquiry, imputed or constructive knowledge or notice) of Jeffry L. Stoddard or Robert M. Irish, without inquiry or investigation (or any duty or obligation to inquire or investigate) on any such individual's or Seller's part, at any such individual's or Sellers direction or on any such individual's or Seller's behalf. "Title Insurer" means the Santa Ana, California, office of First American Title Insurance Company. The telephone number and telecopier number for Title Insurer are set forth in Article 15. ARTICLE 3 Aereement Of Sale 3.1 Summary of Aereement. In consideration of the covenants contained in this Agreement, and subject to the terms and conditions set forth in this Agreement, Seller hereby agrees to sell, and Buyer hereby agrees to purchase, the Property for a total purchase price of $2,510,000.00 ("Purchase Price"). The Purchase Price shall be paid pursuant to the following summary: Deposit to be delivered to Escrow Holder pursuant to Section 4.1.1: $100,000.00 Balance of Purchase Price for the Property to be delivered to Escrow Holder pursuant to Section 4.1.2: $2,410,000.00 3.2 Full and Complete Settlement for Fee Interest. The total compensation to be paid by Buyer to Seller, including the Purchase Price, is in consideration for all of Seller's interests in the Property and any rights or obligations which exist or may arise out of the acquisition of the Property for public purposes, including without limitation, Seller's fee interests in the land and any improvements and fixtures and equipment located thereon, improvements pertaining to the realty (if any), severance damages, relocation assistance, any alleged pre -condemnation damages, loss of business goodwill, costs, interest, attorney's fees, and any claim whatsoever of Seller which might arise out of or relate in any respect to the acquisition of the Property by the Buyer. Upon the Buyer's payment of the Purchase Price, Seller fully releases and discharges Buyer from all and any manner of rights, demands, liabilities, obligations, claims, or cause of actions, in law or equity, of whatever kind or nature, whether known or unknown, whether now existing or hereinafter arising, which arise from or relate in any manner to (i) the sale of the Property or the relocation of Seller's business operations or the relocation of any person or persons, business or businesses, or other occupant or occupants located on the Property, including the specific waiver and release of any right to any relocation benefits, assistance and/or payments under California GOVERNMENT CODE Section 7260, er seq., notwithstanding that such relocation assistance, benefits and/or payments may be otherwise required under said sections or other state or federal law; and (ii) compensation for any interest in the business operations or the Property including, but not limited to, land and improvements, fixtures, furniture, or -3- 311997_ a 0 0 • equipment thereon, goodwill, severance damage, attorneys' fees or any other compensation of any nature whatsoever. It is hereby intended that the release contained above relates to both known and unknown claims that the Seller may have, or claim to have, against the Buyer with respect to the subject matter contained herein or the events relating thereto. By releasing and forever discharging claims both known and unknown which are related to or which arise under or in connection with, the items set out above, the Seller expressly waive any rights under California CIVIL CODE Section 1542, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." ARTICLE 4 Buyer's Deliveries To Escrow Holder 4.1 Deliveries Before Closine Date. Buyer shall, within the applicable time periods stated, deliver to Escrow Holder each of the following: 4.1.1 Deposit. On the Escrow Opening Date, the Initial Deposit in Cash. 4.1.2 Balance of Purchase Price for Property. No later than 12:00 noon on the day • before the Closing Date, the balance of the Purchase Price for the Property in Cash. 4.1.3 Certificate of Acceptance. No later than 12:00 noon on the day before the Closing Date, one original of Buyer's Certificate of Acceptance in the form attached hereto as "Exhibit 3", signed and acknowledged by Buyer. Escrow Holder is instructed to collate the original of Buyer's Certificate of Acceptance with the original of Setter's Grant Deed delivered to Escrow Holder pursuant to Section 5.1.1 for the purpose of creating one complete original instrument for recording. • 4.1.4 Buyer's Charges and Reimbursement Amounts. No later than 12:00 noon on the day before the Closing Date, the charges to Buyer under the Article of this Agreement entitled "Proration, Fees and Costs" in Cash. 4.2 Breach. The failure of Buyer to make any delivery described above on the date, or within the time, set forth above will be a material breach of this Agreement by Buyer. 4.3 Time of the Essence. Time is of the essence of each covenant of this Article for which a date of performance is specified. 4.4 Release of Deposit. Upon the conditions precedent set forth in Sections 6.1.1 and 6.1.2 being waived or satisfied, Escrow Holder is instructed and directed to release the Deposit to Seller. Escrow Holder shall not have any liability in connection with any release of funds pursuant to this Section. -4- 311987_4 ARTICLE 5 Seller's Deliveries To Escrow Holder 5.1 Deliveries Before Closing Date. Seller shall, within the applicable time periods stated, deliver to Escrow Holder each of the following: 5.1.1 Gant Deed. No later than 12:00 noon on the day before the Closing Date, one original of the Seller's Grant Deed, describing the Property, and conveying the Property to Buyer, signed and acknowledged by Seller and such person(s) as Title Insurer requires in order to issue the Title Policy (described in Section 8.1.3). Escrow Holder is instructed to collate the original of Seller's Grant Deed with the original of Buyers Certificate of Acceptance delivered to Escrow Holder pursuant to Section 4.1.3 for the purpose of creating one complete original instrument for recording. 5.1.2 Certificates of Non -Foreign Status. No later than 12:00 noon on the day before the Closing Date, both of the following, completed and signed by Seller: (a) the Certificate of Non -Foreign Status in the form attached to this Agreement as "Exhibit 4"; and (b) a State of California Form 593-C. 5.1.3 Seller's Charges. If the funds deposited with Escrow Holder by Buyer are insufficient to (i) discharge all encumbrances other than those permitted under Section 8.1.3, and (ii) pay the charges of Seller under the Article of this Agreement entitled "Proration, Fees and Costs," Seller will deliver to Escrow Holder sufficient funds and instruments to discharge and pay such encumbrances and charges. 5.2 Breach. The failure of Seller to make any delivery described above on the date, or within the time, set forth above will be a material breach of this Agreement by Seller. 5.3 Time of the Essence. Time is of the essence of each covenant in this Article for which a date of performance is specified. ARTICLE 6 Conditions Precedent, Waiver And Termination 6.1 Condition Precedent. The Close of Escrow is subject to the following conditions precedent for Buyer's benefit: 6.1.1 Preliminary Title Report. Buyer's delivery to Escrow Holder, with a copy to Seller, no later than the later of 30 days after Buyer's receipt of the Preliminary Title Report and a legible copy of all underlying documents, or 5:00 p.m. on the Contingency Date, of Buyer's written approval of the covenants, conditions, reservations, restrictions, easements and other matters described in the Preliminary Title Report. Buyer's failure to deliver its approval or disapproval on or before such date shall be deemed Buyer's disapproval and shall constitute a failure of this condition precedent. 6.1.2 Hazardous Materials, Geology, Soils and General Feasibility. Buyer's delivery to Escrow Holder, with a copy to Seller, no later than 5:00 p.m, on the Contingency Date, of Buyer's written approval of the status of the Property with respect to (i) the presence of any Hazardous Materials; (ii) the geology, topography and other physical characteristics and condition of the Property, including, but not limited to, the status and condition of the soils, matters relating to seismic activity and the size, dimensions and location of the Property -5- 3119874 • • 11 (including the number of buildable acres the Property will contain after being mapped and graded for development); (iii) the compliance of the Property with all applicable laws, ordinances, rules and regulations; (iv) the availability and capacity of water, sewer, electricity, trash removal and any other utilities or services for the Property; (v) the value of the Property; (vi) the presence of threatened or endangered species (whether plant or animal) or habitat therefor, (vii) applicable zoning and other governmental land use restrictions or requirements; and (viii) any other matter, topic or subject relating to the feasibility or desirability of Buyer's proposed development, operation or use of the Property. Buyer's failure to deliver its approval or disapproval on or before such date shall be deemed Buyer's approval and shall constitute satisfaction of this condition precedent. 6.2 Obligations. The obligations of each Party with respect to each of the conditions precedent are set forth in the Article of this Agreement entitled "Pre -Closing Obligations". 6.3 Waiver. Buyer may unilaterally waive any condition precedent set forth in Section 6. 1.1 or 6.1.2. Any waiver pursuant to this Section will be effective only if the same is (i) in writing; (ii) duly signed by an authorized individual on behalf of Buyer; and (iii) delivered to Escrow Holder, with a copy to Seller, no later than the date and time such condition precedent is to be satisfied. 6.4 Termination. If any condition precedent is neither satisfied nor waived in the manner specified in the foregoing Section, a Party who is not then in material breach under this Agreement will have the right to terminate this Agreement (and this Escrow) by delivering a written notice of termination to the other Party and to Escrow Holder. The failure of a condition precedent is not a breach under this Agreement. The right so to terminate this Agreement (and this Escrow) is optional, not mandatory. If a • notice of termination is delivered, the provisions of Section 8.6 will apply. ARTICLE 7 Pre-Closine Obligations • 7.1 Limit on Escrow Holder's Responsibilities. Escrow Holder will have no concern with, nor liability nor responsibility for, this Article. 7.2 Preliminary Title Report. In connection with the condition precedent set forth in Section 6.1.1: 7.2.1 Seller's Obligations. Promptly after the Escrow Opening Date, Seller shall cause to be delivered to Buyer a copy of the Preliminary Title Report, together with a copy of each document to which the Preliminary Title Report refers. Seller covenants that any and all delinquent General or Special Real Estate Taxes, deed of trust or non-governmental monetary lien disapproved by Buyer will be satisfied at or before the Close of Escrow. 7.2.2 Buyer's Obligations. Buyer will not unreasonably withhold the written approval required by the condition; provided, however, it is specifically understood and agreed that (a) Buyer shall not be required to approve (i) any delinquent General or Special Real Estate Taxes, or (ii) deed of trust or other non-governmental monetary lien encumbering the Property; but (b) Buyer's objection to any delinquent General or Special Real Estate Taxes or deed of trust or other non-govemmental monetary lien encumbering the Property shall not be a basis for failure of the condition so long as the delinquent General or Special Real Estate Taxes, deed of trust or monetary lien will be satisfied at or before the Close of Escrow. 6_ 311997 4 7.3 Hazardous Materials, Geoloey. Soils and General Feasibility. In connection with the condition precedent set forth in Section 6.1.2: 7.3.1 Seller's Obligations. Seller shall, promptly after the Escrow Opening Date, deliver to Buyer a Natural Hazard Disclosure Statement. in addition, upon Buyer's reasonable advance oral request, Seller shall make available for inspection and copying by Buyer, at Sellers place of business and at Buyer's cost and expense, any reports, studies or other documents in Seller's possession pertaining to the Property. Entry onto the Property for the purpose of conducting tests, studies, investigations and surveys shall be governed by a separate License to Enter Onto Real Property entered into by and among Seller, Buyer and the Developer concurrently with Seller and Buyer entering into this Agreement ("Entry Permit"). 7.3.2 Buyer's Obligations. Buyer shall, at its sole cost and expense, select one or more qualified professional consultants to make Hazardous Materials, geologic and soils tests of the Property (and any other studies, investigations, surveys or tests Buyer may wish to conduct) and cause such tests, studies, investigations or surveys to be conducted. The Entry Permit (defined in Section 7.3.1) shall govern entry onto the Property for the purpose of conducting any such tests, studies, investigations and surveys. Buyer shall deliver copies of any test results, reports, appraisals or communications to Seller upon Buyer's receipt of the same. With respect to any and all of the subjects to which Section 6.1 .2 refers, Buyer shall be entitled to disapprove the status of the Property in Buyer's sole, absolute and unfettered discretion. 7.4 Disposition and Development Aereement. Buyer shall, at its sole cost and expense, use reasonable efforts in good faith to sign and enter into a disposition and development agreement with Developer for Buyer's disposition of the Property to the Developer, including the Developer's obligation to develop the Property as affordable multifamily housing development for senior citizens ("DAA"), and to obtain City approval of the DDA, all no later than December 8, 2006 (thereby establishing the "Approved DDA"). Buyer and the City retain complete discretion whether to approve the DDA, and Buyer's failure to establish the Approved DDA on or before December 8, 2006, shall not constitute a breach of this Agreement by Buyer, provided Buyer has used reasonable efforts in good faith to negotiate, prepare and Consider approval of the DDA (including obtaining the City's approval) as required pursuant to this Section. 7.5 Tax Allocation Bonds. Buyer intends to issue tax allocation bonds, the proceeds of which Buyer shall use to (a) pay the Purchase Price; and (b) fund any grant or loan required pursuant to the DDA ("Bonds"). Buyer shall determine in good faith the amount of the tax allocation bonds necessary to satisfy such payment and funding requirements Buyer shall, at its sole cost and expense, use reasonable efforts in good faith to take all steps necessary or proper to cause the tax allocation bonds to be issued in time for the bond proceeds to be made available to Buyer for the purpose of Closing this Escrow no later than December 20, 2006. Buyer shall retain complete discretion as to whether to issue the Bonds, and Buyer's failure to issue the Bonds in time for the bond proceeds to be made available to Buyer for the purpose of Closing this Escrow no later than December 20, 2006, shall not constitute a breach of this Agreement by Buyer, provided Buyer has used reasonable efforts in good faith to consider issuance of Bonds required pursuant to this Section. 7.6 Consultation About Property. During the term of this Escrow, Buyer and its employees and consultants may (a) contact or meet with all City, district and other governmental entities and agencies concerning the Property; and (b) discuss with any of those entities or agencies Buyer's proposed use and development of the Property. Buyer shall deliver promptly to Seller copies of any and all documents sent to or received from any such governmental entity or person, including, but not limited to, any correspondence, applications, forms and contracts or drafts of any of the foregoing. Buyer shall not _7_ 311987 4 n LJ 0 make or permit to be made any proposal, agreement, commitment or arrangement which might change, modify, jeopardize or affect any existing land use classifications, pending applications or development entitlements or approvals for the Property before the Close of Escrow, or which might otherwise change or modify obligations or rights with respect to the Property, or .which might otherwise apply to or affect the Property or any portion thereof in any way, without in each case obtaining the prior written consent of Seller, which may be withheld in Seller's sole, absolute and unfettered discretion. 7.7 No Personal Property. There is no personal property comprising or located on the Property. 7.8 Maintenance. During the term of this Escrow, Seller shall maintain the Property as a vacant lot using the same standards of maintenance as Seller used before the Escrow Opening Date. 7.9 Covenant Not to Encumber. During the term of this Escrow, Seller shall not encumber title to the Property with any deed of trust, liens or other encumbrances (i.e., other than those reflected in the Preliminary Title Report). ARTICLE 8 The Closine 8.1 Conditions to Closine. Escrow Holder will close this Escrow on the Closing Date by (i) filing for record Seller's Grant Deed (and such other documents as may be necessary to procure the Title Policy), and (ii) delivering funds and documents to the Parties (as set forth in the Article of this Agreement entitled "Distribution of Funds and Documents") WHEN AND ONLY WHEN each of the • following conditions has been satisfied: 8.1.1 Deliveries. All funds and documents described in Articles 4 and 5 have been delivered to Escrow Holder; and • 8.1.2 Conditions Precedent. Each of the conditions set forth in the Article of this Agreement entitled "Conditions Precedent, Waiver and Termination" has been, or upon such Close of Escrow will be, satisfied or waived in the manner specified in said Article; and 8.1.3 The Title Policy. Escrow Holder can procure a CLTA owner's policy of title insurance ("Title Policy"), with liability in the amount of the Purchase Price, insuring that the fee title to the Property vests in Buyer, subject only to: (a) The matters referred to in Part I, Schedule B of the Title Policy; (b) General and Special Real Estate Taxes and special assessments which are, as of the Close of Escrow, not delinquent; (c) The covenants, conditions, restrictions, reservations, easements and other matters described in the Preliminary Title Report which have been approved by Buyer pursuant to Section 6.1.1; and (d) Any lien voluntarily imposed by Buyer at the applicable Close of Escrow. 8.1.4 Dating Documents and Sequence of Recording. In connection with the Close of Escrow, Escrow Holder shall date as of the date of the closing all documents delivered to -8- 111987_4 Escrow Holder undated, and Escrow Holder is hereby instructed then to record the following documents in the sequence listed: (a) Seller's Grant Deed and the attached Certificate of Acceptance of Buyer, and (b) Any deeds of trust or other lien(s) voluntarily imposed on the Property by Buyer at the Close of Escrow. 8.1.5 Possession. Seller is able to deliver sole and exclusive possession of the Property to Buyer at the Close of Escrow. 8.2 ALTA Policy. Buyer may, at Buyer's option, direct Escrow Holder to procure an ALTA owner's policy of title insurance from Title Insurer, with liability in the amount of the Purchase Price (provided the Close of Escrow would not thereby be delayed beyond the Closing Date), in which case: 82.1 Exceptions to Title. The ALTA policy will insure that fee title to the Property vests in Buyer, subject only to (i) the exclusions listed in the standard "Schedule of Exclusions from Coverage" of the ALTA policy; (ii) the exceptions in Sections 8.1.3(b) through 8.1.3(d); and (iii) any off -record encumbrances determined by Title Insurer to affect the applicable portion of the Property; 8.2.2 ALTA Survey or Other Requirements. Buyer will be solely responsible to supply timely to Title Insurer, at Buyer's sole cost, any ALTA survey or surveys or other requirements required by Title Insurer as a condition to the issuance of the ALTA policy; and 8.2.3 References to the Title Policy. All references in this Agreement to "Title Policy" will be deemed to refer to the ALTA policy. 8.3 Early Closine. If all of the conditions set forth in Sections 8.1.1, 8.1.2 and 8.1.3 become satisfied at a date earlier than the applicable Closing Date, Escrow Holder will close this Escrow at the earlier date. 8.4 Delayed Closine. If Escrow Holder cannot close this Escrow on or before the Closing Date, it will, nevertheless, close this Escrow when all conditions have been satisfied or waived, unless after the Closing Date and before the Close of Escrow, Escrow Holder receives a written notice to terminate this Agreement and this Escrow from a Party who, at the time the notice is delivered, is not in breach under this Agreement. The right to terminate this Agreement and this Escrow will be optional, not mandatory. Notwithstanding the foregoing, and provided neither Party has notified the other Party of a material breach of Article 4 or Article 5 of this Agreement by the other Party, this Escrow shall automatically terminate at the close of the business day of Escrow Holder on the loth day after the Closing Date; and any such termination shall be without fault or further liability or obligation on the part of either Party. 8.5 Termination of Escrow. Escrow Holder will have no liability or responsibility for determining that a Party giving a notice of termination is not in breach under this Agreement. Within three (3) days after receipt of a notice from one Party, Escrow Holder will deliver one copy of such notice to the other Party. Unless written objection to termination of this Escrow is received by Escrow Holder within ten (10) days after Escrow Holder delivers such notice to the other Party, Escrow Holder will promptly terminate this Escrow and return all funds and documents held by it to the Party depositing same (including the Deposit). If written objection to the termination of this Escrow is delivered to Escrow _(J_ 311981_4 0 • Holder within such ten 10 -day period, Escrow Holder is authorized to hold all funds and documents delivered to it in connection with this Escrow and Escrow Holder may, in Escrow Holder's sole discretion, take no further action until otherwise directed, either by the Parties' mutual written instructions or by a final order or judgment of a court of competent jurisdiction. 8.6 Revortine to Internal Revenue Service. Buyer and Seller hereby designate Escrow Holder as the "real estate reporting person" under §6045(e) of the INTERNAL REVENUE CODE for the purpose of the transaction contemplated under this Agreement. Escrow Holder shall file any and all returns, statements or reports required to be filed under §6045(e) of the INTERNAL REVENUE CODE, including the return required under §6045(a) of the INTERNAL REVENUE CODE and the statement required under §6045(b) of the INTERNAL REVENUE CODE, and including any similar returns, statements or reports required by state or local law. In no event shall this Agreement be construed to require that any such returns, reports or statements be filed by Buyer, Buyers counsel, Seller or Seller's counsel. Within five (5) days after the date Escrow Holder receives a written request from Seller or Buyer (or both), Escrow Holder shall deliver written evidence to the requesting Party or Parties that Escrow Holder has complied with the provisions of this Section. ARTICLE 9 Proration, Fees And Costs 9.1 Charees to be Prorated. Based on the latest information available to Escrow Holder, Escrow Holder will prorate (i.e., apportion) General and Special Real Estate Taxes between the Parties, in Cash, to the Close of Escrow. 9.2 Basis of Proration. All proration called for in this Agreement will be made on the basis • of the actual days in the month. 9.3 Supplemental Taxes. As a post -closing covenant, (i) Buyer agrees to hold Seller harmless from and indemnify, defend and protect Seller against any and all supplemental real property taxes which may be imposed on the Property and which relate to taxes due for any period after the Close of Escrow; and (ii) Seller agrees to hold Buyer harmless from and indemnify, defend and protect Buyer against any and all supplemental real property taxes which may be imposed on the Property and which relate to taxes due for any period prior to the Close of Escrow. 9.4 Seller's Charees. Seller will pay (i) documentary transfer taxes (if any); (ii) the premium for title insurance up to the amount payable for a CLTA policy of title insurance; (iii) fees for beneficiaries' statements; (iv) usual seller's document -drafting and recording charges; and (v) one-half of Escrow Holder's fee or termination charge. 9.5 Buyer's Charees. Buyer will pay (i) one-half of Escrow Holder's fee or termination charge; (ii) if ordered by Buyer pursuant to this Agreement, the extra premium for the ALTA Title Policy over and above the premium of a CLTA policy of title insurance; (iii) the premium for any title insurance endorsements; and (iv) usual buyer's document -drafting and recording charges. ARTICLE 10 Distribution Of Funds And Documents 10.1 Retention of Cash. Subject to Section 4.4, all Cash received by Escrow Holder will be, until the Close of Escrow, kept on deposit in a state or national bank. 0 -to- 31196]_4 10.2 Interest. Escrow Holder shall be required to hold deposits in interest-bearing accounts, with interest accruing for the benefit of the Party making the deposit. The Party making a deposit shall bear the costs and fees charged by Escrow Holder for holding the deposit in an interest-bearing account. 10.3 Disbursements. All disbursements by Escrow Holder will be made by checks of Escrow Holder; however, any Party may request that any disbursement to the Parry be made by wire transfer, provided the requesting Party bears the cost of the wire transfer and timely supplies wire transfer instructions to Escrow Holder. 10.4 Payment of Encumbrances. Escrow Holder will, at the Close of Escrow, pay, from funds to which Seller will be entitled and from funds, if any, deposited by Seller with Escrow Holder, to the appropriate obligees, all encumbrances, including reconveyance fees and prepayment penalties, if any, other than those permitted by Section 8.1.3. 10.5 Return After Recording. Escrow Holder will cause the County Recorder of Orange County to mail Seller's Grant Deed (and each other instrument which is expressed in this Agreement to be, or by general usage is, recorded) after recordation, to the grantee, beneficiary or person (i) acquiring rights under said document; or (ii) for whose benefit the instrument was acquired. 10.6 Delivery of Instruments. Escrow Holder will, at the Close of Escrow, deliver by United States certified mail (or will hold for personal pickup, if requested) each non -recorded instrument received by Escrow Holder to the payee or person with copies to the other Party or both Parties if such instrument is being delivered to a third party (i) acquiring rights under the instrument; or (ii) for whose benefit the instrument was acquired; and to the Orange County Tax Assessor such change of ownership certificate(s) as may be required thereby. 10.7 Delivery of Cash. Escrow Holder will, at the Close of Escrow, deliver by United States certified mail (or will hold for personal pickup, if requested) (i) to Seller, or order, the balance of the Cash portion of the Purchase Price to which Seller will be entitled; and (ii) to Buyer, or order, any excess funds delivered to Escrow Holder by or for the benefit of Buyer. The foregoing notwithstanding, any Party may request that any disbursement of Cash to the Party be made by wire transfer, provided the requesting Party bears the cost of the wire transfer and timely supplies wire transfer instructions to Escrow Holder. ARTICLE 11 Possession And Inspection 11.1 Limit on Escrow Holder's Responsibilities. Escrow Holder shall have no concern with, nor liability nor responsibility for, this Article. 11.2 Possession. Upon the Close of Escrow, Seller shall deliver sole and exclusive possession of the Property to Buyer. 11.3 [Intentionally Omitted] ARTICLE 12 Warranties, Representations And Disclaimer 12.1 Limit on Escrow Holder's Responsibilities. Escrow Holder shall have no concern with, nor liability nor responsibility for, this Article. 11- 3119874 0 12.2 Basis of Purchase. Buyer acknowledges that it is acquiring the Property in reliance solely on (a) Buyer's and Developer's inspection of the Property; (b) Buyer's independent verification of the truth of any documents delivered by Seller to Buyer and of any statements made by Seller to Buyer concerning the Property and its condition; and (c) the opinions and advice of consultants engaged by Buyer and Developer concerning the Property and its development. 12.3 Brokerage Commission. Each Party warrants to the other that the warranting Party has incurred no obligation by reason of this Agreement or the transaction contemplated by this Agreement, for a real estate brokerage commission or finder's fee for which the other Party would be liable. Each Party will indemnify, defend, protect and hold the other Party harmless from and against any and all liabilities, damages costs (including attomeys' fees and costs) or expenses the other Party incurs by reason of the untruth as to the warranting Party of the foregoing warranty. 12.4 Title Policy. Nothing in this Article 12 shall be deemed to negate, modify or otherwise amend the requirements regarding the Title Policy pursuant to Article 8. 12.5 Warranties, Representations and Disclosure. 12.5.1 Buyer and Seller, each to the other, hereby represent and warrant that the transaction contemplated by this Agreement has been duly authorized by all necessary actions or approvals on the part of Seller and Buyer, respectively, and no other authorizations or approvals, are necessary in order to enable the warranting Party to enter into and perforin this Agreement. 12.5.2 Buyer warrants and represents to Seller that (a) Buyer is in good standing in the • state of its formation and organization; and (b) if Buyer is formed or organized in a state other than California, Buyer is qualified to conduct intrastate business within the State of California. • 12.5.3 Seller represents and warrants to Buyer that to Seller's Knowledge, there are no actions, suits, claims, legal proceedings, or any other proceedings affecting the Property or any portion thereof, at law, or in equity before any court or governmental agency, domestic or foreign. 12.5.4 Seller represents and warrants to Buyer that to Seller's Knowledge: (a) there are no encroachments onto the Property by improvements on any adjoining property; and (b) there are no buildings or improvements located on the Property. 12.5.5 [Intentionally Omitted] 12.5.6 [Intentionally Omitted] 12.5.7 [Intentionally Omitted] 12.5.8 Seller represents and warrants to Buyer that to Seller's Knowledge, neither the execution of this Agreement nor the performance of the obligations herein will conflict with, or breach any of the provisions of any bond, note, evidence of indebtedness, contract, lease, covenants, conditions and restrictions, or other agreement or instrument to which Seller or the Property may be bound. 12.5.9 Until the Close of Escrow, Seller shall, upon Seller's obtaining Knowledge of any fact or condition which would cause any of Seller's warranties and representations in this Section 12.5 not to be true, immediately deliver written notice of such fact or condition to Buyer. -12- 311987 4 12.5.10 Seller represents and warrants to Buyer that Seller has the full right, power, and authority to sell, convey, and transfer the Property to Buyer as provided herein and to carry out Seller's obligations hereunder. 12.5.11 Seller represents and warrants to Buyer that neither Seller nor any related entity are the subject of a bankruptcy proceeding, and permission of a bankruptcy court is not necessary for Seller to be able to transfer the Property as provided herein. 12.5.12 Seller represents and warrants to Buyer that to Seller's Knowledge, Seller has not received any notice from any governmental agency or authority alleging that the Property is currently in violation of any law, ordinance, rule, regulation or requirement. 12.5.13 Seller represents and warrants to Buyer that to Seller's Knowledge, as of the date of this Agreement, no person or entity (except for Seller) has the right to possess the Property or any portion thereof. 12.5.14 Seller is not a "foreign person" within the parameters of the Foreign Investment in Real Property Transfer Act or any similar state statute, and Seller will comply with all of the requirements of the Foreign Investment in Real Property Transfer Act and any similar state statute in connection with this transaction. 12.6 Property Information Materials; Disclaimer by Seller and Release by Buyer. 12.6.1 Certain of the reports and other information delivered or made available to Buyer by Seller or Seller's consultants in connection with the transaction contemplated under this Agreement, including, but not limited to, reports and other information delivered or made available to Buyer pursuant to Section 7.3.1 (singularly, "Property Information Material", and collectively, "Property Information Materials"), may have been prepared and compiled for Seller's use or the use of Seller's predecessors -in -title. Certain Property Information Materials may have been prepared by persons or entities other than Seller or Seller's consultants. Consequently, Seller makes no representation or warranty whatsoever, express or implied, with respect to the completeness, content or accuracy of the Property Information Materials or any individual Property Information Material. Seller has no Knowledge whether the Property Information Materials are, or any individual Property Information Material is, suitable, sufficient or adequate for Buyer's intended use or purpose. Consequently, Seller makes no representation or warranty whatsoever, express or implied, with respect to whether the Property Information Materials are, or any individual Property Information Material is, suitable, sufficient or adequate for Buyer's intended use or purpose. 12.6.2 ]Intentionally Omitted] 12.6.3 Buyer hereby releases Seller from any and all claims, demands, causes of action, judgments, losses, damages, liabilities, costs and expenses (including attorneys' fees and costs, whether suit is instituted or not), whether known or unknown, fixed or variable, liquidated or contingent (collectively, "Claims") asserted against or incurred by Buyer by reason of the information contained in, or that should have been contained in, the Property information Materials or any individual Property Information Material. -13- 311981 r� U • 0 r� 12.7 Condition of Property; Disclaimer by Seller and Release by Buyer. 12.7.1 SUBJECT TO BUYER'S RIGHTS UNDER THE UNIFORM VENDOR AND PURCHASER RISK ACT, THE PROPERTY IS BEING SOLD "AS IS", "WHERE IS", AND "WITH ALL FAULTS" AS OF THE CLOSE OF ESCROW, WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT TO ITS CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED, EXCEPT FOR THE EXPRESS WARRANTIES AND REPRESENTATIONS OF SELLER SET FORTH IN THIS AGREEMENT. SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT, EXPRESS OR IMPLIED, CONCERNING THE PROPERTY, INCLUDING ANY PHYSICAL OR LEGAL ASPECT OR CHARACTERISTIC OF THE PROPERTY, EXCEPT FOR THE EXPRESS WARRANTIES AND REPRESENTATIONS OF SELLER SET FORTH IN THIS AGREEMENT. BUYER ACKNOWLEDGES THAT BUYER IS PURCHASING THE PROPERTY BASED SOLELY ON BUYER'S OWN INDEPENDENT INVESTIGATIONS AND FINDINGS AND NOT IN RELIANCE ON ANY INFORMATION PROVIDED BY SELLER OR BY SELLER'S EMPLOYEES, AGENTS, CONSULTANTS OR CONTRACTORS, EXCEPT FOR THE EXPRESS WARRANTIES AND REPRESENTATIONS OF SELLER SET FORTH IN THIS AGREEMENT. 12.7.2 Without limiting the provisions of Section 12.7.1, Buyer hereby releases Seller from any and all Claims (defined in Section 12.6.3), whether known or unknown, fixed or variable, or contingent or liquidated, related to or arising from, out of or in connection with (a) any construction defects in any improvements on or in the vicinity of the Property; (b) errors or omissions in the design or construction of any improvements on or in the vicinity of the Property; or (c) other conditions or characteristics of or affecting the Property, including, but not limited to, endangered or threatened species, habitat, environmental or soils conditions. The release set forth in this Section specifically includes, but is not limited to, any and all Claims arising under any laws, rules or regulations governing Hazardous Materials. 12.8 Scope of Releases. In this Agreement, whenever Buyer releases Seller from any Claims or from any further obligation or liability, such release includes a release of Seller and each and all of Seller's agents, employees, contractors, consultants, advisers, partners, members, managers, officers, directors and representatives. FURTHERMORE, BUYER REPRESENTS AND WARRANTS TO SELLER THAT, WITH RESPECT TO THE RELEASES OF SELLER FROM LIABILITY, AS SET FORTH IN SECTION 12.6, SECTION 12.7 AND ELSEWHERE IN THIS AGREEMENT, BUYER HAS BEEN ADVISED BY LEGAL COUNSEL, OR HAS BEEN ADVISED TO SEEK LEGAL COUNSEL AND HAS HAD ADEQUATE OPPORTUNITY SO TO SEEK SUCH ADVICE, AND BUYER IS FAMILIAR WITH AND HEREBY WAIVES THE BENEFIT OF THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS: -14- 3119874 A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR AND INDICATES THAT FACT BY INITIALING HERE: Buyer's Initials 12.9 Refunds and Reimbursements. Seller shall be entitled to all refunds, reimbursements or contributions of funds (including, but not limited to, deposits or prepaid fees) paid pursuant to any requirement of, arrangement with or contract entered into before the Close of Escrow with respect to the Property (or any part thereof), with any public utility company or governmental entity (including, but not limited to, the City). Buyer shall be entitled to all refunds, reimbursements or contributions of funds (including, but not limited to, deposits or prepaid fees) paid pursuant to any requirement of, arrangement with or contract entered into at or after the Close of Escrow with respect to the Property (or any part thereof), with any public utility company or governmental entity (including, but not limited to, the City). If by inadvertence or otherwise either Party receives any of such refunds, reimbursements or contributions to which the other Parry is entitled pursuant to this Section, it will immediately pay and deliver the same to the Party entitled thereto. ARTICLE 13 Delivery Of Documents, Liquidated Damages For Buyer's Breach And Buyer's Remedies For Seller's Breach 13.1 Limit on Escrow Holder's Responsibilities. Escrow Holder will have no concern with, nor liability nor responsibility for, this Article. 13.2 Delivery of Documents. If this Escrow is terminated for any reason, Buyer will, within a reasonable period of time following the termination, deliver to Seller (i) all documents and materials, if any, relating to the Property (or any part thereof) previously delivered to Buyer by Seller; and (ii) copies of all documents, copies of reports and materials prepared by or on behalf of Buyer in connection with or relating to the Property (or any part thereof). 13.3 Liquidated Damages for Buyer's Breach. THE PARTIES AGREE THAT THE PURCHASE PRICE HAS BEEN DETERMINED NOT ONLY BY A CONSIDERATION OF THE VALUE OF THE PROPERTY PER SE BUT ALSO BY A CONSIDERATION OF THE VALUE OF THE VARIOUS COVENANTS, CONDITIONS AND WARRANTIES OF THIS AGREEMENT AS THEY RELATE TO THE PROPERTY. THE CONSIDERATION OF SUCH VALUES, SOMETIMES MEASURABLE IN RELATION TO KNOWN EXTERNAL STANDARDS, AND SOMETIMES DETERMINED ONLY BY SUBJECTIVE BUSINESS JUDGMENTS OF THE PARTIES, ARE ALL INTERRELATED AND AFFECTED BY THE PARTIES' ULTIMATE AGREEMENT UPON THE PURCHASE PRICE. THE PARTIES HAVE DISCUSSED AND NEGOTIATED IN GOOD FAITH UPON THE QUESTION OF THE DAMAGES TO BE SUFFERED BY SELLER IN THE EVENT BUYER BREACHES THIS AGREEMENT BY FAILING TO CLOSE ESCROW WHEN OBLIGATED AND HAVE ENDEAVORED TO REASONABLY ESTIMATE SUCH DAMAGES. THE PARTIES HEREBY AGREE THAT, BY REASON OF THE AFORESAID CONSIDERATIONS: (i) SUCH DAMAGES ARE AND WILL BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX; (ii) LIQUIDATED DAMAGES IN THE AMOUNT OF THE DEPOSIT ARE AND WILL BE -15- 3119874 0 0 REASONABLE; (iii) IN THE EVENT OF SUCH BREACH, SELLER SHALL BE ENTITLED TO BE PAID AND RETAIN THE DEPOSIT IN SATISFACTION OF SUCH LIQUIDATED DAMAGES; AND (iv) IN CONSE WTION OF) HE PAYMENT OF SUCH LIQUIDATED DAMAGES, SELLER SHALL BE DEE1y �E AIVED ALL OTHER CLAIMS FOR DAMAGES. Buyer's Initials 13.4 Buvel"s Remedies for Seller's Breach. If Seller breaches this Agreement before the Close of Escrow, then Buyer shall have the right to elect and pursue one or the other (but not both) of the remedies set forth in Section 13.4.1 or 13.4.2. 13.4.1 Keep this Agreement in effect, in which event Buyer's sole and exclusive remedy with respect to the breach shall be to initiate an action for specific performance to compel Seller to perform the obligation or obligations with respect to which Seller is in breach. IN THE EVENT BUYER ELECTS THE REMEDY DESCRIBED IN THIS SECTION, BUYER SHALL BE DEEMED TO HAVE WAIVED ANY AND ALL RIGHT TO SEEK DAMAGES OF ANY TYPE (WHETHER ACTUAL, GENERAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES) OR OTHER EQUITABLE RELIEF. 13.4.2 Terminate this Agreement by delivering a notice of termination to Seller, with a copy to Escrow Holder, in which event Buyer's sole and exclusive remedy with respect to the breach shall be, subject to Section 13.7, that within 10 days after delivery of Buyer's demand: (a) the Deposit shall be returned to Buyer; and (b) Seller shall pay to Buyer all documented costs and • expenses incurred by Buyer and paid to others in connection with investigations and due diligence related to the conditions precedent set forth in Article 6 and Buyers performing its obligations pursuant to Article 7. THE PARTIES HAVE DISCUSSED AND NEGOTIATED IN GOOD FAITH UPON THE QUESTION OF THE DAMAGES TO BE SUFFERED BY BUYER IN THE EVENT SELLER BREACHES THIS AGREEMENT BEFORE THE CLOSE OF ESCROW AND HAVE ENDEAVORED TO REASONABLY ESTIMATE SUCH DAMAGES. THE PARTIES HEREBY AGREE THAT: (i) SUCH DAMAGES ARE AND WILL BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX; (ii) LIQUIDATED DAMAGES IN THE AMOUNT OF THE DEPOSIT AND THE ABOVE-DESCRIBED COSTS INCURRED BY BUYER ARE AND WILL BE REASONABLE; (iii) IN THE EVENT OF SUCH BREACH, BUYER SHALL BE ENTITLED TO A RETURN OF THE DEPOSIT AND PAYMENT FOR SUCH COSTS IN SATISFACTION OF SUCH LIQUIDATED DAMAGES; AND (iv) IN CONSIDERATION OF THE PAYMENT OF SUCH LIQUIDATED DAMAGES, BUYER SHALL BE DEEMED TO HAVE WAIVED ANY AND ALL RIGHT (aa) TO FILE OR RECORD ANY LIS PENDENS OR ANY OTHER LIEN OR ENCUMBRANCE AGAINST THE PROPERT OR (bb) TO SEEK ANY OTHER DAMAGES (WHETHER GENERAL, SPEC�1fLL, CONSEQUENTIAL OR PUNITIVE DAMAGES) OR EQUITABLE Buyer's Initials 13.5 Buyer's Remelfies for Breach of Warranty or Representation Before Close of Escrow. If before the Close of this Escrow, Buyer discovers that a warranty or representation of Seller set forth in this Agreement is breached, Buyer shall notify Seller of the claimed breach. Buyer's notice shall include a reasonably detailed statement of the claimed breach. Seller shall have 10 days after delivery of Buyer's notice within which to cure the claimed breach; Seller shall have no obligation to cure or to • -16- 37)997 4 attempt to cure the claimed breach, and Seller may, without any obligation or liability to Buyer, cease pursuing any attempted cure at any time. If Seller fails to cure the claimed breach within such 10 -day period, Buyer shall have the right to terminate this Agreement by delivering a notice of termination to Seller, with a copy to Escrow Holder, within five days after the end of such 10 -day period. AFTER BUYER'S DELIVERY OF SUCH NOTICE OF THE CLAIMED BREACH TO SELLER, AND AFTER SELLER'S FAILURE TO CURE THE CLAIMED BREACH, IF BUYER SO TERMINATES THIS AGREEMENT, BUYER'S SOLE AND EXCLUSIVE REMEDY SHALL BE THE LIQUIDATED DAMAGES TO WHICH SECTION 13.4.2 REFERS. AFTER BUYER'S DELIVERY OF SUCH NOTICE OF THE CLAIMED BREACH TO SELLER, AND AFTER SELLER'S FAILURE TO CURE THE CLAIMED BREACH, IF BUYER DOES NOT SO TERMINATE THIS AGREEMENT, BUYER SHALL (a) BE DEEMED TO HAVE ELECTED TO KEEP THIS AGREEMENT IN EFFECT; (b) BE DEEMED NOT TO HAVE RELIED ON THE WARRANTY OR REPRESENTATION CLAIMED TO BE BREACHED; AND (c) BE DEEMED TO HAVE WAIVED ANY AND ALL RIGHT TO SEEK DAMAGES OF ANY TYPE (WHETHER ACTUAL, GENERAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMA- SHER EQUITABLE RELIEF BASED ON OR ARISING FROM, OUT OF OR IN CONN4C ON H THE WARRANTY OR REPRESENTATION CLAIMED TO BE BREACHED. Buyer's Initials 13.6 Buyer's Remedies for Otlier Breaches by Seller. With respect to any breach by Seller other than those which are the subject of Section 13.4 or 13.5, Seller shall be liable only for Buyer's actual damages (i.e., Seller shall not be liable for any consequential, incidental or punitive damages), and any recovery of actual damages by Buyer shall be subject to Section 13.7. 13.7 Limitation on Recovery of Damages by Buyer. Any judgment obtained against Seller by Buyer (not including return of the Deposit) shall be limited to the amount of $50,000.00. In addition, in no event shall Buyer seek or obtain any recovery or judgment for Seller's breach from or against: 13.7.1 Any of the constituent members of Seller, as such, or any of their respective constituent principals, partners or members, as such; or 13.7.2 Any of the shareholders, directors, members, managers, officers or employees of any of the constituent principals or members of Seller, as such, or their respective constituent principals, partners or members, as such. 13.8 Remedies Absolute. The remedies and limitations of liability set forth in this Article 13 shall be absolute and without any exception whatsoever. ARTICLE 14 Assignment By Buyer 14.1 Assignment. Buyer shall not assign its interest in this Agreement without the prior written consent of Seller, which may be withheld in Seller's sole, absolute and unfettered discretion. Any assignment of this Agreement by Buyer (i) must not be in violation of applicable law; (ii) shall not release Buyer from its obligations under this Agreement; and (iii) may be made only by written assignment signed by Buyer, accepted in writing by the assignee (which must, in such written acceptance, assume and obligate itself to perform the obligations of "Buyer" under this Agreement), consented to by Seller if required by the foregoing provisions, and delivered to Escrow Holder and Seller not less than seven days prior to the Close of Escrow. Any assignment of Buyer's rights made or attempted in violation of this -17- 3119974 • provision will be void and this Agreement may be terminated by Seller by written notice to Buyer and Escrow Holder. ARTICLE 15 Notices 15.1 Time of Delivery; Addresses. Unless otherwise specifically provided in this Agreement, all notices, demands or other communications given under this Agreement must be in writing and will be deemed to have been duly delivered as of (i) the day of delivery by personal delivery; or (ii) the second business day after mailing by United States registered or certified mail, return receipt requested, postage prepaid; or (iii) the transmission by telecopy or facsimile, followed by prepaid delivery by a recognized, reputable overnight courier service (such as Federal Express); or (iv) the date delivered by prepaid delivery by a recognized, reputable overnight courier service (such as Federal Express); and all notices shall be addressed as follows: If to Seller, to: Ortega Land Company LLC c/o Buie Stoddard Properties LLC 28281 Crown Valley Parkway, Suite 200 Laguna Niguel, California 92677 Attn: Jeffry L. Stoddard Telephone: (858) 794-2400 Telecopier: (858) 794-2401 And Ortega Land Company LLC • c/o Buie Stoddard Properties LLC 11260 EI Camino Real, Suite 200 San Diego, California 92130-2647 Attn: Robert M. Irish Telephone: (858) 794-2400 Telecopier: (858) 794-2401 • With a cony to: Hecht Solberg Robinson Goldberg & Bagley LLP 600 West Broadway, 8th Floor San Diego, California 92101 Attn: Michael J. Maher Telephone: (619) 239-3444 x. 124 Telecopier: (619) 232-6828 If to Buyer, to: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelento San Juan Capistrano, California 92675 Attn: Douglas Dumhart, Economic Development Manager Telephone: 949-443-6316 Telecopier: With a copy to: Stradling Yocca Carlson & Rauth 660 Newport Center Drive, Suite 1600 Newport Beach, California 92660 Attn: Jon E. Goetz Telephone: (949) 7254179 Telecopier: (949) 823-5179 -18- 31198]_4 If to Escrow Holder, to: First American Title Insurance Company 26440 La Alameda, Suite 250 Mission Viejo, California 92691 Attn: Teresa Monaghan Re: Escrow No. 1963617 Telephone: 949-348-4367 Telecopier: 949-367-1407 E-mail: tmonaghan@firstam.com If to Title Insurer, to: First American Title Insurance Company I First American Way Santa Ana, California 92707 Attn: Ed Luque Re: Title Order No. 1963617 Telephone: 714-80OA 773 Telecopier:714-800-4965 E-mail: eluque@firstam.com or to such other address or to such other person as any Party will designate to the others for such purpose in the manner set forth in this Section. ARTICLE 16 Escrow Provisions 16.1 Neglect, Misconduct. Escrow Holder will not be liable for any of its acts or omissions, unless the same constitutes negligence or willful misconduct. 16.2 Information. Escrow Holder will have no obligation to inform any Party of any other transaction or of facts within Escrow Holder's knowledge, even though the same concerns the Property, provided such matters do not prevent Escrow Holder's compliance with this Agreement. 16.3 Form, Validity and Authority. Escrow Holder will not be responsible for (i) the sufficiency or correctness as to form or the validity of any document deposited with Escrow Holder, unless prepared by Escrow Holder; (ii) the manner of signing of any such deposited document, unless such signing occurs in Escrow Holder's Premises and under its supervision; or (iii) the identity, authority or rights of any person signing any document deposited with Escrow Holder. 16.4 Conflicting Instructions. Upon receipt of any conflicting instructions, Escrow Holder will have the right to take no further action until otherwise directed, either by the Parties' mutual written instructions or a final order orjudgment of a court of competent jurisdiction. 16.5 Interpleader. Escrow Holder will have the absolute right, at its election, to file an action in interpleader requiring the parties to answer and litigate their several claims and rights among themselves, and Escrow Holder is authorized to deposit with the clerk of the court all documents and funds held in this Escrow. if such action is filed, the Parties will jointly and severally pay Escrow Holder's termination charges and costs and reasonable attorney's fees which Escrow Holder is required to expend or incur in the interpleader action, the amount thereof to be fixed and judgment therefor to be rendered by the court. Upon the filing of such action, Escrow Holder will be and become fully released and discharged from all obligations to further perform any obligations imposed by this Agreement. _19- 711987_4 n LJ 0 16.6 Miscellaneous. Recordation of any instruments delivered through this Escrow, if necessary or proper in the issuance of the Title Policy, is authorized. If any Party obtains a loan on the Property, then, during the pendency of this Escrow, Escrow Holder is authorized to furnish the lender, or anyone acting on its behalf, any information concerning this .Escrow, including, but not limited to, a certified copy of this Agreement and any amendments thereto. ARTICLE 17 General Provisions 17.1 Gender, Number. Whenever the context requires, the use in this Agreement of (i) the neuter gender includes the masculine and the feminine, and (ii) the singular number includes the plural. 17.2 Business Days. If the (i) stated Closing Date; or (ii) last day for performance of an act falls upon a federal or state holiday or a day during which Escrow Holder is not open for business, the Closing Date or such last day, as the case may be, will be the next following regular business day of Escrow Holder. 17.3 Survival of Provisions. Any representations, warranties, indemnities and post -closing covenants set forth in this Agreement will remain operative, will be deemed made at the Close of Escrow, and will survive the Close of Escrow and the signing and delivery of the Grant Deed, 17.4 Authority of Sienatories. Each individual signing this Agreement on behalf of a corporation, a partnership, a limited liability company or a trust warrants that (i) he or she is duly authorized to sign and deliver this Agreement on behalf of the corporation, in accordance with a duly • adopted resolution of the board of directors of the corporation or in accordance with the bylaws of the corporation, or on behalf of the partnership in accordance with the partnership agreement, or on behalf of the limited liability company in accordance with the operating agreement, or on behalf of the trust in accordance with the trust agreement or other documentation establishing the trust; and (ii) this Agreement is binding upon the corporation, the partnership, the limited liability company or the trust in accordance with its terms. is 17.5 Joint and Several Liability. If Buyer assigns this Agreement to more than one person, then the liability of each such person shall be joint and several. As used in this Agreement, "person" includes "entity". 17.6 Cautions. Captions in this Agreement are inserted for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement. 17.7 Exhibits. All exhibits to which this Agreement refers are attached to, and are hereby made a part of, this Agreement. 17.8 Entire Aereement. This Agreement contains the entire agreement between the Parties relating to the transaction contemplated by this Agreement and all prior or contemporaneous agreements, understandings, representations, correspondence and Statements, oral or written, are superseded and shall be of no force or effect. 17.9 Modifications. No modification, waiver or discharge of this Agreement will be valid unless the same is in writing and signed by the Party against which the enforcement of such modification, waiver or discharge is or may be sought. _20_ 311987_4 17.10 Attorney's Fees. If either Party commences litigation or arbitration for the interpretation, reformation, enforcement or rescission of this Agreement, the prevailing Party will be entitled to an award or judgment against the other for an amount equal to reasonable attorney's fees and court and other costs incurred. 17.11 Successors. All terms of this Agreement will be binding upon and inure to the benefit of the Parties and their respective administrators or executors, successors and assigns; nothing contained in this Section will affect the Article of this Agreement entitled "Assignment by Buyer". 17.12 Invalidity of Material Provision. If any material covenant, condition or provision herein contained is held to be invalid, void or unenforceable by a final judgment of any court of competent jurisdiction, this Agreement shall become rescinded unless the party benefited by such covenant, condition or provision delivers to the other party and Escrow Holder, within five days after the judgment becomes final, a written waiver of the covenant, condition or provision, in which case the remainder of this Agreement shall be enforceable. 17.13 Counterparts. This Agreement may be signed in any number of counterparts, each of which will be deemed to be an original, but all of which together will constitute one instrument. 17.14 Applicable Law. This Agreement will be construed and enforced in accordance with the laws of the State of California. 17.15 No Third Party Beneficiaries. Nothing in this Agreement creates or is intended to create in the Developer (or in any other person or entity) any right as a third party beneficiary of this Agreement; and without limiting the generality of the foregoing, neither the Developer nor any other person or entity has any right to cause either Seller or Buyer (i) to sign or enter into this Agreement; (ii) to perform any obligation or exercise any right either may have pursuant to this Agreement; or (iii) to forebear from exercising any right either may have pursuant to this Agreement, including, but not limited to, any right to terminate this Agreement. Seller: 17.16 Time of Essence. Time is of the essence of each provision of this Agreement. This Agreement has been signed and entered into as of the date first above written. ORTEGA LAND COMPANY LLC, a California limited liabiliLy ^^ ^ ^ IWA -21- 311987 0 Buyer: • • SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic La Attest: Agency Secretary Approved as to Form: By: A Agency Igal Counsel _22_ 31198]_4 CONSENT OF ESCROW HOLDER The undersigned Escrow Holder hereby agrees to (i) accept the foregoing Agreement, (ii) be escrow holder under said Agreement, and (iii) be bound by said Agreement in the performance of its duties as escrow holder. Dated: FIRST AMERICAN TITLE INSURANCE COMPANY Lo Escrow Officer -23- 3119874 • EXHIBIT "I" Description of Property The land situated in the State of California, County of Orange, City of San Juan Capistrano, described as follows: PARCEL 17 OF PARCEL MAP NO. 79-856, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143, PAGES I THROUGH 8, INCLUSIVE, OF PARCEL MAPS AND AS AMENDED BY THAT CERTAIN AMENDED MAP FILED IN BOOK 176 PAGES 1 THROUGH 8. INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. I_ 3119974 0 • 9 RECORDING REQUESTED BY: First American Title Insurance Company Title Order No. 1963617 Escrow No. 1963617 WHEN RECORDED RETURN TO: Attn: @@ MAIL TAX STATEMENTS TO: Same as above 0 Space Above For Recorder's Use Tax Parcel Number GRANTDEED 1n accordance with Section 11932 of the California Revenue and Taxation Code, Grantor has declared the amount of transfer tax which is due by a separate statement which is not being recorded with this Grant Deed. FOR A VALUABLE CONSIDERATION, receipt and sufficiency ofwhich is hereby acknowledged, ORTEGA LAND COMPANY LLC, a California limited liability company ("Grantor"), hereby grants to @@, a @@ ("Grantee"), that certain real property situated in the City of San Juan Capistrano, County of Orange, State of California, described on Exhibit "A" attached hereto and by this reference made a part hereof ("Property"). This conveyance is made and accepted, and the Property is hereby granted subject to (a) current taxes and assessments; and (b) any and all easements, rights, rights-of-way, covenants, conditions, restrictions, reservations and encumbrances of record or apparent, which are hereby incorporated by reference into this Grant Deed as though fully set forth herein. -I- 3130061 IN WITNESS WHEREOF, Grantor and Grantee have caused this instrument to be executed by individuals thereunto duly authorized. DATED: "Grantor" ORTEGA LAND COMPANY LLC, a California limited liability company BY: BUIE STODDARD PROPERTIES LLC, a California limited liability company, its Manager -2- 2969221 • n STATE OF CALIFORNIA ) ) ss. COUNTY OF 1 On 20,, before me, Notary Public in and for said State, 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 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. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA ) ) ss. COUNTY OF I On 20_, before me, Notary Public in and for said State, personally appeared (Seal) 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 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. WITNESS my hand and official seal. Signature (Seal) 0 -3- 313806_3 Exhibit "A" to Grant Deed DESCRIPTION OF PROPERTY The land situated in the State of California, County of Orange, City of San Juan Capistrano, described as follows: PARCEL 17 OF PARCEL MAP NO. 79-856, IN THE CITY OF SAN JUAN CAPISTRANO, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 143, PAGES 1 THROUGH 8, INCLUSIVE, OF PARCEL MAPS AND AS AMENDED BY THAT CERTAIN AMENDED MAP FILED IN BOOK 176. PAGES I THRQUGH 8, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. -4- 313006_1 0 0 Document No. Dated 0 STATEMENT OF TAX DUE AND REQUEST THAT TAX DECLARATION NOT BE MADE A PART OF THE PERMANENT RECORD IN THE OFFICE OF THE COUNTY RECORDER (Pursuant to Section 11932 R&T Code) To: Registrar -Recorder County of Orange Request is hereby made in accordance with the provisions of the Documentary Transfer Tax Act that the amount of tax due not be shown on the original document which names: ORTEGA LAND COMPANY LLC, a California limited liability company (as grantor) and @@, a @@ (as grantee) Property described in the accompanying document is located in the City of San Juan Capistrano, County of is Orange. The amount of tax due on the accompany document is $@@ X Computed on full value of property conveyed, or Computed on full value less liens and encumbrances remaining at time of sale. Signature of Declarant or Agent ORTEGA LAND COMPANY LLC Firm Name • 313806_1 X111: Y Certificate of Acceptance This is to certify that the interest in real property granted by Grant Deed dated 200_, from Ortega Land Company LLC to San Juan Capistrano Redevelopment Agency is hereby accepted by the undersigned officer or agent on behalf of the San Juan Capistrano Redevelopment Agency pursuant to authority granted by Resolution No. and the San Juan Capistrano Redevelopment Agency consents to recordation thereof. Date: , 200_ By: STATE OF CALIFORNIA ) ) ss. COUNTY OF ) On '20. before me, [here insert name and title of the officer], Notary Public in and for said State, personally appeared . personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) istare 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. WITNESS my hand and official seal. Signature -I- (Seal) )11997_4 • I • • Certificate of Noo-For�ien Status L.J • 311987 4 FEDERAL CERTIFICATION OF NON -FOREIGN §TATUS Section 1445 of the Internal Revenue Code,provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform @@, a @@ ("Transferee"), that withholding of tax is not required upon the disposition of a U.S. real property interest by ORTEGA LAND COMPANY LLC, a California limited liability company ("Transferor"), the undersigned hereby certifies the following on behalf of Transferor: (a) Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations). (b) Transferor's U.S. employer identification number or Social Security Number is @@. (c) The office address of Transferor is 11260 EI Camino Real, Suite 200, San Diego, California 92130-2647. (d) Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both. Under penalties of perjury, I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign the document on behalf of the Transferor. "Transferor" ORTEGA LAND COMPANY LLC, a California limited liability company BY: BUIE STODDARD PROPERTIES LLC, a California limited liability company, its Manager 0 Its: I 313807_1 • • Cl DISPOSITION AND DEVELOPMENT AGREEMENT by and between SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY and SEASONS SJC II, L.P., 0 ATTACHMENT Table of Contents 100. DEFINITIONS 200. SALE OF THE SITE TO OWNER.......................................................... Page 6 201. Agreement to Purchase and Sell; Purchase Price....................................................................6 Development of the Housing Project....................................................................................13 202. Escrow..........................................................................................................................6 402. 202.1 Costs of Escrow..............................................................................................................7 202.2 Escrow Instructions........................................................................................................7 Construction Contract...........................................................................................................14 202.3 Authority of Escrow Agent.............................................................................................7 404. 202.4 Closing..........................................................................................................................8 202.5 Closing Procedure...........................................................................................................8 City and Other Governmental Permits..................................................................................14 203. Review of Title.......................................................................................................................8 406. 204. Title Insurance ........................................................................................................................9 205. Conditions of Closing,......... ....... ......................... ___ ................................. ......................... 9 205.1 Agency's Conditions of Closing.....................................................................................9 407.1 205.2 Owner's Conditions of Closing....................................................................................10 206. Physical and Environmental Condition of the Site............................................................... 11 206.1 As -Is Condition; Exceptions.........................................................................................11 408. 206.2 Physical and Environmental Investigation and Testing of Site....................................1 l 206.3 Release of Agency........................................................................................................11 Entry by the Agency.............................................................................................................16 206.4 Owner Precautions After Closing.................................................................................12 410. 206.5 Owner Indemnity ..........................................................................................................12 300. AGENCY FINANCIAL ASSISTANCE....................................................................................12 301. Agency Loan......................................................:..............:..................................................12 302. Repayment of Agency Loan.................................................................................................12 303. Security for Agency Loan.....................................................................................................13 304. Disbursement of Agency Loan.............................................................................................13 305. Subordination........................................................................................................................13 306. Assumption........................................................................................................................13 400. DEVELOPMENT OF THE HOUSING PROJECT....................................................................13 401. Development of the Housing Project....................................................................................13 402. Development Plans...............................................................................................................14 403. Construction Contract...........................................................................................................14 404. Timing of Development of the Housing Project...................................................................14 405. City and Other Governmental Permits..................................................................................14 406. Certificate of Completion.....................................................................................................15 407. Insurance........................................................................................................................15 407.1 Obligation to Repair and Restore Damage; Due to Casualty Covered by Insurance ....15 407.2 Damage or Destruction Due to Cause Not Required to be Covered by Insurance ....... 16 408. Indemnity ........................................................................................................................16 409. Entry by the Agency.............................................................................................................16 410. Compliance With Laws.........................................................................................................17 n I, J • 0 u Table of Con ents (continue ) 0 Page 411. Prevailing Wages..................................................................................................................17 500. FINANCING OF THE DEVELOPMENT OF THE HOUSING PROJECT..............................18 501. Agency Approval of Financing Plan.....................................................................................18 502. Financing Sources.................................................................................................................18 503. Tax Credit Equity ..................................................................................................................19 504. Required Submissions ........... ____ ...... ....... ............ ............................._...... .......................19 505. Holder Performance of Development of the Housing Project..............................................19 506. Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure ...........................20 507. Failure of Holder to Complete Development........................................................................20 508. Right of Agency to Cure Mortgage or Deed of Trust Default..............................................21 509. Subordination of Affordability Covenants............................................................................21 600. OPERATION OF HOUSING.....................................................................................................21 601. Number of Affordable Units.................................................................................................21 602. Duration of Affordability Requirements...............................................................................22 603. Selection of Tenants..............................................................................................................22 604. Household Income Requirements.........................................................................................22 605. Affordable Rent....................................................................................................................22 606. Marketing Program...............................................................................................................22 607. Design and Occupancy of Senior Units................................................................................23 608. Relationship to Tax Credit Requirements.............................................................................23 609. Maintenance........................................................................................................................23 610. Management Plan; Property Management............................................................................23 611. Capital Reserve Requirements..............................................................................................24 612. Operating Budget and Reserve.............................................................................................24 613. Social Services......................................................................................................................25 614. Prohibited Uses.....................................................................................................................25 615. Non -Discrimination Covenants............................................................................................25 616. Monitoring and Recordkeeping............................................................................................26 617. Regulatory Agreement..........................................................................................................26 618. Inclusionary Housing Requirements.....................................................................................26 700. DEFAULT AND REMEDIES....................................................................................................27 701. Events of Default..................................................................................................................27 702. Remedies........................................................................................................................27 703. Force Majeure .......................................................................................................................27 704. Termination by Agency........................................................................................................27 705. Termination by the Owner................................:...................................................................28 706. Attorneys' Fees.................................................:...................................................................28 707. Remedies Cumulative...........................................................................................................29 708. Waiver of Terms and Conditions..........................................................................................29 Table of Contents (continued) 800. GENERAL PROVISIONS........... Page RE 801. Time........................................................................................................................29 802. Notices........................................................................................................................29 803. Representations and Warranties of Owner............................................................................29 804. Agency Representations........................................................................................................30 805. Limitation Upon Change in Ownership, Management and Control of the Owner...............30 806. Non -Liability of Officials and Employees of Agency..........................................................32 807. Relationship Between Agency and Owner...........................................................................32 808. Agency Approvals and Actions............................................................................................32 809. Counterparts........................................................................................................................32 810. Integration........................................................................................................................32 811. Real Estate Brokerage Commission......................................................................................33 812. Titles and Captions...............................................................................................................33 813. Interpretation........................................................................................................................33 814. No Waiver........................................................................................................................33 815. Modifications........................................................................................................................33 816. Severability........................................................................................................................33 817. Computation of Time............................................................................................................33 818. Legal Advice........................................................................................................................33 819. Time of Essence....................................................................................................................34 820. Cooperation........................................................................................................................34 821. Conflicts of Interest...............................................................................................................34 • DISPOSITION AND DEVELOPMENT AGREEMENT THIS DISPOSITION AND DEVELOPMENT AGREEMENT (the "Agreement") is entered into as of .2006 by and between the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and SEASONS SJC , L.P., a California limited partnership (the "Owner"). RECITALS A. The Agency has entered into a Purchase Agreement and Escrow Instructions with Ortega Land Company, LLC, dated September 1, 2006 (the "Purchase Agreement"), to acquire approximately 1.2 acres of real property located at the northwest corner of Rancho Viejo Road and Paseo Espada in the City of San Juan Capistrano (the "Site"). B. The Agency has established a Low and Moderate Income Housing Fund (the "Housing Fund") for the purpose of increasing, improving and preserving the community's supply of housing for low and moderate income persons at an affordable housing cost. The Site has been, or will be, purchased with Housing Fund money. C. By this Agreement, and subject to the terms and conditions herein, the Agency desires to acquire and convey the Site to the Owner, and to provide financial assistance to Owner in the form of a loan (the "Agency Loan") for the cost of the acquisition of the Site and a portion of the • cost of development of an approximately thirty-eight (38) unit rental senior housing development thereon (the "Housing Project"). The Owner desires to acquire the Site with the assistance of the Agency and the Agency Loan, and to construct and operate the Housing Project thereon. D. It is the intent of the parties to maximize the leverage of Agency funds by making every effort to secure sources of non -local subsidies for the Housing Project. Accordingly, this Agreement requires the Owner to attempt to obtain federal 9% Tax Credits for the Housing Project (and provides for the parties to determine whether to pursue an alternate financing strategy if such federal 9% Tax Credits are not available). In addition to Tax Credits, the Agreement requires the Owner to also diligently pursue an allocation of funding for the Housing Project from the County of Orange and the Affordable Housing Program of the Federal Home Loan Bank. E. The conveyance of the Site, the making of the Agency Loan and the development and operation of the Housing Project pursuant to this Agreement is in the vital and best interest of the City and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. The income and rent restrictions provided for hereunder are intended to satisfy the requirements of Health and Safety Code Section 33413(6). NOW, THEREFORE, the parties hereto agree as follows: 100. DEFINITIONS "Act" means the Community Redevelopment LaW of the State of California, Health and Safety Code Section 33000, et seq., as the same may from time to time he amended. 0 "ADA" shall mean the Americans with Disabilities Act of 1990,42 U.S.C. § 12101, et seq., as the same may from time to time be amended "Affordability Period" shall mean the duration of the affordable housing requirements which are set forth in this Agreement and the Regulatory Agreement, as set forth in Section 602 hereof. "Affordable Rent" shall have the meaning set forth in Health and Safety Code Section 50053, as further defined in Section 605 hereof. "Agency" means the San Juan Capistrano Redevelopment Agency, a public body, corporate and politic. "Agency Loan" means the loan from the Agency to the Owner pursuant to Section 301 hereof. "Agreement" means this Disposition and Development Agreement between Agency and the Owner. "Anqual Project Revenue" shall mean all gross income and all revenues of any kind from the Housing Project in a calendar year, including without limitation, Rent, Section 8 housing assistance payments, if any, late charges, vending machine income, and any other revenue's of whatever kind or nature from the Housing Project, except that interest on security deposits and required reserves, and the proceeds of loans, refinancings, condemnation, insurance claims, and partner capital contributions, shall not be considered Annual Project Revenue. "Best Knowledge" means the actual knowledge of the party's employees and agents who manage the Site or have participated in the preparation of this Agreement, and all documents and materials in the possession of such party, and shall not impose a duty of investigation. "Capital Replacement Reserve" means the account which is described in Section 611 hereof. "Certificate of Completion" means the document which evidences the Owner's satisfactory completion of the development of the Housing Project, as set forth in Section 406 hereof, substantially in the form of Attachment No. 9 hereto. "City" means the City of San Juan Capistrano, California, a California municipal corporation. The City is not a party to this Agreement and shall have no obligations hereunder. "Conditions Precedent" means the conditions precedent to the conveyance of the Site, as set forth in Sections 205.1 and 205.2 hereof. "Consumer Price Index" shall mean the Consumer Price Index published by the Bureau of Labor Statistics of the U.S. Department of Labor for Urban Wage Earners and Clerical Workers, Los Angeles -Riverside -Orange County, California (1982-84=100) "All Items." In the event the compilation and/or publication of the Consumer Price Index shall be transferred to any other governmental department, bureau or agency or shall be discontinued, then the index most nearly the same as the Consumer Price Index shall be used to make such calculation as determined by the Agency. "County" shall mean the County of Orange, California. • I • • "Debt Service" means regularly scheduled payments of principal and interest made in a calendar year pursuant to the approved financing obtained for the development and ownership of the Housing Project which is senior in lien priority to the Agency Loan, but excluding payments made pursuant to the Promissory Note. "Default" means the failure of a party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 701 hereof. "Deferred Developer Fees" shall mean any deferred developer fee allowable under the financing which has been approved by the Agency pursuant to Section 501 hereof. "Developer" means Simpson Housing Solutions, LLC, a Colorado limited liability company, and its permitted successors and assigns. "Development Plans" means those plans and drawings to be submitted to City for its approval, pursuant to Section 402 hereof. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders, and decrees of the United States, the state, the County, the City, or any other political subdivision in which the Housing Project is located, and of any other political subdivision, agency, or instrumentality exercising jurisdiction over the Owner or the Housing Project. • "Hazardous Materials" means any substance, material, or waste which is or becomes regulated by any local governmental authority, the County, the State of California, regional governmental authority, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article I I of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. §1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903) or (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq. Notwithstanding the foregoing, "Hazardous Materials" shall not include such products in quantities as are customarily used in the construction, maintenance, development or management of residential developments or associated buildings and grounds, or tycally used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Housing Project, including without limitation alcohol, aspirin, tobacco and saccharine. • "Mousing Fund" means the Agency's Low and Moderate Income Housing Fund, established pursuant to Health and Safety Code Section 33334.3. "Housing Project" means the multifamily apartment complex to be developed and operated by the Owner as provided herein. "Housing Units" means the individual apartment units within the Housing Project to be developed and operated by the Owner. "Legal Description" means the description of the Site which is attached hereto as Attachment No. 1 and incorporated herein. "Lender" means each of the responsible financial lending institutions or persons or entities approved by the Agency in its reasonable discretion, which provide construction loans or permanent loans for the development or operation of the Housing Project, as set forth in Section 501 hereof. "Lender's Title Policy" means the policy of title insurance to be issued to the Agency pursuant to Section 204 hereof. "Lower Income Household" shall mean a household earning not greater than that percentage of Orange County area median income, adjusted for household size, which is set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50079.5. "Management Plan" is defined in Section 610 hereof. "Marketing Program" is defined in Section 606. "Notice" shall mean a notice in the forth prescribed by Section 802 hereof. "Operating Expenses" shall mean actual, reasonable and customary (for comparable affordable senior rental housing developments in Orange County) costs, fees and expenses directly incurred, paid, and attributable to the operation, maintenance and management of the Housing Project in a calendar year, which are in accordance with the Operating Budget approved by the Agency pursuant to Section 612 hereof, including: painting, cleaning, repairs, alterations, landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal property taxes, assessments, insurance, security, advertising and promotion, janitorial . services, cleaning and building supplies, purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings which are not paid from the capital replacement reserve, fees and expenses of property management, fees and expenses of accountants, attorneys and other professionals, the cost of social services in accordance with Section 613 hereof, repayment of any completion or operating loans made to Owner by its partners or the Developer, and other actual, reasonable and customary operating costs and capital costs which are directly incurred and paid by the Owner, but which are not paid from the Operating Reserve or other reserve accounts. The Operating Expenses shall not in any event include expenses not related to the operation of the Housing Project, including without limitation, depreciation, amortization, and accrued principal and interest expense on deferred payment debt. "Operating Reserve" means the account which is described in Section 612 hereof. "Outside Date" is defined in Section 202.4 hereof. r1 U 0 "Owner" means SEASONS SIC II,.L.P., , a California limited partnership, and its permitted successors and assigns. "Owner's Title Policy" means the policy of title insurance to be issued to the Owner pursuant to Section 204 hereof. "Partnership Agreement" means the agreement which sets forth the terms of the limited partnership formed by Owner to be the assignee of Owner's interests hereunder, as such agreement may be amended from time to time. "Property Manager" means the manager of the Housing Project, as set forth in Section 610 hereof. "Purchase Agreement" means the Purchase Agreement and Escrow Instructions between the Agency and Ortega Land Company, LLC, dated September 1, 2006, as such agreement may be amended. "Purchase Price" means the price to be paid by Owner for the Conveyance of the Site, as provided in Section 201 hereof. "Qualifted Permanent Residents" is defined in Section 607. • "Redevelopment Plan" means the redevelopment plan for the Agency's Central Redevelopment Project, as it may be amended from time to time. "Regulatory Agreement" shall mean the Regulatory Agreement which is to be recorded as an encumbrance to the Housing Project in a form which is attached hereto as Attachment No. 10 and incorporated herein, in accordance with Section 617 hereof. "Rent" shall mean the total of monthly payments by the tenants of a Housing Unit for use and occupancy for the Housing Unit and facilities associated therewith, including a reasonable allowance for utilities for an adequate level of service, as defined in 25 California Code of Regulations §6918. "Reserve Deposits" shall mean any payments to the Capital Replacement Reserve account and Operating Reserve account pursuant to Sections 611 and 612 hereof. "Residual Receipts" shall mean, for each calendar year, Annual Project Revenue less the sum of (i) Operating Expenses, (ii) Debt Service, (iii) Reserve Deposits, (iv) Deferred Developer Fees, and (v) a partnership management fee to the managing general partner of Owner, and/or a general partner asset management fee payable to one or more of the general partners of the Owner, and/or a limited partner asset management fee payable to one or more of the limited partners of Owner, and an annual audit fee, in such amounts which are set forth in the Financing Plan which is approved by the Agency; provided, however, that if such icalculation results in a negative number, Residual Receipts shall be zero for that year. "Schedule of Performance" means that certain Schedule of Performance attached hereto as • Attachment No. 7 and incorporated herein, which sets forth the time for performing the various obligations of this Agreement. "Scope ojDevelopment" means that certain Scope of Development attached hereto as Attachment No. 8 and incorporated herein, which describes the scope, amount, and quality of the development of the Housing Project by the Owner pursuant to the terms and conditions of this Agreement. "Senior Citizens" is defined in Section 607. "Site" means that certain approximately 1.2 acres of real property located at the northwest comer of Rancho Viejo Road and Paseo Esparta in the City, as described in the Legal Description and depicted on the Site Map. "Site Map" means the map of the Housing Project which is attached hereto as Attachment No. 2 and incorporated herein. "Substantial Damage" is defined in Section 407.2 hereof. "Tax Credits" shall mean Low Income Housing Tax Credits granted pursuant to Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Sections 50199, et seq. "Tax Credit Rules" means Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq., as the foregoing may be amended from time to time, and the rules and regulations implementing the foregoing. "Tax Credit Regulatory Agreement" shall mean the regulatory agreement which may be required to be recorded against the Housing Units with respect to the issuance of Tax Credits, as set forth in Section 608 hereof. . "TCAC" means the California Tax Credit Allocation Committee, the allocating agency for Tax Credits in California. "Very Low Income Household" shall mean a household earning not greater than the applicable percentage of Orange County area median income, adjusted for household size, as set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50105. 200. SALE OF THE SITE TO OWNER 201. Agreement to Purchase and Sell; Purchase Price. The Agency agrees to acquire the Site pursuant to the terms of the Purchase Agreement and to sell the Site to the Owner, and the Owner agrees to purchase the Site from the Agency, in accordance with and subject to all of the terms, covenants, and conditions of this Agreement, for the sum of Two Million Five Hundred Ten Thousand Dollars ($2,510,000) (the "Purchase Price"). The Purchase Price is equal to or greater than the fair market value of the Site, as determined by an appraisal performed by a certified appraiser. 202. Escrow. Within the time set forth in the Schedule of Performance, the Parties shall open escrow ("Escrow") with First American Title Comprny in its Los Angeles County office or with another escrow company mutually satisfactory to both Parties (the "Escrow Agent'). 6 • 1 0 • 202.1 Costs of Escrow. Owner and Agency shall each pay their portion of the premium for the Title Policies as set forth in Section 204 hereof, the Agency shall pay the documentary transfer taxes due with respect to the Conveyance of the Site, and the parties shall each pay one-half of all other usual fees, charges, and costs which arise from Escrow. 202.2 Escrow Instructions. This Agreement constitutes the joint escrow instructions of Owner and Agency, and Escrow Agent to whom these instructions are delivered is hereby empowered to act under this Agreement. The Parties hereto agree to execute and deliver such documents (in recordable form as required), pay or deposit such funds, and to do all such acts consistent with their respective obligations hereunder as may be reasonably necessary to close this Escrow in the shortest possible time, and in any event on or before the date set forth in the Schedule of Performance. All funds received in the Escrow shall be deposited with other escrow funds in a general escrow accounts) and may be transferred to any other such escrow trust account in any State or National Bank doing business in the State. All disbursements shall be made by check from such account. If in the opinion of Escrow Agent or either Party it is necessary or convenient in order to accomplish the Closing of this transaction, such Party may require that the Parties sign supplemental escrow instructions; provided that if there is any inconsistency between this Agreement and the supplemental escrow instructions, then the provisions of this Agreement shall control. The Parties agree to execute such other and further documents as may be reasonably necessary, helpful or appropriate to effectuate the provisions of this Agreement. Escrow Agent is instructed to release Agency's and Owner's escrow closing statements to both Parties. 202.3 Authority of Escrow Agent. Escrow Agent is authorized to, and shall: • (a) Pay and charge the Agency and Owner for their portions of the premium of the Title Policies and any endorsements thereto as set forth in Section 204 and any amount necessary to place title to the Site in the Condition of Title provided for in Section 203 of this Agreement. (b) Pay and charge Agency and Owner for any escrow fees, charges, and costs payable in accordance with Section 202.1 of this Agreement. (c) Disburse funds and deliver and record the Grant Deed when both the Owner's Conditions Precedent and the Agency's Conditions Precedent have been fulfilled or waived in writing by the benefited Party or Parties. (d) Do such other actions as necessary, including, without limitation, obtaining the Title Policies, to fulfill its obligations set forth in this Agreement and to close the transactions contemplated hereby. (e) Within the discretion of Escrow Agent, direct the Agency and the Owner to execute and deliver any instrument, affidavit, and statement, and to perform any act reasonably necessary to comply with the provisions of FIRPTA and any similar state act and regulation promulgated thereunder. Agency agrees to execute a Certificate of Non -Foreign Status by individual transferor and/or a Certification of Compliance with Real Estate Reporting Requirement of the 1986 Tax Reform Act as may be required by Escrow Agent, on the form to be supplied by Escrow Agent. (f) Prepare and file with all appropriajte governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099-S form, and be responsible for withholding taxes, if any such forms are provided for or required by • law. 202.4 Closing. The Conveyance of the Site shall close (the "Closing") within thirty (30) business days after the Parties' satisfaction (or written waiver, as the case may be) of all of the Agency's and Owner's Conditions Precedent to Closing as set forth in Section 205 hereof, and in no event later than the latest date for closing applicable to the Tax Credit allocation for the Housing Project, if an allocation is obtained (the "Outside Date"). The "Closing" shall mean the time and day the Grant Deed is filed for record with the County Recorder. The "Closing Date" shall mean the day on which the Closing occurs. follows: 202.5 Closing Procedure. Escrow Agent shall close the Escrow for the Site as (a) Record the Grant Deed, Deed of Trust and Regulatory Agreement; (b) Deliver to the Agency the Promissory Note; (c) Deliver and record any loan or financing documents as may be requested by the Owner or its construction lender (if applicable); (d) Instruct the Title Company to deliver the Owner's Title Policy to the Owner and the Lender's Title Policy to the Agency; (e) File any informational reports required by Internal Revenue Code Section 6045(e), as amended, and any other applicable requirements; and (I) Deliver the FIRPTA Certificate, if any, to the Owner; and (g) Forward to both the Owner and the Agency a separate accounting of all funds received and disbursed for each Party and copies of all executed and recorded or filed documents deposited into Escrow, with such recording and filing date and information endorsed thereon. 203. Review of Title. Within the time set forth in the Schedule of Performance, the Agency shall cause First American Title Company or another title company mutually agreeable to both parties (the "Title Company"), to deliver to the Owner a preliminary title report or reports (collectively, the "Title Report") with respect to the title to the Site, together with legible copies of the documents underlying the exceptions ("Exceptions") set forth in the Title Report. The Owner shall have the right to reasonably approve or disapprove the Exceptions; provided, however, that the Owner hereby approves the following Exceptions: (a) The Redevelopment Plan, and (b) The lien of any non -delinquent property taxes and assessments (to be prorated as of the Closing Date). The Owner shall have thirty (30) days from the date of its receipt of the Title Report to give written Notice to the Agency and Escrow Agent of the Owner's approval or disapproval of any of such Exceptions set forth in the Title Report, within its reasonable discretion. Owner's failure to provide Notice of its approval of the Title Report within such time limit shall be deemed approval of the Title Report. If the Owner delivers Notice to the Agency of its disapproval of any Exceptions in the Title Report, the Agency shall have the right, but not the obligation, to elect to remove any disapproved Exceptions within thirty (30) days after receiving written Notice of the Owner's disapproval or to deliver Notice to the Owner providing assurances satisfactory to the Owner within • said time period that such Exception(s) will be removed on or before the Closing. If the Agency cannot or does not elect to remove any of the disapproved Exceptions within that period, the Owner shall have fifteen (15) days after the expiration of such thirty (30) day period to either give the Agency written Notice that the Owner elects to proceed! with the purchase of the Site subject to the disapproved Exceptions or to give the Agency written Notice that the Owner elects to terminate this Agreement and the Owner's failure to give timely written Notice shall be deemed as an election to terminate this Agreement. Fee simple title subject only to the Exceptions to title approved by the Owner as provided herein shall hereinafter be referred to as the "Condition of Title." The Owner shall have the right to approve or disapprove any further Exceptions reported by the Title Company after the Owner has approved the Condition of Title for the Site (which are not created by the Owner). The Agency shall not voluntarily create any new exceptions to title following the Date of Agreement. 204. Title Insurance. Concurrently with recordation of the Grant Deed conveying title to the Site to the Owner, the Title Company shall (a) issue to the Owner, at the Owner's election, a CLTA or ALTA owner's policy of title insurance (the "Owner's Title Policy"), together with such endorsements as are reasonably requested by the Owner, insuring that the title to the conveyed Site is vested in the Owner in the Condition of Title approved by the Owner as provided in Section 203 of this Agreement, and (b) issue to the Agency an ALTA lender's policy of title insurance, together with such endorsements as are reasonably requested by the Agency (the "Lender's Title Policy") insuring the priority of the lien of the Agency's Deed of Trust (the Owner's Title Policy and the Lender's Title Policy are referred to collectively herein as the "Title Policies"). The Title Company shall provide the Agency with a copy of the Title Policies. The Agency shall pay for the portion of • the Owner's Title Policy equal to the premium for a CLTA owner's policy in the amount of the Purchase Price, and Owner shall pay the premium for the Lender's Title Policy, any additional costs of the Owner's Policy, including the cost of any endorsements thereto, and the cost of a survey (if required by the Owner and/or the Title Company). 205. Conditions of Closing. The Closing of the Conveyance of the Site is conditioned upon the satisfaction (or written waiver by the benefited Party or Parties in its or their sole and absolute discretion) of the following terms and conditions within the times designated below: 205.1 Agency's Conditions of Closing, The Agency's obligation to proceed with the Closing of the Conveyance of the Site is subject to the fulfillment or waiver by Agency of each and all of the conditions precedent (a) through (i), inclusive, described below (the "Agency's Conditions Precedent"), which are solely for the benefit of the Agency, and which shall be fulfilled or waived by the time periods provided for herein (provided, however, that if the reason for the failure of any of the following conditions is due to an Agency Default, such failure shall not be deemed to constitute the failure of the Agency's Conditions Precedent): (a) No Default. At the Closing, the Owner shall not be in material Default in any of its obligations set forth in this Agreement and all representations and warranties of Owner contained herein shall be true and correct in all material respects. (b) Execution of Documents. The Owner shall have executed the Promissory Note, Deed of Trust, Regulatory Agreement and any other documents required to he executed by the Owner hereunder, and delivered such documents into Escrow. (c) Payment of Funds. Prior to the ¢lose of Escrow, the Owner shall have paid • the cash portion of the closing costs that is the Owner's responsibility. (d) Lender's Title Policy. The Title Company shall have unconditionally committed to issue the Lender's Title Policy to the Agency, in accordance with Section 204 hereof. (e) Design Approvals. Owner shall have obtained approval of the Development Plans required for the Housing Project as described in Section 402 hereof. (f) Land Use Approvals. Owner shall have obtained approval of each and all of the land use approvals for the Housing Project and the Site as described in Section 405 hereof. (g) Construction Contract. Owner shall have provided to the Agency a signed copy of the contract between the Owner and one or more general contractors for the construction of the development, certified by the Owner to be true and correct copies thereof, and the Agency shall have approved such contractor or contractors. (h) Insurance. The Owner shall have provided proof of insurance as required by Section 407 hereof. (i) Financing. The Agency shall have approved the Financing Plan as provided in Section 501 hereof, the construction financing and equity contributions which are required for the acquisition of the Site and the development of the Housing Project shall be available to the Owner, and all Tax Credits required for the development of the Housing Project shall have been allocated. To the extent said financing consists of a third party loan or loans, said loan or loans have closed and funded or shall be ready to close and fund upon the Closing. 205.2 Owner's Conditions of Closing. Owner's obligation to proceed with the purchase of the Site is subject to the fulfillment or waiver by Owner of each and all of the conditions precedent (a) through (g), inclusive, described below (the "Owner's Conditions Precedent"), which are solely for the benefit of Owner, and which shall be fulfilled or waived by the time periods provided for herein (provided, however, that if the reason for the failure of any of the following conditions is due to a Owner Default, such failure shall not be deemed to constitute the failure of the Owner's Conditions Precedent): (a) No Default. At the Closing, the Agency shall not be in material Default in any of its obligations set forth in this Agreement and all representations and warranties of Agency contained herein shall be true and correct in all maferial respects. (b) Execution of Documents. The Agency shall have executed the Grant Deed and the Regulatory Agreement and any other documents required to be executed by the Agency hereunder, and delivered such documents into Escrow. (c) Owner's Title Policy. The Title Company shall have unconditionally committed to issue the Owner's Title Policy to the Owner, in accordance with Section 204 hereof. (d) Design Approvals. Owner shall have obtained approval of the Development Plans required for the Housing Project as described in Section 402 hereof. (e) Land Use Approvals. Owner sholl have obtained approval of each and all of the land Use approvals for the Housing Project and the Site as described in Section 405 hereof. (f) Environmental Condition. Owner shall not have elected to terminate this Agreement due to the environmental condition of the Site pursuant to Section 206 hereof. IM 0 1 0 • (g) Financing. The Owner shall have approved the amount of the Agency Loan as determined in the Financing Plan, construction financing and equity contributions which are required for the acquisition of the Site and the development of the Housing Project shall be available to the Owner, and all Tax Credits required for the development of the Housing Project shall have been allocated. To the extent said financing consists of a third party loan or loans, said loan or loans have closed and funded or shall be ready to close and fund upon the Closing. 206. Physical and Environmental Condition of the Site. 206.1 As -Is Condition; Exceptions. Except as set forth herein, the Site shall be conveyed to the Owner in an "as is" physical and environmental condition, with no warranty, express or implied, by the Agency as to the condition of any existing improvements, the soil, its geology, the presence of known or unknown faults or Hazardous Materials or toxic substances, and it shall be the sole responsibility of the Owner at its expense to investigate and determine the physical and environmental conditions. If the physical or environmental condition is not in all respects entirely suitable for the use or uses to which the Site will be put, ,the Owner may terminate this Agreement pursuant to Section 704 hereof. If the Owner approves the physical and environmental condition of the Site and accepts the Conveyance of the Site, then it shall be the sole responsibility and obligation of the Owner to take such action as may be necessary to place the physical and environmental conditions of the Site in a condition entirely suitable for the purposes set forth in this Agreement. 206.2 Physical and Environmental Investigation and Testing of Site. The Owner shall have the right, at its sole cost and expense, subject to the requirements of the Purchase Agreement, to engage its own environmental consultant (the "Environmental Consultant") and other • consultants to make such investigations of the Site as the Owner deems necessary, including any "Phase I" and/or "Phase II" environmental investigations of the Site, soils, geotechnical and other testing of the Site, and the Agency shall promptly be provided a copy of all reports and test results provided to the Owner by the Environmental Consultant (collectively, the "Environmental Report"). The Owner shall reasonably approve or disapprove of the physical and environmental condition of the Site within the time set forth in the Schedule of Performance. The Owner's failure to deliver written Notice of its approval within such time limit shall be deemed disapproval of the physical and environmental condition of the Site. 206.3 Release of Agency. The Owner hereby waives, releases and discharges forever the Agency and the City, and their respective employees, officers, agents and representatives, from all present and future claims, demands, suits, legal and administrative proceedings and from all liability for damages, losses, costs, liabilities, fees and expenses, present and future, arising out of or in any way connected with the physical and environmental condition of the Site, any Hazardous Materials on or under the Site, or the existence of Hazardous Materials contamination due to the generation of Hazardous Materials from the Site, however they came to be placed there, except that arising out of the negligence or misconduct of the Agency or City or their respective employees, officers, agents or representatives. The Owner acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor of the time of executing the release, which if known by him must have materially affected his • settlement with the debtor." 11 As such relates to this Section 206.3, the Owner hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the Qalifomia Civil Code. 206.4 Owner Precautions After Cloning. Upon the Closing, the Owner shall take all necessary but reasonable precautions to prevent the release into the environment of any Hazardous Materials which are located in, on or under tete Site which have been conveyed to the Owner, except as may be provided otherwise by applicable Governmental Requirements. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, the Owner shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. 206.5 Owner Indemnity. Upon the Closing, the Owner agrees to indemnify, defend and hold the Agency harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, reasonable attorneys' fees), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from the Site which occurs during the period of the Owner's ownership thereof, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Site which occurs during the period of the Owper's ownership of the Site. This indemnity shall include, without limitation, any damage, liability, fine, penalty, or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. At the request of the Owner, the Agency shall cooperate with and assist the Owner in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that the Agency shall not be obligated to incur any expense in connection with such cooperation or assistance. 300. AGENCY FINANCIAL ASSISTANCE 301. Agency Loan. The Agency hereby agrees to loan to Owner an amount not less than Three Million Three Hundred Ninety -Four Thousand Dollars ($3,394,000) (the "Agency Loan % subject to the terms and conditions set forth in this Agreement, and subject further to the terms and conditions set forth within the documents and instruments executed by the Owner in connection with this transaction. The exact amount of the Agency Loan shall be reasonably determined by the Agency in accordance with an economic analysis of the Housing Project to be performed by the Agency prior to Closing in connection with the Agency's approval of the Financing Plan, as set forth in Section 501 hereof. In no event, however, shall the Agency be obligated to approve an Agency Loan amount of more than Four Million Nine Hundred Thousand Dollars ($4,900,000). The amount of the Agency Loan may also be increased as provided in Section 411 hereof. The Agency shall not be obligated to loan more of its Low and Moderate Inco a Housing Funds than the amount permitted pursuant to Health and Safety Code Section 33 34.4(b). Any additional funds necessary to make the Agency Loan shall be provided from other funs of the Agency, or grants which the Agency receives. 302. Repayment of Agency Loan. The Owner's obligation to repay the Agency Loan shall be set forth in the Promissory Note in the form of Attachment No. 4 attached hereto, which is 12 • I • • incorporated herein. The Promissory Note shall be for a term of fifty-five (55) years from the date of the City's issuance of a certificate of occupancy for the ,Housing Project, and shall bear interest at the rate of three percent (3%)per annum, compounded ann ally, commencing upon the date of the Promissory Note. The Promissory Note shall be payabl from fifty percent (50%) of the "Residual Receipts" of the Housing Project, after payment of {i) perating Expenses, (ii) Debt Service which is senior to the Promissory Note, (iii) deposits to required serve accounts ("Reserve Deposits"), (iv) Deferred Developer Fee payments which are paid within ten years of completion of construction of the Housing Project, (v) a partnership management fee to the managing general partner of Owner, and/or a general partner asset management fee payable to one or more of the general partners of the Owner, and/or a limited partner asset management fee payable to one or more of the limited partners of Owner, and an annual audit fee, in such amounts which are set forth in the Financing Plan which is approved by the Agency, until the Promissory Note has been paid in full; provided, however, that if such calculation results in a negative number, Residual Receipts shall be zero for that year. In the event that the Owner obtains other approved financing f}om the County or other sources which also required payment from Residual Receipts, the Agency shall negotiate with such other lender to allocate the Residual Receipts to repayment of both loans in an amount proportionate to the relative amount of such loans or in another equitable manner mutually agreeable to the parties. The Owner shall annually, on or before March 31 of each year, com}nencing in the year after the issuance of the certificate of occupancy for the Housing Project, submit,to the Agency a Residual Receipts Report, in the form attached hereto as Attachment No. 6 and incorporated herein, which shall provide the basis for the Owner's payment of Residual Receipts to the Agency. The Note shall be non-recourse to the Owner. 303. Security for Agency Loan. The Promissory Note shall be secured by a Deed of • Trust to be recorded as an encumbrance to the Site owned by the Owner substantially in the form of Attachment No. 5 attached hereto, which is incorporated herein. 304. Disbursement of Agency Loan. The proceeds of the Agency Loan shall be disbursed first for the payment of the Purchase Price of the Site, second to pay for the cost of governmental permits and fees required in connection with the construction of the Housing Project, and third to pay for or reimburse the Owner for Owner's actually incurred predevelopment expenses, including architectural services, environmental studies, traffic studies, land appraisal, and land acquisition consultant fees, and governmental fees and permit costs, which shall be disbursed concurrently with the Agency's Conveyance of the Site to the Owner. In the event that there are any Agency Loan proceeds remaining after payment of the foregoing, such proceeds shall be disbursed for costs of construction of the Housing Project, conditioned upon delivery of contractor invoices to Agency and Agency approval of the items of construction for which such disbursement is requested. 305. Subordination. The Deed of Trust shall.be made subordinate to the deed of trust for the primary construction financing which is approved by ithe Agency pursuant to Section 501 hereof. The lien priority of the Agency Deed of Trust and the other financing shall be as set forth in the Financing Plan which is approved by the Agency. 306. Assumption. The Promissory Note shall not be assumable by successors and assigns of Owner except for those successors approved or permit�ed pursuant to Section 805 hereof. 400. DEVELOPMENT OF THE HOUSING PROJECT 401. Development of the Housing Project. a Owner agrees to construct and develop • the Housing Project substantially in accordance with the cope of Development which is attached hereto as Attachment No. 8 and incorporated herein, all applicable local codes, development 13 standards, ordinances and zoning ordinances in effect at the time of project completion, and the Development Plans which are approved by the City pu ; want to Section 402 hereof. The Housing Project shall generally consist of a multifamily apartme t complex with thirty-eight (38) apartment units, a thirty-eight (38) space off-street parking lot, an associated landscaping and common areas. Any funds necessary to complete the development of th Housing Project shall be obtained by the Owner, in accordance with the Financing Plan approve by the Agency hereunder. 402. Development Plans. The Owner shall ubmil to the City such plans, materials and drawings describing the development of the Housing P ject (collectively, the "Development Plans") which may be required by the City with respect to any ermits and entitlements which are required to be obtained to develop the Housing Project. Owner, oIC r prior to the date set forth in the Schedule of Performance (subject to force majeure pursuant to S ion 703 hereof), shall further submit to the City such plans for the development of the Housing Project as required by the City in order for Owner to obtain building permits for such development !work. Within thirty (30) days after the City's disapproval or conditional approval of such plans, Owner shall revise the portions of such plans identified by the City as requiring revisions and resubmit the revised plans to the City. The City shall have all rights to review and approve or disapprove all Development Plans and other required submittals in accordance with the City Municipal Code, and nothing set forth in this Agreement shall be construed as the City's approval of any or all of the Development Plans. Any and all change orders or revisions required by the City and its inspectors which are required under the Municipal Code and all other applicable Uniform Code (e.g. Building, Plumbing, Fire, Electrical, etc.) and under other applicable laws and regulations sh;ll be included by the Owner in its Development Plans and other required submittals and shall be completed during the development of the Housing Project. The Agency and the City shall novIbe responsible either to the Owner or to third parties in any way for any defects in the Development Plans, nor for any structural or other defects in any work done according to the approved Development )Tans, nor for any delays reasonably caused by the review and approval processes established by this] Section 402. 403. Construction Contract. Owner shall enter into a contract with one or more general contractors reasonably acceptable to the Agency for the 'construction of the Housing Project. The construction contract(s) shall be reasonably acceptable to the Agency. The Agency's approval of the general contractor and the construction contract shall not be unreasonably withheld, conditioned or delayed. 404. Timing of Development of the Housing Project. The Owner hereby covenants and agrees to commence the development of the Housing P*ct within the time set forth in the Schedule of Performance, which is attached hereto as Attachment No. 7 and incorporated herein (subject to force majeure pursuant to Section 703 hereof). The Oer further covenants and agrees to diligently prosecute to completion the development of the Housing Project in accordance with the approved Development Plans and to file a Notice of Completion p . rsuant to California Civil Code Section 3093 within the time set forth in the Schedule of Performance. 405. City and Other Governmental Permit development of the Housing Project, the Owner shall se, all permits and land use entitlements which may be requ agency affected by such construction, including without affordable family/senior housing designation, Architech grading and building permits. The Owner shall pay all i final drawings with final corrections to obtain such pem obligation to incur liability or expense therefor, use its b building permits and certificates of occupancy for const 14 Before commencement of the v or cause its contractor to secure any and d by the City or any other governmental nitation a General Plan Amendment to I Control application, Zone Variance, and essary fees and timely submit to the City c, and the staff of the Agency will, without efforts to expedite the City's issuance of tion that meets the requirements of the • 1 0 • City Code, and all other applicable laws and regulations. 406. Certificate of Completion. Promptly fter the completion of the development of the Housing Project in conformity with this Agreement (as easonably determined by the Agency Executive Director or his or her designee), upon the wri en request of the Owner, the Agency.shall furnish the Owner with a Certificate of Completion (substantially in the form attached hereto as Attachment No. 9) which evidences and determines the satisfactory completion of the development of the Housing Project in accordance with this Agreement. The issuance and recordation of the Certificate of Completion with respect to the Housing Project shall not supersede, cancel, amend or limit the continued effectiveness of any obligations relating to the maintenance, or uses, or payment of monies, or any other obligations, except for the obligation to complete the development of the Housing Project or applicable portion thereof as of the time of the issuance of the Certificate of Completion. 407. Insurance. The Owner shall take out and maintain or shall cause its contractor to take out and maintain until the issuance of the Certificate of Completion pursuant to this Agreement, (a) a comprehensive general liability policy in the amount of not less than Two Million Dollars ($2,000,000) combined single limit policy, (b) a comprehensive automobile liability policy in not less than the amount of One Million Dollars ($1,000,000) combined single limit, and (c) a policy of all-risk property insurance in an amount not less than one hundred percent (100%) of the full insurable value of the Housing Project owned by the Owner. The required amount of insurance shall be subject to increases as the Agency may reasonably require from time to time, but not more frequently than every twelve (12) months. Such policies shall protect the Owner and Agency from claims for such damages, and be issued by an insurance carrier qualified to do business in the State of • California. Such policy or policies shall be written on an occurrence form. The Owner shall also furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that Owner and any contractor with whom it has contracted for the performance of work on the Housing Project or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. Prior to the commencement of the construction of the Housing Project, the Owner shall furnish a certificate of insurance countersigned by an authorized agent of the insurance carrier setting forth the general provisions of the insurance coverage. This countersigned certificate shall name the Agency and its officers, agents, and employees as additionally insured parties under the policy, and the certificate shall be accompanied by a duly executed endorsement evidencing such additional insured status, which shall be provided as a separate endorsement attached to the certificate. The certificate and separate endorsement by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify the Agency of any material change, cancellation or termination of the coverage at least ten (10) days in advance of the effective date of any such material change, cancellation or termination, and to notify the Agency within ten (10) days of Owner's failure to pay any premium when due. Coverage provided hereunder b� the Owner shall be primary insurance and not be contributing with any insurance maintained by the Agency, and the policy shall contain such an endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of the Agency. The required certificate shall be furnished by the Owner prior to the commencement of the development of the Housing Project. 407.1 Obligation to Repair and Resto a Damage Due to Casualty Covered by Insurance. Subject to Section 407.2 below, if during the period of the development, any portion of the Housing Project shall be totally or partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against by Owner, Owner shal I promptly proceed to obtain insurance proceeds and take all steps necessary to egm reconstruction and, immediately upon • receipt of insurance proceeds, to promptly and diligently commence the repair or replacement of the Housing Project to substantially the same condition as the Housing Project is required to be 15 developed pursuant to this Agreement, if and to the extent the insurance proceeds are sufficient to cover the actual cost of repair, replacement, or restoration, and Owner shall complete the same as soon as possible thereafter so that the Housing Project an be occupied in accordance with this Agreement. Subject to force majeure delays pursuant to Section 703 hereof, in no event shall the repair, replacement, or restoration period exceed one (1 year from the date Owner obtains insurance proceeds unless Agency's Executive Director, in his or Iger reasonable discretion, approves a longer period of time. Agency shall cooperate with Owner, at no expense to Agency, in obtaining any governmental permits required for the repair, replacement, or restoration. If, however, the then - existing laws of any other governmental agencies with jurisdiction over the Housing Project do not permit the repair, replacement, or restoration, Owner may elect not to repair, replace, or restore the Housing Project by giving notice to Agency (in which event Owner will be entitled to all insurance proceeds but Owner shall be required to remove all debris from the applicable portion of the Housing Project) or Owner may reconstruct such other improve ents on the site of the destroyed Housing Project as are consistent with applicable land use regulations and approved by the City, Agency, and the other governmental agency or agencies with jurisdiction. 407.2 Damage or Destruction Due to Cause Not Required to be Covered by Insurance. If during the period of construction any portion of the Housing Project is completely destroyed or substantially damaged by a casualty for which Owner is not required to (and has not) insured against, then Owner shall not be required to repair, replace, or restore such improvements and may elect not to do so by providing Agency with written notice of election not to repair, replace, or restore within ninety (90) days after such substantial damage or destruction. In such event, Owner shall concurrently repay to the Agency a pro rata portion of the Agency Loan attributable to the destroyed Housing Units. As used in this Section 407.2, "substantial damage" caused by a casualty not required to be (and not) covered by insurance shall mean damage or destruction which is fifteen percent (15"/0) or more of the replacement cost of the improvements comprising the Housing Project. In the event Owner does not timely elect not to repair, replace, or restore the Housing Project as set forth in the first sentence of this Section 407.2, Owner shall be conclusively deemed to have waived its right not to repair, replace, or restore the Housing Project and thereafter Owner shall promptly commence and complete the repair, replacement, or restoration of the damaged or destroyed Housing Project in accordance with Section 407.1 above. 408. Indemnity. Owner shall, at its expense, defend, indemnify, and hold harmless the Agency and its officers, agents, employees and representatives harmless from any and all losses, liabilities, claims, lawsuits, causes of action, judgments, settlements, court costs, attorneys' fees, and other legal expenses, costs of evidence of title, costs of evidence of value, and other damages of whatsoever nature arising out of or in connection with, or relating in any manner to any act or omission of Owner or its agents, employees, contractors and subcontractors of any tier and employees thereof in connection with or arising from Owner's performance or nonperformance of its obligations under this Agreement, Owner's ownership or operation of the Housing Project, or the development of the Housing Project, or challenges to the,approval, validity, applicability, interpretation or implementation of this Agreement or the California Environmental Quality Act approvals made in connection therewith, except that arisipg from the negligence or misconduct of the Agency or its officers, agents, employees or representatives. 409. Entry by the Agency. Owner shall pe it the Agency, through its officers, agents or employees, at all reasonable times, upon not less than th (3) days prior written notice from Agency to the Owner (but subject to tenants' rights of po session), to enter onto the Housing Project and inspect the work of development of the Housing Proj ct to determine that the same is in conformity with the Development Plans and all the requi ements hereof. The Agency shall conduct the entry and inspections in a manner that causes the leas possible disturbance to the work in 16 • • progress or the operation of the Housing Project. If the Agency disturbs the Housing Project in the course of such entry and inspection, the Agency shall, following the entry and inspection, restore the Housing Project to the condition it was in immediatelyrior to the entry and inspection. Owner acknowledges that the Agency is under no obligation to�supervise, inspect, or inform Owner of the progress of construction, and Owner shall not rely upon the Agency therefor. Any inspection by the Agency is entirely for its purposes in determining wheter Owner is in compliance with this Agreement and is not for the purpose of determining or . Informing Owner of the quality or suitability of construction. Owner shall rely entirely upon its own supervision and inspection in determining the quality and suitability of the materials and work, and the performance of architects, subcontractors, and material suppliers. Agency's rights hereunder are subject to the rights of tenants in possession. 410. Compliance With Laws. The Owner shall carry out the design, development and operation of the Housing Project in conformity with all applicable laws, including all applicable state labor standards, City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Seclion 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. The Owner shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Housing Project, subject to the Owner's right to contest in good faith any such taxes, and to the Owner's rights to request exemption under California Revenu6 and Taxation Code Section 214. The Owner may apply for and receive any exemption from the payment of property taxes or assessments on any interest in or to the Housing Project without the prior approval of the Agency. • 411. Prevailing Wages. Owner and its contractors and subcontractors shall comply with Labor Code Section 1720, et seq., and its implementing regulations, regarding the payment of prevailing wages (the "Prevailing Wage Law") with regard to the construction of the Housing Project and the development of the Site, to the extent such sections are applicable to the construction of the Housing Project and the development of the Site. Although the parties believe that the Prevailing Wage Law is not applicable herein because the Site is being sold to the Owner at its appraised fair market value, and because the Agency's participation in the Housing Project that would otherwise qualify as "paid for in whole or in part out of public fundis" is public funding in the form of a below- market interest rate loan for a project in which occupancy of at least 40 percent of the units is restricted for at least 20 years, by regulatory agreement, to individuals or families earning no more than 80 percent of the area median income, pursuant to the exception set forth in Labor Code Section 1720(c)(6)(E), Owner shall be solely responsible for determining and effectuating compliance with the Prevailing Wage Law, and the.Agency makes no representation as to the applicability or non - applicability of the Prevailing Wage Law to the Housing Projeet, or any part thereof. In the event that the parties later determine, as a result of the final resolution of pending litigation or a precedential determination of the Department of Industri 1 Relations, that prevailing wages are required to be paid in connection with the construction of the Housing Project and development of the Site, the Owner shall seek an allocation of additional Tax Credits to reflect the additional cost of construction of the Housing Project, and the Agency shall increase the amount of the Agency Loan to the amount required to comply with the Prevailing Wage Law. Owner releases from liability, and agrees to ind nify, protect, defend and hold harmless the Agency and its officers, employees, contractors and agen , with counsel reasonably acceptable to the Agency, from and against any and all loss, liability, dama e, claim, cost, expense and/or "increased costs" (including reasonable attorneys fees, court and liti ation costs, and fees of expert witnesses) • which, in connection with the development, construction, and/or operation of the Housing Project, including, without limitation, any and all public works (a defined by applicable law), results or 17 arises in any way from any of the following: (1) the noncompliance by Owner of the Prevailing Wage Law; (2) the implementation of Labor Code Sect�on 1781, as the same may be amended from time to time, or any other similar law; and/or (3) failure by Owner to provide any required disclosure or identification as required by Labor Code Section 17811, as the same may be amended from time to time, or any other similar law. It is agreed by the parties that, in connection with the development of the Housing Project, including, without limitation, any and all public works (as defined by applicable law), Owner shall bear all risks of payment or non-payment of prevailing wages under California law and/or the implementation of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. "Increased costs," as used in this Section 411, shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be amended from time to time. The foregoing indemnity shall survive termination of this Agreement and shall continue after completion of the development of the Housing Project by the Owner. 500. FINANCING OF THE DEVELOPMENT OF THE HOUSING PROJECT. 501. Agency Approval of Financing Plan. Prior to the Closing the Owner shall submit to the Agency for its reasonable approval a Financing Plan within the time set forth in the Schedule of Performance, which contains: (i) an acquisition and development budget for the Housing Project, (ii) a sources and uses analysis for the period of the development, including an analysis of the additional subsidized financing which is necessary from other public bodies, the proposed amount of the Agency Loan, and required Deferred Developer Fees, (iii) a sources and uses analysis from the date of the origination of the permanent loan, if any, including an analysis of the additional subsidized financing which is necessary from other public entities, an increase in the amount of the Agency Loan, and required Deferred Developer Fees, (iv) a 30 year cash flow analysis of the Housing Project from the date of the completion of the Housing Project, (v) an operating budget for the Housing Project, including without limitation the Operating Reserve and Capital Replacement Reserve, (vi) all fees and obligations proposed to be payable prior to the payment of Residual Receipts, (vii) the proposed allocation of Residual Receipts between the repayment of the Agency Loan, the repayment of other loans, and retention by the Owner, (viii) the lien priority of all forms of financing, and (ix) all underlying assumptions for each of the above. The Owner shall also submit to the Agency for its reasonable approval any revisions to the Financing Plan. 502. Financing Sources. It is the intent of the parties to maximize the leverage of Agency funds by making every effort to secure sources of non -local subsidies for the Housing Project. Accordingly, the Owner shall submit up to three applications to the California Tax Credit Allocation Committee ("TCAC") for competitive federal 9% Tax Credits in the first three allocation rounds which occur after the date of this Agreement as may be necessary to secure an allocation of federal 9% Tax Credits for the Housing Project (in the event that the Developer submits its first application in 2007 prior to obtaining land use entitlements for the Housing Project, which application is not expected to receive the maximum number of points reasonably available to the Housing Project, such application will not count as one of the three applications to TCAC hereunder). The Owner and Agency shall also determine the feasibility and economiceffect of applying for state Tax Credits in association with the federal Tax Credit application. In the event that the Owner applies for and does not receive an allocation of federal 9% Tax Credits in any of the first three allocation rounds, the Owner and the Agency shall meet and confer todetermin whether (i) the Owner should make further applications for federal 9% Tax Credits, or (ii) the Owner should pursue an alternative financing strategy of multifamily housing bond financing and federal 4% Tax Credits, or (iii) the Parties should terminate this Agreement. The Owner shall also diligently pursue an allocation of funds from the County of Orange and the Affordable Hou ing Program of the Federal Home Loan Bank. Upon completion of construction of the Housing P ject, the Owner shall cause its accountants to perform a final audit of the costs of development of the Housing Project in accordance 18 • • with the requirements of the Tax Credits (the "Audif). If the Audit determines that the total sources of permanent financing for the Housing Project (including long-term permanent debt and equity) exceed the total development cost for the Housing Projjct (including, without limitation, all hard and soft costs and all off-site improvements required in connection with the development of the Housing Project), the Owner shall pay to the Agency an amount equal to such excess, which amount shall be applied to the repayment of the Agency Loan. 503. Tax Credit Equity. The following requirements must be satisfied in order for the equity financing for Tax Credit funding to be approved by the Agency pursuant to Section 501 (which requirements may be waived in the Agency's sole and absolute discretion): (a) The equity investment of the limited partners of the limited partnership shall not be less than the approximate prevailing price for Tax Credits at such time, as determined by the Owner and reasonably acceptable to the Agency, taking into consideration all relevant factors such as timing of required payments and amount of the Tax Credits. (b) The identity of the managing general partner, other general partners, syndicator and initial limited partners of the limited partnership shall be reasonably acceptable to the Agency. (c) The Developer or its affiliates shall be entitled to a developer fee from the financing of not greater than the developer fee as approved by the Agency in the Financing Plan. The parties acknowledge that the Deferred Developer Fee may be required to be deferred until after the completion and commencement of operation of the Housing Project in order to ensure that • sufficient funds are available for the costs of construction and operation of the Housing Project. 504. Required Submissions. Owner shall submit the following documents as evidence of financing: (a) a copy of a loan commitment(s) or approval(s) obtained by the Owner from unrelated financial institutions for the mortgage loan or loans for construction and permanent financing, subject to such lenders' reasonable, customary and normal conditions and terms, (b) a limited partnership agreement or funding commitment letter from the equity investors in the Housing Project which demonstrates that Owner has sufficient funds for such construction, and that such funds have been committed to such construction, and a current financial statement of Owner and Owner's other sources of equity capital, (c) a copy of a preliminary reservation letter from TCAC notifying the Owner that an allocation of Tax Credits has been reserved for the construction of the Housing Project, (d) a copy of documentation relating to other affordable housing subsidy programs from which the Owner has applied to obtain financial subsidies, and (e) other documentation reasonably satisfactory to Agency as evidence of other sources of capital, all of which together are sufficient to demonstrate that the Owner has adequate funds, together with the proceeds of any other financing t construct and complete the Housing Project. i 505. Holder Performance of Development o the Housing Project. The holder of any • mortgage or deed of trust for construction financing authorized by this Agreement ghall not be 19 - obligated by the provisions of this Agreement to develop the Housing Project or any portion thereof, or to guarantee such construction or completion; nor shall any covenant or any other provision in this Agreement be construed so to obligate such holder. 506. Notice of Default to Mortgagee or Dead of Trust Holders; Right to Cure. With respect to any mortgage or deed of trust granted by Ower as provided herein, whenever Agency may deliver any notice or demand to Owner with respect to any breach or default by the Owner hereunder or under any other document executed pursuant to this Agreement, Agency shall at the same time deliver to each holder of record of any mortg age or deed of trust authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights granted by Agency are concerned) have the right, but not the obligation, at its option, within thirty (30) days after the receipt of the notice, to cure or remedy or comence to cure or remedy and thereafter to pursue with due diligence the cure or remedy of any sue default and to add the cost thereof to the mortgage debt and the lien of its mortgage. Nothing co tained in this Agreement shall be deemed to permit or authorize any construction lender to undertak or continue the construction or completion of the development of the Housing Project, or any porti n thereof (beyond the extent necessary to conserve or protect the improvements or construction aeady made) without first having expressly assumed Owner's obligations to Agency by written agre ment reasonably satisfactory to Agency. The construction lender, in that event, must agree to complete, or cause to be completed by a party which is reasonably acceptable to the Agency, in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates. Any such construction lender (or assignee approved by the Agency) properly completing such improvement shall be entitled, upon compliance with the requirements of Section 406 of this Agreement, to a Certificate of Completion. It is understood that a construction lender (or assignee a proved by the Agency) shall be deemed to have satisfied the thirty (30) day time limit set forth above for commencing to cure or remedy a Owner default which requires title and/or possession of the Housing Project (or portion thereof), if and to the extent any such holder (or assignee approved by the Agency) has within such thirty (30) day period commenced proceedings to obtain title and/or possession and thereafter the holder diligently pursues such proceedings to completion and cures or remedies the default. Owner's limited partner shall be entitled to receive the same written notice of default as provided to the Owner, and Owner's limited partner shall have the right, but not the obligation, to cure any Owner default within the same cure period and on the same terms as provided to the Owner. Notice to the Owner's limited partner shall be given as provided in Section 802 of this Agreement. 507. Failure of Holder to Complete Development. In any case where, ninety (90) days after the holder of any construction loan mortgage or deed of trust creating a lien or encumbrance upon the Housing Project or any part thereof receives a notice from Agency of a default by Owner in completion of construction of any of the development under this Agreement, and such holder has not exercised the option to perform the development or caus�the development to be performed as set forth in Section 506, or if it has exercised the option but as defaulted hereunder and failed to timely cure such default, Agency may purchase the mortgage ori deed of trust by payment to the holder of the amount of the unpaid construction loan mortgage or deed of trust debt, including principal and interest and all other sums secured by the mortgage or de d of trust. If the possession of the Housing Project or any part thereof has vested in the holder, Agen y, if it so desires, shall be entitled to a conveyance from the construction lender to Agency upon payment to the holder of an amount equal to the sum of the following: (a) The unpaid construction loan mortgage or deed of trust debt at the time title became vested in the holder (less all appropriate credits, i cluding those resulting from collection and application of rentals and other income received during foreclosure proceedings); 20 • (b) All expenses with respect to foreclosure including reasonable attorneys' fees; (c) The net expense, if any (exclusi a of general overhead), incurred by the holder as a direct result of the subsequent management Of the Housing Project or part thereof; (d) The costs of any improvements made by such holder (or assignee approved by the Agency) pursuant to the requirements of this Agreement or as otherwise approved by the Agency; (e) An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the construction loan mortgage or deed of trust debt and such debt had continued in existence to the date of payment by Agency; and (1) Any prepayment charges imposed by the construction tender pursuant to its loan documents and agreed to by the Owner. 508. Right of Agency to Cure Mortgage or Deed of Trust Default. In the event of a loan agreement, promissory note, mortgage or deed of trust default or breach by the Owner, or a default under the terms of Owner's partnership agreement, Owner shall immediately deliver to Agency a copy of any default notice pertaining thereto. If the holder of any loan agreement, promissory note, mortgage or deed of trust has not exercised its option to construct prior to the issuance of the Certificate of Completion, pursuant to Section 406 hereof, Agency shall have the right but not the obligation to cure the default of such loan agreement, promissory note, mortgage, deed of trust or partnership agreement. The Agency shall likewise have the right but no obligation to • cure any partnership agreement default. In such event, Agency shall be entitled to reimbursement from the Owner of all proper costs and expenses incurred by Agency in curing such default. Agency shall also be entitled to a lien upon the Housing Project to the extent of such costs and disbursements. Any such lien shall be junior and subordinate to the mortgages or deeds of trust approved pursuant to Section 501. 509. Subordination of Affordability Covenants. In the event that the Agency finds that an economically feasible method of financing for the construction and operation of the Housing Project, without the subordination of the affordable housing covenants as may be set forth in this Agreement and the Regulatory Agreement, is not reasonably available, the Agency shall make the affordable housing covenants set forth in this Agreement and the Regulatory Agreement junior and subordinate to the deeds of trust and other documents required in connection with the construction and permanent financing for the Housing Project approved pursuant to Section 501. Any subordination agreement entered into by the Agency shall contain written commitments which the Agency finds are reasonably designed to protect Agency's investment in the event of Default, such as any of the following: (a) a right of Agency to cure a default on the senior loan prior to foreclosure, (b) a right of Agency to negotiate with the lender after notice of default from the lender and prior to foreclosure, and (c) an agreement that if prior to foreclosure of the loan, Agency takes title to the property and cures the default on the senior loan, the lender will not exercise any right it may have to accelerate the senior loan by reason of the transfer of title to Agency, and (d) a right of Agency to acquire the Housing Project from the Owner at any time after a material default on the senior loan. 600. OPERATION OF HOUSING 601. Number of Affordable Units. Owner ag es to make available, restrict occupancy to, and rent Twenty -Eight (28) of the Housing Units to Very Low Income Households, and Ten (10) • of the Housing Units to Lower Income Households, all at an Affordable Rent. One of the Housing 21 Units may be reserved for the on-site property manageri provided that such property manager meets the income requirements provided for such unit. 602. Duration of Affordability Requiremets. The Housing Units shall be subject to the requirements of this Article 600 for fifty-five (55) years ;from the date of the City's issuance of a certificate of occupancy for the Housing Project. The I ration of this requirement shall be known as the "Affordability Period." 603. Selection of Tenants. Owner shall be responsible for the selection of tenants for the Housing Units in compliance with lawful and reasonably criteria, as set forth in the Regulatory Agreement and the Management Plan which is required ito be submitted and approved by the Agency pursuant to Section 610 hereof. 604. Household Income Requirements. Following the initial lease -up of the Housing Units, and annually thereafter, the Owner shall submit to Agency, at Owner's expense, a summary of the income, household size and rent payable by each of the tenants of the Housing Units. At the Agency's request, the Owner shall also provide to the Agency completed income computation and certification forms, in a form reasonably acceptable to the Agency, for any such tenant or tenants. Owner shall obtain, or shall cause to be obtained by the Property Manager, a certification from each household leasing an Affordable Unit demonstrating that such household is a Very Low Income Household or Lower Income Household, as applicable, and meets the eligibility requirements established for the Housing Unit. Owner shall verify, or, shall cause to be verified by the Property Manager, the income certification of the household. 605. Affordable Rent. The maximum Monthly Rent chargeable for the Affordable Units shall be annually determined in accordance with the following requirements. The Monthly Rent for the Affordable Units to be rented to Very Low Income Households shall not exceed one -twelfth (1 /12) of thirty percent (30%) of fifty percent (50%) of Orange County Median Income for a family of a size appropriate to the unit. The Monthly Rent for the Affordable Units to be rented to Lower Income Households shall not exceed one -twelfth (1/12) of thirty percent (30%) of sixty percent (60%) of Orange County Median Income for a family of'a size appropriate to the unit. For purposes of this Agreement, "Mon Rent" means the total of monthly Affordabl payments for (a) use and occupancy of each e nit and land and facilities associated therewith, (b) any separately charged fees or service charges assessed by the Owner which are required of all tenants, other than security deposits, (c) a reasonable allowance for an adequate level of service of utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuels, but not including telephone service, and (d) possessory interest, taxes or other fees or charges, assessed for use of the land and facilities associated therewith by a public or private entity other than Owner. In the event that all utility charges are paid by the landlord rather than the tenant, no utility allowance shall be deducted from the rent. For purposes of this Agreement, "family of a size appropriate to the unit" means two persons for a one -bedroom unit, and three persons for a two-bedroom unit. 606. Marketing Program. Each Affordable quit shall be leased to tenants selected by the Owner who meet all of the requirements provided herein. Owner shall prepare and obtain Agency's approval, which approval shall not be unreasonably withheld, of a marketing program for the leasing of the Affordable Units at the Housing Project (the "Ma eting Program"). The Marketing Program shall require the Owner to give priority notice to tenants of other affordable housing projects in the 22 • City. The leasing of the Affordable Units shall thereafter be marketed in accordance with the Marketing Program as the same may be amended from ime to time with Agency's prior written approval, which approval shall not unreasonably be wiheld. Owner shall provide Agency with periodic reports with respect to the leasing of the Affor able Units. The Agency agrees to exercise reasonable efforts to assist Owner in connection with th implementation of the Marketing Program; provided, however, Agency shall not be under any obli ation to incur any out-of-pocket expenses in connection therewith. 607. Design and Occupancy of Senior U04. Owner shall restrict occupancy of all Housing Units to "Senior Citizens" and "Qualified Pe anent Residents" (as those terms are or may be defined in California Civil Code Section 51.3). California Civil Code Section 51.3 presently provides as follows: At least one person in residence in ch dwelling unit must be a Senior Citizen, and other residents in the same dwelling unit who, 2aSenior Citizens must be Qualified Permanent Residents. Temporary guests of a Senior Cizen or Qualified Permanent Resident shall be allowed for a period of not more than sixty (60) days in any twelve (12) month period. Upon the death, dissolution of marriage, hospitalization or other pjolonged absence of the Senior Citizen in a dwelling unit, any Qualified Permanent Resident who has continuously resided in the dwelling unit with such Senior Citizen shalt be permitted to continue as a resident of that dwelling unit. "Permitted Health Care Residents" (as that term is or may be defined in California Civil Code Section 51.3) shall be permitted to occupy any dwelling unit during any period that such person is actually providing live-in, long-term or hospice health care to a Senior Citizen tenant or Qualified Permanent Resident tenant for compensation. Notwithstanding the foregoing, however, in the event that the Owner in its sole discretion elects to provide one of the Housing Units for residency by an on-site manager, the manager's unit shall not be required by this Agreement to be restricted to Senior Citizens and • Qualified Permanent Residents. 608. Relationship to Tax Credit Requirements. Notwithstanding any other provisions of this Agreement, to the extent that the regulatory agreejnent executed by the Owner as a requirement of receiving the Tax Credits (the "Tax Crede Regulatory Agreement") is less restrictive with respect to the requirements applicable to tenant selection, tenant income levels and unit rent levels than as provided in this Agreement and the Regulatory Agreement, this Agreement and the Regulatory Agreement shall control. 609. Maintenance. The Owner shall maintain the Housing Project or cause it to be maintained in a decent, safe and sanitary manner, and in accordance with the standard of maintenance of first class senior apartment units within Orange County, California. If at any time Owner fails to maintain the Housing Project in accordan a with this Agreement and such condition is not corrected within five days after written notice from the Agency with respect to graffiti, debris, and waste material, or thirty days after written notice from the Agency with respect to general maintenance, landscaping and building improvements, th n the Agency, in addition to whatever remedy it may have at law or at equity, shall have the rit to enter upon the applicable portion of the Housing Project and perform all acts and work necessary to protect, maintain, and preserve the Housing Project, and to attach a lien upon the Housing P glect, or to assess the Housing Project, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the Agency and/or costs of such cure, inc uding a reasonable administrative charge, which amount shall be promptly paid by Owner to the Agency upon demand. 610. Management Plan; Property Managem nt. The Owner shall submit for the reasonable approval of the Agency a "Management Plan" which sets forth in detail the Owner's • property management duties, a tenant selection process in accordance with Section 603 hereof, a security system and crime prevention program, the procedures for the collection of rent, the 23 procedures for eviction of tenants, the rules and regulations of the Housing Project and manner of enforcement, a standard lease form, an Operating Budg t, the identity of the manager of the Housing Project (the "Property Manager"), the social services pr gram to be provided pursuant to Section 613 hereof, and other matters relevant to the management o the Housing Project. The management of the Housing Project shall be in compliance with the Ma iagement Plan which is approved by the Agency. If the Agency determines that the performance of the Property Manager is deficient based upon the standards set forth in the Management Plan and in this Agreement, the Agency shall provide notice to the Owner of such deficiencies, and the Owner shall use its best efforts to correct such deficiencies. In the event that such deficiencies have not been cured within the time set forth in Section 701 hereof, the Agency shall have the right to require the Owner to immediately remove and replace the Property Manager with another property manager or property management company which is reasonably acceptable to the Agency, which is not related to or affiliated with the Owner, and which has not less than five (5) years experience in property management, including significant experience managing housing facilities of the size, qualm and scope of the Housing Project. 611. Capital Reserve Requirements. The Owner shall also, or cause the Property Manager to, annually set aside an amount of Two Hundred Fifty Dollars ($250) per Housing Unit (or such larger amount as may be required by TCAC or a Housing Project lender), from the gross rents received from the Housing Project, into a separate interept-bearing trust account in the name of the Owner (the "Capital Replacement Reserve"); provided, however, to the extent the Owner is required by any lender to maintain a separate account to hold deposits for capital reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be adjusted annually by the Consumer Price Index (or such larger amount as may be required by TCAC or a Housing Project lender). Funds in the Capital Replacement Reserve shall be used for capital replacements to the Housing Project fixtures and equipm nt which are normally capitalized under generally accepted accounting principles. The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve the Owner of the obligation to undertake necessary capital repairs and improvements and to continue to maintain the Housing Project in the manner prescribed herein. Not less than once per year, Owner, at its expense, shall submit to the Agency an accounting for the Capital Replacement Reserve. Capital repairs to and replacement of the Housing Project shall include only those items with a long useful life, including without limitation the following: carpet and drape replacement; appliance replacement; exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement; asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; common area repainting, and uninsured losses due to casualties such aslearthquakes. 612. Operating Budget and Reserve. The Omer shall submit to Agency on not less than an annual basis an operating budget for the Housing Project, which budget shall be subject to the written approval of the Agency Executive Director or�designee, which approval shall not be unreasonably withheld, conditioned or delayed. The er shall, or shall cause the Property Manager to, set aside in a separate interest-bearing trust a ount in the Owner's name, commencing upon the rental of the Housing Units, the sum of Seventy One Thousand Dollars ($71,000), or such larger amount as may be required by TCAC or a Housing Project lender (the "Operating Reserve"), and shall make further deposits from the Annual Project evenue, to the extent available, to replenish the Operating Reserve to the amount existing in such acc unt prior to the withdrawal of funds; provided, however, to the extent the Owner is required by any lender to maintain a separate account 24 • • to hold deposits for operating reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amounts all be retained in the Operating Reserve to cover shortfalls between Housing Project income and a tual operating expenses, and emergency expenses (such as uninsured casualties), but shall in no event be used to pay for capital items properly payable from the Capital Replacement Reserve. Owner shall, not less than once per every twelve (12) months, submit to the Agency evidence reasonably satisfactory to the Agency of compliance herewith. 613. Social Services. At all times during the Affordability Period, Owner shall provide, or cause to be provided, activities and programs appropriate to the needs of the residents of the Housing Project, with the selection of such activities and programs to be determined by Owner in collaboration with the residents of the Housing Project and the adjacent senior housing development owned by an affiliate of the Owner. The specific types of social services to be provided shall be submitted to and approved by the Agency, and may be revised with the prior approval of the Agency, which approval shall not be unreasonably withheld. 614. Prohibited Uses. None of the Housing Units in the Housing Project shall at any time be utilized on a transient basis, nor shall the Housing Project or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium or rest home. 615. Non -Discrimination Covenants. Owner covenants by and for itself, its successors 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, religion, sex, marital status, familial status, disability, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Housing Project, nor shall Owner itself or any person claiming under or through it, establish or permit 4ny 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 Housing Project. The Owner shall refrain from restricting the rental, sale or lease of the Housing Project on the basis of race, color, creed, religion, sex, marital status, familial status, disability, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (i) 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, familial status, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself 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 land herein conveyed. The foregoing covenants shall run with the land." (ii) In leases: "The lessee herein conants 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: "There shall be no discrimination against or segregation of any person or • group of persons on account of race, color, creed, religio , sex, marital status, familial status, disability, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure 25 or enjoyment of the premises herein leased nor shall the lessee himself or herself, 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 seledtion, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased." (iii) In contracts: "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, familial status, disability, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself 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 of the premises." The covenants established in this Section 615 shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency and its successors and assigns, and shall remain in effect in perpetuity. 616. Monitoring and Recordkeeping. Throughout the Affordability Period, Owner shall comply with all applicable recordkeeping and monitoring requirements set forth in Health and Safety Code Section 33418 and shall annually complete and submit to Agency a report, prior to April 15 of each year, which includes the name, address, income and age of each occupant of an Affordable Unit, identifying the bedroom count and Monthly Rent fbr such Affordable Unit. Agency agrees that the Owner may submit reporting forms prepared and submitted in connection with the Tax Credits, to the extent those forms contain the information required hereunder. Representatives of the Agency shall be entitled to enter the Housing Project, upon at least seventy-two (72) hours prior written notice, to monitor compliance with this Agreement, to inspect the records of the Housing Project, and to conduct an independent audit or inspection of such records. The Owner agrees to cooperate with the Agency in making the Housing Project available for such inspection or audit. Owner agrees to maintain records in businesslike manner, and to maintain such records for the term of this Agreement. 617. Regulatory Agreement. The requirements of this Agreement which are applicable after the conveyance of the Site to the Owner are set forth in the "Regulatory Agreement' which is attached hereto as Attachment No. 10 and incorporated herein. The execution of the Regulatory Agreement is a condition precedent to the Closing, as set forth in Section 205.1 hereof. 618. Inclusionary Housing Requirements. The income and rent restrictions provided for hereunder are intended to satisfy the requirements of Health and Safety Code Section 33413(b). IOU • • 700. DEFAULT AND REMEDIES 701. Events of Default. An event of "Default" shall occur under this Agreement when there shall be a material breach of any condition, covenant, warranty, promise or representation contained in this Agreement and such breach shall continue for a period of thirty (30) days after written notice thereof to the defaulting party without the defaulting party curing such breach, or if such breach cannot reasonably be cured within such thirty (30) day period, commencing the cure of such breach within such thirty (30) day period and thereafter diligently proceeding to cure such breach as soon as reasonably possible, but in no event later than ninety (90) days from the date of the original written notice. However, that if a different period or notice requirement is specified for any particular breach under any other paragraph of this Agreement, the specific provision shall control. 702. Remedies. The occurrence of any event of Default shall give the nondefaulting party the right to proceed with any and all remedies set forth in this Agreement and/or the documents executed pursuant to this Agreement, including an action for damages, an action or proceeding at law or in equity to require the defaulting party to perform its,obligations and covenants under this Agreement and/or the documents executed pursuant to this Agreement or to enjoin acts or things which may be unlawful or in violation of the provisions of this Agreement and/or the documents executed pursuant to this Agreement, and the right to ter#ninate this Agreement. In addition, the occurrence of any event of Default by Owner will relieve the Agency of any obligation to perform hereunder, including without limitation to make or continue the Agency Loan, and the right to cause all indebtedness of the Owner to the Agency under this Agreement and the Promissory Note, together with any accrued interest thereon, to become immediately due and payable. • 703. Force Majeure. Subject to the party's compliance with the notice requirements as set forth below, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays or defaults are due to causes beyond the control and without the fault of the party claiming an extension of time to perform, which may include, without limitation, the following: war, acts of terrorism, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, assaults, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, materials or tools, acts or omissions of the other party, or acts or failures to act of any public or governmental entity (except that the Agency's acts or failure to act shall not excuse performance of the Agency hereunder). An extension of the time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. 704. Termination by Agency. In the event that Agency is not in Default under this Agreement, and: (a) One or more of the Agency's Conditions Precedent to Closing is not satisfied on or before the time set forth in the Schedule of Performance, and such Condition Precedent is not satisfied after notice and an opportunity to cure as provided in Section 701 hereof, and such failure is not caused by Agency; or (b) Owner is otherwise in default of this Agreement and fails to cure such default within the time set forth in Section 701 hereof; or • (c) Owner has applied for but not received an allocation of federal 9% Tax 27 Credits in each of the first three allocation rounds occurring after the date of this Agreement, and the parties have not agreed upon an alternate financing structure pursuant to Section 502 hereof; or (d) Agency has disapproved the Fin ncing Plan submitted by the Owner pursuant to Section 501 hereof within the time set forth in the Scope of Development; then this Agreement and any rights of Owner orany assignee or transferee with respect to or arising out of this Agreement shall, at the option of Agency, be terminated by Agency by written notice thereof to Owner. From the date of the written notice of termination of this Agreement by Agency to Owner and thereafter this Agreement shall be deemed terminated, the Agency shall not be obligated to make any further payments of the Agency l4oan, repayment of the Promissory Note shall be accelerated, and there shall be no further rights or obligations between the parties, except that if the Owner is in default hereunder the Agency, after delivery of notice and expiration of the cure period provided in Section 701 hereof, may pursue any remedies it has at law or equity. 705. Termination by the Owner. In the event that the Owner is not in Default under this Agreement and (a) One or more of the Owner's Conditions Precedent to Closing is not satisfied on or before the time set forth in the Schedule of Performance, and such Condition Precedent is not satisfied after notice and an opportunity to cure as provided in Section 701 hereof, and such failure is not caused by Owner; or (b) Agency does not tender the Site in the manner and condition and by the date provided in this Agreement, or (c) In the event of any Default of any material provision of this Agreement by Agency prior to the Closing which is not cured within the time set forth in Section 701 hereof, or (d) Owner disapproves the physical or environmental condition of the Site pursuant to Section 206.2 hereof; or (e) Owner has applied for but not received an allocation of federal 9% Tax Credits in each of the first three allocation rounds occurring after the date of this Agreement, and the parties have not agreed upon an alternate financing structure pursuant to Section 502 hereof; and any such failure is not cured within the applicable time period after written demand by the Owner, then this Agreement may, at the option of the:Owner, be terminated by Notice thereof to Agency. From the date of the Notice of termination of thps Agreement to Agency and thereafter, this Agreement shall be deemed terminated and there shall bel no further rights or obligations between the parties, except that if the Agency is in default hereunder the Owner, after delivery of notice and expiration of the cure period provided in Section 701 hereof, may pursue any remedies it has at law or equity. The Agency shall have no obligation upon such termination to convey the Site to the Owner, and the Agency may convey the Site to any other party in the Agency's sole and absolute discretion. 706. Attorneys' Fees. In addition to any otheri remedies provided hereunder or available pursuant to law, if either party brings an action or proceec ing to enforce, protect or establish any right or remedy hereunder or under any of the documents executed pursuant to this Agreement, the prevailing party shall be entitled to recover from the othei party its costs of suit, including without limitation expert witness fees, and reasonable attorneys' es. 28 • 707. Remedies Cumulative. No right, power, or remedy given to the Agency by the terms of this Agreement is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the Agency by the terms of any such instrument, or by any statute or otherwise against Owner and any other person. 708. Waiver of Terms and Conditions. The Agency may, in its sole discretion, waive in writing any of the terms and conditions of this Agreement. Waivers of any covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. 800. GENERAL PROVISIONS 801. Time. Time is of the essence in this Agreement. 802. Notices. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below, or at any other address as that party may later designate by Notice: Owner: SEASONS SIC II, L.P., 320 Golden Shore, Suite 200 is Long Beach, California 90802 Attention : Legal Department With Copy to Multi -Housing Investments, LLC Limited Partner: 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention : Legal Department Agency: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director Such addresses may be changed by notice to the other patty given in the same manner as provided above. , 803. Representations and Warranties of Owner. Owner hereby represents and warrants to the Agency as follows: (a) Organization. Owner is a limited partnership validly existing and in good standing under the laws of the State of California and has Ithe power and authority to own its property and carry on its business as now being conducted. (b) Authority of Owner. Owner has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Promissory Note, Deed of Trust, Regulatory Agreement, and all other documents or • instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and 29 to perform and observe the terms and provisions of all of the above. (c) Valid Binding Agreements. This Agreement, the Grant Deed, Promissory Note, Deed of Trust and the Regulatory Agreement and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of Owner- enforceable against it in accordance with their respective terns. (d) Pending Proceedings. Owner is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Owner, threatened against or affecting Owner or the Housing Project, at law or in equity, beforje or by any court, board, commission or agency whatsoever which might, if determined adversely to Owner, materially affect Owner's ability to perform its obligations hereunder. 804. Agency Representations. The Agency represents and warrants to the Owner as follows: (a) Authority. The Agency is a public body, corporate and politic, which has been authorized to transact business pursuant to action of the City. The Agency has full right, power and lawful authority to acquire and convey the Site as provided herein, and the execution, performance and delivery of this Agreement by the Agency has been fully authorized by all requisite actions on the part of the Agency. (b) FIRPTA. The Agency is not a "foreign person" within the parameters of FIRPTA or any similar state statute, or is exempt from the provisions of FIRPTA or any similar state statute, or the Agency has complied and will comply with all the requirements under FIRPTA or any similar state statute. (c) No Conflict. The Agency's execution, delivery and performance of its obligations set forth in this Agreement will not constitute a default or a breach under any contract, agreement or order to which the Agency is a party or by which it is bound. (d) No Litigation. To the Agency's Actual Knowledge, there is no threatened or pending litigation against the Agency challenging the validity of this Agreement or any of the actions proposed to be undertaken by the Agency or Owner pursuant to this Agreement. "Actual knowledge," as used herein, shall not impose a duty of investigation, and shall be limited to the actual knowledge of the Agency's employees and agentsjwho have participated in the preparation of this Agreement and the acquisition and management of the Site. 805. Limitation Upon Change in Ownership, Management and Control of the Owner (a) Prohibition. The identity and qt successful developer and operator of affordable senior re concern to the Agency. It is because of this identity and entered into this Agreement with the Owner. No volunt Owner shall acquire any rights or powers under this Agr Owner make any total or partial sale, transfer, conveyam assignment or lease of the whole or any part of the Hous approval of the Agency pursuant to Subparagraph (c) he which approval shall not be unreasonably withheld. 30 fications of Owner as an experienced and d housing developments are of particular :se qualifications that the Agency has or involuntary successor in interest of the nent by assignment or otherwise, nor shall encumbrance to secure financing, Project without the prior written f, except as expressly set forth herein, • (b) Permitted Transfers. Notwith landing any other provision of this Agreement to the contrary, Agency approval of an asci ent or transfer of this Agreement, the Agency Loan, the Regulatory Agreement, or conveyana of the Housing Project or any part thereof pursuant to subparagraph (c) of this Section 805, shall of be required in connection with any of the following (the "Permitted Transfers"): (i) Subject to the restrictions of Sections 601 through 618 of this Agreement and the Regulatory Agreement, the lease of Housing Units to qualified tenants. (ii) Assignment for financing purposes, subject to such financing being considered and approved by the Agency pursuant to Secktion 501 hereof. (iii) Transfer of the Housing (Project or partnership interests of the Owner to (A) Multi -Housing Investments, LLC, Simpson Housing Solutions, LLLP, Simpson Housing Solutions, LLC (each a "Simpson Entity" and collectivdly "Simpson Entities"), or (B) an entity which has a Simpson Entity as a general partner, mans ng member or controlling shareholder, or (C) an entity whose general partner, managing member or controlling shareholder has a Simpson Entity as its general partner, managing member or controlling shareholder, or (D) an entity in which a Simpson Entity is a "controlling person" (as defined in Section 20(a) of the Securities Exchange Act of 1934, as amended. (iv) The removal and replacement of Owner's general partner, provided that the removed general partner is replaced by (A) a Simpson Entity, or (B) an entity which has a Simpson Entity as a general partner, managing member or controlling shareholder, or (C) an entity • whose general partner, managing member or controlling shareholder has a Simpson Entity as its general partner, managing member or controlling shareholder, or (D) an entity in which a Simpson Entity is a "controlling person" (as defined in Section 20(a) of the Securities Exchange Act of 1934, as amended. (v) Transfer of the Housing Project or partnership interests in the Owner's limited partnership to the nonprofit general partner at the end of the fifteen year Tax Credits initial compliance period. In the event of an assignment by Owner Pursuant to subparagraph (iii) or (iv) not requiring the Agency's prior approval, Owner nevertheless agrees that at least thirty (30) days prior to such assignment or transfer it shall give written noticq to Agency of such assignment or transfer. (c) Agency Consideration of Requested Transfer, The Agency agrees that it will not unreasonably withhold approval of a request made pursuant to this Section 805, provided (a) the Owner delivers written notice to the Agency requesti g such approval, and (b) the proposed assignee or transferee possesses comparable operational experience and capability, and comparable net worth and resources, as the proposed transferor or as ignor, and (c) the assignee or transferee assumes the obligations of the Owner under this Agreem nt in a form which is reasonably acceptable to the Agency. Such notice shall be accompanied by evi ence regarding the proposed assignee's or purchaser's qualifications and experience and its financi 1 commitments and resources sufficient to enable the Agency to evaluate the proposed assignee or urchaser pursuant to the criteria set forth in this Section 805(c) and other criteria as reasonably dete ined by the Agency. The Agency shall approve or disapprove the request within thirty (30) days of its receipt of the Owner's notice and all information and materials required herein. In no event wever, shall the Agency be obligated to • approve the assignment or transfer of the Agency Loan, Promissory Note or Deed of Trust pursuant to this Section 805, except to an approved transferee or assignee of the Owner's rights in and to the 31 Housing Project. (d) Amendment of Owner's Parl Partnership Agreement, from time to time, without fir: consent to: (i) correct scrivener's errors; (ii) make suc. the loan documents; (iii) bring such agreement into co any successor agency or Section 42 of the Internal Rei California Debt Limit Allocation Committee or any su 103 and 142 of the Internal Revenue Code and the reg with the decision of any court of competent jurisdictio loss, credit and deduction, the distribution of available required to comply with other provisions of the loan d, changes in the Owner's partners; and (vii) make other of this Agreement, the liability of the signatories there Agreement. ership Agreement. Owner may amend its 3roviding notice to or securing Agency's agreement consistent with other provisions of 3liance with the requirements of TCAC or iue Code of 1986, as amended, or the essor agency and the provisions of Section [tions promulgated thereunder; (iii) comply (iv) vary the allocation of items of profit, ish or net cash flow; (v) effect changes uments as such may be modified; (vi) effect ranges which do not affect the enforceability or otherwise violate any provision of this (e) Successors and Assigns. This Agreement shall run with the land, and all of the terms, covenants and conditions of this Agreement shall be binding upon the Owner and the permitted successors and assigns of the Owner. Whene*er the term "Owner" is used in this Agreement, such term shall include any other permitted, successors and assigns as herein provided. 806. Non -Liability of Officials and Employ es of Agency. No member, official or employee of Agency or the City shall be personally liable to Owner or any successor in interest, in the event of any Default or breach by Agency or for anyj amount which may become due to Owner or its successors, or on any obligations under the terms of this Agreement. 807. Relationship Between Agency and Owner. It is hereby acknowledged that the relationship between Agency and Owner is not that of a partnership or joint venture and that Agency and Owner shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, Agency shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Housing Project. 808. Agency Approvals and Actions. The A gency shall maintain authority of this Agreement and the authority to implement this Agreement through the Agency's Executive Director (or his duly authorized representative). The Executive Director shall have the authority to make approvals, issue interpretations, waive provisions, execu a documents, make and execute further agreements and/or enter into amendments of this Agreement on behalf of the Agency so long as such actions do not materially or substantially change the uses or development permitted on the Housing Units, or materially or substantially add to the costs incurred or to be incurred by the Agency as specified herein, and such interpretations, waivers and/o amendments may include extensions of time to perform as specified in the Schedule of Perform ce. All other material and/or substantive interpretations, waivers, or amendments shall require thel consideration, action and written consent of the Agency Board. 809. Counterparts. This Agreement may be igned in multiple counterparts which, when signed by all parties, shall constitute a binding agreemen . This Agreement is executed in three (3) originals, each of which is deemed to be an original. 810. Integration. This Agreement containsa entire understanding between the parties relating to the transaction contemplated by this Agreement. All prior or contemporaneous 32 • • agreements, understandings, representations and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. This Agreement includes Attachment Nos. I through 10, which together with the Agreement constitute the entire understanding and agreement of the parties, notwithstanding any previous negotiations or agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. 811. Real Estate Brokerage Commission. Agency and Owner each represent and warrant to the other that no broker or finder is entitled to any commission or finder's fee in connection with this transaction, and Owner and Agency agree to defend and hold harmless the each other from any claim to any such commission or fee resulting from any action on its part. 812. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent o8 this Agreement or of any of its terms. Reference to -section numbers are to sections in this Agreement, unless expressly stated otherwise. 813. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. 814. No Waiver. A waiver by either party of a breach of any of the covenants, conditions or agreements under this Agreement to be performed by the other party shall not be construed as a • waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. 815. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party . 816. Severability. if any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the turn, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable tp the fullest extent permitted by law. 817. Computation of Time. The time in which any act is to be done under this Agreement is computed by excluding the first day and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 818. Legal Advice. Each party represents and, warrants to the other the following: they have carefully read this Agreement, and in signing this A ement, they do so with full knowledge of any right which they may have; they have received Inde ndent legal advice from their respective legal counsel as to the matters set forth in this Agreemcn4 or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreemen and, they have freely signed this Agreement without any reliance upon any agreement, p ise, statement or representation by or on behalf of the other party, or their respective agents, empl yees or attorneys, except as specifically set • forth in this Agreement, and without duress or coercion, whether economic or otherwise. 33 819. Time of Essence. Time is expressly made of the essence with respect to the performance by Agency and Owner of each and every obligation and condition of this Agreement. 820. Cooperation. Each party agrees to coo rate with the other in this transaction and, in that regard, to sign any and all documents which ma be reasonably necessary, helpful or appropriate to cavy out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. 821. Conflicts of Interest. No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. 34 IN WITNESS WHERE©P, the patties herew have executed this Agreement as of the date and year'm forth above. DEVELOWER: SEASON$'SJC IL L.P., , a California limited ppm By: Affordable Multi -Family, LLC, a Colorado limited li ability Company, its General Panner BYt 1.1�,r Its S'V,iiyrPsnt ATTACHMENT NO. 1 LEGAL DESCRIIPTION That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages 1 through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages 1 through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Attachment No. 1-1 n LJ r� U W ATTACHMENT NO.2 SITE MAP D, Attachment No. 2-1 M L p Bx�b AA9�� 8�Y ATTACHMENT NO.3 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: This dhoument is exempt from payment of a recording fee pursuapt to government Code Section 27383. Documentary Transfer Tax: S Based on Full Value of Real Property Conveyed GRANT MED For valuable consideration, receipt of which is hereby acknowledged, The SAN JUAN CAPISTRANO REDEVEL(WMENT AGENCY, a public body, corporate qnd politic (the "Agency"), effective as of 1 200_, hereby grants to SEASONS SJC II, L.P., , a California limited partnership ("Owner"), the real property described in Exhibit A attached hereto and incorporated herein, subject to the existing easements, restrictions and covenants of record described there, and the requirements of the Disposition and Development Agreement between the parties, dated as of , 2006. ATTEST: Margaret R. Monahan, Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Jon Goetz, Agency Counsel AGENCY: SAN JUCAPISTRANO REDEVELOPMENT AGENCY,a public body, corporate and politic Joe Soto, Chairman Attachment No. 3-1 0 1 0 • EXHIBIT'"A- LEGAL DESCRIPTION OF SITE That real property located in the State of California, Capistrano, and described as follows:County of Orange, City of San Juan Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Page 1 through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 1 6, Pages I through 8 inclusive of Parcel Maps, in the office of the County Recorder of said Couhty. 0 Exhibit A STATE OF CALIFORNIA COUNTY OF On personally appeared ss. before me, , Notary Public, ' (Print Name of Notary Public) ❑ personally known to me -or- 0 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 authorizer) 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer F Partner(s) ❑ Limited ❑ General Attorney -In -Fact Trustee(s) Guardian/Conservator Other: Signer is representing: Name Of Person(s) Or Entily(ies) DESCRIPTION OF ATTACHED DOCUMENT Or Type Date Of Dmosnt as I �, Signer(s) Other Than Named Above ATTACHMENT NO.4 PROMISSORY MOTE $ 200_ Califomia San Juan Capistrano, FORK VALUE RECEIVED, SEASONS SJC 11 L.P., , a California limited partnership (the "Borrower"), promises to pay to the SAN JUAN CAPISIiRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), or order, at the Agency's office at 32400 Paseo Adelanto, San Juan Capistrano, California 02675, or such other place as the Agency may designate in writing, the sum of Dollars ($__) (the "Note Amount"), in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts. 1. Agreement. This Promissory Note (the "Note") is given in accordance with that certain Disposition and Development Agreement executed by the Agency and Borrower, dated as of , 2006 (the "Agreement"). no rights and obligations of the Borrower and the Agency under this Note shall be governed by the Ag#eement and by the additional terms set forth in this Note. In the event of any inconsistencies between the terms of this Note and the terms of the Agreement or any other document related to the Note Amount, the terms of this Note shall prevail. 2. Interest. The Note Amount shall bear interest at the rate of three percent (3%) per annum, compounded annually, from the date hereof. 3. Repayment of Note Amount. The Note Amount shall be paid by the Borrower's annual payment to the Agency of an amount equal to Fifty Percent (50%) (or such other percentage if the re -allocation provisions of Section 302 of the Agreement apply) of the Residual Receipts (as defined below) from operation of the Housing Project (as defined in the Agreement), as determined by a residual receipts calculation from the operation of the Housing Project the preceding calendar year. Annual Residual Receipts payments shall be by the Borrower by cashier's check and shall be delivered on or before ninety (90) days after the end of the Owner's fiscal year, of each year during the tern of this Note first following the date the Housing Project is placed in service, until the Note Amount and all unpaid interest thereon has been repaid in full. Any remaining portion of the Note Amount shall be due and payable on the fifty-fifth (55h) anniversary of the date of the City's issuance of a Certificate of Occupancy for the Housing Project. Notwithstanding the foregoing, the full Note Amount may be accelerated as set forth in'Section 12 hereof. As used herein, "Annual Project Revenue" shall mean all gross income and all revenues of any kind from the Housing Project in a calendar year, icluding without limitation, Housing Project rents, Section 8 housing assistance payments, if any, lat charges, vending machine income, and any other revenues of whatever kind or nature from the Housing Project, except that interest on security deposits and required reserves shall not be considered Annual Project Revenue. As used herein, "Debt Service" means regular) scheduled payments of principal and interest made in a calendar year pursuant to the financing approved pursuant to Section 501 of the Agreement Attachment No. 4-1 • 0. 1 0 which is obtained for the development and ownership of the Housing Project, which is senior in lien priority to the Agency Loan, but excluding payments made pursuant to this Note. As used herein, "Deferred Developer Fees" shalll mean any deferred developer fee allowable under the financing approved by the Agency pursuant to,Section 501 of the Agreement. As used herein, "Operating Expenses" shall mea actual, reasonable and customary (for comparable affordable senior rental housing developments in Orange County) costs, fees and expenses directly incurred, paid, and attributable to the operation, maintenance and management of the Housing Project in a calendar year, which are in accordance with the Operating Budget approved by the Agency pursuant to Section 612 of the Agreement, including: painting, cleaning, repairs, alterations, landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal property taxes, assessments, insurance; security, advertising and promotion, janitorial services, cleaning and building supplies, purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings which are not paid from the Capital Replacement Reserve, fees and expenses of property management, fees and expenses of accountants, attorneys and other professionals, the cost of social services in accordance with Section 613 of the Agreement, repayment of any completion or operating loans made to Borrower by its partners or the Developer (as defined in the Agreement), and other actual, reasonable and customary operating costs and capital costs which are directly incurred and paid by the Borrower, but which are not paid from the Operating Reserve or other reserve accounts. The Operating Expenses shall not in any event include expenses not related to the Housing Project's operationsy including without limitation, depreciation, • amortization, and accrued principal and interest expense on deferred payment debt. As used herein, "Reserve Deposits" shall mean and payments to the Capital Replacement Reserve account pursuant to Section 611 of the Agreement and the Operating Reserve account pursuant to Section 612 of the Agreement. As used herein, "Residual Receipts" shall mean Annual Project Revenue less the sum of (i) Operating Expenses, (ii) Debt Service, (iii) Reserve Deposits, (iv) Deferred Developer Fees, (v) a partnership management fee to the managing general partner of Owner, and/or a general partner asset management fee payable to one or more of the general partners of the Owner, and/or a limited partner asset management fee payable to one or more of the limited partners of Owner, and an annual audit fee, in such amounts which are set forth in the Financing Plan which is approved by the Agency, for each calendar year; provided, however, that if such calculation results in a negative number, Residual Receipts shall be zero for that year. On or before ninety (90) days after the end of the Owner's fiscal year, of each year commencing in the year of the issuance of a certificate of occupancy for the Housing Project, the Borrower shall annually provide the Agency a Residual) Receipts report, in the forth attached to the Agreement as Attachment No. 6, which shall describe in detail the Annual Project Revenue, Debt Service, Operating Expenses, Reserve Deposits, Asset Management Fees, Deferred Developer Fees, and Residual Receipts for that year. The Borrower shah also submit to the Agency, on or before ninety (90) days after the end of the Owner's fiscal yea of each year commencing in the year of the issuance of a certificate of occupancy for the Housing Froject, annual financial statements with respect to the Housing Project that have been reviewed y an independent certified public accountant, together with an expressed written opinion f the certified public accountant that such financial statements present the financial position, resul s of operations, and cash flows fairly and in • Attachment No. 4-2 accordance with generally accepted accounting principles. 4. Security. This Note is secured by a Deco of Trust (the "Deed of Trust") dated as of the same date as this Note. 5. Waivers a. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time at the Agency's sole discretion and that the Agency may accept security in consideration for any such extension or release any security for this Note at its sole discretion all without in any way affecting the liability of Borrower. b. No extension of time for payment of this Note made by agreement by the Agency with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part. C. The obligations of Borrower under this Note shall be absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reasons whatsoever. ' d. Borrower waives presentment, demand, notice of protest and nonpayment, notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the rights of interests in or to properties securing of this Note, and the benefit of any exemption under any homestead exemption laws, if applicable. e. No previous waiver and no failure or delay by Agency in acting with respect to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach, default, or failure or condition under this Note, the Deed of Trust or the obligations secured thereby. A waiver of any term of this Note, the Deed of Trust or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver. 6. Attorneys' Fees and Costs. Borrower agrees that if any amounts due under this Note are not paid when due, to pay in addition, all costs and expenses of collection and reasonable attorneys' fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed. 7. Joint and Several Obligation. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be!binding upon them and their heirs, successors and assigns. 8. Amendments and Modifications. This Note may not be changed orally, but only by an amendment in writing signed by Borrower and by the Agency. 9. Agency May Assign. Agency may, at its option, assign its right to receive payment under this Note without necessity of obtaining the constnt of the Borrower. 10. Borrower Assignment Prohibited. In no event shall Borrower assign or transfer Attachment No. 4-3 • 0. 1 0 any portion of this Note without the prior express written consent of the Agency, which consent shall not unreasonably be withheld, except pursuant to a transfer which is permitted or approved under Section 805 of the Disposition and Development Agreement. 11. Terms. Any terms not separately defined herein shall have the same meanings as set forth in the Agreement. 12. Acceleration and Other Remedies. Upon: (a) the occurrence of an event of Default as defined in the Agreement, or (b) Borrower selling, contracting to sell, giving an option to purchase, conveying, leasing, further encumbering, mortgaging, assigning or alienating the Borrower's interest in the Housing Project (other than (i) financing approved by the Agency or otherwise permitted pursuant to Section 501 of the Agreement, (ii) leasing of individual Housing Units to tenants in the ordinary course of business, or (iii) a purchase option and/or right of first refusal granted to Borrower's general partner(s) or affiliates thereof), whether directly or indirectly, whether voluntarily or involuntarily or by operation of law, or any interest in the Housing Project, or suffering its title, or any interest in the Housing Project to be divested, whether voluntarily or involuntarily, without the consent of the Agency or as otherwise approved or permitted under the Disposition and Development Agreement, Agency may, at Agency's option, declare the outstanding principal amount of this Note, together with the then accrued and unpaid interest thereon and other charges hereunder, and all other sums secured by the Deed of Trust, to lie due and payable immediately, and upon such declaration, such principal and interest and other sums shall immediately become and be due and payable without demand or notice, all as further set forth in the Deed of • Trust. All costs of collection, including, but not limited to, reasonable attorneys' fees and all expenses incurred in connection with protection of, or realization on, the security for this Note, may be added to the principal hereunder, and shall accrue interest as provided herein. Agency shall at all times have the right to proceed against any portion of the security for this Note in such order and in such manner as such Agency may consider appropriate, without waiving any rights with respect to any of the security. Any delay or omission on the part of the Agency in exercising any right hereunder, under the Agreement or under the Deed of Trust shall not operate as a waiver of such right, or of any other right. No single or partial exercise of any right or remedy hereunder or under the Agreement or any other document or agreement shall preclude other or further exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of any sum payable hereunder, or part thereof, after the due date of such payment shall not be a waiver of Agency's right to either require prompt payment when due of all other sums payable hereunder or to declare an event of Default for failure to make prompt or complete payment. 13. Successors and Assigns. Whenever "Agency" is referred to in this Note, such reference shall be deemed to include the San Juan Capistrano Redevelopment Agency and its successors and assigns, including, without limitation, any subsequent assignee or holder of this Note. All covenants, provisions and agreements by or on behalf of Borrower, and on behalf of any makers, endorsers, guarantors and sureties hereof which are contained herein shall inure to the benefit of the Agency and Agency's successors and assigns. 14. Miscellaneous. Time is of the essence ereof. This Note shall be governed by and construed under the laws of the State of California exec A to the extent Federal laws preempt the laws of the State of California. Borrower irrevocably and uryconditionally submits to the jurisdiction of the Superior Court of the State of California for the Cot�nty of Orange or the United States District • Court of the Central District of California, as Agency hereof may deem appropriate, in connection Attachment No. 4-4 with any legal action or proceeding arising out of or relatipg to this Note. Borrower also waives any objection regarding personal or in rem jurisdiction or venue. 15. No Personal Liability. In the event of any default under the terms of this Note or the Deed of Trust, the sole recourse of the Agency for any and all such defaults shall be by judicial foreclosure or by the exercise of the trustee's power of sale, and Borrower and its partners shall not be personally liable for the payment of this Note or for the payment of any deficiency established after judicial foreclosure or trustee's sale; provided, however, that the foregoing shall not in any way affect any rights the Agency may have (as a secured part} or otherwise) hereunder or under the Agreement or Deed of Trust to recover directly from Borrower any amounts secured by the Deed of Trust, or any funds, damages or costs (including without limitation reasonable attorneys' fees and costs) incurred by Agency as a result of fraud, misrepresentation or waste (it shall not be waste if Borrower does not repair or restore the Housing Project ;ifter any destruction, damage or partial condemnation notwithstanding the availability of insurance or condemnation proceeds), and any costs and expenses incurred by the Agency in connection therewith (including without limitation reasonable attorneys' fees and costs). 16. Notice and Cure Rights of Borrower's limited Partner. The provisions of Section 506 of the Agreement as they relate to the notice to and cure rights of the Borrower's limited partner are incorporated herein by this reference. IMMITITIATATU SEASONS SJC II, L.P., , a California limited partnership M Attachment No. 4-5 • W 0 ATTACHMENT NO.5 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director This document is exempt from the payment of a recording fee pursuant to Government Codc Section 27383 DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING THIS DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING ("Deed of Trust"), made as of • ,200 is entered into by and between SEASONS SJC II, L.P., , a California limited partnership ("Trustor"), ("Trustee"), and the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic ("Beneficiary"). ARTICLE 1. GRANT INTRUST 1.1 GRANT. For the purposes of and upon the terms and conditions in this Deed of Trust, Trustor irrevocably grants, conveys and assigns to Trustee, IN TRUST FOR THE BENEFIT OF BENEFICIARY, WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, all of Trustor's right, title and interest, whether now owned or hereafter acquired, in and to that certain real property located in the City of San Juan Capistrano, County of Orange, State of California, described on Exhibit A attached hereto (the "Real Property"), including, but not necessarily limited to, (i) Trustor's interest in the Real Property, (ii) all buildings and other improvements and fixtures now or hereafter located on the Real Property, including, but not limited to, all apparatus, equipment, and appliances used in the operation or occupancy of the Real Property, it being intended by the parties that all such items shall be conclusively considered to be a part of the Real Property, whether or not attached or affixed to the Real Property (collectively, the "Improvements"); (iii) all development rights or credits, air rights, water, water rights and water stock related to the Real Property or the Improvements (the Real Property and the Improvements are collectively referred to herein as the "Property"); (iv) all minerals, oil and gas, and other hydrocarbon substances in, on or under the Property, (v) all appurtenances, easements, rig is and rights of way appurtenant or related to the Property; (vi) all interest or estate which Trustor rr ay hereafter acquire in any of the property described above; and (vii) all additions and accretions to and the proceeds of, any of the foregoing (all of the foregoing being collectively referred to as the `Subject Property"). The listing of specific rights or property shall not be interpreted as a limit of ge ieral terms. Attachment No. 5-1 1.2 ADDRESS. The subject property is located at San Juan Capistrano, California. However, neither the failure to Oesignate an address nor any inaccuracy in the address designated shall affect the validity or priority of the lien of this Deed of Trust on the Subject Property as described on Exhibit A. ARTICLE 2. OBLIGATIONS SECURED 2.1 OBLIGATIONS SECURED. Trustor makes this grant and assignment for the purpose of securing the following obligations ("Secured Obligations"): a. Payment to Beneficiary of all sums at any time owing under that certain Promissory Note ("Note") of even date herewith, in the principal amount of Dollars ($_� executed by Trustor and payable to the order of Beneficiary, as lender; and b. Payment and performance of all covenants and obligations of Trustor under that certain "Disposition and Development Agreement' between Trustor and Beneficiary, of even date herewith; and C. Payment and performance of all covenants and obligations of Trustor under this Deed of Trust; and d. Payment and performance of all future advances and other obligations that the then owner of all or part of the Subject Property may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when such future advance or obligation is evidenced by a writing which recites that it is secured by this Deed of Trust; and e. All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced, including, without limitation: (i) modifications of the required principal payment dates or interest payment dates or both, as the case may be, deferring or accelerating payment dates wholly or partly; or (ii) modifications, extensions or renewals at a different rate of interest whether or not in the case of a note, the modification, extension or renewal is evidenced by a new or additional promissory note or notes. 2.2 OBLIGATIONS. The term "obligations" is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all principal, interest, prepayment charges (if any), late charges, other charges, and loan fees at any time accruing or assessed on any of the Secured Obligations. 2.3 INCORPORATION. All terms of the Secured Obligations and the documents evidencing such obligations are incorporated herein by this reference. Any and all persons or entities who may have or acquire an interest in the Subject Property shall be deemed to have notice of the terms of the Secured Obligations and to have notice, if provided therein, that: (a) the Note may permit borrowing, repayment and re -borrowing so that repayments shall not reduce the amounts of the Secured Obligations; and (b) the rate of interest on one or more Secured Obligations may vary from time to time. Attachment No. 5-2 • ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS 3.1 ASSIGNMENT. Trustor hereby irrevocably assigns to Beneficiary, subject to any prior assignment to Trustor's lenders, all of Trustor's right, title and interest in, to and under: (a) all leases and subleases of the Subject Property or any portion thereof, all licenses and agreements relating to the management, leasing or operation of the Subject Property or any portion thereof, and all other agreements of any kind relating to the use or occupancy of the Subject Property or any portion thereof, whether now existing or entered into after the date hereof ("Leases"); and (b) the rents, issues, deposits and profits of the Subject Property, including, without limitation, all amounts payable and all rights and benefits accruing to Trustor under the Leases ("Payments"). The term "Leases" shall also include all guarantees of and security for the lessees' performance thereunder, and all amendments, extensions, renewals or modifications thereto which are permitted hereunder. This is a present and absolute assignment, not an assignment for security purposes only, and Beneficiary's right to the Leases and Payments is not contingent upon, and may he exercised without possession of, the Subject Property. 3.2 GRANT OF LICENSE. Beneficiary confers upon Trustor a license ("License"), subject to any prior license conferred upon Trustor's lenders, to collect and retain the Payments as they become due and payable, until the occurrence of a Default (as hereinafter defined). Upon a Default, the Licensd shall be automatically revoked and Beneficiary may collect and apply the Payments pursuant to Section 6.4 without notice and without taking possession of the Subject Property. Trustor hereby irrevocably authorizes and directs the lessees under the Leases to rely upon and comply with any notice or demand by Beneficiary for the payment to Beneficiary of any rental or other sums which may at any time become due under the Leases, or for the performance of any of the lessees' undertakings under the Leases, and the lessees shall have no right or duty to inquire as to whether any Default has actually occurred or is then existing hereunder. Trustor hereby relieves the lessees from any liability to Trustor by reason of relying upon and complying with any such notice or demand by Beneficiary. 3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable Assignment shall not cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible or liable for the control, care, management or repair of the Subject Property or for performing any of the terms, agreements, undertakings, obligations, representations, warranties, covenants and conditions of the Leases; or (c) responsible or liable for any waste committed on the Subject Property by the lessees under any of the Leases or any other parties; for any dangerous or defective condition of the Subject Property; or for any negligence in the management, upkeep, repair or control of the Subject Property resulting in loss or injury or death to any Lessee, licensee, employee, invitee or other person or entity. Beneficiary shall not directly or indirectly be liable to Trustor or any other person or entity as a consequence of: (i) the exercise or failure to exercise any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii) the failure or refusal of Beneficiary to perform or discharge any obligation, duty or liability of Trustor arising under the Leases. 3.4 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that as of the date of this Deed of Trust there are no existing Leases. 3.5 COVENANTS. Trustor covenants and agrees at Trustor's sole cost and expense to: (a) perform the obligations of lessor contained in the Leases and enforce by all available remedies performance by the lessees of the obligations of the lessees contained in the Leases; (b) exercise • Attachment No. 5-3 Trustor's best efforts to lease all of the condominium units within the Subject Property at all times upon the completion of construction of the Improvements; (c) deliver to Beneficiary fully executed, counterpart copies of each and every Lease if requested to do so; and (d) execute and record such additional assignments of any Lease or specific suborditnations of any Lease to the Deed of Trust, in form and substance acceptable to Beneficiary, as Beneficiary may request. Trustor shall not, without Beneficiary's prior written consent, except as otherwise permitted pursuant to the Disposition and Development Agreement: (i) enter into any Leases after the date of this Assignment except leases in the ordinary course of Trustor's business and on the lease form approved by Beneficiary; (ii) execute any other assignment relating to any of the Leases, except pursuant to the terms of any construction and/or permanent financing approved by Beneficiary; (iii) discount any rent or other sums due under the Leases or collect the same in advance, other than to collect rent one (1) month in advance of the time when it becomes due; (iv) terminate, modify or amend any of the terms of the Leases or in any manner release or discharge the lessees from any obligations thereunder except in the ordinary course of Trustor's business; (v) consent to any assignment or subletting by any lessee; or (vi) subordinate or agree to subordinate any of the Leases to any other deed of trust or encumbrance, except as required to obtain financing for the Subject Property. Any such attempted action in violation of the provisions of this Section 3.5 shall be null and void. Without in any way limiting the requirement of Beneficiary's consent hereunder, any sums received by Trustor in consideration of any termination (or the release or discharge of any lessee) modification or amendment of any Lease shall be applied to reduce the outstanding Secured Obligations and any such sums received by Trustor shall be held in trust by Trustor for such purpose. 3.6 ESTOPPEL CERTIFICATES. Within thirty (30) days after written request by Beneficiary, Trustor shall deliver to Beneficiary and to any party designated by Beneficiary estoppel certificates executed by Trustor, in recordable form, certifying (if such be the case): (a) that the foregoing assignment and the Leases are in full force and effect; (b) the date of each lessee's most recent payment of rent; (c) that there are no defenses or offsets outstanding, or stating those claimed by Trustor under the foregoing assignment or the Leases, as the case may be; and (d) any other information reasonably requested by Beneficiary. ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING 4.1 SECURITY INTEREST. Trustor hereby grants and assigns to Beneficiary, as of the effective date of the Disposition and Development Agreement, a security interest, to secure payment and performance of all of the Secured Obligations, in all of the following described personal property in which Trustor now or at any time hereafter has any interest (collectively, the "Collateral"): All goods, building and other materials, supplies, work in process, equipment, machinery, fixtures, furniture, furnishings, signs and other personal property, wherever situated, which are or are to be incorporated into, used in connection with, or appropriated for use thereon, (i) the Real Property described on Exhibit A attached hereto and incorporated by reference herein (to the extent the same are not effectively made a part of the Real Property pursuant to Section 1.1 above) or (ii) the improvementscons cted or to be constructed on the Subject Property, as described in the Disposition and De elopment Agreement between Trustor and Beneficiary, dated , 2006 wh ch real property and improvements are, pursuant to Section 1.1 above, collectively referr d to herein, along with the other property described in Section 1.1 above, as the Subject Property); together with all rents, issues, Attachment No. 5-4 deposits and profits of the Subject Property (to the extent, if any, they are not subject to Article 111); all inventory, accounts, cash receipts, deposit accounts, accounts receivable, contract rights, general intangibles, chattel papei, instruments, documents, notes, drafts, letters of credit, insurance policies, insurance and condemnation awards and proceeds, any other rights to the payment of money, trade names, trademarks and service marks arising from or related to the Subject Property or any business now or hereafter conducted thereon by Trustor; all permits consents, approvals, licenses, authorizations and other rights granted by, given by or obtained from, any governmental entity with respect to the Subject Property; all deposits or other security now or hereafter made with or given to utility companies by Trustor with respect to the Subject Property; all advance payments of insurance premiums made by Trustor with respect to the Subject Property; all plans, drawings and specifications relating to the Subject Property; all loan funds held by Beneficiary, whether or not disbursed; all funds deposited with Beneficiary pursuant to any loan agreement; all reserves, deferred payments, deposits, accounts, refunds, cost savings and payments of any kind related to the Subject Property or any portion thereof; together with all replacements and proceeds of, and additions and accessions to, any of the foregoing; together with all books, records and files relating to any of the foregoing. As to all of the above described personal property which is or which hereafter becomes a "fixture" under applicable law, this Deed of Trust constitutes a security agreement and a fixture filing under Sections 9105, 9313 and 9402(6) of the California Uniform Commercial Code, as amended or • recodified from time to time, and is acknowledged and agreed to be a "construction mortgage" under such Sections. Trustor is the "debtor" and Beneficiary is the "secured party". Beneficiary's security interest in the Collateral shall be junior and subject to the prior security interest of Trustor's lender(s) for the Subject Property. • 4.2 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that: (a) Trustor has, or will have, good title to the Collateral; (b) Trustor has not previously assigned or encumbered the Collateral, and no financing statement covering any of the Collateral has been delivered to any other person or entity except to construction and permanent lenders approved by Beneficiary or otherwise permitted under the Disposition and Development Agreement; and (c) Trustor's principal place of business is located at the address shown in Section 7.8. 4.3 RIGHTS OF BENEFICIARY. In addition to Beneficiary's rights as a "secured party" under the California Uniform Commercial Code, as amended or recodified from time to time ("UCC"), Beneficiary may, but shall not be obligated to, at any time without notice and at the expense of Trustor: (a) give notice to any person or entity of Beneficiary's rights hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and preserve the Collateral or any rights or interests of Beneficiary therein; (c) inspect the Collateral; and (d) endorse, collect and receive any right to payment of money owing to Trustor under or from the Collateral. Notwithstanding the above, in no event shall Beneficiary be deemed to have accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Beneficiary shall make an express written election of said remedy under UCC §9505, or other applicable law. 4.4 RIGHTS OF BENEFICIARY ON DE AULT. Upon the occurrence of a Default (hereinafter defined) under this Deed of Trust then in addition to all of Beneficiary's rights as a "secured party" under the UCC or otherwise at law: Attachment No. 5-5 a. Beneficiary may (i) upon written notice, require Trustor to assemble any or all of the Collateral and make it available to Beneficiaryl at a place designated by Beneficiary; (ii) without prior notice, enter upon the Subject Property or other place where any of the Collateral may be located and take possession of, collect, sell, and dispose of any or all of the Collateral, and store the same at locations acceptable to Beneficiary at Trustor's expense; (iii) sell, assign and deliver at any place or in any lawful manner all or any part of the Collateral and bid and become purchaser at any such sales; and b. Beneficiary may, for the account of Trustor and at Trustor's expense: (i) operate, use, consume, sell or dispose of the Collateral as Beneficiary deems appropriate for the purpose of performing any or all of the Secured Obligations; (ii) enter into any agreement, compromise, or settlement, including insurance claims, which Beneficiary may deem desirable or proper with respect to any of the Collateral; and (iii) endorse and deliver evidences of title for, and receive, enforce and collect by legal action or otherwise, all indebtedness and obligations now or hereafter owing to Trustor in connection with or on account of any or all of the Collateral. Notwithstanding any other provision hereof, Beneficiary shall not be deemed to have accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Trustor shall make an express written election of said remedy under UCC §9505, or other applicable law. 4.5 POWER OF ATTORNEY. Trustor hereby irrevocably appoints Beneficiary as Trustor's attomey-in-fact (such agency being coupled with an interest), and as such attorney-in-fact Beneficiary may, without the obligation to do so, in Beneficiary's name, or in the name of Trustor, prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve any of Beneficiary's security interests and rights in or to any of the Collateral, and, upon a Default hereunder, take any other action required of Trustor; Mop vided, however, that Beneficiary as such attomey-in-fact shall be accountable only for such funds as are actually received by Beneficiary. 4.6 POSSESSION AND USE OF COLLATERAL. Except as otherwise provided in this Section, or any other Loan Documents (as defined in the Disposition and Development Agreement), so long as no Default exists under this Deed of Trust, Trustor may possess, use, move, transfer or dispose of any of the Collateral in the ordinary course of Trustor's business and in accordance with the Disposition and Development Agreement. ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES 5.1 TITLE. Trustor represents and warrants that, except as disclosed to Beneficiary in a writing which refers to this warranty, Trustor lawfully holds and possesses valid title to the Subject Property without limitation on the right to encumber, and that this Deed of Trust is a first and prior lien on the Subject Property. 5.2 TAXES AND ASSESSMENTS. Subjec to Trustor's right to in good faith contest payment of taxes and claim exemptions pursuant to Cali Mia Health and Safety Code Section 214, Trustor shall pay prior to delinquency all taxes, assessme is, levies and charges imposed by any public or quasi -public authority or utility company whic (i) are or which may become a lien upon or cause a loss in value of the Subject Property or any interest therein, or (ii) are required to be paid by Attachment No. 5-6 • Trustor. Trustor shall also pay prior to delinquency all taxes, assessments, levies and charges imposed by any public authority upon Beneficiary by reason of its interest in any Secured Obligation or in the Subject Property, or by reason of any payment made to Beneficiary pursuant to any Secured Obligation; provided, however, Trustor shall have no obligation to pay taxes which may be imposed from time to time upon Beneficiary and which are measured by and imposed upon Beneficiary's net income. 5.3 TAX AND INSURANCE IMPOUNDS. Following a Default by Trustor, at Beneficiary's option and upon its demand and subject to the impound requirements of any of the Senior Obligations, Trustor, shall, until all Secured Obligations have been paid in full, pay to Beneficiary monthly, annually or as otherwise directed by Beneficiary an amount estimated by Beneficiary to be equal to: (a) all taxes, assessments and levies imposed by any public or quasi - public authority or utility company which are or may become a lien upon the Subject Property and will become due for the tax year during which such payment is so directed; and (b) premiums for fire, other hazard and mortgage insurance next due. If Beneficiary determines that any amounts paid by Trustor are insufficient for the payment in full of such taxes, assessments, levies and/or insurance premiums, Beneficiary shall notify Trustor of the increased amounts required to pay all amounts due, whereupon Trustor shall pay to Beneficiary within thirty (30) days thereafter the additional amount as stated in Beneficiary's notice. All sums so paid shall not bear interest, except to the extent and in any minimum amount requiied by law; and Beneficiary Shall, unless Trustor is otherwise in Default hereunder or under any Secured Obligation, apply said funds to the payment of, or at the sole option of Beneficiary release said funds to Trustor for the application to and payment of, such sums, taxes, • assessments, levies, charges, and insurance premiums. Upon Default by Trustor hereunder or under any Secured Obligation, Beneficiary may apply all or any part of said sums to any Secured Obligation and/or to cure such Default, in which event Trustor shall be required to restore all amounts so applied, as well as to cure any other events or conditions of Default not cured by such application. Upon assignment of this Deed of Trust, Beneficiary shall have the right to assign all amounts collected and in its possession to its assignee whereupon Beneficiary and its Trustee shall be released from all liability with respect thereto. Within ninety-five (95) days following full repayment of the Secured Obligations (other than full repayment of the Secured Obligations as a consequence of a foreclosure or conveyance in lieu of foreclosure of the liens and security interests securing the Secured Obligations) or at such earlier time as Beneficiary may elect, the balance of all amounts collected and in Beneficiary's possession shall be paid to Trustor and no other party shall have any right or claim thereto. • 5.4 PERFORMANCE OF SECURED OBLIGATIONS. Trustor shall promptly pay and perform each Secured Obligation when due. 5.5 LIENS, ENCUMBRANCES AND CHARGES. Trustor shall immediately discharge any lien not approved by Beneficiary in writing that has or may attain priority over this Deed of Trust, subject to the requirements of the Disposition and Development Agreement with respect to mechanic's liens. Trustor shall pay when due all obligations secured by or reducible to liens and encumbrances which shall now or hereafter encumber or appear to encumber all or any part of the Subject Property or any interest therein, whether senior or subordinate hereto. 5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS a. The following (whether now existing or hereafter arising) are, in the amount Attachment No. 5-7 not to exceed any sums then owing under the Disposition and Development Agreement and Note, all absolutely and irrevocably assigned by Trustor to Beneficiary and, at the request of Beneficiary, shall be paid directly to Beneficiary, subject to the rights of the holders of Senior Obligations: (i) all awards of damages and all other compensation payable directly or indirectly by reason of a condemnation or proposed condemnation for public or private use affecting all or any part of, or any interest in, the Subject Property; (ii) all other claims and awards for damages to, or decrease in value of, all or any part of, or any interest in, the Subject Property; (iii) all proceeds of any insurance policies payable by reason of loss sustained to all or any part of the Subject Property; and (iv) all interest which may accrue on any of the foregoing. Subject to applicable law, and without regard to any requirement contained in Section 5.7(d), Beneficiary may at its discretion apply all or any of the proceeds it receives to its expenses in settling, prosecuting or defending any claim and may apply the balance to the Secured Obligations in any order, and/or Beneficiary may release all or any part of the proceeds to Trustor upon any conditions Beneficiary may impose. Beneficiary may commence, appear in, defend or prosecute any assigned claim or action and may adjust, compromise, settle and collect all claims and awards assigned to Beneficiary; provided, however, in no event shall Beneficiary be responsible for any failure to collect any claim or award, regardless of the cause of the failure. b. At its reasonable option, Beneficiary may permit insurance or condemnation proceeds held by Beneficiary to be used for repair or restoration but may condition such application upon reasonable conditions, including, without limitation: (i) the deposit with Beneficiary of such additional funds which Beneficiary determines are needed to pay all costs of the repair or restoration, (including, without limitation, taxes, financing charges, insurance and rent during the repair period); (ii) the establishment of an arrangement for lien releases and disbursement of funds acceptable to Beneficiary; (iii) the delivery to Beneficiary of plans and specifications for the work, a contract for the work signed by a contractor acceptable to Beneficiary, a cost breakdown for the work and a payment and performance bond for the work, all of which shall be acceptable to Beneficiary; and (iv) the delivery to Beneficiary of evidence acceptable to Beneficiary (aa) that after completion of the work the income from the Subject Property will be sufficient to pay all expenses and debt service for the Subject Property; (bb) of the continuation of Leases acceptable to and required by Beneficiary; (cc) that upon completion of the work, the size, capacity and total value of the Subject Property will be at least as great as it was before the damage or condemnation occurred;(dd) that there has been no material adverse change in the financial condition or credit of Trustor since the date of this Deed of Trust; and (ee) of the satisfaction of any additional conditions that Beneficiary may reasonably establish to protect its security. Trustor hereby acknowledges that the conditions described above are reasonable, and, if such conditions have not been satisfied within thirty (30) days of receipt by Beneficiary of such insurance or condemnation proceeds, then Beneficiary may apply such insurance or condemnation proceeds to pay down principal of the Secured Obligations in such order and amounts as Beneficiary in its sole discretion may choose. 5.7 MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY. Trustor covenants, subject to the provisions of the Disposition and Development Agreement: (a) to insure the Subject Property against such risks as Beneficiary may reasonably require and, at Beneficiary's request, to provide evidence of such insurance to Beneficiary, and to comply with the requirements of any insurance companies insuring the Su Ject Property; (b) to keep the Subject Property in good condition and repair; (c) not to remove Or demolish the Subject Property or any part thereof, not to alter, restore or add to the Subject Property] and not to initiate or acquiesce in any change in any zoning or other land classification which af'f'ects the Subject Property without Attachment No. 5-8 Beneficiary's prior written consent; (d) to complete or restore promptly and in good and workmanlike manner the Subject Property, or any partereof which may be damaged or destroyed, without regard to whether Beneficiary elects to require at insurance proceeds be used to reduce the Secured Obligations as provided in Section 5.6; (e) to comply with all laws, ordinances, regulations and standards, and all covenants, conditions, restrictions and equitable servitudes, whether public or private, of every kind and character which affect the Subject Property and pertain to acts committed or conditions existing thereon, including, without limitation, any work, alteration, improvement or demolition mandated by such laws, covenants or requirements; (t) not to commit or permit waste of the Subject Property (it shall not be waste if Trustor does not repair or restore the Subject Property after any destruction, damage or partial condemnation notwithstanding the availability of insurance or condemnation proceeds); and (g) to do all other acts which from the character or use of the Subject Property may be reasonably necessary to maintain and preserve its value. 5.8 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At Trustor's sole expense, Trustor shall protect, preserve and defend the Subject Property and title to and right of possession of the Subject Property, the security hereof and the rights and powers of Beneficiary and Trustee hereunder against all adverse claims. Trustor shall give Beneficiary and Trustee prompt notice in writing of the assertion of any claim, of the filing of any action or proceeding, of the occurrence of any damage to the Subject Property and of any condemnation offer or action. 5.9 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF TRUSTEE. Trustee accepts this trust when this Deed of Trust is recorded. From time to time upon written request of Beneficiary and presentation of this Deed of Trust or a certified copy thereof for endorsement, and is without affecting the personal liability of any person or entity for payment of any indebtedness or performance of any obligations secured hereby, Trustee may, without liability therefor and without notice: (a) reconvey all or any part. of the Subject Property; (b) consent to the making of any map or plat thereof; and (c) join in any grant of easement thereon, any declaration of covenants and restrictions, or any extension agreement or any agreement subordinating the lien or charge of this Deed of Trust. Except as may be required by applicable law, Trustee or Beneficiary may from time to time apply to any court of competent jurisdiction for aid and direction in the execution of the trust hereunder and the enforcement of the rights and remedies available hereunder, and may obtain orders or decrees directing or confirming or approving acts in the execution of said trust and the enforcement of said remedies. Trustee has no obligation to notify any party of any pending sale or any action or proceeding, including, without limitation, actions in which Trustor, Beneficiary or Trustee shall be a party unless held or commenced and maintained by Trustee under this Deed of Trust. Trustee shall not be obligated to perform any act required of it hereunder unless the performance of the act is requested in writing and Trustee is reasonably indemnified and held harmless against loss, cost, liability or expense. 5.10 COMPENSATION; EXCULPATION; INDEMNIFICATION. • a. Trustor shall pay Trustee's fees a*d reimburse Trustee for expenses in the administration of this trust, including attorneys' fees. Trustor shall pay to Beneficiary reasonable compensation for services rendered concerning this Deed of Trust, including without limit any statement of amounts owing under any Secured Obligati n. Beneficiary shall not directly or indirectly be liable to Trustor or any other person or entil e as a consequence of (i) the exercise of the rights, remedies or powers granted to Beneficiary in this 3eed of Trust; (ii) the failure or refusal of Beneficiary to perform or discharge any obligation or lial iflity of Trustor under any agreement related Attachment No. 5-9 to the Subject Property or under this Deed of Trust; or (f ii) any loss sustained by Trustor or any third party resulting from Beneficiary's failure to sell, lease or sublease the Subject Property after a Default (hereinafter defined) or from any other act or or iission of Beneficiary in managing the Subject Property after a Default, unless the loss is caused by the gross negligence or willful misconduct of Beneficiary, and no such liability shall bo asserted against or imposed upon Beneficiary, and all such liability is hereby expressly waived and released by Trustor. b. Subject to the provisions of Section 6.8 hereof, Trustor indemnifies Trustee and Beneficiary against, and holds Trustee and Beneficiary harmless from, all losses, damages, liabilities, claims, causes of action, judgments, court costs, attorneys' fees and other legal expenses, cost of evidence of title, cost of evidence of value, and other expenses which either may suffer or incur: (i) by reason of this Deed of Trust; (ii) by reason of the execution of this trust or in performance of any act required or permitted hereunder pr by law; (iii) as a result of any failure of Trustor to perform Truster's obligations; or (iv) by reason of any alleged obligation or undertaking on Beneficiary's part to perform or discharge any of the!, representations, warranties, conditions, covenants or other obligations contained in any other document related to the Subject Property, unless the loss is caused by the gross negligence or willful misconduct of Trustee or Beneficiary, as applicable. The above obligation of Trustor to indemnio and hold harmless Trustee and Beneficiary shall survive the release and cancellation of the Secured Obligations and the release and reconveyance or partial release and reconveyance of this Deed of Trust. Notwithstanding the foregoing, however, under no circumstances shall these �ndemnity obligations of Trustor include any obligation for payment of punitive damages assessed against Beneficiary or Trustee or their officers, employees, agents or representatives. C. Trustor shall pay all amounts and indebtedness arising under this Section 5.10 immediately upon demand by Trustee or Beneficiary together with interest thereon from the date the indebtedness arises at the rate of interest then applicable to the principal balance of the Note as specified therein. 5.11 SUBSTITUTION OF TRUSTEES. From time to time, bya writing, signed and acknowledged by Beneficiary and recorded in the Offtco of the Recorder of the County in which the Subject Property is situated, Beneficiary may appoint a then trustee to act in the place and stead of Trustee or any successor. Such writing shall set forth any information required by law. The recordation of such instrument of substitution shall discl arge Trustee herein named and shall appoint the new trustee as the trustee hereunder with the same elrect as if originally named Trustee herein. A writing recorded pursuant to the provisions of this Section 5.11 shall be conclusive proof of the proper substitution of such new Trustee. 5.12 DUE ON SALE OR ENCUMBRANC. therein shall be sold, assigned, leased, subleased, transk sale or transfer of a majority or controlling interest of th interests or nonprofit public benefit corporation interest: assigned, or further encumbered (other than leases of im Improvements), whether directly or indirectly, whether, law, without the prior written consent of Beneficiary, or permitted pursuant to the Disposition and Development discretion, may declare all Secured Obligations immedi; . If the Subject Property or any interest -ed (including, without limitation, through corporate stock or general partnership if Trustor), mortgaged, collaterally vidual condominium units within the >luntarily, involuntarily or by operation of ✓ithout otherwise being approved or .greement, THEN Beneficiary, in its sole ely due and payable. Attachment No. 5-10 • 5.13 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY. Without notice to or the consent, approval or agreement of any persons or entities having any interest at any time in the Subject Property qr in any manner obligated under the Secured Obligations ("Interested Parties"), Beneficiary may, from time to time, release any person or entity from liability for the payment or performance of any Se ured Obligation, take any action or make any agreement extending the maturity or otherwise altering the terms or increasing the amount of any Secured Obligation, or accept additional security or release all or a portion of the Subject Property and other security for the Secured Obligations. None of the foregoing actions shall release or reduce the personal liability of any of said Interested Parties, or release or impair the priority of the lien of this Deed of Trust upon the Subject Property. 5.14 RECONVEYANCE, Upon Beneficiary's written request, and upon surrender to Trustee for cancellation of this Deed of Trust or a certified copy thereof and any note, instrument, or instruments setting forth all obligations secured hereby, Trustee shall reconvey, without warranty, the Subject Property or that portion thereof then held hereunder. To the extent permitted by law, the reconveyance may describe the grantee as "the person or persons legally entitled thereto" and the recitals of any matters or facts in any reconveyance executed hereunder shall be conclusive proof of the truthfulness thereof. Neither Beneficiary nor Trustee shall have any duty to determine the rights of persons or entities claiming to be rightful grantees of any reconveyance. When the Subject Property has been fully reconveyed, the last such reconveyance shall operate as a reassignment of all future rents, issues and profits of the Subject Property to the person or persons legally entitled thereto. . 5.15 SUBROGATION. Beneficiary shall be subrogated to the lien of all encumbrances, whether released of record or not, paid in whole or in part by Beneficiary pursuant to this Deed of Trust or by the proceeds of any loan secured by this Deed of Trust. is 5.16 RIGHT OF INSPECTION. Beneficiary, its agents and employees, may enter the Subject Property at any reasonable time for the purpose of inspecting the Subject Property and ascertaining Trustor's compliance with the terms hereof. ARTICLE 6. DEFAULT PROVISIONS 6.1 DEFAULT. For all purposes hereof, the term "Default" shall mean (a) at Beneficiary's option, the failure of Trustor to make any payment of principal or interest on the Note or to pay any other amount due hereunder or under the Note when the same is due and payable, within ten (10) days after receipt of written notice from Beneficiary; or (b) the failure of Trustor to perform any non -monetary obligation hereunder, or the failure to be true of any representation or warranty of Trustor contained herein and the continuance of such failure for thirty (30) days after notice from Beneficiary (or such longer grace period as may be provided pursuant to the Disposition and Development Agreement for such failure or the existence of any default under the Disposition and Development Agreement), or if it is not reasonably practicable to cure or remedy such failure within such thirty (30) day period, then Trustor shall not be deemed to be in default if Trustor shall commence such cure within such thirty (30) day period ad thereafter diligently prosecutes such cure to completion. 6.2 RIGHTS AND REMEDIES. At any time after Default, Beneficiary and Trustee shall each have all the following rights and remedies: Attachment No. 5-11 a. With or without notice, to declam all Secured Obligations immediately due and payable; b. With or without notice, and without releasing Trustor from any Secured Obligation, and without becoming a mortgagee in possession, to cure any breach or Default of Trustor and, in connection therewith, to enter upon the Subject Property and do such acts and things as Beneficiary or Trustee deem necessary or desirable to protect the security hereof, including, without limitation: (i) to appear in and defend any action or proceeding purporting to affect the security of this Deed of Trust or the rights or powers of Beneficiary or Trustee under this Deed of Trust; (ii) to pay, purchase, contest or compromise any encumbrance, charge, lien or claim of lien which, in the sole judgment of either Beneficiary or Trustee, is or may be senior in priority to this Deed of Trust, the judgment of Beneficiary or Trustee being conclusive as between the parties hereto; (iii) to obtain insurance; (iv) to pay any premiums or charges with respect to insurance required to be carried under this Deed of Trust; or (v) to employ counsel, accountants, contractors and other appropriate persons. C. To commence and maintain an action or actions in any court of competent jurisdiction to foreclose this instrument as a mortgage or to obtain specific enforcement of the covenants of Trustor hereunder, and Trustor agrees that such covenants shall be specifically enforceable by injunction or any other appropriate'equitable remedy and that for the purposes of any suit brought under this subparagraph, Trustor waives the defense of laches and any applicable statute of limitations; d. To apply to a court of competent jurisdiction for and obtain appointment of a receiver of the Subject Property as a matter of strict right and without regard to the adequacy of the security for the repayment of the Secured Obligations, the existence of a declaration that the Secured Obligations are immediately due and payable, or the filing of a notice of default, and Trustor hereby consents to such appointment; e. To enter upon, possess, manage and operate the Subject Property or any part thereof, to take and possess all documents, books, records, papers and accounts of Trustor or the then owner of the Subject Property, to make, terminate, enforce or modify Leases of the Subject Property upon such terms and conditions as Beneficiary deems proper, to make repairs, alterations and improvements to the Subject Property as necessary, in Trustee's or Beneficiary's sole judgment, to protect or enhance the security hereof, f. To execute a written notice of such Default and of its election to cause the Subject Property to be sold to satisfy the Secured Obligations. As a condition precedent to any such sale, Trustee shall give and record such notice as the law then requires, When the minimum period of time required by law after such notice has elapsed, Trustee, without notice to or demand upon Trustor except as required by law, shall sell the Subject Property at the time and place of sale fixed by it in the notice of sale, at one or several sales, either a&a whole or in separate parcels and in such manner and order, all as Beneficiary in its sole discretion knay determine, at public auction to the highest bidder for cash, in lawful money of the UnitedS res, payable at time of sale. Neither Trustor nor any other person or entity other than Benefik ry shall have the right to direct the order in which the Subject Property is sold. Subject to requireme is and limits imposed by law, Trustee may from time to time postpone sale of all or any portion of th Subject Property by public announcement at such time and place of sale. Trustee shall deliver to th purchaser at such sale a deed conveying Attachment No. 5-12 f� 1 0 the Subject Property or portion thereof so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts hall be conclusive proof of the truthfulness thereof. Any person or entity, including Trustee, Trustol or Beneficiary may purchase at the sale; g. To resort to and realize upon the security hereunder and any other security now or later held by Beneficiary concurrently or succes§ively and in one or several consolidated or independent judicial actions or lawfully taken non judicial proceedings, or both, and to apply the proceeds received upon the Secured Obligations all in such order and manner as Trustee and Beneficiary, or either of them, determine in their sole discretion. h. Upon sale of the Subject Property at any judicial or non judicial foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its sole and absolute discretion) all or any portion of the Secured Obligations. In determining such credit bid, Beneficiary may, but is not obligated to, take into account all or any of the following: (i) appraisals of the Subject Property as such appraisals may be discounted or adjusted by Beneficiary in its sole and absolute underwriting discretion; (ii) expenses and costs incurred by Beneficiary with respect to the Subject Property prior to foreclosure; (iii) expenses and costs which Beneficiary anticipates will be incurred with respect to the Subject Property after foreclosure, but prior to resale, including, without limitation, costs of structural reports and other due diligence, costs to cavy the Subject Property prior to resale, costs of resale (e.g. commissions, attorneys' fees, and taxes), c6sts of any hazardous materials clean-up and monitoring, costs of deferred maintenance, repair, refurbishment and retrofit, costs of defending or settling litigation affecting the Subject Property, and lost opportunity costs (if any), including the • time value of money during any anticipated holding period by Beneficiary; (iv) declining trends in real property values generally and with respect to properties similar to the Subject Property; (v) anticipated discounts upon resale of the Subject Property as a distressed or foreclosed property; (vi) the fact of additional collateral (if any), for the Secured Obligations; and (vii) such other factors or matters that Beneficiary (in its sole and absolute discretion) deems appropriate. In regard to the above, Trustor acknowledges and agrees that: (w) Beneficiary is not required to use any or all of the foregoing factors to determine the amount of its credit bid; (x) this'Section does not impose upon Beneficiary any additional obligations that are not imposed by law at the time the credit bid is made; (y) the amount of Beneficiary's credit bid need not have any relation to any loan -to -value ratios previously discussed between Trustor and Beneficiary; a rd (z) Beneficiary's credit bid may be (at Beneficiary's sole and absolute discretion) higher or lower than any appraised value of the Subject Property. 6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS. After deducting all costs, fees and expenses of Trustee, and of this trust, including, without limitation, cost of evidence of title and attorneys' fees in connection with sale and casts and expenses of sale and of any judicial proceeding wherein such sale may be made, Trustee shall apply all proceeds of any foreclosure sale: (a) to payment of all sums expended by Beneficiary under the terms hereof and not then repaid, with accrued interest at the rate of interest specified in the Note to be applicable on or after maturity or acceleration of the Note; (b) to payment of all other Secured Obligations; and (c) the remainder, if any, to the person or persons legally entitled thereto. 6.4 APPLICATION OF OTHER SUMS. j 01 sums received by Beneficiary under Section 6.2 or Section 3.2, less all costs and expenses incurred by Beneficiary or any receiver under Section 6.2 or Section 3.2, including, without limitation, ttorneys' fees, shall be applied in payment of the Secured Obligations in such order as Beneficiary s iall determine in its sole discretion; • 1 Attachment No. 5-13 provided, however, Beneficiary shall have no liability for funds not actually received by Beneficiary. 6.5 NO CURE OR WAIVER. Neither Bc4eficiary's nor Trustee's nor any receiver's entry upon and taking possession of all or any part of the Subject Property, nor any collection of rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other security or proceeds of other security, or other sums, nor the application of any collected sum to any Secured Obligation, nor the exercise or failure to exercise of any other right or remedy by Beneficiary or Trustee or any receiver shall cure or waive any breach, Default or notice of default under this Deed of Trust, or nullify the effect of any notice of default or sale (unless all Secured Obligations then due have been paid and performed and Trustor has cured all other defaults), or impair the status of the security, or prejudice Beneficiary or Trustee in the exercise of any right or remedy, or be construed as an affirmation by Beneficiary of any tenancy, lease or option or a subordination of the lien of this Deed of Trust. 6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEYS' FEES. Trustor agrees to pay to Beneficiary immediately and without demand all costs and expenses incurred by Trustee and Beneficiary pursuant to Section 6.2 (including, without limitation, court costs and attorneys' fees, whether incurred in litigation or not) with interest from the date of expenditure until said sums have been paid at the rate of interest then applicable to the principal balance of the Note as specified therein. In addition, Trustor shall pay to Trustee all Trustee's fees'heieunder and shall reimburse Trustee for all expenses incurred in the administration of this trust, including, without limitation, any attorneys' fees. 6.7 POWER TO FILE NOTICES AND CURE DEFAULTS. Trustor hereby irrevocably appoints Beneficiary and its successors and assigns, as its attomey-in-fact, which agency is coupled with an interest, (a) to execute and/or record any notices of completion, cessation of labor, or any other notices that Beneficiary deems appropriate to protect Beneficiary's interest, (b) upon the issuance of a deed pursuant to the foreclosure of this Deed of Trust or the delivery of a deed in lieu of foreclosure, to execute all instruments of assignment or further assurance with respect to the Leases and Payments in favor of the grantee of any such deed, as may be necessary or desirable for such purpose, (c) to prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve Beneficiary's security interests and rights in or to any of the Collateral, and (d) upon the occurrence of an event, act or omission which, with notice or passage of time or both, would constitute a Default, Beneficiary may perform any obligation of Trustor hereunder; provided, however, that: (i) Beneficiary as such attomey-in-fact shall only be accountable for such fun&as are actually received by Beneficiary; and (ii) Beneficiary shall not be liable to Trustor or any other person or entity for any failure to act under this Section. 6.8 NO PERSONAL LIABILITY. In the event of any default under the terms of the Note or this Deed of Trust, the sole recourse of the Beneficiary for any and all such defaults shall be by judicial foreclosure or by the exercise of the trustee's,power of sale, and Trustor and its partners shall not be personally liable for the payment of the Note or for the payment of any deficiency established after judicial foreclosure or trustee's sale; pr vided, however, that the foregoing shall not in any way affect any rights the Beneficiary may have (as a secured party or otherwise) hereunder or under the Agreement or Note to recover directly from Trustor any amounts secured by this Deed of Trust, or any funds, damages or costs (including without limitation reasonable attorneys' fees and costs) incurred by Beneficiary as a result of fraud, misrepresentation or waste (provided that it shall Attachment No. 5-14 • *I 1 0 not be waste if Trustor does not repair or restore the Subject Property after any destruction, damage or partial condemnation, notwithstanding the availability of insurance or condemnation proceedings), and any costs and expenses incurred by Beneficiary in connection thereof (including without limitation reasonable attorneys' fees and costs). ARTICLE 7. MISCELLANEOUS PROVISIONS 7.1 NO MERGER. No merger shall occur as a result of Beneficiary's acquiring any other estate in, or any other lien on, the Subject Property unless Beneficiary consents to a merger in writing. If both the lessor's and lessee's estate under any lease or any portion thereof which now or hereafter constitutes a part of Subject Property shall at any time become vested in one owner, this Deed of Trust and the lien created hereby shall not be destroyed or terminated by application of the doctrine of merger unless Beneficiary so elects as evidenced by recording a written declaration so stating, and, unless and until Beneficiary so elects, Beneficiary shall continue to have and enjoy all of the rights and privileges of Beneficiary as to the separate estates. In addition, upon the foreclosure of the lien created by this Deed of Trust on the Subject Property pursuant to the provisions hereof, any leases or subleases then existing and affecting all or any portion of the Subject Property shall not be destroyed or terminated by application of the law of merger or as a matter of law or as a result of such foreclosure unless Beneficiary or any purchaser at such foreclosure sale shall so elect. No act by or on behalf of Beneficiary or arty such purchaser shall constitute a termination of any lease or sublease unless Beneficiary or such purchaser shall give written notice thereof to such tenant or subtenant. • 7.2 WAIVER OF MARSHALLING RIGHTS. Trustor, for itself and for all parties claiming through or under Trustor, and for all parties who may acquire a lien on or interest in the Subject Property, hereby waives all rights to have the Subject Property and/or any other property, including, without limitation, the Collateral, which is now or later may be security for any Secured Obligation ("Other Property") marshaled upon any foreclosure of this Deed of Trust or on a foreclosure of any other security for any of the Secured Obligations. Beneficiary shall have the right to sell, and any court in which foreclosure proceedings may be brought shall have the right to order a sale of, the Subject Property and any or all of the Collatelral or Other Property as a whole or in separate parcels, in any order that Beneficiary may designate. 7.3 RULES OF CONSTRUCTION. Wher1 the identity of the parties or other circumstances make it appropriate the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. The term "Subject Property" means all and any part of the Subject Property and any interest in the Subject Property. 7.4 SUCCESSORS IN INTEREST. The terms, covenants, and conditions herein contained shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto; provided, however, that this Section 7.4 does not waive or modify the provisions of Section 5.12. 7.5 EXECUTION IN COUNTERPARTS. This Deed of Trust may be executed in any number of counterparts, each of which, when executed and delivered to Beneficiary, will be deemed to be an original and all of which, taken together, will be (deemed to be one and the same instrument. • Attachment No. 5-15 7.6 CALIFORNIA LAW. This Deed of Tst shall be construed in accordance with the laws of the State of California, except to the extent that federal laws preempt the laws of the State of California. 7.7 INCORPORATION. Exhibit A and Schedule I all as attached, are incorporated into this Deed of Trust by this reference. 7.8 NOTICES. All notices or other communications required or permitted to be given pursuant to the provisions of this Deed of Trust shall be In writing and shall be considered as properly given if delivered personally or sent by first class U.S. mail, postage prepaid, except that notice of a Default may be sent by certified mail, return receipt requested, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon receipt at the addresses 'set forth below. For purposes of notice, the addresses of the parties shall be: Trustor: SEASONS SIC II, L.P., 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention : Legal Department With Copy to Multi -Housing Investments, LLC Limited Partner: 320 Golden Shore, Suite 200 Long Beach, California 00802 Attention : Legal Department Beneficiary: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director Trustee: Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days notice to the other party in the manner set forth hereinabove. Trustor shall forward to Beneficiary, without delay, any notices, letters or other communications delivered to the Subject Property or to Trustor naming Beneficiary, "Lender" or the "Construction Lender" or any similar designation as addressee, or which could reasonably be deemed to affect the construction of the Improvements or the ability of Trustor to perform its obligations to Beneficiary under the Note. 7.10 NOTICE AND CURE RIGHTS OF TRUSTOR'S LIMITED PARTNER The provisions of Section 506 of the Disposition and Develop ent Agreement as they relate to the notice to and cure rights of the Trustor's limited partner are incorporated herein by this reference. Attachment No. 5-16 • • • IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year set forth above. SEASONS SJC II, L.P., , a California limited partnership M (ALL SIGNATURES MUST BE ACKNOWLEDGED) Attachment No. 5-17 EXHIBIT A' DESCRIPTION OF SUBJECT PROPERTY That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages 1 through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176'` Pages 1 through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Exhibit A-1 • STATE OF CALIFORNIA COUNTY OF On personally appeared _ • 0 • 1 0 ss. before me, Notary Public, (Print Name of Notary Public) ❑ 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 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuablie to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer ❑ Partner(s) ❑ Limited ❑ General ❑ Auomey-In-Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) DESCRIPTION OF ATTACHED DOCUMENT Tine Or Type Of Document Number Of Pages Date Of Documents Signer(s) Other Than Named Above ATTACHMENT, NO.6 FORM OF RESIDUAL RECEIPTS REPORT San Juan Capistrano Redevelopment Agency Housing Project Residual Receipts Report for the Year Ending Date Prepared Please complete the following information and *execute the certification at the bottom of this form. Annual Project Revenue Please report Annual Project Revenue for the year ending on the following lines: Rent Payments (including Section 8 tenant assistance payments, if any) (1) Interest Income (do not include interest income from replacement and operating reserves nor interest income on tenant security deposits) Additional Income Related to Project Operations (for example, vending machine income, tenant forfeited deposits, laundry income not paid to the residents' association) Total Annual Project Revenue (Add lines 1, 2, and 3) Oneratina Expenses Please report Operating Expenses incurred in relation to the operations of the Project for the year ending on the following lines: Operating and Maintenance Expenses Utilities Property management Expenses and On -Site Staff Payroll Administrative Expenses Incurred by Project (2) (3) (4) (5) $ (6) $ (7) $ (8) $ Property Taxes (9) $ Insurance (10) $ Other Expenses Related to Operations of the Project (11) $ Please list these expenses: • W 1 0 Total Annual Operating Expenses (Add lines 5, 6, 7, 8, 9, 10, and 11) Net Operating Income (Subtract Line 12 from Line 4) Do not include expense unrelated to the Project's operations, such as depreciation, amortization, accrued principal and interest expense on deferred payment debt, or capital expenditures. Additional Cash Flow Payments Obligated Debt Service Payments (as approved by the Agency and other parties that may have such approval rights) Scheduled Deposits to Reserves (as approved by the Agency) Additional Payment Obligations (such as partnership management fees, deferred developer fees, or repayments on loans to partners, as approved by the Agency to have priority over Residual Receipt Payment to the Agency Total Additional Cash Flow Payments (Add lines 14, 15, and 16) Residual Receipts for Year Ending (Subtract Line 17 from Line 13) Percentage of Residual Receipts to be Paid to the Agency (as shown in the Promissory Note by and between the Agency and Borrower dated Amount Payable to the Agency (Multiply Line 18 by Line 19) (12) (13) (14) (15) (16) $ (17) (18) $ (19) % (20) The amount payable to the Agency listed on Line 2 is subject to payment according to the terms of the Promissory Note by and between the Agency and Borrower dated . If Line 20 is $0.00 or negative, you owe nothing to the Agency this year. If Line 20 is a positive number, remit check payable to and attach to this report. Exhibit D-2 Computation of Residual Receipts for the Year Ending The following certification should be executed by the Executive Director or Chief Financial Officer of the Borrower, or the Managing General Partner of the Borrower. I certify that the information provided in this form is true, accurate, and correct in all respects. M (Print Name) (Title) Exhibit D-3 Date • • W 1 0 ATTACHMENT jNO. 7 SCHEDULE OF PERFORMANCE NOTES: 1. Days are calendar days unless specifically noted as business days. 2. The Agency and the Developer may, by mutual written agreement, amend or modify any item contained herein or the date for performance. The Executive Director of the Agency is hereby authorized to approve minor amendments as set forth in this Schedule of Performance on behalf of the Agency. Any amendments deemed major shall be submitted to the Agency Board of Directors for consideration. 3. The City is not a party to the Agreement and is not bound by the times set forth herein. GENERAL I Execution of this Agreement. This Agreement Not less than five (5) calendar days prior to shall be executed by the Developer and a copy the Agency's consideration of the of the executed Agreement shall be sent to the Agreement, but in no event later than Agency. 11/15/06. 2 Execution of Agreement by Agency. After the Within seven (7) calendar days after Agreement has been approved, the Agency shall approval of this agreement by the Agency. execute the Agreement. FINANCING 3 Approval of Developer's Preliminary Financing Concurrent with approval of this Agreement. Plan. Agency shall approve, conditionally approve, or disapprove the Developer's Preliminary Financing Plan as required by the Agreement. 4 Approval of Changes to Developer's Developer shall submit changes on an as Preliminary Financing Plan. Developer shall warranted basis and the Agency shall have submit and Agency shall review and approve, thirty (30) calendar days to respond. conditionally approve, or disapprove changes to the Financing Plan and the Construction Cost Budget. 5 Submission of Application for HOME/AHP Not later than the scheduled closing of Funding (as applicable). The Developer and City shall submit application for HOME grant escrow on the site and close of construction (financing funds. 6 Submission of 9% Tax Credit Application. of later than the tax credit application Developer shall complete and submit anPlanningound following final City Council and application for Federal 9% Tax Credits Commission project approval Attachment No. 7-1 Attachment No. 7-2 Including approval of the general plan amendment and zone chap e application. 7 Submittal of Final Financin Pg lan. Developer of less than forty-five (45) calendar days shall submit a Final Financing Plan and prior to the scheduled closing of escrow on Construction Budget as required by Section 501 the Site and close of construction financing. of the Agreement, including copies of all commitment letters and conditions of approval and demonstrating sufficient debt and equity commitments required to complete the Project in accordance with the Scope of Development. 8 Approval of Final Financing Plan Agency Within twenty-one (21) calendar days after shall approve, conditionally approve, or receipt of complete financing plan from disapprove Financing Plan. Developer and prior to the Close of Escrow. GRADING & IMPROVEMENTS 9 Approval of Plans. Developer shall have Prior to commencement of grading. approved plans for site grading, utilities and public improvements. 10 CEOA/NEPA aooroval (as applicable). Prior to commencement of grading. Developer shall receive authorization from City/State to proceed with site grading 11 Site Work Contract. Developer shall submit Within seven (7) calendar days after final contract to complete site work approval of this agreement by the Agency. Attachment No. 7-2 • • 61 1 0 BUILDING APPROVALS 12 Submission of Preliminary Construction Within one hundred and twenty (120)days Drawings to Agency/City. The Developer shall following Federal 9% Tax Credit Award. submit preliminary construction drawings, public improvement plans, landscape plans, and such other documents as may be reasonably required by the City for review and evaluation with respect to the construction of the Housing Complex pursuant to Section 402. Developer may submit these plans to the Agency and City concurrently for plan check. 13 Agency Approval of Preliminary Construction Not later than thirty (30) calendar days after Drawings. Agency shall approve, conditionally submission and acceptance as complete. approve, or disapprove preliminary construction plans. 14 City Plan Check Approval. City shall complete City shall provide comments on first plan its building plan check approval. check within 15 business days of submittal. Developer shall provide revisions to first plan check comments within 15 business days of receipt of comments. The City and Developer shall respond within 10 business days thereafter for each additional plan check round. 15 Completion of Building Plan Check and Upon satisfaction of all conditions of Issuance of Construction Permits. City shall approval for buildings, public improvement, issue construction permits. landscape and/or other required reviews and payment of all required building permit and development impact fees. 16 Submission of Certificates of Insurance. Prior to the commencement of construction. Developer shall submit Certificates of Insurance to Agency in accord with Section 306 of this Agreement. Attachment No. 7-3 ESCROW FOR PURCHASE OF LAND 17 Open Escrow. Agency will open escrow to sell land to Thirty (30) days prior to the Developer. submission of the Developer's first application for tax credits. 18 Title Exceptions. The Developer shall submit to the Within thirty (30) calendar days Agency its written approval or disapproval of the after the Developer receives the exceptions to title per Section 203. Agency shall Preliminary Title Report from the respond in accordance with Section 203. Agency. 19 Final Environmental Release. Developer shall complete Within sixty (60) calendar days after physical and environmental investigation of the Site and Opening of Escrow. provide a written release to the Agency. 20 Deposit of Documents into Escrow. Not less than three (3) business days The Agency and Developer shall execute and deposit prior to Close of Escrow. with Escrow the Regulatory Agreement, the Agency Loan Promissory Note, the Agency Loan Deed of Trust and such other documents required to be recorded at the Close of Escrow. 21 Close of Escrow. The Close of Escrow shall occur as Within thirty (30) calendar days specified in Section 205 of this agreement. after Agency and Developer have complied with all conditions precedent to closing as stated in Section 205 of this Agreement. CONSTRUCTION 22 Commencement of Construction. Developer shall Within one hundred fifty (150) commence Construction of building and common area calendar days after Federal 9% Tax improvements. Credit Award, if all City project approvals are obtained prior to the Tax Credit Application, otherwise no later than two hundred and seventy (270) days after Federal 9% Tax Credit Award. 23 Completion of Construction. Developer shall complete Not later than the last day of the Construction of the buildings and all site and off-site second calendar year after Federal improvements in accordance with all conditional 9% Tax Credit Award. approvals. 24 Certificate of Completion. Developer shall request and Upon written request from Agency shall issue a Release of Construction Cove ants Developer and a determination by (Attachment No. 6) for completion of the Construction of the Agency that all conditions of the the Housing Complex per Section 311. Agreement have been satisfied. Attachment No. 7-4 n U W 1 0 ATTACHMENT NO. 8 SCOPE OF DEVET OPMENT SEASONS SENIOR APARTMENTS II, SAN JUAN CAPISTRANO, CA Location The proposed site for the Seasons Senior Apartments II is located at the comer of Paseo Espada and Rancho Viejo Road in San Juan Capistrano, California. The usable site is approximately 1.3 acres. Housing type The development will be an 38 -unit senior apartment community. Architectural Goals The award-winning KTGY Architects are designing the project. Careful consideration will be given to designing a project that meets the demands of affordability, yet has the architectural amenities to present itself as a quality market rate comparable apartment community. The Seasons • phase one will serve as the architectural model for phase II. The Project The project will consist of one two-story building. Construction will be Type V, wood -frame construction, with clay the roofs, stucco exterior and wood trim and accents. The design will be a Mediterranean style consistent with phase I. The balconies and patios will be framed and covered. The unit mix will be as follows: 1 Parking will be consistent with City requirements, and will allow for 38 spaces. Phase Il will offer residents shaded outdoor seating andcommunity laundry facilities. All of the existing shared amenities of Phase I will be available to the residents of Phase II. Existing amenities include Community Room, Pool, and Spa. Management staff for Phase I will be responsible for • management duties over Phase II. Attachment No. 8-1 Unit Amenities All units will feature: • covered interior entrances • plush carpeting in living areas • vinyl flooring in kitchens and baths • vertical blinds throughout • individually controlled heating • kitchen appliances including, range, refrigerator, dishwasher and disposal • cable television available • smoke alarms Proiect Amenities All common areas shall be professionally planned and decorated. Amenities will include: • Entry lobby with designer flooring, seating and ddcor • Elevator • Community laundry room Exterior common areas shall include: • Shaded outdoor seating area Attachment No. 8-2 U *I 1 0 ATTACHMENT NO.9 .RECORDING REQUESTED BY: AND WHEN RECORDED MAIL TO: This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. CERTIFICATE OF COMPLETION THIS CERTIFICATE OF COMPLETION (the "Certificate") is hereby made as of 20, by the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), in favor of SEASONS SJC II, L.P., 0 , a California limited partnership (the "Owner"). RECITALS • A. The Agency and the Owner have entered into an Disposition and Development Agreement dated as of , 2006 (the "Agreement"), which Agreement provides for the development of a Housing Project on certain real property situated in the City of San Juan Capistrano, California, and more particularly described on Exhibit "A" attached hereto and made a part hereof by this reference (the "Development of the Housing Project"). As required in the Agreement, the Agency shall furnish the Owner with a Certificate of Completion upon completion of the Development of the Housing Project, which Certificate shall be in such form as to permit it to be recorded in the Orange County Recorder's Office. B. The Agency has conclusively determined that the Development of the Housing Project required by the Agreement to be made to the Housing Project has been satisfactorily completed. NOW, THEREFORE, the Agency hereto certifies as follows: I . As provided in the Agreement, the Agency does hereby certify that the Development of the Housing Project has been fully and satisfactorily performed and completed in accordance with the Agreement. 2. After the recordation of this Certificate, any person or entity then owning or thereafter purchasing, or otherwise acquiring any intere t in the Housing Project will not (because of such ownership, purchase, or acquisition) incur any obl gation or liability under the Agreement, except that such party shall be bound by any and all of a covenants, conditions, and restrictions which survive such recordation. • 3. This Certificate is not a notice of completion as referred to in Section 3093 of the California Civil Code. Attachment No. 9-1 4. The recitals above are incorporated in full as part of the substantive text of this Release. IN WITNESS WHEREOF, the Agency has executed this Certificate as of the date set forth above. AGENCY: SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic ATTEST: Joe Soto, Chairman Margaret R. Monahan, Agency Secretary APPROVED FOR RECORDING: SEASONS SJC II, L.P., , a California limited partnership Attachment No. 9-2 0 • • Exhibit "All LEGAL DESCRIPTION OF PROPERTY That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages 1 through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages I through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Exhibit A-1 STATE OF CALIFORNIA I COUNTY OF ORANGE I On personally appeared ss. before me, , Notary Public, Print Name of Notary Public) ❑ personally known to me -or- F-1 proved to me on the basis of satisfactory evidence to he 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. WITNESS my hand and official seal. signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer Title(s) ❑ Partner(s) ❑ Attomey-In-Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Pcoon(s) Or Emity(ies) ❑ Limited ❑ General DESCRIPTION OF ATTACHED DOCUMENT Tide Or Type Of Document Number Of Pages Date Of Document signers) Other Than Named Above • W 1 0 ATTACHMENT NO. 10 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director This docume t is exempt from the payment of a rccmding Poe pursuant to Govemment Code Sectim 27383 REGULATORY AGREEMENT THIS REGULATORY AGREEMENT (the "Agreement") is entered into as of ,200_, by and between the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and SEASONS SJC II, L.P., , a California limited partnership (the "Owner"). • RECITALS A. Owner has acquired from the Agency certain real property located within the City of San Juan Capistrano, as particularly described in the Legal Description attached hereto as Exhibit A, which is incorporated herein by reference (the "Site"). B. Owner desires to construct a thirty-eight (38) unit multifamily affordable senior housing development on the Site (the "Housing Project"), and to make available and rent the apartment units within the Housing Project (the "Housing Units') for low and very low income persons at an affordable rent. C. Owner and Agency have entered into a Disposition and Development Agreement (the "DDA") dated as of 12006. Subject to the terms and conditions therein, the Owner has agreed to acquire the Site and construct and operate the Housing Project, the Agency has agreed to provide financial assistance to Owner, and the Owner has agreed to make available and lease twenty-eight (28) of the Housing Units to Very Low Income Households, and ten (10) of the Housing Units to Lower Income Households, all at an Affordable Rent (as those terms are defined herein). The execution and recording of this Agreement is a requirement of the DDA. NOW, THEREFORE, the parties hereto agree as follows: 1. Number of Affordable Units. Owner agrees to make available, restrict occupancy to, and rent twenty-eight (28) of the Housing Units to Vry Low Income Households, and ten (10) of the Housing Units to Lower Income Households, all at an Affordable Rent. One of the Housing • Units may be reserved for the on-site property manager, provided that such property manager meets the income requirements provided for such unit. Attachment No. 10-1 2. Duration of Affordability Requirements. The Housing Units shall be subject to the requirements of this Agreement for fifty-five (55) years *om the date of the City's issuance of a final certificate of occupancy for the Housing Project. The duration of this requirement shall be known as the "Affordability Period." 3. Selection of Tenants. Owner shall be responsible for the selection of tenants for the Housing Units in compliance with lawful and reasonable criteria, as set forth in the Regulatory Agreement and the Management Plan which is required to be submitted and approved by the Agency pursuant to Section 10 hereof. 4. Household Income Requirements. Following the initial lease -up of the Housing Units, and annually thereafter, the Owner shall submit to Agency, at Owner's expense, a summary of the income, household size and rent payable by each of the tenants of the Housing Units. At the Agency's request, the Owner shall also provide to the Agency completed income computation and certification forms, in a form reasonably acceptable to the Agency, for any such tenant or tenants. Owner shall obtain, or shall cause to be obtained by the Property Manager, a certification from each household leasing an Affordable Unit demonstrating that such household is a Very Low Income Household or Lower Income Household, as applicable, and meets the eligibility requirements established for the Housing Unit. Owner shall verify, or shall cause to be verified by the Property Manager, the income certification of the household. 5. Affordable Rent. The maximum Monthly Rent chargeable for the Affordable Units shall be annually determined in accordance with the following requirements. The Monthly Rent for the Affordable Units to be rented to Very Low Income Households shall not exceed one -twelfth (1/12) of thirty percent (30%) of fifty percent (50%) of Orange County Median Income for a family of a size appropriate to the unit. The Monthly Rent for the Affordable Units to be rented to Lower Income Households shall not exceed one -twelfth (1/12) of thirty percent (30"/0) of sixty percent (66%) of Orange County Median Income for a family of a size appropriate to the unit. For purposes of this Agreement, "Monthly Rent" means the total of monthly payments for (a) use and occupancy of each Affordable Unit and land and facilities associated therewith, (b) any separately charged fees or service charges assessed by the Owner which are required of all tenants, other than security deposits, (c) a reasonable allowance for an adequate level of service of utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuels, but not including telephone service, and (d) possessory interest, taxes or other fees or charges assessed for use of the land and facilities associated therewith by a public or private entity other than Owner. In the event that all utility charges are paid by the landlord rather than the tenant, no utility allowance shall be deducted from the rent. For purposes of this Agreement, "family of a size appropriate to the unit" means two parsons for a one -bedroom unit, and three persons for a two-bedroom unit. 6. Marketing Program. Each Affordable Unit shall be leased to tenants selected by the Owner who meet all of the requirements provided herein Owner shall prepare and obtain Agency's approval, which approval shall not be unreasonably with ield, of a marketing program for the leasing of the Affordable Units at the Housing Project (the "Mar ceting Program"). The Marketing Program shall require the Owner to give priority notice to tenants 3f other affordable housing projects in the City. The leasing of the Affordable Units shall thereafter be marketed in accordance with the Marketing Program as the same may be amended from time to time with Agency's prior written Attachment No. 10-2 • 1 approval, which approval shall not unreasonably be with¢eld. Owner shall provide Agency with periodic reports with respect to the leasing of the Affordable Units. The Agency agrees to exercise reasonable efforts to assist Owner in connection with the, implementation of the Marketing Program; provided, however, Agency shall not be under any obligation to incur any out-of-pocket expenses in connection therewith. 7. Design and Occupancy of Senior Units. Owner shall restrict occupancy of all Housing Units to "Senior Citizens" and "Qualified Permanent Residents" (as those terms are or may be defined in California Civil Code Section 51.3). California Civil Code Section 51.3 presently provides as follows: At least one person in residence in each dwelling unit must be a Senior Citizen, and other residents in the same dwelling unit who are not Senior Citizens must be Qualified Permanent Residents. Temporary guests of a Senior Citizen or Qualified Permanent Resident shall be allowed for a period of not more than sixty (60) days in any twelve (12) month period. Upon the death, dissolution of marriage, hospitalization or other prolonged absence of the Senior Citizen in a dwelling unit, any Qualified Permanent Resident who has continuously resided in the dwelling unit with such Senior Citizen shall be permitted to continue as a resident of that dwelling unit. "Permitted Health Care Residents" (as that term is or may be defined in California Civil Code Section 51.3) shall be permitted to occupy any dwelling unit during any period that such person is actually providing live in, long term or hospice health care to a Senior Citizen tenant or Qualified Permanent Resident tenant for compensation. Notwithstanding the foregoing, however, in the event that the Owner in its sole discretion elects to provide one of the Housing Units for residency by an on-site manager, the manager's unit shall not be required by this Agreement to be restricted to Senior Citizens and is Qualified Permanent Residents. 8. Relationship to Tax Credit Requirements. Notwithstanding any other provisions of this Agreement, to the extent that the regulatory agreement executed by the Owner as a requirement of receiving the Tax Credits (the "Tax Credit Regulatory Agreement") is less restrictive with respect to the requirements applicable to tenant selection, tenant income levels and unit rent levels than as provided in this Agreement and the DDA, this Agreement and the DDA shall control. 9. Maintenance. The Owner shall maintain the Housing Project or cause it to be maintained in a decent, safe and sanitary manner, and in accordance with the standard of maintenance of first class senior apartment units within Orange County, California. If at any time Owner fails to maintain the Housing Project in accordance with this Agreement and such condition is not corrected within five days after written notice from the Agency with respect to graffiti, debris, and waste material, or thirty days after written notice from the Agency with respect to general maintenance, landscaping and building improvements, then the Agency, in addition to whatever remedy it may have at law or at equity, shall have the right to enter upon the applicable portion of the Housing Project and perform all acts and work necessary to protect, maintain, and preserve the Housing Project, and to attach a lien upon the Housing Project, or to assess the Housing Project, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the Agency and/or costs of such cure, including a reasonable administrative charge, which amount shall be promptly paid by Owner to the Agency upon demand. 10. Management Plan; Property Managenient. The Owner shall submit for the reasonable approval of the Agency a "Management Plan' which sets forth in detail the Owner's property management duties, a tenant selection process in accordance with Section 6 hereof, a • security system and crime prevention program, the procepures for the collection of rent, the procedures for eviction of tenants, the rules and regulations of the Housing Project and manner of Attachment No. 10-3 enforcement, a standard lease form, an operating budget, the identity of the manager of the Housing Project (the "Property Manager"), the social services program to he provided pursuant to Section 13 hereof, and other matters relevant to the management of the Housing Project. The Management Plan shall require the Owner to adhere to a fair lease and grievance procedure and provide a plan for tenant participation in management decisions. The management of the Housing Project shall be in compliance with the Management Plan which is approved by the Agency. If the Agency determines that the performance of the Property Manager is deficient based upon the standards set forth in the Management Plan and in this Agreement, the Agency shall provide notice to the Owner of such deficiencies, and the Owner shall use its best efforts to correct such deficiencies. In the event that such deficiencies have not been cured within the time set forth in Section 701 of the DDA, the Agency shall have the right to require the Owner to immediately remove and replace the Property Manager with another property manager or property management company which is reasonably acceptable to the Agency, which is not related to or affiliated with the Owner, and which has not less than five (5) years experience in property management, including significant experience managing housing facilities of the size, quality and scope of the Housing Project. 11. Capital Reserve Requirements. The Owner shall also, or cause the Property Manager to, annually set aside an amount of Two Hundred Fifty Dollars ($250) per Housing Unit (or such larger amount as may be required by TCAC or a Housing Project lender), from the gross rents received from the Housing Project, into a separate interest-bearing trust account in the name of the Owner (the "Capital Replacement Reserve"); provided, however, to the extent the Owner is required by any lender to maintain a separate account to hold deposits for capital reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be adjusted annually by the Consumer Price Index (or such larger amount as may be required by TCAC or a Housing Project lender). Funds in the Capital Replacement Reserve shall be used for capital replacements to the Housing Project fixtures and equipment which are normally capitalized under generally accepted accounting principles. The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve the Owner of the obligation to undertake necessary capital repairs and improvements and to continue to maintain the Housing Project in the manner prescribed herein. Not less than once per year, Owner, at its expense, shall submit to the Agency an accounting for the Capital Replacement Reserve. Capital repairs to and replacement of the Housing Project shall include only those items with a long useful life, including without limitation the following: carpet and drape replacement; appliance replacement; exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement; asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; common area repainting, and uninsured losses due to casualties such as earthquakes. 12. Operating Budget and Reserve. The Owner shall submit to Agency on not less than an annual basis an operating budget for the Housing Project, which budget shall be subject to the written approval of the Agency Executive Director o 7 designee, which approval shall not be unreasonably withheld, conditioned or delayed. The O er shall, or shall cause the Property Manager to, set aside in a separate interest-bearing trust iccount in the Owner's name, commencing upon the rental of the Housing Units, the sum of Seven -One Thousand Dollars ($71,000), or such larger amount as may be required by TCAC or a HousinY Project lender (the "Operating Reserve"), Attachment No. 10-4 • and shall make further deposits from the Annual Project Revenue, to the extent available, to replenish the Operating Reserve to the amount existing in such amount prior to the withdrawal of funds; provided, however, to the extent the Owner is required b' any lender to maintain a separate account to hold deposits for operating reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be retained in the Operating Reserve to cover shortfalls between Housing Project income and actual operating expenses, and emergency expenses (such as uninsured casualties), but shall in no event be used to pay for capital items properly payable from the Capital Replacement Reserve. Owner shall, not less than once per every twelve (12) months, submit to the Agency evidence reasonably satisfactory to the Agency of compliance herewith. 13. Social Services. At all times during the Affordability Period, Owner shall provide, or cause to be provided, activities and programs appropriate to the needs of the residents of the Housing Project, with the selection of such activities and programs to be determined by Owner in collaboration with the residents of the Housing Project and the adjacent senior housing development owned by an affiliate of the Owner. The specific types of social services to be provided shall be submitted to and approved by the Agency, and may be revised with the prior approval of the Agency, which approval shall not be unreasonably withheld. 14. Prohibited Uses. None of the Housing Units in the Housing Project shall at any time be utilized on a transient basis, nor shall the Housing Project or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, • sanitarium or rest home. 15. Non Discrimination Covenants. Owner covenants by and for itself, its successors 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, religion, sex, marital status, familial status, disability, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or'enjoyment of the Housing Project, nor shall Owner itself or any person claiming under or through it, 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 Housing Project. The Owner shall refrain from restricting the rental, sale or lease of the Housing Project on the basis of race, color, creed, religion, sex, marital status, familial status, disability, national origin or ancestry of any person: All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (i) 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, familial status, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself 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 nants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing co enants shall run with the land." (ii) In leases: "The lessee herein colenants by and for himself or herself, his or • her heirs, executors, administrators and assigns, and all g arsons claiming under or through him or Attachment No. 10-5 her, and this lease is made and accepted upon and subject to the following conditions: "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, familial status, disability, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, 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." (iii) In contracts: "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, familial status, disability, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself 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 of the premises." The covenants established in this Section 15 shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency and its successors and assigns, and shall remain in effect in perpetuity. 16. Monitoring and Recordkeeping. Throughout the Affordability Period, Owner shall comply with all applicable recordkeeping and monitoring requirements set forth in Health and Safety Code Section 33418 and shall annually complete and submit to Agency a report, prior to April 15 of each year, which includes the name, address, income and age of each occupant of an Affordable Unit, identifying the bedroom count and Monthly Rent for such Affordable Unit. Agency agrees that the Owner may submit reporting forms prepared and submitted in connection with the Tax Credits, to the extent those forms contain the information required hereunder. Representatives of the Agency shall be entitled to enter the Housing Project, upon at least seventy-two (72) hours prior written notice, to monitor compliance with this Agreement, to inspect the records of the Housing Project, and to conduct an independent audit or inspection of such records. The Owner agrees to cooperate with the Agency in making the Housing Project available for such inspection or audit. Owner agrees to maintain records in businesslike manner, and to maintain such records for the term of this Agreement. 17. Compliance With Laws and DDA. The Owner shall cavy out the design, development and operation of the Housing Project in conformity with the DDA and all applicable laws, including all applicable state labor standards, City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. 18. Duty to Prevent Hazardous Material ontamination. During the development and operation of the Housing Project, the Owner shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment[ on or under the Site. Such precautions shall include compliance with all Governmental Requirementls with respect to Hazardous Materials. The Owner shall notify the Agency, and provide tc the Age Icy a copy or copies, of any notices of Attachment No. 10-6 • violation, notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements and reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous Materials and underground tanks, and the Owner shall report to the Agency, as soon as po}sible after each incident, any unusual, potentially important incidents in the event of a release of any Hazardous Materials into the environment. For purposes of this Section 18, "Governmental Requirements" shall mean all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the City, or any other political subdivision in which the Housing Project is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Agency, the Owner or the Housing Project. For purposes of this Section 18, "Hazardous Materials" means any substance, material, or waste which is or becomes, regulated by any local governmental authority, the State of California, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health • and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article I 1 of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. §1317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §§6901, et seq. (42 U.S.C. §6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§9601, et seq. Notwithstanding the foregoing, "Hazardous Materials" shall not include such products in quantities as are customarily used in the construction, maintenance, Rehabilitation or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Housing Project, including without limitation alcohol, aspirin, tobacco and saccharine. 19. Successors and Assigns. This Agreement shall run with the land, and all of the terms, covenants and conditions of this Agreement shall be binding upon the Owner and the Agency and the permitted successors and assigns of the Owner and the Agency. Whenever the term "Owner," or "Agency" is used in this Agreement, such term shall include any other successors and assigns as herein provided. 20. No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the Agency and its successors and assigns, and Owner and its successors and assigns, and no other person or persons shall have qny right of action hereon. • 21. Partial Invalidity. If any provision of this Agreement shall be declared invalid, Attachment No. 10-7 illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. 22. Governing Law. This Agreement and tete documents and other instruments given pursuant hereto shall be construed in accordance with a0d be governed by the laws of the State of California. Any references herein to particular statutes or regulations shall be deemed to refer to successor statutes or regulations, or amendments thereto. 23. Amendment. This Agreement may not be changed orally, but only by agreement in writing signed by Owner and the Agency. IN WITNESS WHEREOF, the parties hereto have executed this Regulatory Agreement effective as of the date and year set forth above. ATTEST: Margaret R. Monahan, Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Jon Goetz, Agency Counsel DEVELOPER: SEASONS SJC II, L.P., , a California limited partnership AGENCY: SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic Joe Sotos Chairman Attachment No. 10-8 Exhibit "A" LEGAL DESCRIPTION OF PROPERTY That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages I through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages I through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. • • Exhibit A-1 STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On before me, Notary Public, (Pont Naine of Notary is personally appeared ❑ personally known to me -or- F1 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 and 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer Tide(s) ❑ Parmer(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entdy(ies) DESCRIPTION OF ATTACHED DOCUMENT Tide Or Type Number Of Pages Date Of Documcm Signer(s) Other Than Named Above • 0 1 0 SUMMARY REPORT PURSUANT TO SECTION 334133 OF THE CALIFORNIA HEALTH AND SAFETY CODE ON A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY AND SEASONS SJC, L.P. The following Summary Report has been prepared pursuant to Section 33433 of the California Health and Safety Code. The report sets forth certain details of the proposed Disposition and Development Agreement (Agreement) between the San Juan Capistrano Redevelopment Agency (Agency) and Seasons SJC, L.P. (Developer). The purpose of the Agreement is to effectuate the San Juan Capistrano Central Project Area Redevelopment Plan (Redevelopment Plan). The Agreement requires the Agency to acquire the 1.2 acres of real property located at the northwest comer of Rancho Viejo Road and Paseo Espada (Site) in the City of San Juan • Capistrano (City), to convey the subject Site to the Developer and to provide financial assistance to the Developer in the form of a loan for the acquisition of the Site and a portion of the cost of the subsequent development of a thirty-eight unit senior citizens apartment complex (Project). The following Summary Report is based upon information contained within the Agreement, and is organized into the following seven sections: Salient Points of the Agreement: This section summarizes the major responsibilities imposed on the Developer and the Agency by the Agreement. If. Cost of the Agreement to the Agency: This section details the total cost to the Agency associated with implementing the Agreement. III. Estimated Value of the Interests to be Conveyed Determined at the Highest Use Permitted under the Redevelopment Plan: This section estimates the value of the interests to be conveyed determined at the highest use permitted under the Site's existing zoning and the requirements imposed by the Redevelopment Plan for the San Juan Capistrano Central Redevelopment Project Area. IV. Estimated Reuse Value of the Interests to be Conveyed: This section summarizes the valuation estimate for the Site based on thq required scope of development and the other conditions and covenants required by the'IAgreement. • OB100W1 UN P:Jkgb0 1B .001.024I1011 6 ATTACHMENT 5 V. Consideration Received and Comparison with the Established Value: This section describes the compensation to be received by [the Agency and explains any difference between the compensation to be received and the established highest and best use value of the Site. VI. Blight Elimination: This section describes the existing blighting conditions on the Site, and explains how the Agreement will assist in alleviating the blighting influence. VII. Conformance with the AB1290 Implementation Plan: This section describes how the Agreement achieves goals identified in the Agency's adopted AB1290 Implementation Plan. This report and the Agreement are to be made available for public inspection prior to the approval of the Agreement. SALIENT POINTS OF THE AGREEMENT A. Project Description The Agency entered into a Purchase Agreement, on September 1, 2006, with Ortega Land Company, LLC (Land Owner) to acquire the Site with Low and Moderate Income Housing Funds (Housing Funds). The Site totals approximately 52,490 square feet of vacant land area. The "Scope of Development" defined in the Agreement includes the following: One two-story senior citizen apartment complex, including thirty-eight (38) units in the following unit mix: 2. The Project will include 38 surface parking spaces for tenants as required by the City Planning Commission. 3. The 38 -unit Project will be restricted as follows: Number of Unit Size Units SF One -bedroom Units 30 552 Two-bedroom Units 8 778 Totals and Average 38 665 2. The Project will include 38 surface parking spaces for tenants as required by the City Planning Commission. 3. The 38 -unit Project will be restricted as follows: MIMI 1.SNNNCRJR:gm If?M 001 O4/1N12M Very -Low Low Income Income Totals One -bedroom Units 21 9 30 Two-bedroom Units 7 1 8 Totals and Average 28 { 10 38 MIMI 1.SNNNCRJR:gm If?M 001 O4/1N12M • 1 0 4. One (1) two-bedroom unit will be provided to a, property manager and restricted to a low income household, provided that the property manager meets the income requirements provided for the unit. 5. The 32 units per acre Project will not require a density bonus to meet City standards. The Scope of Development also defines the quality level and required scope for the off- and on- site improvements required to serve the Project. It is expected that the Project costs will be funded from the sources: 1. A conventional loan; 2. Low Income Housing Tax Credit (Tax Credit) equity as allocated by the California Tax Credit Allocation Committee (CTCAC); and 3. Deferred Developer fee. B. Developer Responsibilities The Agreement requires the Developer to accept the following responsibilities: is1. The Developer must purchase the Site from the Agency for $2,510,000 (Purchase Price), which equals approximately $48 per square foot of land area. 2. The Developer will pay its portion of the premium for the Title Policies and one-half of all other usual fees, charges, and costs which arise from Escrow. 3. Prior to conveyance of the Site, the Developer must provide the following items: a. Evidence of financing; b. Proof of insurance; C. The Promissory Note, Deed of Trust, Regulatory Agreement, and all other documents must be executed and delivered into Escrow; d. The cash portion of the dosing costs that the Developer is responsible for must be paid; e. The Title company must commit to issue the Lender's Title Policy to the Agency; f. The development plans must be approved and the land use approvals and entitlements required for the Project mutt be obtained; • s WIWI1.$NNNG Jkpbd 1po$$aol uz<nalzu$ g. A signed copy of the contract between the Developer and one or more general contractors for the construction of the Project must be provided to the Agency; and h. The Developer must not be in material default of any of its obligations set forth in the Agreement. 4. Prior to finalizing the Agency Loan amount, the Developer must provide the Agency with a Financing Plan that includes the following: a. An acquisition and development budget for the Project; b. A construction and permanent sources and uses analysis; C. A 30 -year cash flow analysis; d. An operating budget, including without Amitation the Operating Reserve and Capital Replacement Reserve; e. All fees and obligations proposed to be payable prior to the payment of the Agency Loan debt service; f. The proposed allocation of Residual Receipts between the repayment of the Agency Loan, other loans and retention by the Owner; g. The lien priority of all forms of financing; and h. All underlying assumptions for each of the above. 5. The Developer must approve the physical and environmental condition of the Site during the Due Diligence Period as well as indemnify the Agency from any legal action arising from the condition of the Site. 6. The Developer must develop the Site in accordance with the Scope of Development. 7. The Developer must enter into contract with one or more general contractors acceptable to the Agency; the Developer must commence with the development of the Project within the timeframe set forth in the Schedule of Performance; and the Developer is responsible for all costs related to construction and for obtaining necessary permits. 8. The Agreement requires the Developer to take out and maintain insurance coverage until the issuance of the Certificate of Completion. 9. It is the sole responsibility of the Developer to d termine if prevailing wages are required to be paid on the Project and effectuate complia� ce with the Prevailing Wage Law, if applicable. If prevailing wages are required to be paid in connection with the construction of the Project, as determined by litigation or a precedential determination of MIMI1SNJUNCPJR.Od INft W1.ox41I0PZ e 0 0 9 the Department of Industrial Relations, the Developer will seek allocation of additional Tax Credits to reflect the additional costs of construction of Project, and the Agency will increase the amount of the Agency Loan. 10. The Developer shall submit up to three applications to CTCAC for Federal 9% Tax Credits; however, the Developer will be entitled to one additional round if the first submission is made in 2007. If the Developer does not receive and allocation in the first three rounds, the Developer and Agency will meet to determine if: a. The Developer should continue to pursue the Federal 9% Tax Credits; b. The Developer should pursue an alternative financing strategy or multi -family housing bond financing and Federal 4% Tax Credits; or C. The Developer and Agency should terminate the Agreement. The Developer will also diligently pursue additional funding from the County of Orange and the Affordable Housing Program of the Federal Home Loan Bank. 11. The Developer must satisfy the following requirements in order for the Agency to approve the equity financing for the Tax Credit Funding: • a. The equity investment of the limited partners can not be less than the prevailing price for Tax Credits; b. The identity of the managing general partner, general partner, syndicator, or the initial limited partners of the limited partnership must be acceptable to the Agency; and C. The Developer is entitled to a developer fee from the financing as approved by the Agency, and the Developer acknowledges that the deferred developer fee may be required to be deferred until after the completion of the Project. 12. The Agreement requires the Developer to use, operate and maintain the Site as an affordable housing project to fulfill the following income and affordability restrictions over a 55 -year term: a. Twenty-eight (28) of the units must be rented to very -low income households. The tenants' monthly rent must not exceed one -twelfth (1/12) of thirty percent (30%) of fifty percent (50%) of Orange County Median income (Median) for two persons for a one -bedroom unit and three persons for a two-bedroom unit. b. Ten (10) of the units must be rented to low income households. The tenants' monthly rent must not exceed one-twelftk (1/12) of thirty percent (30%) of sixty percent (60%) of Orange County Median Income for two persons for a one - bedroom unit and three persons for a twb-bedroom unit. • J MIMI1,SWUN P:JR:pW 190&5.0p1,024/iN12U6 C. One (1) unit may be reserved for the on-site property manager, provided the property manager meets the income requirements provided for the unit. d. The Developer will make available, restrict, and rent to ensure the continued affordability of each unit for a 55 -year affordability period. 13. The Developer will be responsible for the selection of tenants for the Project in compliance with the criteria set forth in the Regulatory Agreement and Management Plan. 14. The Developer will restrict occupancy of all units to Senior Citizens and Qualified Permanent Residents. At least one resident in each dwelling must be a Senior Citizen. 15. The Developer will comply with all recordkeeping and monitoring requirements set forth in Health and Safety Code Section 33418, and will annually complete and submit to the Agency a report, prior to April 15 each year, highlighting the tenant information, bedroom count and monthly rents. 16. The Developer must submit to the Agency an annual operating budget for the Project for approval. This budget must include but not limited to the following: a. The Developer must set aside $250 per unit, or such larger amount as may be required by CTCAC or a Project lender, from the gross rents received from the Project into a separate interest-bearing trust account in the name of the Developer (Capital Replacement Reserve). This amount will be adjusted annually by the Consumer Price Index. b. An Operating Reserve deposit to replenish any prior withdrawals. The beginning balance of the Operating Reserve fund should be at least $71,000 or such larger amount as may be required by Tax Credit Allocation Committee (TCAC) or another lender. 17. During the entire 55 -year affordability period, the Developer shall provide activities and programs appropriate to the needs of the residents of the Project, with the selection of such activities and programs to be detemnined by the Developer in collaboration with the residents of the Project and the adjacent senior housing development owned by an affiliate of the Developer. The specific types of social services to be provided must be submitted to and approved by the Agency. 18. No voluntary or involuntary successor in interest of the Developer can acquire the rights set forth in the Regulatory Agreement. in addition, the Developer can not sell or transfer the Project without the written approval of the Agency, unless the Developer is selling or transferring the Project to: a. Multi -Housing Investments, LLC, Simpson Housing, LLLP, Simpson Housing Solutions, LLC; or WW11SNJUNCPJRJbd 1B 5W102411WI? • b. An entity which has Simpson Entity as a general partner, managing member or controlling shareholder; or C. Any of which entity's partners, members or controlling shareholders has as its general partner, managing member or controlling shareholder a Simpson Entity or an entity in which a Simpson Entity is a controlling person; or d. A non-profit general partner at the end of the fifteen -year tax credits initial compliance period. 19. The following summarizes the schedule the Developer must meet: a. Construction must commence within one hundred fifty (150) calendar days after Federal 9% Tax Credit award; if readiness points are requested, otherwise no later than 270 days after Federal 9% Tax Credit award; and b. Construction must be completed within two calendar years after commencement of construction. C. Agency Responsibilities The Agreement imposes the following responsibilities on the Agency: • 1. The Agency will convey the Site in "as is" physical and environmental condition to the Developer for $2,510,000. 2. The Agency will pay its portion of the premium for the Title Policies, and the documentary transfer taxes due with respect to the Conveyance of the Site, and one-half of all other usual fees, charges, and costs which arise from Escrow. 3. Prior to conveyance of the Site, the Agency must provide the following items: a. The Grant Deed and the Regulatory Agreement and all other documents must be executed and delivered into Escrow; and b. The Agency must not be in material default of any of its obligations set forth in the Agreement. 4. The Agency will provide not less than $3,394,000, or $89,300 per unit, and not more than $4,900,000, or $128,900 per unit, to the Developer in the form of a loan (Agency Loan) subject to the terms and conditions of the regulatory agreement. The exact amount of the Agency Loan will be determined in accordance with an economic analysis of the Project prior to the Closing and in connection with the Agency's approval of the Financing Plan. • 061001, SHJUN JRQW ,sms.am.02u,a1ao6 5. The Agency will not be obligated to loan more of its Low and Moderate Income Housing Funds than allowed by law; however, any addi)ional funds necessary to make the Agency Loan will be provided from other funds of the Agency or grants that the Agency receives. 6. The following describes the use and disbursement of the Agency Loan: a. The first payment will be disbursed as a credit for the Purchase Price of the Site; b. A second payment will be disbursed to pay for the cost of governmental permits and fees required to construct the Project; C. The third payment will be disbursed, concurrently with the Agency's Conveyance of the Site to the Developer, for the payment of or reimbursement for the Developer's predevelopment expenses; and d. If any Agency Loan proceeds remain after the payments noted above, the proceeds will be disbursed for the costs of construction, upon delivery of contractor invoices to the Agency. Should the Developer determine that prevailing wages are required to be paid in connection with the construction of the Project, the Agency will increase the amount of the Agency Loan to the amount required to comply with the Prevailing Wage Law. a. The Agency Note will have the following terms: a. The annual payments will be equal to fifty percent (50%) of the Residual Receipts from the operation of the Project, shall be delivered to the Agency on or before ninety days after the end of the Developer's fiscal year until the Note Amount, and all unpaid interest has been repaid in full, b. The Agency Note will accrue interest at a 3% compounded interest rate and will accrue interest over the 55 -year term. 9. The affordability covenants will be subordinated to financing placed on the Project in the event that the Agency finds that financing for the Project is not reasonably available without subordination. In that event, the Agency shall make the affordable housing covenants set forth in this Agreement and the Regulatory Agreement junior and subordinate to the deeds of trust and other documents required in connection with the approved construction and permanent financing for the Project. 0510011 9dJUROR:JR:0b0 19 5.p'J1.02G1011M U 0 COST OF THE AGREEMENT TO THE AGENCY The costs incurred by the Agency to implement the Agreement are estimated as follows: Site Acquisition Costs $2,510,000 Financial Assistance 884,000 - 2,393,000 Agency Expenditures Attorney Fees 10,000 Appraisal Fee 4,000 CEQA Review 15,000 Bond Interest TBD Traffic Study 8,000 Phase I Environmental Study 1,000 Financial Consultant 9,000 Total Agency Costs $3,441,000 - $4,950,000 The Agency is providing assistance to the Project as a loan. The Agency Loan will be for a term of fifty-five (55) years from the date of the City issuance of a Certificate of Occupancy for the Project. it will bear interest at the rate of three percent (3%) per annum, compounded annually, commencing on the date of the Promissory Note. The Promissory Note will be payable from fifty percent (50%) of the Residual Receipts of the Project until the Project has been paid in full. • Therefore, the net cost of the Agreement to the Agency is $3.44 to $4.95 million less the Agency Loan repayments. 111. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN Section 33433 of the California Health and Safety Code requires the Agency to identify the value of the interests being conveyed at the highest use allowed by the Site's zoning and the requirements imposed by the Redevelopment Plan. The valuation must be based on the assumption that near-term development is required, but the valuation does not take into consideration any extraordinary use, quality and/or income restrictions that are being imposed on the development by the Agency. The General Plan designation for the Site is general commercial which provides for a variety of retail, office and service-oriented business activities. The zoning for the property is Planned Community (PC) and is controlled by the Comprehensive Development Plan (CDP -84-1). The Agency commissioned an appraisal to be conducted for the Site by Lidgard and Associates, Inc. According to the appraisal, dated May 25, 2006, th Punencumbered fee simple interest of the Site in as -is condition is valued at $2.51 million, or 48 per square foot of land area. • 08111IM5 JUNCP:JR: �soesom.mulatvns IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED Keyser Marston Associates, Inc. (KMA), the Agency's financial consultant, prepared a reuse valuation analysis, dated June 20, 2006, of the Project based on the financial terms and conditions imposed by the Agreement. The KMA analysis concluded that the fair reuse value of the Site is negative $884,000, which equates free land, plus $884,000 or $23,300 per unit, in direct financial assistance. However, the Developer estimated that the Project will require free land plus $2.39 million in direct financial assistance. This $1.51 million difference is caused by a variety of factors including: Higher than typical residential shelt costs provided by the Developer; Variances in the indirect and financing cost estimates; and 3. A lower tax credit equity estimate by the Developer due to a lower than typical tax credit yield rate and lower than current threshold basis limits assumptions. Due to the current environment of significant construction cost and interest rate increases, as well as potential changes in the tax credit program and preliminary nature of the construction drawings, the Agency has agreed to acquire the Site and then re-evaluate the financial assistance package prior to the Developer submitting the 2007 TCAC application. Therefore, depending upon future construction cost and interest rate increases, the total financial gap may range from $3.35 million to $5.02 million, or $88,200 to $132,100 per unit. As a result, it was determined that the Project will require free land plus $23,300 to $62,900 per unit in direct financial assistance. It should also be noted that if the Project is required to pay prevailing wages to contractors and subcontractors, the direct financial assistance may increase on a dollar for dollar basis. V. CONSIDERATION RECEIVED AND COMPARISON WITH THE ESTABLISHED VALUE The Agreement imposes extraordinary controls on the Project. Specifically, the Developer must construct and provide all of the units to very -low and low income senior citizen households. The extraordinary cost associated with these requirements reduces the value of the Site from $2.51 million at the highest use allowed by the Site's zoning and the requirements imposed by the Redevelopment Plan, to the established fair reuse value of negative $884,000 to $2.39 million. While the Agreement states that the Developer is to purchase the Site for $2.51 million, the Agency will not receive a cash payment. However, the 1,63.39 million to $4.90 million Agency Loan Includes a $2.51 million credit towards the Purch+ Price plus $884,000 to $2.39 million in direct financial assistance. Therefore, it is concluded Ithat the Agency is receiving the fair market value for the Site. 10 081001 t.3 NIUNCP:JR:p W 190l5.00tONtlOM2U0 0 1 0 LJ VI. BLIGHT ELIMINATION The Project includes the development of 38 residential units, all of which are subject to long- term income and affordability restrictions. In accordance with California Redevelopment Law, as portrayed in the California Health and Safety Codel Section 33433, the sale of property which results in the provision of housing for low or moderate income persons satisfies the blight elimination criteria imposed by Section 33433. Thus, the Project fulfills the blight elimination requirement. VII. CONFORMANCE WITH THE AB1290 IMPLEMENTATION PLAN The Project furthers the AB1290 Implementation Plan goals of meeting the Agency's inclusionary and replacement housing requirements imposed by the California Health and Safety Code. • 1t • 0911MI.5.SWNU01 ppG is xV,JRza RESOLUTION NO. CRA 06- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY AND SEASONS SJC, LP, AND MAKING CERTAIN FINDINGS IN CONNECTION THEREWITH WHEREAS, the San Juan Capistrano Redevelopment Agency (the "Agency") is engaged in activities necessary to carry out and implement the Redevelopment Plan for the Central Redevelopment Project (the "Project"); and WHEREAS, in order to carry out and implement such Redevelopment Plan the Agency proposes to enter into that certain Disposition and Development Agreement (the "Agreement") with Seasons SJC, LP, (the "Developer") for the development of certain property located within the Project Area at the northwest corner of Rancho Viejo Road and Paseo Espada in the City of San Juan Capistrano (the "Site"), all as described in the Agreement; and WHEREAS, the Developer desires to acquire the Site for the purpose of developing a housing project (the "Housing Development") on the Site, which will generally consist of a rental housing complex for senior citizens containing thirty-eight (38) units, with associated parking, landscaping and community facilities; and WHEREAS, the construction and operation of the Housing Development is intended to implement the Agency's goals and objectives under the Act to provide decent, safe and sanitary housing for persons of very low and lower income, and to increase, improve and preserve housing available at affordable housing cost to persons and families of very low and lower income, pursuant to the Redevelopment Plan and Health & Safety Code Sections 33334.2, et seq., and 33413; and WHEREAS, the Developer has submitted to the Agency and the City Council of the City of San Juan Capistrano (the "City Council") copies of the Agreement in a form executed by the Developer; and WHEREAS, pursuant to the Agreement, the Agency would sell the Site to the Developer, and the Developer would construct and operate the Development on the Site; and WHEREAS, the purchase price payable by Developer for the Site pursuant to the Agreement Is not less than the fair market value of the Site, as determined by an appraisal conducted by a state certified appraiser commissioned by the Agency; and WHEREAS, pursjuant to Section 33433 of the Community Redevelopment Law (California Health and Pafety Code Section 33000, et seq.), the Agency is ATTACHMENT • Ll �I • authorized, with the approval of the City Council after a duly noticed public hearing, to sell the Site for development pursuant to the Redevelopment Plan upon a determination by the Agency Board that the sale of the property will either assist in the elimination of blight or provide affordable housing for very low and lower income persons, that the consideration for such sale is not less than either the fair market value or fair reuse value of the Site in accordance with the covenants and conditions governing the sale and the development costs required thereof, and that the sale is consistent with the implementation plan which has been adopted by the Agency for the Project; and WHEREAS, a joint public hearing of the Agency and City Council on the proposed Agreement was duly noticed in accordance with the requirements of Health and Safety Code Sections 33431 and 33433; and WHEREAS, the proposed Agreement, and a summary report meeting the requirements of Health and Safety Code Section 33433, were available for public inspection prior to the joint public hearing consistent with the requirements of Health and Safety Code Section 33433; and WHEREAS, on November 7, 2006, the Agency and City Council held a joint public hearing on the proposed Agreement, at which time the Agency reviewed and evaluated all of the information, testimony, and evidence presented during the joint public hearing; and WHEREAS, all actions required by all applicable law with respect to the proposed Agreement have been taken in an appropriate and timely manner; and WHEREAS, the Agency has reviewed the summary required pursuant to Health and Safety Code Section 33433 and evaluated other information provided to it pertaining to the findings required pursuant to Health and Safety Code Section 33433; and WHEREAS, the City Council has previously determined, in its adoption of the ordinance approving the Central Redevelopment Project, that the Site was blighted; and WHEREAS, the Agreement would provide for the elimination of such blighting conditions by providing for the construction of a high quality affordable multifamily senior housing development on the Site; and WHEREAS, the Agreement would provide affordable housing for very low and lower income persons on the Site; and WHEREAS, the Agency has adopted an Implementation Plan pursuant to Health and Safety Code Section 33490, which specifically identifies the intent of the Agency to provide for the development of affordable housing for very low and lower income households; and WHEREAS, the[ Agreement will assist the Agency in meeting the objectives set forth in the Implementation Plan by providing for the development and operation of the Housing Development on the Site; and WHEREAS, the voters of the City have approved a ballot measure which provides that up to five percent of the housing units constructed in the City may be low rent housing projects as defined under Article XXXIV of the State Constitution; and WHEREAS, in the event that the Housing Development is constructed and restricted to very low and lower income tenants, less than five percent of the housing units constructed in the City will be low rent housing projects as defined under Article XXXIV of the State Constitution; and WHEREAS, a Mitigated Negative Declaration ("MND") was prepared for the Project pursuant to and in accordance with the California Environmental Quality Act (Public Resources Code Section 21000 et seq.) ("CEQA") and the Guidelines for Implementation of the California Environmental Quality Act (Title 14, California Code of Regulations, Sections 15000 et seq.) ("the CEQA Guidelines"); and WHEREAS, the Agency has duly considered all terms and conditions of the proposed Agreement and believes that the redevelopment of the Site pursuant thereto is in the best interests of the City of San Juan Capistrano and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. NOW, THEREFORE, BE IT RESOLVED that the Board of Directors of the San Juan Capistrano Community Redevelopment Agency, San Juan Capistrano, does hereby: Section 1. Each of the foregoing recitals is true and correct. Section 2. The Agency finds and determines that, based upon substantial evidence provided in the record before it, the consideration for the Agency's sale of the Site pursuant to the terms and conditions of the Agreement is not less than the fair market value of the Site, in accordance with covenants and conditions governing the sale, and the development costs required under the Agreement. Section 3. The Agency hereby finds and determines that the disposition of the Site pursuant to the Agreement will eliminate blight within the Project Area by providing for the proper reuse and redevelopment of a portion of the Project Area which was declared blighted for the reasons described above. Section 4. The Agency hereby finds and determines that the Agreement would provide affordable housing for very low and lower income persons on the Site. Section 5. The Agency hereby finds and determines that the Agreement is consistent with the provisions and goals of the Implementation Plan. Section 6. The Agency hereby determines that the Housing Development is permitted in accordance with Article XXXIV of the $tate Constitution. This Resolution is • hereby deemed to constitute final approval of a proposal which may result in housing assistance benefiting persons of low income, within the meaning of Health and Safety Code Section 36005. Section 7. The Agency hereby approves the Agreement, and authorizes and directs the Chairman of the Agency to execute the Agreement on behalf of the Agency. A copy of the Agreement when executed shall be placed on file in the office of the Agency Secretary. The Executive Director of the Agency, or his designee, is authorized to implement the Agreement and take all further actions and execute all escrow documents and other documents which are necessary or appropriate to carry out the Agreement. Section 8. An Initial Study and Mitigated Negative Declaration (MND) have been prepared in compliance with the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and City environmental procedures. The Draft MND was made available for a 20 -day public review period on October 13, 2006. The contents of the environmental document, including comments on the document and responses to the comments, have been considered in the various decisions on this project. On the basis of the entire environmental review record, the proposed project will either have a less than significant impact upon the environment or any identified impacts can be mitigated to a less than significant level. Additionally, there are no long-term environmental goals that would be compromised by the project nor cumulative impacts are anticipated in connection with the project. The mitigation measures have been incorporated into a Mitigation Monitoring and Reporting Program (MMRP). • Section 9. This Resolution shall take effect from and after its date of adoption. PASSED, APPROVED AND ADOPTED this 7th day of November, 2006, ATTEST: Margaret R. Monahan, Secretary U Joe Soto, Chairman 0 DISPOSITION AND DEVELOPMENT AGREEMENT by and between SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY and SEASONS SENIOR APARTMENTS II, L.P. 0 Table of Contents 0 Page 100. DEFINITIONS 200. SALE OF THE SITE TO OWNER.................................................................................. 201. Agreement to Purchase and Sell; Purchase Price....................................................................6 Agency Loan........................................................................................................................12 202. Escrow..........................................................................................................................6 302. 202.1 Costs of Escrow..............................................................................................................7 202.2 Escrow Instructions........................................................................................................7 Security for Agency Loan.....................................................................................................13 202.3 Authority of Escrow Agent.............................................................................................7 304. 202.4 Closing..........................................................................................................................8 202.5 Closing Procedure...........................................................................................................8 Subordination........................................................................................................................13 203. Review of Title.......................................................................................................................8 306. 204. Title Insurance........................................................................................................................9 205. Conditions of Closing.............................................................................................................9 OF THE HOUSING PROJECT....................................................................13 205.1 Agency's Conditions of Closing.....................................................................................9 407.1 205.2 Owner's Conditions of Closing....................................................................................10 206. Physical and Environmental Condition of the Site............................................................... 11 206.1 As -Is Condition; Exceptions.........................................................................................1 l 206.2 Physical and Environmental Investigation and Testing of Site....................................11 206.3 Release of Agency........................................................................................................ 11 206.4 Owner Precautions After Closing.................................................................................12 410. 206.5 Owner Indemnity ..........................................................................................................12 300. AGENCY FINANCIAL ASSISTANCE....................................................................................12 301. Agency Loan........................................................................................................................12 302. Repayment of Agency Loan.................................................................................................12 303. Security for Agency Loan.....................................................................................................13 304. Disbursement of Agency Loan.............................................................................................13 305. Subordination........................................................................................................................13 306. Assumption........................................................................................................................13 400. DEVELOPMENT OF THE HOUSING PROJECT....................................................................13 401. Development of the Housing Project....................................................................................13 402. Development Plans...............................................................................................................14 403. Construction Contract...........................................................................................................14 404. Timing of Development of the Housing Project...................................................................14 405. City and Other Governmental Permits..................................................................................14 406. Certificate of Completion.....................................................................................................15 407. Insurance........................................................................................................................15 407.1 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance ....15 407.2 Damage or Destruction Due to Cause Not Required to be Covered by Insurance ....... 16 408. Indemnity........................................................................................................................16 409. Entry by the Agency.............................................................................................................16 410. Compliance With Laws.........................................................................................................17 0 0 Table of Contents (continued) Page 411. Prevailing Wages..................................................................................................................17 500. FINANCING OF THE DEVELOPMENT OF THE HOUSING PROJECT..............................18 501. Agency Approval of Financing Plan.....................................................................................18 502. Financing Sources.................................................................................................................18 503. Tax Credit Equity..................................................................................................................19 504. Required Submissions...........................................................................................................19 505. Holder Performance of Development of the Housing Project..............................................19 506. Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure ...........................20 507. Failure of Holder to Complete Development........................................................................20 508. Right of Agency to Cure Mortgage or Deed of Trust Default..............................................21 509. Subordination of Affordability Covenants............................................................................21 600. OPERATION OF HOUSING 601. 602. 603. 604. 605. 606. 607. 608. 609. 610. 611. Number of Affordable Units.................................................................................................21 Operating Budget and Reserve.............................................................................................24 Duration of Affordability Requirements...............................................................................22 613. Selectionof Tenants..............................................................................................................22 Household Income Requirements.........................................................................................22 Prohibited Uses.....................................................................................................................25 AffordableRent....................................................................................................................22 615. MarketingProgram...............................................................................................................22 Design and Occupancy of Senior Units................................................................................23 Monitoring and Recordkeeping............................................................................................26 Relationship to Tax Credit Requirements.............................................................................23 617. Maintenance........................................................................................................................23 Management Plan; Property Management Capital Reserve Requirements .................. 23 24 612. Operating Budget and Reserve.............................................................................................24 613. Social Services......................................................................................................................25 614. Prohibited Uses.....................................................................................................................25 615. Non -Discrimination Covenants............................................................................................25 616. Monitoring and Recordkeeping............................................................................................26 617. Regulatory Agreement..........................................................................................................26 618. Inclusionary Housing Requirements.....................................................................................26 700. DEFAULT AND REMEDIES....................................................................................................27 701. Events of Default..................................................................................................................27 702. Remedies........................................................................................................................27 703. Force Majeure.......................................................................................................................27 704. Termination by Agency........................................................................................................27 705. Termination by the Owner....................................................................................................28 706. Attorneys' Fees.....................................................................................................................28 707. Remedies Cumulative...........................................................................................................29 708. Waiver of Terms and Conditions..........................................................................................29 800. GENERAL PROVISIONS Table of Contents (continued) 0 Page ........................................................................................29 801. Time......................................................................................................... 802. Notices......................................................................................................... 803. Representations and Warranties of Owner............................................................. 804. Agency Representations......................................................................................... 805. Limitation Upon Change in Ownership, Management and Control of the Owner 806. Non -Liability of Officials and Employees of Agency ........................................... 807. Relationship Between Agency and Owner............................................................ 808. Agency Approvals and Actions............................................................................. 809. Counterparts......................................................................................................... 810. Integration......................................................................................................... 811. Real Estate Brokerage Commission....................................................................... 812. Titles and Captions................................................................................................ 813. Interpretation......................................................................................................... 814. No Waiver......................................................................................................... 815. Modifications......................................................................................................... 816. Severability......................................................................................................... 817. Computation of Time............................................................................................. 818. Legal Advice......................................................................................................... 819. Time of Essence..................................................................................................... 820. Cooperation......................................................................................................... 821. Conflicts of Interest................................................................................................ .............29 .............29 .............29 .............30 .............30 .............32 .............32 .............32 .............32 .............32 .............33 .............33 .............33 .............33 .............33 .............33 .............33 .............33 .............34 .............34 .............34 0 0 DISPOSITION AND DEVELOPMENT AGREEMENT THIS DISPOSITION AND DEVELOPMENT AGREEMENT (the "Agreement") is entered into as of November 7, 2006 by and between the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership (the "Owner"). RECITALS A. The Agency has entered into a Purchase Agreement and Escrow Instructions with Ortega Land Company, LLC, dated November 7, 2006 (the "Purchase Agreement"), to acquire approximately 1.2 acres of real property located at the northwest corner of Rancho Viejo Road and Paseo Espada in the City of San Juan Capistrano (the "Site"). B. The Agency has established a Low and Moderate Income Housing Fund (the "Housing Fund") for the purpose of increasing, improving and preserving the community's supply of housing for low and moderate income persons at an affordable housing cost. The Site has been, or will be, purchased with Housing Fund money. C. By this Agreement, and subject to the terms and conditions herein, the Agency desires to acquire and convey the Site to the Owner, and to provide financial assistance to Owner in the form of a loan (the "Agency Loan") for the cost of the acquisition of the Site and a portion of the cost of development of an approximately thirty-eight (38) unit rental senior housing development thereon (the "Housing Project"). The Owner desires to acquire the Site with the assistance of the Agency and the Agency Loan, and to construct and operate the Housing Project thereon. D. It is the intent of the parties to maximize the leverage of Agency funds by making every effort to secure sources of non -local subsidies for the Housing Project. Accordingly, this Agreement requires the Owner to attempt to obtain federal 9% Tax Credits for the Housing Project (and provides for the parties to determine whether to pursue an alternate financing strategy if such federal 9% Tax Credits are not available). In addition to Tax Credits, the Agreement requires the Owner to also diligently pursue an allocation of funding for the Housing Project from the County of Orange and the Affordable Housing Program of the Federal Home Loan Bank. E. The conveyance of the Site, the making of the Agency Loan and the development and operation of the Housing Project pursuant to this Agreement is in the vital and best interest of the City and the health, safety and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. The income and rent restrictions provided for hereunder are intended to satisfy the requirements of Health and Safety Code Section 33413(b). NOW, THEREFORE, the parties hereto agree as follows: 100. DEFINITIONS "Act" means the Community Redevelopment Law of the State of California, Health and Safety Code Section 33000, et seg., as the same may from time to time be amended. "ADA" shall mean the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101, et seq., as the same may from time to time be amended "Affordability Period" shall mean the duration of the affordable housing requirements which are set forth in this Agreement and the Regulatory Agreement, as set forth in Section 602 hereof. "Affordable Rent" shall have the meaning set forth in Health and Safety Code Section 50053, as further defined in Section 605 hereof. "Agency" means the San Juan Capistrano Redevelopment Agency, a public body, corporate and politic. "Agency Loan" means the loan from the Agency to the Owner pursuant to Section 301 hereof. "Agreement" means this Disposition and Development Agreement between Agency and the Owner. "Annual Project Revenue" shall mean all gross income and all revenues of any kind from the Housing Project in a calendar year, including without limitation, Rent, Section 8 housing assistance payments, if any, late charges, vending machine income, and any other revenue's of whatever kind or nature from the Housing Project, except that interest on security deposits and required reserves, and the proceeds of loans, refinancings, condemnation, insurance claims, and partner capital contributions, shall not be considered Annual Project Revenue. "Best Knowledge" means the actual knowledge of the party's employees and agents who manage the Site or have participated in the preparation of this Agreement, and all documents and materials in the possession of such party, and shall not impose a duty of investigation. "Capital Replacement Reserve" means the account which is described in Section 611 hereof. "Certificate of Completion " means the document which evidences the Owner's satisfactory completion of the development of the Housing Project, as set forth in Section 406 hereof, substantially in the form of Attachment No. 9 hereto. "City" means the City of San Juan Capistrano, California, a California municipal corporation. The City is not a party to this Agreement and shall have no obligations hereunder. "Conditions Precedent " means the conditions precedent to the conveyance of the Site, as set forth in Sections 205.1 and 205.2 hereof. "Consumer Price Index" shall mean the Consumer Price Index published by the Bureau of Labor Statistics of the U.S. Department of Labor for Urban Wage Earners and Clerical Workers, Los Angeles -Riverside -Orange County, California (1982-84=100) "All Items." In the event the compilation and/or publication of the Consumer Price Index shall be transferred to any other governmental department, bureau or agency or shall be discontinued, then the index most nearly the same as the Consumer Price Index shall be used to make such calculation as determined by the Agency. "County" shall mean the County of Orange, California. 0 0 "Debt Service" means regularly scheduled payments of principal and interest made in a calendar year pursuant to the approved financing obtained for the development and ownership of the Housing Project which is senior in lien priority to the Agency Loan, but excluding payments made pursuant to the Promissory Note. "Default" means the failure of a party to perform any action or covenant required by this Agreement within the time periods provided herein following notice and opportunity to cure, as set forth in Section 701 hereof. "Deferred Developer Fees" shall mean any deferred developer fee allowable under the financing which has been approved by the Agency pursuant to Section 501 hereof. "Developer" means Simpson Housing Solutions, LLC, a Colorado limited liability company, and its permitted successors and assigns. "Development Plans" means those plans and drawings to be submitted to City for its approval, pursuant to Section 402 hereof. "Governmental Requirements" means all laws, ordinances, statutes, codes, rules, regulations, orders, and decrees of the United States, the state, the County, the City, or any other political subdivision in which the Housing Project is located, and of any other political subdivision, agency, or instrumentality exercising jurisdiction over the Owner or the Housing Project. "Hazardous Materials" means any substance, material, or waste which is or becomes regulated by any local governmental authority, the County, the State of California, regional governmental authority, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 e1 seq. (42 U.S.C. §6903) or (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq. Notwithstanding the foregoing, "Hazardous Materials" shall not include such products in quantities as are customarily used in the construction, maintenance, development or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Housing Project, including without limitation alcohol, aspirin, tobacco and saccharine. "Housing Fund" means the Agency's Low and Moderate Income Housing Fund, established 0 0 pursuant to Health and Safety Code Section 33334.3 "Housing Project" means the multifamily apartment complex to be developed and operated by the Owner as provided herein. "Housing Units" means the individual apartment units within the Housing Project to be developed and operated by the Owner. "Legal Description" means the description of the Site which is attached hereto as Attachment No. 1 and incorporated herein. "Lender" means each of the responsible financial lending institutions or persons or entities approved by the Agency in its reasonable discretion, which provide construction loans or permanent loans for the development or operation of the Housing Project, as set forth in Section 501 hereof. "Lender's Title Policy" means the policy of title insurance to be issued to the Agency pursuant to Section 204 hereof. "Lower Income Household" shall mean a household earning not greater than that percentage of Orange County area median income, adjusted for household size, which is set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50079.5. "Management Plan" is defined in Section 610 hereof. "Marketing Program" is defined in Section 606. "Notice" shall mean a notice in the form prescribed by Section 802 hereof. "Operating Expenses" shall mean actual, reasonable and customary (for comparable affordable senior rental housing developments in Orange County) costs, fees and expenses directly incurred, paid, and attributable to the operation, maintenance and management of the Housing Project in a calendar year, which are in accordance with the Operating Budget approved by the Agency pursuant to Section 612 hereof, including: painting, cleaning, repairs, alterations, landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal property taxes, assessments, insurance, security, advertising and promotion, janitorial services, cleaning and building supplies, purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings which are not paid from the capital replacement reserve, fees and expenses of property management, fees and expenses of accountants, attorneys and other professionals, the cost of social services in accordance with Section 613 hereof, repayment of any completion or operating loans made to Owner by its partners or the Developer, and other actual, reasonable and customary operating costs and capital costs which are directly incurred and paid by the Owner, but which are not paid from the Operating Reserve or other reserve accounts. The Operating Expenses shall not in any event include expenses not related to the operation of the Housing Project, including without limitation, depreciation, amortization, and accrued principal and interest expense on deferred payment debt. "Operating Reserve" means the account which is described in Section 612 hereof. "Outside Date" is defined in Section 202.4 hereof. 4 0 0 "Owner" means Seasons Senior Apartments II, L.P., a California limited partnership, and its permitted successors and assigns. "Owner's Title Policy" means the policy of title insurance to be issued to the Owner pursuant to Section 204 hereof. "Partnership Agreement" means the agreement which sets forth the terms of the limited partnership formed by Owner to be the assignee of Owner's interests hereunder, as such agreement may be amended from time to time. "Property Manager" means the manager of the Housing Project, as set forth in Section 610 hereof. "Purchase Agreement" means the Purchase Agreement and Escrow Instructions between the Agency and Ortega Land Company, LLC, dated November 7, 02006; as such agreement may be amended. "Purchase Price" means the price to be paid by Owner for the Conveyance of the Site, as provided in Section 201 hereof. "Qualified Permanent Residents" is defined in Section 607. "Redevelopment Plan" means the redevelopment plan for the Agency's Central Redevelopment Project, as it may be amended from time to time. "Regulatory Agreement" shall mean the Regulatory Agreement which is to be recorded as an encumbrance to the Housing Project in a form which is attached hereto as Attachment No. 10 and incorporated herein, in accordance with Section 617 hereof. "Rent" shall mean the total of monthly payments by the tenants of a Housing Unit for use and occupancy for the Housing Unit and facilities associated therewith, including a reasonable allowance for utilities for an adequate level of service, as defined in 25 California Code of Regulations §6918. "Reserve Deposits" shall mean any payments to the Capital Replacement Reserve account and Operating Reserve account pursuant to Sections 611 and 612 hereof. "Residual Receipts" shall mean, for each calendar year, Annual Project Revenue less the sum of (i) Operating Expenses, (ii) Debt Service, (iii) Reserve Deposits, (iv) Deferred Developer Fees, and (v) a partnership management fee to the managing general partner of Owner, and/or a general partner asset management fee payable to one or more of the general partners of the Owner, and/or a limited partner asset management fee payable to one or more of the limited partners of Owner, and an annual audit fee, in such amounts which are set forth in the Financing Plan which is approved by the Agency; provided, however, that if such calculation results in a negative number, Residual Receipts shall be zero for that year. "Schedule of Performance" means that certain Schedule of Performance attached hereto as Attachment No. 7 and incorporated herein, which sets forth the time for performing the various obligations of this Agreement. 0 "Scope of Development" means that certain Scope of Development attached hereto as Attachment No. 8 and incorporated herein, which describes the scope, amount, and quality of the development of the Housing Project by the Owner pursuant to the terms and conditions of this Agreement. "Senior Citizens" is defined in Section 607. "Site" means that certain approximately 1.2 acres of real property located at the northwest comer of Rancho Viejo Road and Paseo Espada in the City, as described in the Legal Description and depicted on the Site Map. "Site Map" means the map of the Housing Project which is attached hereto as Attachment No. 2 and incorporated herein. "Substantial Damage" is defined in Section 407.2 hereof. "Tax Credits" shall mean Low Income Housing Tax Credits granted pursuant to Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Sections 50199, et seq. "Tax Credit Rules" means Section 42 of the Intemal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq., as the foregoing may be amended from time to time, and the rules and regulations implementing the foregoing. "Tax Credit Regulatory Agreement" shall mean the regulatory agreement which may be required to be recorded against the Housing Units with respect to the issuance of Tax Credits, as set forth in Section 608 hereof. "TCAC" means the California Tax Credit Allocation Committee, the allocating agency for Tax Credits in California. "Very Low Income Household" shall mean a household earning not greater than the applicable percentage of Orange County area median income, adjusted for household size, as set forth by regulation of the California Department of Housing and Community Development, pursuant to Health and Safety Code Section 50105. 200. SALE OF THE SITE TO OWNER 201. Agreement to Purchase and Sell; Purchase Price. The Agency agrees to acquire the Site pursuant to the terms of the Purchase Agreement and to sell the Site to the Owner, and the Owner agrees to purchase the Site from the Agency, in accordance with and subject to all of the terms, covenants, and conditions of this Agreement, for the sum of Two Million Five Hundred Ten Thousand Dollars ($2,510,000) (the "Purchase Price"). The Purchase Price is equal to or greater than the fair market value of the Site, as determined by an appraisal performed by a certified appraiser. 202. Escrow. Within the time set forth in the Schedule of Performance, the Parties shall open escrow ("Escrow") with First American Title Company in its Los Angeles County office or with another escrow company mutually satisfactory to both Parties (the "Escrow Agent'). 6 202.1 Costs of Escrow. Owner and Agency shall each pay their portion of the premium for the Title Policies as set forth in Section 204 hereof, the Agency shall pay the documentary transfer taxes due with respect to the Conveyance of the Site, and the parties shall each pay one-half of all other usual fees, charges, and costs which arise from Escrow. 202.2 Escrow Instructions. This Agreement constitutes the joint escrow instructions of Owner and Agency, and Escrow Agent to whom these instructions are delivered is hereby empowered to act under this Agreement. The Parties hereto agree to execute and deliver such documents (in recordable form as required), pay or deposit such funds, and to do all such acts consistent with their respective obligations hereunder as may be reasonably necessary to close this Escrow in the shortest possible time, and in any event on or before the date set forth in the Schedule of Performance. All funds received in the Escrow shall be deposited with other escrow funds in a general escrow account(s) and may be transferred to any other such escrow trust account in any State or National Bank doing business in the State. All disbursements shall be made by check from such account. If in the opinion of Escrow Agent or either Party it is necessary or convenient in order to accomplish the Closing of this transaction, such Party may require that the Parties sign supplemental escrow instructions; provided that if there is any inconsistency between this Agreement and the supplemental escrow instructions, then the provisions of this Agreement shall control. The Parties agree to execute such other and further documents as may be reasonably necessary, helpful or appropriate to effectuate the provisions of this Agreement. Escrow Agent is instructed to release Agency's and Owner's escrow closing statements to both Parties. 202.3 Authority of Escrow Agent. Escrow Agent is authorized to, and shall: (a) Pay and charge the Agency and Owner for their portions of the premium of the Title Policies and any endorsements thereto as set forth in Section 204 and any amount necessary to place title to the Site in the Condition of Title provided for in Section 203 of this Agreement. (b) Pay and charge Agency and Owner for any escrow fees, charges, and costs payable in accordance with Section 202.1 of this Agreement. (c) Disburse funds and deliver and record the Grant Deed when both the Owner's Conditions Precedent and the Agency's Conditions Precedent have been fulfilled or waived in writing by the benefited Party or Parties. (d) Do such other actions as necessary, including, without limitation, obtaining the Title Policies, to fulfill its obligations set forth in this Agreement and to close the transactions contemplated hereby. (e) Within the discretion of Escrow Agent, direct the Agency and the Owner to execute and deliver any instrument, affidavit, and statement, and to perform any act reasonably necessary to comply with the provisions of FIRPTA and any similar state act and regulation promulgated thereunder. Agency agrees to execute a Certificate of Non -Foreign Status by individual transferor and/or a Certification of Compliance with Real Estate Reporting Requirement of the 1986 Tax Reform Act as may be required by Escrow Agent, on the form to be supplied by Escrow Agent. (f) Prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099-5 form, and be responsible for withholding taxes, if any such forms are provided for or required by law. 0 0 202.4 Closing. The Conveyance of the Site shall close (the "Closing") within thirty (30) business days after the Parties' satisfaction (or written waiver, as the case may be) of all of the Agency's and Owner's Conditions Precedent to Closing as set forth in Section 205 hereof, and in no event later than the latest date for closing applicable to the Tax Credit allocation for the Housing Project, if an allocation is obtained (the "Outside Date"). The "Closing" shall mean the time and day the Grant Deed is filed for record with the County Recorder. The "Closing Date" shall mean the day on which the Closing occurs. follows: 202.5 Closing Procedure. Escrow Agent shall close the Escrow for the Site as (a) Record the Grant Deed, Deed of Trust and Regulatory Agreement; (b) Deliver to the Agency the Promissory Note; (c) Deliver and record any loan or financing documents as may be requested by the Owner or its construction lender (if applicable); (d) Instruct the Title Company to deliver the Owner's Title Policy to the Owner and the Lender's Title Policy to the Agency; (e) File any informational reports required by Internal Revenue Code Section 6045(e), as amended, and any other applicable requirements; and (f) Deliver the FIRPTA Certificate, if any, to the Owner; and (g) Forward to both the Owner and the Agency a separate accounting of all funds received and disbursed for each Party and copies of all executed and recorded or filed documents deposited into Escrow, with such recording and filing date and information endorsed thereon. 203. Review of Title. Within the time set forth in the Schedule of Performance, the Agency shall cause First American Title Company or another title company mutually agreeable to both parties (the "Title Company"), to deliver to the Owner a preliminary title report or reports (collectively, the "Title Report") with respect to the title to the Site, together with legible copies of the documents underlying the exceptions ("Exceptions") set forth in the Title Report. The Owner shall have the right to reasonably approve or disapprove the Exceptions; provided, however, that the Owner hereby approves the following Exceptions: (a) The Redevelopment Plan, and (b) The lien of any non -delinquent property taxes and assessments (to be prorated as of the Closing Date). The Owner shall have thirty (30) days from the date of its receipt of the Title Report to give written Notice to the Agency and Escrow Agent of the Owner's approval or disapproval of any of such Exceptions set forth in the Title Report, within its reasonable discretion. Owner's failure to provide Notice of its approval of the Title Report within such time limit shall be deemed approval of the Title Report. If the Owner delivers Notice to the Agency of its disapproval of any Exceptions in the Title Report, the Agency shall have the right, but not the obligation, to elect to remove any disapproved Exceptions within thirty (30) days after receiving written Notice of the Owner's disapproval or to deliver Notice to the Owner providing assurances satisfactory to the Owner within 0 0 said time period that such Exception(s) will be removed on or before the Closing. If the Agency cannot or does not elect to remove any of the disapproved Exceptions within that period, the Owner shall have fifteen (15) days after the expiration of such thirty (30) day period to either give the Agency written Notice that the Owner elects to proceed with the purchase of the Site subject to the disapproved Exceptions or to give the Agency written Notice that the Owner elects to terminate this Agreement and the Owner's failure to give timely written Notice shall be deemed as an election to terminate this Agreement. Fee simple title subject only to the Exceptions to title approved by the Owner as provided herein shall hereinafter be referred to as the "Condition of Title." The Owner shall have the right to approve or disapprove any further Exceptions reported by the Title Company after the Owner has approved the Condition of Title for the Site (which are not created by the Owner). The Agency shall not voluntarily create any new exceptions to title following the Date of Agreement. 204. Title Insurance. Concurrently with recordation of the Grant Deed conveying title to the Site to the Owner, the Title Company shall (a) issue to the Owner, at the Owner's election, a CLTA or ALTA owner's policy of title insurance (the "Owner's Title Policy"), together with such endorsements as are reasonably requested by the Owner, insuring that the title to the conveyed Site is vested in the Owner in the Condition of Title approved by the Owner as provided in Section 203 of this Agreement, and (b) issue to the Agency an ALTA lender's policy of title insurance, together with such endorsements as are reasonably requested by the Agency (the "Lender's Title Policy") insuring the priority of the lien of the Agency's Deed of Trust (the Owner's Title Policy and the Lender's Title Policy are referred to collectively herein as the "Title Policies"). The Title Company shall provide the Agency with a copy of the Title Policies. The Agency shall pay for the portion of the Owner's Title Policy equal to the premium for a CLTA owner's policy in the amount of the Purchase Price, and Owner shall pay the premium for the Lender's Title Policy, any additional costs of the Owner's Policy, including the cost of any endorsements thereto, and the cost of a survey (if required by the Owner and/or the Title Company). 205. Conditions of Closing. The Closing of the Conveyance of the Site is conditioned upon the satisfaction (or written waiver by the benefited Party or Parties in its or their sole and absolute discretion) of the following terms and conditions within the times designated below: 205.1 Agency's Conditions of Closing. The Agency's obligation to proceed with the Closing of the Conveyance of the Site is subject to the fulfillment or waiver by Agency of each and all of the conditions precedent (a) through (i), inclusive, described below (the "Agency's Conditions Precedent"), which are solely for the benefit of the Agency, and which shall be fulfilled or waived by the time periods provided for herein (provided, however, that if the reason for the failure of any of the following conditions is due to an Agency Default, such failure shall not be deemed to constitute the failure of the Agency's Conditions Precedent): (a) No Default. At the Closing, the Owner shall not be in material Default in any of its obligations set forth in this Agreement and all representations and warranties of Owner contained herein shall be true and correct in all material respects. (b) Execution of Documents. The Owner shall have executed the Promissory Note, Deed of Trust, Regulatory Agreement and any other documents required to be executed by the Owner hereunder, and delivered such documents into Escrow. (c) Payment of Funds. Prior to the Close of Escrow, the Owner shall have paid the cash portion of the closing costs that is the Owner's responsibility. 0 0 (d) Lender's Title Policy. The Title Company shall have unconditionally committed to issue the Lender's Title Policy to the Agency, in accordance with Section 204 hereof. (e) Design Approvals. Owner shall have obtained approval of the Development Plans required for the Housing Project as described in Section 402 hereof. (f) Land Use Approvals. Owner shall have obtained approval of each and all of the land use approvals for the Housing Project and the Site as described in Section 405 hereof. (g) Construction Contract. Owner shall have provided to the Agency a signed copy of the contract between the Owner and one or more general contractors for the construction of the development, certified by the Owner to be true and correct copies thereof, and the Agency shall have approved such contractor or contractors. (h) Insurance. The Owner shall have provided proof of insurance as required by Section 407 hereof. (i) Financing. The Agency shall have approved the Financing Plan as provided in Section 501 hereof, the construction financing and equity contributions which are required for the acquisition of the Site and the development of the Housing Project shall be available to the Owner, and all Tax Credits required for the development of the Housing Project shall have been allocated. To the extent said financing consists of a third party loan or loans, said loan or loans have closed and funded or shall be ready to close and fund upon the Closing. 205.2 Owner's Conditions of Closing. Owner's obligation to proceed with the purchase of the Site is subject to the fulfillment or waiver by Owner of each and all of the conditions precedent (a) through (g), inclusive, described below (the "Owner's Conditions Precedent"), which are solely for the benefit of Owner, and which shall be fulfilled or waived by the time periods provided for herein (provided, however, that if the reason for the failure of any of the following conditions is due to a Owner Default, such failure shall not be deemed to constitute the failure of the Owner's Conditions Precedent): (a) No Default. At the Closing, the Agency shall not be in material Default in any of its obligations set forth in this Agreement and all representations and warranties of Agency contained herein shall be true and correct in all material respects. (b) Execution of Documents. The Agency shall have executed the Grant Deed and the Regulatory Agreement and any other documents required to be executed by the Agency hereunder, and delivered such documents into Escrow. (c) Owner's Title Policy. The Title Company shall have unconditionally committed to issue the Owner's Title Policy to the Owner, in accordance with Section 204 hereof. (d) Design Approvals. Owner shall have obtained approval of the Development Plans required for the Housing Project as described in Section 402 hereof. (e) Land Use Approvals. Owner shall have obtained approval of each and all of the land use approvals for the Housing Project and the Site as described in Section 405 hereof. (t) Environmental Condition. Owner shall not have elected to terminate this Agreement due to the environmental condition of the Site pursuant to Section 206 hereof. 10 C] (g) Financing. The Owner shall have approved the amount of the Agency Loan as determined in the Financing Plan, construction financing and equity contributions which are required for the acquisition of the Site and the development of the Housing Project shall be available to the Owner, and all Tax Credits required for the development of the Housing Project shall have been allocated. To the extent said financing consists of a third party loan or loans, said loan or loans have closed and funded or shall be ready to close and fund upon the Closing. 206. Physical and Environmental Condition of the Site. 206.1 As -Is Condition; Exceptions. Except as set forth herein, the Site shall be conveyed to the Owner in an "as is" physical and environmental condition, with no warranty, express or implied, by the Agency as to the condition of any existing improvements, the soil, its geology, the presence of known or unknown faults or Hazardous Materials or toxic substances, and it shall be the sole responsibility of the Owner at its expense to investigate and determine the physical and environmental conditions. If the physical or environmental condition is not in all respects entirely suitable for the use or uses to which the Site will be put, the Owner may terminate this Agreement pursuant to Section 704 hereof. If the Owner approves the physical and environmental condition of the Site and accepts the Conveyance of the Site, then it shall be the sole responsibility and obligation of the Owner to take such action as may be necessary to place the physical and environmental conditions of the Site in a condition entirely suitable for the purposes set forth in this Agreement. 206.2 Physical and Environmental Investigation and Testing of Site. The Owner shall have the right, at its sole cost and expense, subject to the requirements of the Purchase Agreement, to engage its own environmental consultant (the "Environmental Consultant") and other consultants to make such investigations of the Site as the Owner deems necessary, including any "Phase I" and/or "Phase Il" environmental investigations of the Site, soils, geotechnical and other testing of the Site, and the Agency shall promptly be provided a copy of all reports and test results provided to the Owner by the Environmental Consultant (collectively, the "Environmental Report"). The Owner shall reasonably approve or disapprove of the physical and environmental condition of the Site within the time set forth in the Schedule of Performance. The Owner's failure to deliver written Notice of its approval within such time limit shall be deemed disapproval of the physical and environmental condition of the Site. 206.3 Release of Agency. The Owner hereby waives, releases and discharges forever the Agency and the City, and their respective employees, officers, agents and representatives, from all present and future claims, demands, suits, legal and administrative proceedings and from all liability for damages, losses, costs, liabilities, fees and expenses, present and future, arising out of or in any way connected with the physical and environmental condition of the Site, any Hazardous Materials on or under the Site, or the existence of Hazardous Materials contamination due to the generation of Hazardous Materials from the Site, however they came to be placed there, except that arising out of the negligence or misconduct of the Agency or City or their respective employees, officers, agents or representatives. The Owner acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." I1 As such relates to this Section 206.3, the Owner hereby waives and relinquishes all rights and benefits which it may have under Section 1542 of the California Civil Code. 206.4 Owner Precautions After Closing. Upon the Closing, the Owner shall take all necessary but reasonable precautions to prevent the release into the environment of any Hazardous Materials which are located in, on or under the Site which have been conveyed to the Owner, except as may be provided otherwise by applicable Governmental Requirements. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. In addition, the Owner shall install and utilize such equipment and implement and adhere to such procedures as are consistent with commercially reasonable standards as respects the disclosure, storage, use, removal and disposal of Hazardous Materials. 206.5 Owner Indemnity. Upon the Closing, the Owner agrees to indemnify, defend and hold the Agency harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, reasonable attorneys' fees), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from the Site which occurs during the period of the Owner's ownership thereof, or (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials on, under, in or about, to or from, the Site which occurs during the period of the Owner's ownership of the Site. This indemnity shall include, without limitation, any damage, liability, fine, penalty, or expense arising from or out of any claim, action, suit or proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment. At the request of the Owner, the Agency shall cooperate with and assist the Owner in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that the Agency shall not be obligated to incur any expense in connection with such cooperation or assistance. 300. AGENCY FINANCIAL ASSISTANCE 301. Agency Loan. The Agency hereby agrees to loan to Owner an amount not less than Three Million Three Hundred Ninety -Four Thousand Dollars ($3,394,000) (the "Agency Loan"), subject to the terms and conditions set forth in this Agreement, and subject further to the terms and conditions set forth within the documents and instruments executed by the Owner in connection with this transaction. The exact amount of the Agency Loan shall be reasonably determined by the Agency in accordance with an economic analysis of the Housing Project to be performed by the Agency prior to Closing in connection with the Agency's approval of the Financing Plan, as set forth in Section 501 hereof. In no event, however, shall the Agency be obligated to approve an Agency Loan amount of more than Four Million Nine Hundred Thousand Dollars ($4,900,000). The amount of the Agency Loan may also be increased as provided in Section 411 hereof. The Agency shall not be obligated to loan more of its Low and Moderate Income Housing Funds than the amount permitted pursuant to Health and Safety Code Section 33334.4(b). Any additional funds necessary to make the Agency Loan shall be provided from other funds of the Agency, or grants which the Agency receives. 302. Repayment of Agency Loan. The Owner's obligation to repay the Agency Loan shall be set forth in the Promissory Note in the form of Attachment No. 4 attached hereto, which is 12 0 9 incorporated herein. The Promissory Note shall be for a term of fifty-five (55) years from the date of the City's issuance of a certificate of occupancy for the Housing Project, and shall bear interest at the rate of three percent (3%) per annum, compounded annually, commencing upon the date of the Promissory Note. The Promissory Note shall be payable from fifty percent (50%) of the "Residual Receipts" of the Housing Project, after payment of (i) Operating Expenses, (ii) Debt Service which is senior to the Promissory Note, (iii) deposits to required reserve accounts ("Reserve Deposits"), (iv) Deferred Developer Fee payments which are paid within ten years of completion of construction of the Housing Project, (v) a partnership management fee to the managing general partner of Owner, and/or a general partner asset management fee payable to one or more of the general partners of the Owner, and/or a limited partner asset management fee payable to one or more of the limited partners of Owner, and an annual audit fee, in such amounts which are set forth in the Financing Plan which is approved by the Agency, until the Promissory Note has been paid in full; provided, however, that if such calculation results in a negative number, Residual Receipts shall be zero for that year. In the event that the Owner obtains other approved financing from the County or other sources which also required payment from Residual Receipts, the Agency shall negotiate with such other lender to allocate the Residual Receipts to repayment of both loans in an amount proportionate to the relative amount of such loans or in another equitable manner mutually agreeable to the parties. The Owner shall annually, on or before March 31 of each year, commencing in the year after the issuance of the certificate of occupancy for the Housing Project, submit to the Agency a Residual Receipts Report, in the form attached hereto as Attachment No. 6 and incorporated herein, which shall provide the basis for the Owner's payment of Residual Receipts to the Agency. The Note shall be non-recourse to the Owner. 303. Security for Agency Loan. The Promissory Note shall be secured by a Deed of Trust to be recorded as an encumbrance to the Site owned by the Owner substantially in the form of Attachment No. 5 attached hereto, which is incorporated herein. 304. Disbursement of Agency Loan. The proceeds of the Agency Loan shall be disbursed first for the payment of the Purchase Price of the Site, second to pay for the cost of governmental permits and fees required in connection with the construction of the Housing Project, and third to pay for or reimburse the Owner for Owner's actually incurred predevelopment expenses, including architectural services, environmental studies, traffic studies, land appraisal, and land acquisition consultant fees, and governmental fees and permit costs, which shall be disbursed concurrently with the Agency's Conveyance of the Site to the Owner. In the event that there are any Agency Loan proceeds remaining after payment of the foregoing, such proceeds shall be disbursed for costs of construction of the Housing Project, conditioned upon delivery of contractor invoices to Agency and Agency approval of the items of construction for which such disbursement is requested. 305. Subordination. The Deed of Trust shall be made subordinate to the deed of trust for the primary construction financing which is approved by the Agency pursuant to Section 501 hereof. The lien priority of the Agency Deed of Trust and the other financing shall be as set forth in the Financing Plan which is approved by the Agency. 306. Assumption. The Promissory Note shall not be assumable by successors and assigns of Owner except for those successors approved or permitted pursuant to Section 805 hereof. 400. DEVELOPMENT OF THE HOUSING PROJECT 401. Development of the Housing Project. The Owner agrees to construct and develop the Housing Project substantially in accordance with the Scope of Development which is attached hereto as Attachment No. 8 and incorporated herein, all applicable local codes, development 13 0 0 standards, ordinances and zoning ordinances in effect at the time of project completion, and the Development Plans which are approved by the City pursuant to Section 402 hereof. The Housing Project shall generally consist of a multifamily apartment complex with thirty-eight (38) apartment units, a thirty-eight (38) space off-street parking lot, and associated landscaping and common areas. Any funds necessary to complete the development of the Housing Project shall be obtained by the Owner, in accordance with the Financing Plan approved by the Agency hereunder. 402. Development Plans. The Owner shall submit to the City such plans, materials and drawings describing the development of the Housing Project (collectively, the "Development Plans") which may be required by the City with respect to any permits and entitlements which are required to be obtained to develop the Housing Project. Owner, on or prior to the date set forth in the Schedule of Performance (subject to force majeure pursuant to Section 703 hereof), shall further submit to the City such plans for the development of the Housing Project as required by the City in order for Owner to obtain building permits for such development work. Within thirty (30) days after the City's disapproval or conditional approval of such plans, Owner shall revise the portions of such plans identified by the City as requiring revisions and resubmit the revised plans to the City. The City shall have all rights to review and approve or disapprove all Development Plans and other required submittals in accordance with the City Municipal Code, and nothing set forth in this Agreement shall be construed as the City's approval of any or all of the Development Plans. Any and all change orders or revisions required by the City and its inspectors which are required under the Municipal Code and all other applicable Uniform Codes (e.g. Building, Plumbing, Fire, Electrical, etc.) and under other applicable laws and regulations shall be included by the Owner in its Development Plans and other required submittals and shall be completed during the development of the Housing Project. The Agency and the City shall not be responsible either to the Owner or to third parties in any way for any defects in the Development Plans, nor for any structural or other defects in any work done according to the approved Development Plans, nor for any delays reasonably caused by the review and approval processes established by this Section 402. 403. Construction Contract. Owner shall enter into a contract with one or more general contractors reasonably acceptable to the Agency for the construction of the Housing Project. The construction contract(s) shall be reasonably acceptable to the Agency. The Agency's approval of the general contractor and the construction contract shall not be unreasonably withheld, conditioned or delayed. 404. Timing of Development of the Housing Project. The Owner hereby covenants and agrees to commence the development of the Housing Project within the time set forth in the Schedule of Performance, which is attached hereto as Attachment No. 7 and incorporated herein (subject to force majeure pursuant to Section 703 hereof). The Owner further covenants and agrees to diligently prosecute to completion the development of the Housing Project in accordance with the approved Development Plans and to file a Notice of Completion pursuant to California Civil Code Section 3093 within the time set forth in the Schedule of Performance. 405. City and Other Governmental Permits. Before commencement of the development of the Housing Project, the Owner shall secure or cause its contractor to secure any and all permits and land use entitlements which may be required by the City or any other governmental agency affected by such construction, including without limitation a General Plan Amendment to affordable family/senior housing designation, Architectural Control application, Zone Variance, and grading and building pen -nits. The Owner shall pay all necessary fees and timely submit to the City final drawings with final corrections to obtain such permits, and the staff of the Agency will, without obligation to incur liability or expense therefor, use its best efforts to expedite the City's issuance of building permits and certificates of occupancy for construction that meets the requirements of the 14 0 0 City Code, and all other applicable laws and regulations. 406. Certificate of Completion. Promptly after the completion of the development of the Housing Project in conformity with this Agreement (as reasonably determined by the Agency Executive Director or his or her designee), upon the written request of the Owner, the Agency shall furnish the Owner with a Certificate of Completion (substantially in the form attached hereto as Attachment No. 9) which evidences and determines the satisfactory completion of the development of the Housing Project in accordance with this Agreement. The issuance and recordation of the Certificate of Completion with respect to the Housing Project shall not supersede, cancel, amend or limit the continued effectiveness of any obligations relating to the maintenance, or uses, or payment of monies, or any other obligations, except for the obligation to complete the development of the Housing Project or applicable portion thereof as of the time of the issuance of the Certificate of Completion. 407. Insurance. The Owner shall take out and maintain or shall cause its contractor to take out and maintain until the issuance of the Certificate of Completion pursuant to this Agreement, (a) a comprehensive general liability policy in the amount of not less than Two Million Dollars ($2,000,000) combined single limit policy, (b) a comprehensive automobile liability policy in not less than the amount of One Million Dollars ($1,000,000) combined single limit, and (c) a policy of all-risk property insurance in an amount not less than one hundred percent (100%) of the full insurable value of the Housing Project owned by the Owner. The required amount of insurance shall be subject to increases as the Agency may reasonably require from time to time, but not more frequently than every twelve (12) months. Such policies shall protect the Owner and Agency from claims for such damages, and be issued by an insurance carrier qualified to do business in the State of California. Such policy or policies shall be written on an occurrence form. The Owner shall also furnish or cause to be furnished to the Agency evidence satisfactory to the Agency that Owner and any contractor with whom it has contracted for the performance of work on the Housing Project or otherwise pursuant to this Agreement carries workers' compensation insurance as required by law. Prior to the commencement of the construction of the Housing Project, the Owner shall furnish a certificate of insurance countersigned by an authorized agent of the insurance carrier setting forth the general provisions of the insurance coverage. This countersigned certificate shall name the Agency and its officers, agents, and employees as additionally insured parties under the policy, and the certificate shall be accompanied by a duly executed endorsement evidencing such additional insured status, which shall be provided as a separate endorsement attached to the certificate. The certificate and separate endorsement by the insurance carrier shall contain a statement of obligation on the part of the carrier to notify the Agency of any material change, cancellation or termination of the coverage at least ten (10) days in advance of the effective date of any such material change, cancellation or termination, and to notify the Agency within ten (10) days of Owner's failure to pay any premium when due. Coverage provided hereunder by the Owner shall be primary insurance and not be contributing with any insurance maintained by the Agency, and the policy shall contain such an endorsement. The insurance policy or the endorsement shall contain a waiver of subrogation for the benefit of the Agency. The required certificate shall be furnished by the Owner prior to the commencement of the development of the Housing Project. 407.1 Obligation to Repair and Restore Damage Due to Casualty Covered by Insurance. Subject to Section 407.2 below, if during the period of the development, any portion of the Housing Project shall be totally or partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against by Owner, Owner shall promptly proceed to obtain insurance proceeds and take all steps necessary to begin reconstruction and, immediately upon receipt of insurance proceeds, to promptly and diligently commence the repair or replacement of the Housing Project to substantially the same condition as the Housing Project is required to be 15 0 9 developed pursuant to this Agreement, if and to the extent the insurance proceeds are sufficient to cover the actual cost of repair, replacement, or restoration, and Owner shall complete the same as soon as possible thereafter so that the Housing Project can be occupied in accordance with this Agreement. Subject to force majeure delays pursuant to Section 703 hereof, in no event shall the repair, replacement, or restoration period exceed one (1) year from the date Owner obtains insurance proceeds unless Agency's Executive Director, in his or her reasonable discretion, approves a longer period of time. Agency shall cooperate with Owner, at no expense to Agency, in obtaining any governmental permits required for the repair, replacement, or restoration. If, however, the then - existing laws of any other governmental agencies with jurisdiction over the Housing Project do not permit the repair, replacement, or restoration, Owner may elect not to repair, replace, or restore the Housing Project by giving notice to Agency (in which event Owner will be entitled to all insurance proceeds but Owner shall be required to remove all debris from the applicable portion of the Housing Project) or Owner may reconstruct such other improvements on the site of the destroyed Housing Project as are consistent with applicable land use regulations and approved by the City, Agency, and the other governmental agency or agencies with jurisdiction. 407.2 Damage or Destruction Due to Cause Not Required to be Covered by Insurance. If during the period of construction any portion of the Housing Project is completely destroyed or substantially damaged by a casualty for which Owner is not required to (and has not) insured against, then Owner shall not be required to repair, replace, or restore such improvements and may elect not to do so by providing Agency with written notice of election not to repair, replace, or restore within ninety (90) days after such substantial damage or destruction. In such event, Owner shall concurrently repay to the Agency a pro rata portion of the Agency Loan attributable to the destroyed Housing Units. As used in this Section 407.2, "substantial damage" caused by a casualty not required to be (and not) covered by insurance shall mean damage or destruction which is fifteen percent (151/6) or more of the replacement cost of the improvements comprising the Housing Project. In the event Owner does not timely elect not to repair, replace, or restore the Housing Project as set forth in the first sentence of this Section 407.2, Owner shall be conclusively deemed to have waived its right not to repair, replace, or restore the Housing Project and thereafter Owner shall promptly commence and complete the repair, replacement, or restoration of the damaged or destroyed Housing Project in accordance with Section 407.1 above. 408. Indemnity. Owner shall, at its expense, defend, indemnify, and hold harmless the Agency and its officers, agents, employees and representatives harmless from any and all losses, liabilities, claims, lawsuits, causes of action, judgments, settlements, court costs, attorneys' fees, and other legal expenses, costs of evidence of title, costs of evidence of value, and other damages of whatsoever nature arising out of or in connection with, or relating in any manner to any act or omission of Owner or its agents, employees, contractors and subcontractors of any tier and employees thereof in connection with or arising from Owner's performance or nonperformance of its obligations under this Agreement, Owner's ownership or operation of the Housing Project, or the development of the Housing Project, or challenges to the approval, validity, applicability, interpretation or implementation of this Agreement or the California Environmental Quality Act approvals made in connection therewith, except that arising from the negligence or misconduct of the Agency or its officers, agents, employees or representatives. 409. Entry by the Agency. Owner shall permit the Agency, through its officers, agents or employees, at all reasonable times, upon not less than three (3) days prior written notice from Agency to the Owner (but subject to tenants' rights of possession), to enter onto the Housing Project and inspect the work of development of the Housing Project to determine that the same is in conformity with the Development Plans and all the requirements hereof. The Agency shall conduct the entry and inspections in a manner that causes the least possible disturbance to the work in 16 0 0 progress or the operation of the Housing Project. If the Agency disturbs the Housing Project in the course of such entry and inspection, the Agency shall, following the entry and inspection, restore the Housing Project to the condition it was in immediately prior to the entry and inspection. Owner acknowledges that the Agency is under no obligation to supervise, inspect, or inform Owner of the progress of construction, and Owner shall not rely upon the Agency therefor. Any inspection by the Agency is entirely for its purposes in determining whether Owner is in compliance with this Agreement and is not for the purpose of determining or informing Owner of the quality or suitability of construction. Owner shall rely entirely upon its own supervision and inspection in determining the quality and suitability of the materials and work, and the performance of architects, subcontractors, and material suppliers. Agency's rights hereunder are subject to the rights of tenants in possession. 410. Compliance With Laws. The Owner shall cant' out the design, development and operation of the Housing Project in conformity with all applicable laws, including all applicable state labor standards, City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seg., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. The Owner shall pay prior to delinquency all ad valorem real estate taxes and assessments on the Housing Project, subject to the Owner's right to contest in good faith any such taxes, and to the Owner's rights to request exemption under California Revenue and Taxation Code Section 214. The Owner may apply for and receive any exemption from the payment of property taxes or assessments on any interest in or to the Housing Project without the prior approval of the Agency. 411. Prevailing Wages. Owner and its contractors and subcontractors shall comply with Labor Code Section 1720, et seq., and its implementing regulations, regarding the payment of prevailing wages (the "Prevailing Wage Law") with regard to the construction of the Housing Project and the development of the Site, to the extent such sections are applicable to the construction of the Housing Project and the development of the Site. Although the parties believe that the Prevailing Wage Law is not applicable herein because the Site is being sold to the Owner at its appraised fair market value, and because the Agency's participation in the Housing Project that would otherwise qualify as "paid for in whole or in part out of public funds" is public funding in the form of a below- market interest rate loan for a project in which occupancy of at least 40 percent of the units is restricted for at least 20 years, by regulatory agreement, to individuals or families earning no more than 80 percent of the area median income, pursuant to the exception set forth in Labor Code Section 1720(c)(6)(E), Owner shall be solely responsible for determining and effectuating compliance with the Prevailing Wage Law, and the Agency makes no representation as to the applicability or non - applicability of the Prevailing Wage Law to the Housing Project, or any part thereof. In the event that the parties later determine, as a result of the final resolution of pending litigation or a precedential determination of the Department of Industrial Relations, that prevailing wages are required to be paid in connection with the construction of the Housing Project and development of the Site, the Owner shall seek an allocation of additional Tax Credits to reflect the additional cost of construction of the Housing Project, and the Agency shall increase the amount of the Agency Loan to the amount required to comply with the Prevailing Wage Law. Owner releases from liability, and agrees to indemnify, protect, defend and hold harmless the Agency and its officers, employees, contractors and agents, with counsel reasonably acceptable to the Agency, from and against any and all loss, liability, damage, claim, cost, expense and/or "increased costs" (including reasonable attorneys fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction, and/or operation of the Housing Project, including, without limitation, any and all public works (as defined by applicable law), results or 17 0 0 arises in any way from any of the following: (1) the noncompliance by Owner of the Prevailing Wage Law; (2) the implementation of Labor Code Section 1781, as the same may be amended from time to time, or any other similar law; and/or (3) failure by Owner to provide any required disclosure or identification as required by Labor Code Section 1781, as the same may be amended from time to time, or any other similar law. It is agreed by the parties that, in connection with the development of the Housing Project, including, without limitation, any and all public works (as defined by applicable law), Owner shall bear all risks of payment or non-payment of prevailing wages under California law and/or the implementation of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. "Increased costs," as used in this Section 411, shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be amended from time to time. The foregoing indemnity shall survive termination of this Agreement and shall continue after completion of the development of the Housing Project by the Owner. 500. FINANCING OF THE DEVELOPMENT OF THE HOUSING PROJECT. 501. Agency Approval of Financing Plan. Prior to the Closing the Owner shall submit to the Agency for its reasonable approval a Financing Plan within the time set forth in the Schedule of Performance, which contains: (i) an acquisition and development budget for the Housing Project, (ii) a sources and uses analysis for the period of the development, including an analysis of the additional subsidized financing which is necessary from other public bodies, the proposed amount of the Agency Loan, and required Deferred Developer Fees, (iii) a sources and uses analysis from the date of the origination of the permanent loan, if any, including an analysis of the additional subsidized financing which is necessary from other public entities, an increase in the amount of the Agency Loan, and required Deferred Developer Fees, (iv) a 30 year cash flow analysis of the Housing Project from the date of the completion of the Housing Project, (v) an operating budget for the Housing Project, including without limitation the Operating Reserve and Capital Replacement Reserve, (vi) all fees and obligations proposed to be payable prior to the payment of Residual Receipts, (vii) the proposed allocation of Residual Receipts between the repayment of the Agency Loan, the repayment of other loans, and retention by the Owner, (viii) the lien priority of all forms of financing, and (ix) all underlying assumptions for each of the above. The Owner shall also submit to the Agency for its reasonable approval any revisions to the Financing Plan. 502. Financing Sources. It is the intent of the parties to maximize the leverage of Agency funds by making every effort to secure sources of non -local subsidies for the Housing Project. Accordingly, the Owner shall submit up to three applications to the California Tax Credit Allocation Committee ("TCAC") for competitive federal 9% Tax Credits in the first three allocation rounds which occur after the date of this Agreement as may be necessary to secure an allocation of federal 9% Tax Credits for the Housing Project (in the event that the Developer submits its first application in 2007 prior to obtaining land use entitlements for the Housing Project, which application is not expected to receive the maximum number of points reasonably available to the Housing Project, such application will not count as one of the three applications to TCAC hereunder). The Owner and Agency shall also determine the feasibility and economic effect of applying for state Tax Credits in association with the federal Tax Credit application. In the event that the Owner applies for and does not receive an allocation of federal 9% Tax Credits in any of the first three allocation rounds, the Owner and the Agency shall meet and confer to determine whether (i) the Owner should make further applications for federal 9% Tax Credits, or (ii) the Owner should pursue an alternative financing strategy of multifamily housing bond financing and federal 4% Tax Credits, or (iii) the Parties should terminate this Agreement. The Owner shall also diligently pursue an allocation of funds from the County of Orange and the Affordable Housing Program of the Federal Home Loan Bank. Upon completion of construction of the Housing Project, the Owner shall cause its accountants to perform a final audit of the costs of development of the Housing Project in accordance 18 0 0 with the requirements of the Tax Credits (the "Audit"). If the Audit determines that the total sources of permanent financing for the Housing Project (including long-term permanent debt and equity) exceed the total development cost for the Housing Project (including, without limitation, all hard and soft costs and all off-site improvements required in connection with the development of the Housing Project), the Owner shall pay to the Agency an amount equal to such excess, which amount shall be applied to the repayment of the Agency Loan. 503. Tax Credit Equity. The following requirements must be satisfied in order for the equity financing for Tax Credit funding to be approved by the Agency pursuant to Section 501 (which requirements may be waived in the Agency's sole and absolute discretion): (a) The equity investment of the limited partners of the limited partnership shall not be less than the approximate prevailing price for Tax Credits at such time, as determined by the Owner and reasonably acceptable to the Agency, taking into consideration all relevant factors such as timing of required payments and amount of the Tax Credits. (b) The identity of the managing general partner, other general partners, syndicator and initial limited partners of the limited partnership shall be reasonably acceptable to the Agency. (c) The Developer or its affiliates shall be entitled to a developer fee from the financing of not greater than the developer fee as approved by the Agency in the Financing Plan. The parties acknowledge that the Deferred Developer Fee may be required to be deferred until after the completion and commencement of operation of the Housing Project in order to ensure that sufficient funds are available for the costs of construction and operation of the Housing Project. 504. Required Submissions. Owner shall submit the following documents as evidence of financing: (a) a copy of a loan commitment(s) or approval(s) obtained by the Owner from unrelated financial institutions for the mortgage loan or loans for construction and permanent financing, subject to such lenders' reasonable, customary and normal conditions and terms, (b) a limited partnership agreement or funding commitment letter from the equity investors in the Housing Project which demonstrates that Owner has sufficient funds for such construction, and that such funds have been committed to such construction, and a current financial statement of Owner and Owner's other sources of equity capital, (c) a copy of a preliminary reservation letter from TCAC notifying the Owner that an allocation of Tax Credits has been reserved for the construction of the Housing Project, (d) a copy of documentation relating to other affordable housing subsidy programs from which the Owner has applied to obtain financial subsidies, and (e) other documentation reasonably satisfactory to Agency as evidence of other sources of capital, all of which together are sufficient to demonstrate that the Owner has adequate funds, together with the proceeds of any other financing to construct and complete the Housing Project. 505. Holder Performance of Development of the Housing Project. The holder of any mortgage or deed of trust for construction financing authorized by this Agreement shall not be 19 0 0 obligated by the provisions of this Agreement to develop the Housing Project or any portion thereof, or to guarantee such construction or completion; nor shall any covenant or any other provision in this Agreement be construed so to obligate such holder. 506. Notice of Default to Mortgagee or Deed of Trust Holders; Right to Cure. With respect to any mortgage or deed of trust granted by Owner as provided herein, whenever Agency may deliver any notice or demand to Owner with respect to any breach or default by the Owner hereunder or under any other document executed pursuant to this Agreement, Agency shall at the same time deliver to each holder of record of any mortgage or deed of trust authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights granted by Agency are concerned) have the right, but not the obligation, at its option, within thirty (30) days after the receipt of the notice, to cure or remedy or commence to cure or remedy and thereafter to pursue with due diligence the cure or remedy of any such default and to add the cost thereof to the mortgage debt and the lien of its mortgage. Nothing contained in this Agreement shall be deemed to permit or authorize any construction lender to undertake or continue the construction or completion of the development of the Housing Project, or any portion thereof (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed Owner's obligations to Agency by written agreement reasonably satisfactory to Agency. The construction lender, in that event, must agree to complete, or cause to be completed by a party which is reasonably acceptable to the Agency, in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates. Any such construction lender (or assignee approved by the Agency) properly completing such improvement shall be entitled, upon compliance with the requirements of Section 406 of this Agreement, to a Certificate of Completion. It is understood that a construction lender (or assignee approved by the Agency) shall be deemed to have satisfied the thirty (30) day time limit set forth above for commencing to cure or remedy a Owner default which requires title and/or possession of the Housing Project (or portion thereof), if and to the extent any such holder (or assignee approved by the Agency) has within such thirty (30) day period commenced proceedings to obtain title and/or possession and thereafter the holder diligently pursues such proceedings to completion and cures or remedies the default. Owner's limited partner shall be entitled to receive the same written notice of default as provided to the Owner, and Owner's limited partner shall have the right, but not the obligation, to cure any Owner default within the same cure period and on the same terms as provided to the Owner. Notice to the Owner's limited partner shall be given as provided in Section 802 of this Agreement. 507. Failure of Holder to Complete Development. In any case where, ninety (90) days after the holder of any construction loan mortgage or deed of trust creating a lien or encumbrance upon the Housing Project or any part thereof receives a notice from Agency of a default by Owner in completion of construction of any of the development under this Agreement, and such holder has not exercised the option to perform the development or cause the development to be performed as set forth in Section 506, or if it has exercised the option but has defaulted hereunder and failed to timely cure such default, Agency may purchase the mortgage or deed of trust by payment to the holder of the amount of the unpaid construction loan mortgage or deed of trust debt, including principal and interest and all other sums secured by the mortgage or deed of trust. If the possession of the Housing Project or any part thereof has vested in the holder, Agency, if it so desires, shall be entitled to a conveyance from the construction lender to Agency upon payment to the holder of an amount equal to the sum of the following: (a) The unpaid construction loan mortgage or deed of trust debt at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings); 20 0 0 (b) All expenses with respect to foreclosure including reasonable attorneys' fees; (e) The net expense, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent management of the Housing Project or part thereof; (d) The costs of any improvements made by such holder (or assignee approved by the Agency) pursuant to the requirements of this Agreement or as otherwise approved by the Agency; (e) An amount equivalent to the interest that would have accrued on the aggregate of such amounts had all such amounts become part of the construction loan mortgage or deed of trust debt and such debt had continued in existence to the date of payment by Agency; and (f) Any prepayment charges imposed by the construction lender pursuant to its loan documents and agreed to by the Owner. 508. Right of Agency to Cure Mortgage or Deed of Trust Default. In the event of a loan agreement, promissory note, mortgage or deed of trust default or breach by the Owner, or a default under the terms of Owner's partnership agreement, Owner shall immediately deliver to Agency a copy of any default notice pertaining thereto. If the holder of any loan agreement, promissory note, mortgage or deed of trust has not exercised its option to construct prior to the issuance of the Certificate of Completion, pursuant to Section 406 hereof, Agency shall have the right but not the obligation to cure the default of such loan agreement, promissory note, mortgage, deed of trust or partnership agreement. The Agency shall likewise have the right but no obligation to cure any partnership agreement default. In such event, Agency shall be entitled to reimbursement from the Owner of all proper costs and expenses incurred by Agency in curing such default. Agency shall also be entitled to a lien upon the Housing Project to the extent of such costs and disbursements. Any such lien shall be junior and subordinate to the mortgages or deeds of trust approved pursuant to Section 501. 509. Subordination of Affordability Covenants. In the event that the Agency finds that an economically feasible method of financing for the construction and operation of the Housing Project, without the subordination of the affordable housing covenants as may be set forth in this Agreement and the Regulatory Agreement, is not reasonably available, the Agency shall make the affordable housing covenants set forth in this Agreement and the Regulatory Agreement junior and subordinate to the deeds of trust and other documents required in connection with the construction and permanent financing for the Housing Project approved pursuant to Section 501. Any subordination agreement entered into by the Agency shall contain written commitments which the Agency finds are reasonably designed to protect Agency's investment in the event of Default, such as any of the following: (a) a right of Agency to cure a default on the senior loan prior to foreclosure, (b) a right of Agency to negotiate with the lender after notice of default from the lender and prior to foreclosure, and (c) an agreement that if prior to foreclosure of the loan, Agency takes title to the property and cures the default on the senior loan, the lender will not exercise any right it may have to accelerate the senior loan by reason of the transfer of title to Agency, and (d) a right of Agency to acquire the Housing Project from the Owner at any time after a material default on the senior loan. 600. OPERATION OF HOUSING 601. Number of Affordable Units. Owner agrees to make available, restrict occupancy to, and rent Twenty -Eight (28) of the Housing Units to Very Low Income Households, and Ten (10) of the Housing Units to Lower Income Households, all at an Affordable Rent. One of the Housing 21 0 0 Units may be reserved for the on-site property manager, provided that such property manager meets the income requirements provided for such unit. 602. Duration of Affordability Requirements. The Housing Units shall be subject to the requirements of this Article 600 for fifty-five (55) years from the date of the City's issuance of a certificate of occupancy for the Housing Project. The duration of this requirement shall be known as the "Affordability Period." 603. Selection of Tenants. Owner shall be responsible for the selection of tenants for the Housing Units in compliance with lawful and reasonable criteria, as set forth in the Regulatory Agreement and the Management Plan which is required to be submitted and approved by the Agency pursuant to Section 610 hereof. 604. Household Income Requirements. Following the initial lease -up of the Housing Units, and annually thereafter, the Owner shall submit to Agency, at Owner's expense, a summary of the income, household size and rent payable by each of the tenants of the Housing Units. At the Agency's request, the Owner shall also provide to the Agency completed income computation and certification forms, in a form reasonably acceptable to the Agency, for any such tenant or tenants. Owner shall obtain, or shall cause to be obtained by the Property Manager, a certification from each household leasing an Affordable Unit demonstrating that such household is a Very Low Income Household or Lower Income Household, as applicable, and meets the eligibility requirements established for the Housing Unit. Owner shall verify, or shall cause to be verified by the Property Manager, the income certification of the household. 605. Affordable Rent. The maximum Monthly Rent chargeable for the Affordable Units shall be annually determined in accordance with the following requirements. The Monthly Rent for the Affordable Units to be rented to Very Low Income Households shall not exceed one -twelfth (1/12) of thirty percent (30%) of fifty percent (50%) of Orange County Median Income for a family of a size appropriate to the unit. The Monthly Rent for the Affordable Units to be rented to Lower Income Households shall not exceed one -twelfth (1/12) of thirty percent (30%) of sixty percent (60%) of Orange County Median Income for a family of a size appropriate to the unit. For purposes of this Agreement, "Monthly Rent" means the total of monthly payments for (a) use and occupancy of each Affordable Unit and land and facilities associated therewith, (b) any separately charged fees or service charges assessed by the Owner which are required of all tenants, other than security deposits, (c) a reasonable allowance for an adequate level of service of utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuels, but not including telephone service, and (d) possessory interest, taxes or other fees or charges assessed for use of the land and facilities associated therewith by a public or private entity other than Owner. In the event that all utility charges are paid by the landlord rather than the tenant, no utility allowance shall be deducted from the rent. For purposes of this Agreement, "family of a size appropriate to the unit" means two persons for a one -bedroom unit, and three persons for a two-bedroom unit. 606. Marketing Program. Each Affordable Unit shall be leased to tenants selected by the Owner who meet all of the requirements provided herein. Owner shall prepare and obtain Agency's approval, which approval shall not be unreasonably withheld, of a marketing program for the leasing of the Affordable Units at the Housing Project (the "Marketing Program"). The Marketing Program shall require the Owner to give priority notice to tenants of other affordable housing projects in the 22 0 0 City. The leasing of the Affordable Units shall thereafter be marketed in accordance with the Marketing Program as the same may be amended from time to time with Agency's prior written approval, which approval shall not unreasonably be withheld. Owner shall provide Agency with periodic reports with respect to the leasing of the Affordable Units. The Agency agrees to exercise reasonable efforts to assist Owner in connection with the implementation of the Marketing Program; provided, however, Agency shall not be under any obligation to incur any out-of-pocket expenses in connection therewith. 607. Design and Occupancy of Senior Units. Owner shall restrict occupancy of all Housing Units to "Senior Citizens" and "Qualified Permanent Residents" (as those terms are or may be defined in California Civil Code Section 51.3). California Civil Code Section 51.3 presently provides as follows: At least one person in residence in each dwelling unit must be a Senior Citizen, and other residents in the same dwelling unit who are not Senior Citizens must be Qualified Permanent Residents. Temporary guests of a Senior Citizen or Qualified Permanent Resident shall be allowed for a period of not more than sixty (60) days in any twelve (12) month period. Upon the death, dissolution of marriage, hospitalization or other prolonged absence of the Senior Citizen in a dwelling unit, any Qualified Permanent Resident who has continuously resided in the dwelling unit with such Senior Citizen shall be permitted to continue as a resident of that dwelling unit. 'Permitted Health Care Residents" (as that term is or may be defined in California Civil Code Section 51.3) shall be permitted to occupy any dwelling unit during any period that such person is actually providing live-in, long-term or hospice health care to a Senior Citizen tenant or Qualified Permanent Resident tenant for compensation. Notwithstanding the foregoing, however, in the event that the Owner in its sole discretion elects to provide one of the Housing Units for residency by an on-site manager, the manager's unit shall not be required by this Agreement to be restricted to Senior Citizens and Qualified Permanent Residents. 608. Relationship to Tax Credit Requirements. Notwithstanding any other provisions of this Agreement, to the extent that the regulatory agreement executed by the Owner as a requirement of receiving the Tax Credits (the "Tax Credit Regulatory Agreement") is less restrictive with respect to the requirements applicable to tenant selection, tenant income levels and unit rent levels than as provided in this Agreement and the Regulatory Agreement, this Agreement and the Regulatory Agreement shall control. 609. Maintenance. The Owner shall maintain the Housing Project or cause it to be maintained in a decent, safe and sanitary manner, and in accordance with the standard of maintenance of first class senior apartment units within Orange County, California. If at any time Owner fails to maintain the Housing Project in accordance with this Agreement and such condition is not corrected within five days after written notice from the Agency with respect to graffiti, debris, and waste material, or thirty days after written notice from the Agency with respect to general maintenance, landscaping and building improvements, then the Agency, in addition to whatever remedy it may have at law or at equity, shall have the right to enter upon the applicable portion of the Housing Project and perform all acts and work necessary to protect, maintain, and preserve the Housing Project, and to attach a lien upon the Housing Project, or to assess the Housing Project, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the Agency and/or costs of such cure, including a reasonable administrative charge, which amount shall be promptly paid by Owner to the Agency upon demand. 610. Management Plan; Property Management. The Owner shall submit for the reasonable approval of the Agency a "Management Plan" which sets forth in detail the Owner's property management duties, a tenant selection process in accordance with Section 603 hereof, a security system and crime prevention program, the procedures for the collection of rent, the 23 0 0 procedures for eviction of tenants, the rules and regulations of the Housing Project and manner of enforcement, a standard lease form, an Operating Budget, the identity of the manager of the Housing Project (the "Property Manager"), the social services program to be provided pursuant to Section 613 hereof, and other matters relevant to the management of the Housing Project. The management of the Housing Project shall be in compliance with the Management Plan which is approved by the Agency. If the Agency determines that the performance of the Property Manager is deficient based upon the standards set forth in the Management Plan and in this Agreement, the Agency shall provide notice to the Owner of such deficiencies, and the Owner shall use its best efforts to correct such deficiencies. In the event that such deficiencies have not been cured within the time set forth in Section 701 hereof, the Agency shall have the right to require the Owner to immediately remove and replace the Property Manager with another property manager or property management company which is reasonably acceptable to the Agency, which is not related to or affiliated with the Owner, and which has not less than five (5) years experience in property management, including significant experience managing housing facilities of the size, quality and scope of the Housing Project. 611. Capital Reserve Requirements. The Owner shall also, or cause the Property Manager to, annually set aside an amount of Two Hundred Fifty Dollars ($250) per Housing Unit (or such larger amount as may be required by TCAC or a Housing Project lender), from the gross rents received from the Housing Project, into a separate interest-bearing trust account in the name of the Owner (the "Capital Replacement Reserve"); provided, however, to the extent the Owner is required by any lender to maintain a separate account to hold deposits for capital reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be adjusted annually by the Consumer Price Index (or such larger amount as may be required by TCAC or a Housing Project lender). Funds in the Capital Replacement Reserve shall be used for capital replacements to the Housing Project fixtures and equipment which are normally capitalized under generally accepted accounting principles. The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve the Owner of the obligation to undertake necessary capital repairs and improvements and to continue to maintain the Housing Project in the manner prescribed herein. Not less than once per year, Owner, at its expense, shall submit to the Agency an accounting for the Capital Replacement Reserve. Capital repairs to and replacement of the Housing Project shall include only those items with a long useful life, including without limitation the following: carpet and drape replacement; appliance replacement; exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement; asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; common area repainting, and uninsured losses due to casualties such as earthquakes. 612. Operating Budget and Reserve. The Owner shall submit to Agency on not less than an annual basis an operating budget for the Housing Project, which budget shall be subject to the written approval of the Agency Executive Director or designee, which approval shall not be unreasonably withheld, conditioned or delayed. The Owner shall, or shall cause the Property Manager to, set aside in a separate interest-bearing trust account in the Owner's name, commencing upon the rental of the Housing Units, the sum of Seventy -One Thousand Dollars ($71,000), or such larger amount as may be required by TCAC or a Housing Project lender (the "Operating Reserve"), and shall make further deposits from the Annual Project Revenue, to the extent available, to replenish the Operating Reserve to the amount existing in such account prior to the withdrawal of funds; provided, however, to the extent the Owner is required by any lender to maintain a separate account 24 0 0 to hold deposits for operating reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be retained in the Operating Reserve to cover shortfalls between Housing Project income and actual operating expenses, and emergency expenses (such as uninsured casualties), but shall in no event be used to pay for capital items properly payable from the Capital Replacement Reserve. Owner shall, not less than once per every twelve (12) months, submit to the Agency evidence reasonably satisfactory to the Agency of compliance herewith. 613. Social Services. At all times during the Affordability Period, Owner shall provide, or cause to be provided, activities and programs appropriate to the needs of the residents of the Housing Project, with the selection of such activities and programs to be determined by Owner in collaboration with the residents of the Housing Project and the adjacent senior housing development owned by an affiliate of the Owner. The specific types of social services to be provided shall be submitted to and approved by the Agency, and may be revised with the prior approval of the Agency, which approval shall not be unreasonably withheld. 614. Prohibited Uses. None of the Housing Units in the Housing Project shall at any time be utilized on a transient basis, nor shall the Housing Project or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium or rest home. 615. Non -Discrimination Covenants. Owner covenants by and for itself, its successors 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, religion, sex, marital status, familial status, disability, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Housing Project, nor shall Owner itself or any person claiming under or through it, 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 Housing Project. The Owner shall refrain from restricting the rental, sale or lease of the Housing Project on the basis of race, color, creed, religion, sex, marital status, familial status, disability, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (i) 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, familial status, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself 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 land herein conveyed. The foregoing covenants shall run with the land." (ii) 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: "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, familial status, disability, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure 25 0 0 or enjoyment of the premises herein leased nor shall the lessee himself or herself, 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." (iii) In contracts: "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, familial status, disability, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself 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 of the premises." The covenants established in this Section 615 shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency and its successors and assigns, and shall remain in effect in perpetuity. 616. Monitoring and Recordkeeping. Throughout the Affordability Period, Owner shall comply with all applicable recordkeeping and monitoring requirements set forth in Health and Safety Code Section 33418 and shall annually complete and submit to Agency a report, prior to April 15 of each year, which includes the name, address, income and age of each occupant of an Affordable Unit, identifying the bedroom count and Monthly Rent for such Affordable Unit. Agency agrees that the Owner may submit reporting forms prepared and submitted in connection with the Tax Credits, to the extent those forms contain the information required hereunder. Representatives of the Agency shall be entitled to enter the Housing Project, upon at least seventy-two (72) hours prior written notice, to monitor compliance with this Agreement, to inspect the records of the Housing Project, and to conduct an independent audit or inspection of such records. The Owner agrees to cooperate with the Agency in making the Housing Project available for such inspection or audit. Owner agrees to maintain records in businesslike manner, and to maintain such records for the term of this Agreement. 617. Regulatory Agreement. The requirements of this Agreement which are applicable after the conveyance of the Site to the Owner are set forth in the "Regulatory Agreement' which is attached hereto as Attachment No. 10 and incorporated herein. The execution of the Regulatory Agreement is a condition precedent to the Closing, as set forth in Section 205.1 hereof. 618. Inclusionary Housing Requirements. The income and rent restrictions provided for hereunder are intended to satisfy the requirements of Health and Safety Code Section 33413(b). 26 0 0 700. DEFAULT AND REMEDIES 701. Events of Default. An event of"Default" shall occur under this Agreement when there shall be a material breach of any condition, covenant, warranty, promise or representation contained in this Agreement and such breach shall continue for a period of thirty (30) days after written notice thereof to the defaulting party without the defaulting party curing such breach, or if such breach cannot reasonably be cured within such thirty (30) day period, commencing the cure of such breach within such thirty (30) day period and thereafter diligently proceeding to cure such breach as soon as reasonably possible, but in no event later than ninety (90) days from the date of the original written notice. However, that if a different period or notice requirement is specified for any particular breach under any other paragraph of this Agreement, the specific provision shall control. 702. Remedies. The occurrence of any event of Default shall give the nondefaulting party the right to proceed with any and all remedies set forth in this Agreement and/or the documents executed pursuant to this Agreement, including an action for damages, an action or proceeding at law or in equity to require the defaulting party to perform its obligations and covenants under this Agreement and/or the documents executed pursuant to this Agreement or to enjoin acts or things which may be unlawful or in violation of the provisions of this Agreement and/or the documents executed pursuant to this Agreement, and the right to terminate this Agreement. In addition, the occurrence of any event of Default by Owner will relieve the Agency of any obligation to perform hereunder, including without limitation to make or continue the Agency Loan, and the right to cause all indebtedness of the Owner to the Agency under this Agreement and the Promissory Note, together with any accrued interest thereon, to become immediately due and payable. 703. Force Majeure. Subject to the party's compliance with the notice requirements as set forth below, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where delays or defaults are due to causes beyond the control and without the fault of the party claiming an extension of time to perform, which may include, without limitation, the following: war, acts of terrorism, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, assaults, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, materials or tools, acts or omissions of the other party, or acts or failures to act of any public or governmental entity (except that the Agency's acts or failure to act shall not excuse performance of the Agency hereunder). An extension of the time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the cause. 704. Termination by Agency. In the event that Agency is not in Default under this Agreement, and: (a) One or more of the Agency's Conditions Precedent to Closing is not satisfied on or before the time set forth in the Schedule of Performance, and such Condition Precedent is not satisfied after notice and an opportunity to cure as provided in Section 701 hereof, and such failure is not caused by Agency; or (b) Owner is otherwise in default of this Agreement and fails to cure such default within the time set forth in Section 701 hereof, or (c) Owner has applied for but not received an allocation of federal 9% Tax 27 Credits in each of the first three allocation rounds occurring after the date of this Agreement, and the parties have not agreed upon an alternate financing structure pursuant to Section 502 hereof; or (d) Agency has disapproved the Financing Plan submitted by the Owner pursuant to Section 501 hereof within the time set forth in the Scope of Development; then this Agreement and any rights of Owner or any assignee or transferee with respect to or arising out of this Agreement shall, at the option of Agency, be terminated by Agency by written notice thereof to Owner. From the date of the written notice of termination of this Agreement by Agency to Owner and thereafter this Agreement shall be deemed terminated, the Agency shall not be obligated to make any further payments of the Agency Loan, repayment of the Promissory Note shall be accelerated, and there shall be no further rights or obligations between the parties, except that if the Owner is in default hereunder the Agency, after delivery of notice and expiration of the cure period provided in Section 701 hereof, may pursue any remedies it has at law or equity. 705. Termination by the Owner. In the event that the Owner is not in Default under this Agreement and (a) One or more of the Owner's Conditions Precedent to Closing is not satisfied on or before the time set forth in the Schedule of Performance, and such Condition Precedent is not satisfied after notice and an opportunity to cure as provided in Section 701 hereof, and such failure is not caused by Owner; or (b) Agency does not tender the Site in the manner and condition and by the date provided in this Agreement, or (c) In the event of any Default of any material provision of this Agreement by Agency prior to the Closing which is not cured within the time set forth in Section 701 hereof, or (d) Owner disapproves the physical or environmental condition of the Site pursuant to Section 206.2 hereof; or (e) Owner has applied for but not received an allocation of federal 9% Tax Credits in each of the first three allocation rounds occurring after the date of this Agreement, and the parties have not agreed upon an alternate financing structure pursuant to Section 502 hereof, and any such failure is not cured within the applicable time period after written demand by the Owner, then this Agreement may, at the option of the Owner, be terminated by Notice thereof to Agency. From the date of the Notice of termination of this Agreement to Agency and thereafter, this Agreement shall be deemed terminated and there shall be no further rights or obligations between the parties, except that if the Agency is in default hereunder the Owner, after delivery of notice and expiration of the cure period provided in Section 701 hereof, may pursue any remedies it has at law or equity. The Agency shall have no obligation upon such termination to convey the Site to the Owner, and the Agency may convey the Site to any other party in the Agency's sole and absolute discretion. 706. Attorneys' Fees. In addition to any other remedies provided hereunder or available pursuant to law, if either party brings an action or proceeding to enforce, protect or establish any right or remedy hereunder or under any of the documents executed pursuant to this Agreement, the prevailing party shall be entitled to recover from the other party its costs of suit, including without limitation expert witness fees, and reasonable attorneys' fees. 28 0 0 707. Remedies Cumulative. No right, power, or remedy given to the Agency by the terms of this Agreement is intended to be exclusive of any other right, power, or remedy; and each and every such right, power, or remedy shall be cumulative and in addition to every other right, power, or remedy given to the Agency by the terms of any such instrument, or by any statute or otherwise against Owner and any other person. 708. Waiver of Terms and Conditions. The Agency may, in its sole discretion, waive in writing any of the terms and conditions of this Agreement. Waivers of any covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent breach of the same covenant, term, or condition. 800. GENERAL PROVISIONS 801. Time. Time is of the essence in this Agreement. 802. Notices. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, or (iii) mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below, or at any other address as that party may later designate by Notice: Owner: SEASONS SJC II, L.P., 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention : Legal Department With Copy to Multi -Housing Investments, LLC Limited Partner: 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention : Legal Department Agency: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director Such addresses may be changed by notice to the other party given in the same manner as provided above. 803. Representations and Warranties of Owner. Owner hereby represents and warrants to the Agency as follows: (a) Organization. Owner is a limited partnership validly existing and in good standing under the laws of the State of California and has the power and authority to own its property and carry on its business as now being conducted. (b) Authority of Owner. Owner has full power and authority to execute and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to execute and deliver the Promissory Note, Deed of Trust, Regulatory Agreement, and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement, and 29 0 0 to perform and observe the terms and provisions of all of the above. (c) Valid Binding Agreements. This Agreement, the Grant Deed, Promissory Note, Deed of Trust and the Regulatory Agreement and all other documents or instruments which have been executed and delivered pursuant to or in connection with this Agreement constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of Owner enforceable against it in accordance with their respective terms. (d) Pending Proceedings. Owner is not in default under any law or regulation or under any order of any court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Owner, threatened against or affecting Owner or the Housing Project, at law or in equity, before or by any court, board, commission or agency whatsoever which might, if determined adversely to Owner, materially affect Owner's ability to perform its obligations hereunder. 804. Agency Representations. The Agency represents and warrants to the Owner as follows: (a) Authority. The Agency is a public body, corporate and politic, which has been authorized to transact business pursuant to action of the City. The Agency has full right, power and lawful authority to acquire and convey the Site as provided herein, and the execution, performance and delivery of this Agreement by the Agency has been fully authorized by all requisite actions on the part of the Agency. (b) FIRPTA. The Agency is not a "foreign person" within the parameters of FIRPTA or any similar state statute, or is exempt from the provisions of FIRPTA or any similar state statute, or the Agency has complied and will comply with all the requirements under FIRPTA or any similar state statute. (c) No Conflict. The Agency's execution, delivery and performance of its obligations set forth in this Agreement will not constitute a default or a breach under any contract, agreement or order to which the Agency is a party or by which it is bound. (d) No Litigation. To the Agency's Actual Knowledge, there is no threatened or pending litigation against the Agency challenging the validity of this Agreement or any of the actions proposed to be undertaken by the Agency or Owner pursuant to this Agreement. "Actual knowledge," as used herein, shall not impose a duty of investigation, and shall be limited to the actual knowledge of the Agency's employees and agents who have participated in the preparation of this Agreement and the acquisition and management of the Site. 805. Limitation Upon Change in Ownership, Management and Control of the Owner (a) Prohibition. The identity and qualifications of Owner as an experienced and successful developer and operator of affordable senior rental housing developments are of particular concern to the Agency. It is because of this identity and these qualifications that the Agency has entered into this Agreement with the Owner. No voluntary or involuntary successor in interest of the Owner shall acquire any rights or powers under this Agreement by assignment or otherwise, nor shall Owner make any total or partial sale, transfer, conveyance, encumbrance to secure financing, assignment or lease of the whole or any part of the Housing Project without the prior written approval of the Agency pursuant to Subparagraph (c) hereof, except as expressly set forth herein, which approval shall not be unreasonably withheld. 30 (b) Permitted Transfers. Notwithstanding any other provision of this Agreement to the contrary, Agency approval of an assignment or transfer of this Agreement, the Agency Loan, the Regulatory Agreement, or conveyance of the Housing Project or any part thereof pursuant to subparagraph (c) of this Section 805, shall not be required in connection with any of the following (the "Permitted Transfers"): (i) Subject to the restrictions of Sections 601 through 618 of this Agreement and the Regulatory Agreement, the lease of Housing Units to qualified tenants. (ii) Assignment for financing purposes, subject to such financing being considered and approved by the Agency pursuant to Section 501 hereof. (iii) Transfer of the Housing Project or partnership interests of the Owner to (A) Multi -Housing Investments, LLC, Simpson Housing Solutions, LLLP, Simpson Housing Solutions, LLC (each a "Simpson Entity" and collectively "Simpson Entities"), or (B) an entity which has a Simpson Entity as a general partner, managing member or controlling shareholder, or (C) an entity whose general partner, managing member or controlling shareholder has a Simpson Entity as its general partner, managing member or controlling shareholder, or (D) an entity in which a Simpson Entity is a "controlling person" (as defined in Section 20(a) of the Securities Exchange Act of 1934, as amended. (iv) The removal and replacement of Owner's general partner, provided that the removed general partner is replaced by (A) a Simpson Entity, or (B) an entity which has a Simpson Entity as a general partner, managing member or controlling shareholder, or (C) an entity whose general partner, managing member or controlling shareholder has a Simpson Entity as its general partner, managing member or controlling shareholder, or (D) an entity in which a Simpson Entity is a "controlling person" (as defined in Section 20(a) of the Securities Exchange Act of 1934, as amended. (v) Transfer of the Housing Project or partnership interests in the Owner's limited partnership to the nonprofit general partner at the end of the fifteen year Tax Credits initial compliance period. In the event of an assignment by Owner pursuant to subparagraph (iii) or (iv) not requiring the Agency's prior approval, Owner nevertheless agrees that at least thirty (30) days prior to such assignment or transfer it shall give written notice to Agency of such assignment or transfer. (c) Agency Consideration of Requested Transfer. The Agency agrees that it will not unreasonably withhold approval of a request made pursuant to this Section 805, provided (a) the Owner delivers written notice to the Agency requesting such approval, and (b) the proposed assignee or transferee possesses comparable operational experience and capability, and comparable net worth and resources, as the proposed transferor or assignor, and (c) the assignee or transferee assumes the obligations of the Owner under this Agreement in a form which is reasonably acceptable to the Agency. Such notice shall be accompanied by evidence regarding the proposed assignee's or purchaser's qualifications and experience and its financial commitments and resources sufficient to enable the Agency to evaluate the proposed assignee or purchaser pursuant to the criteria set forth in this Section 805(c) and other criteria as reasonably determined by the Agency. The Agency shall approve or disapprove the request within thirty (30) days of its receipt of the Owner's notice and all information and materials required herein. In no event, however, shall the Agency be obligated to approve the assignment or transfer of the Agency Loan, Promissory Note or Deed of Trust pursuant to this Section 805, except to an approved transferee or assignee of the Owner's rights in and to the 31 0 Housing Project. 0 (d) Amendment of Owner's Partnership Agreement. Owner may amend its Partnership Agreement, from time to time, without first providing notice to or securing Agency's consent to: (i) correct scrivener's errors; (ii) make such agreement consistent with other provisions of the loan documents; (iii) bring such agreement into compliance with the requirements of TCAC or any successor agency or Section 42 of the Internal Revenue Code of 1986, as amended, or the California Debt Limit Allocation Committee or any successor agency and the provisions of Section 103 and 142 of the Internal Revenue Code and the regulations promulgated thereunder; (iii) comply with the decision of any court of competent jurisdiction; (iv) vary the allocation of items of profit, loss, credit and deduction, the distribution of available cash or net cash flow; (v) effect changes required to comply with other provisions of the loan documents as such may be modified; (vi) effect changes in the Owner's partners; and (vii) make other changes which do not affect the enforceability of this Agreement, the liability of the signatories thereto or otherwise violate any provision of this Agreement. (e) Successors and Assigns. This Agreement shall run with the land, and all of the terms, covenants and conditions of this Agreement shall be binding upon the Owner and the permitted successors and assigns of the Owner. Whenever the term "Owner" is used in this Agreement, such term shall include any other permitted successors and assigns as herein provided. 806. Non -Liability of Officials and Employees of Agency. No member, official or employee of Agency or the City shall be personally liable to Owner or any successor in interest, in the event of any Default or breach by Agency or for any amount which may become due to Owner or its successors, or on any obligations under the terms of this Agreement. 807. Relationship Between Agency and Owner. It is hereby acknowledged that the relationship between Agency and Owner is not that of a partnership or joint venture and that Agency and Owner shall not be deemed or construed for any purpose to be the agent of the other. Accordingly, except as expressly provided herein or in the Attachments hereto, Agency shall have no rights, powers, duties or obligations with respect to the development, operation, maintenance or management of the Housing Project. 808. Agency Approvals and Actions. The Agency shall maintain authority of this Agreement and the authority to implement this Agreement through the Agency's Executive Director (or his duly authorized representative). The Executive Director shall have the authority to make approvals, issue interpretations, waive provisions, execute documents, make and execute further agreements and/or enter into amendments of this Agreement on behalf of the Agency so long as such actions do not materially or substantially change the uses or development permitted on the Housing Units, or materially or substantially add to the costs incurred or to be incurred by the Agency as specified herein, and such interpretations, waivers and/or amendments may include extensions of time to perform as specified in the Schedule of Performance. All other material and/or substantive interpretations, waivers, or amendments shall require the consideration, action and written consent of the Agency Board. 809. Counterparts. This Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. This Agreement is executed in three (3) originals, each of which is deemed to be an original. 810. Integration. This Agreement contains the entire understanding between the parties relating to the transaction contemplated by this Agreement. All prior or contemporaneous 32 r1 u n u agreements, understandings, representations and statements, oral or written, are merged in this Agreement and shall be of no further force or effect. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. This Agreement includes Attachment Nos. 1 through 10, which together with the Agreement constitute the entire understanding and agreement of the parties, notwithstanding any previous negotiations or agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof. 811. Real Estate Brokerage Commission. Agency and Owner each represent and warrant to the other that no broker or finder is entitled to any commission or finder's fee in connection with this transaction, and Owner and Agency agree to defend and hold harmless the each other from any claim to any such commission or fee resulting from any action on its part. 812. Titles and Captions. Titles and captions are for convenience of reference only and do not define, describe or limit the scope or the intent of this Agreement or of any of its terms. Reference to -section numbers are to sections in this Agreement, unless expressly stated otherwise. 813. Interpretation. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others where and when the context so dictates. The word "including" shall be construed as if followed by the words "without limitation." This Agreement shall be interpreted as though prepared jointly by both parties. 814. No Waiver. A waiver by either party of a breach of any of the covenants, conditions or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. 815. Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 816. Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 817. Computation of Time. The time in which any act is to be done under this Agreement is computed by excluding the first day and including the last day, unless the last day is a holiday or Saturday or Sunday, and then that day is also excluded. The term "holiday" shall mean all holidays as specified in Section 6700 and 6701 of the California Government Code. If any act is to be done by a particular time during a day, that time shall be Pacific Time Zone time. 818. Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 33 0 0 819. Time of Essence. Time is expressly made of the essence with respect to the performance by Agency and Owner of each and every obligation and condition of this Agreement. 820. Cooperation. Each party agrees to cooperate with the other in this transaction and, in that regard, to sign any and all documents which may be reasonably necessary, helpful or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. 821. Conflicts of Interest. No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interested. 34 0 0 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year set forth above. ATTEST: Monahan, Agency Secretary AS TO FORM: OVA Stradlin Yocca rlson & Rauth Jon GM4, Agency Counsel DEVELOPER: SEASONS SENIOR APARTMENTS H, L.P., , a California limited partnership By: Affordable Multi -Family, LLC, a Colorado limited liability Company, its General Partner By: %/Av37, Thomas Erickson Its: Senior Vice President AGENCY: SAN JUAN CAPISTRANO REDEVELOPMENT AGEN a p lic 4yr corporate and politic Joe Soto, 35 0 ATTACHMENT NO. I LEGAL DESCRIPTION 0 That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages I through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages I through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Attachment No. 1-1 ATTACHMENT NO.2 SITE MAP Attachment No. 2-1 !2 �J 0 0 ATTACHMENT NO.3 RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO: ) This document is exempt from payment of a recording fee pursuant to government Code Section 27383. Documentary Transfer Tax: $ Based on Full Value of Real Property Conveyed GRANT DEED For valuable consideration, receipt of which is hereby acknowledged, The SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), effective as of , 2006, hereby grants to SEASONS SENIOR APARTMENTS II,LP, a California limited partnership ("Owner"), the real property described in Exhibit A attached hereto and incorporated herein, subject to the existing easements, restrictions and covenants of record described there, and the requirements of the Disposition and Development Agreement between the parties, dated as of November 7, 2006. ATTEST: Margaret R. Monahan, Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth, Jon Goetz, Agency Special Counsel AGENCY: SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic Joe Soto, Chairman Attachment No. 3-1 C] EXHIBIT "A" LEGAL DESCRIPTION OF SITE 0 That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages I through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages 1 through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Exhibit A STATE OF CALIFORNIA COUNTY OF On personally appeared ❑ personally known to me -or- n U ss. before me, , Notary Public, (Print Name of Notary Public) F1 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document ❑ Partner(s) ❑ Limited ❑ General ❑ Attomey-In-Fact ❑ Trustee(s) ❑ Guardian/Conservator Number Of Pages ❑ Other: Signer is representing: Name Of Person(s) Or Entdy(ies) Date Of Documents Signer(s) Other Than Named Above • ATTACHMENT NO. 4 PROMISSORY NOTE 11 , 200_ San Juan Capistrano, California FOR VALUE RECEIVED, SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership (the `Borrower"), promises to pay to the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), or order, at the Agency's office at 32400 Paseo Adelanto, San Juan Capistrano, California 92675, or such other place as the Agency may designate in writing, the sum of Dollars ($) (the "Note Amount"), in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts. 1. Agreement. This Promissory Note (the "Note") is given in accordance with that certain Disposition and Development Agreement executed by the Agency and Borrower, dated as of , 2006 (the "Agreement"). The rights and obligations of the Borrower and the Agency under this Note shall be governed by the Agreement and by the additional terms set forth in this Note. In the event of any inconsistencies between the terms of this Note and the terms of the Agreement or any other document related to the Note Amount, the terms of this Note shall prevail. 2. Interest. The Note Amount shall bear interest at the rate of three percent (3%) per annum, compounded annually, from the date hereof. 3. Repayment of Note Amount. The Note Amount shall be paid by the Borrower's annual payment to the Agency of an amount equal to Fifty Percent (50%) (or such other percentage if the re -allocation provisions of Section 302 of the Agreement apply) of the Residual Receipts (as defined below) from operation of the Housing Project (as defined in the Agreement), as determined by a residual receipts calculation from the operation of the Housing Project the preceding calendar year. Annual Residual Receipts payments shall be by the Borrower by cashier's check and shall be delivered on or before ninety (90) days after the end of the Owner's fiscal year, of each year during the term of this Note first following the date the Housing Project is placed in service, until the Note Amount and all unpaid interest thereon has been repaid in full. Any remaining portion of the Note Amount shall be due and payable on the fifty-fifth (55h) anniversary of the date of the City's issuance of a Certificate of Occupancy for the Housing Project. Notwithstanding the foregoing, the full Note Amount may be accelerated as set forth in Section 12 hereof. As used herein, "Annual Project Revenue" shall mean all gross income and all revenues of any kind from the Housing Project in a calendar year, including without limitation, Housing Project rents, Section 8 housing assistance payments, if any, late charges, vending machine income, and any other revenues of whatever kind or nature from the Housing Project, except that interest on security deposits and required reserves shall not be considered Annual Project Revenue. As used herein, "Debt Service" means regularly scheduled payments of principal and interest made in a calendar year pursuant to the financing approved pursuant to Section 501 of the Agreement which is obtained for the development and ownership of the Housing Project, which is senior in lien Attachment No. 4-1 0 0 which is obtained for the development and ownership of the Housing Project, which is senior in lien priority to the Agency Loan, but excluding payments made pursuant to this Note. As used herein, "Deferred Developer Fees" shall mean any deferred developer fee allowable under the financing approved by the Agency pursuant to Section 501 of the Agreement. As used herein, "Operating Expenses" shall mean actual, reasonable and customary (for comparable affordable senior rental housing developments in Orange County) costs, fees and expenses directly incurred, paid, and attributable to the operation, maintenance and management of the Housing Project in a calendar year, which are in accordance with the Operating Budget approved by the Agency pursuant to Section 612 of the Agreement, including: painting, cleaning, repairs, alterations, landscaping, utilities, refuse removal, certificates, permits and licenses, sewer charges, real and personal property taxes, assessments, insurance, security, advertising and promotion, janitorial services, cleaning and building supplies, purchase, repair, servicing and installation of appliances, equipment, fixtures and furnishings which are not paid from the Capital Replacement Reserve, fees and expenses of property management, fees and expenses of accountants, attorneys and other professionals, the cost of social services in accordance with Section 613 of the Agreement, repayment of any completion or operating loans made to Borrower by its partners or the Developer (as defined in the Agreement), and other actual, reasonable and customary operating costs and capital costs which are directly incurred and paid by the Borrower, but which are not paid from the Operating Reserve or other reserve accounts. The Operating Expenses shall not in any event include expenses not related to the Housing Project's operations, including without limitation, depreciation, amortization, and accrued principal and interest expense on deferred payment debt. As used herein, "Reserve Deposits" shall mean and payments to the Capital Replacement Reserve account pursuant to Section 611 of the Agreement and the Operating Reserve account pursuant to Section 612 of the Agreement. As used herein, "Residual Receipts" shall mean Annual Project Revenue less the sum of (i) Operating Expenses, (ii) Debt Service, (iii) Reserve Deposits, (iv) Deferred Developer Fees, (v) a partnership management fee to the managing general partner of Owner, and/or a general partner asset management fee payable to one or more of the general partners of the Owner, and/or a limited partner asset management fee payable to one or more of the limited partners of Owner, and an annual audit fee, in such amounts which are set forth in the Financing Plan which is approved by the Agency, for each calendar year; provided, however, that if such calculation results in a negative number, Residual Receipts shall be zero for that year. On or before ninety (90) days after the end of the Owner's fiscal year, of each year commencing in the year of the issuance of a certificate of occupancy for the Housing Project, the Borrower shall annually provide the Agency a Residual Receipts report, in the form attached to the Agreement as Attachment No. 6, which shall describe in detail the Annual Project Revenue, Debt Service, Operating Expenses, Reserve Deposits, Asset Management Fees, Deferred Developer Fees, and Residual Receipts for that year. The Borrower shall also submit to the Agency, on or before ninety (90) days after the end of the Owner's fiscal year, of each year commencing in the year of the issuance of a certificate of occupancy for the Housing Project, annual financial statements with respect to the Housing Project that have been reviewed by an independent certified public accountant, together with an expressed written opinion of the certified public accountant that such financial statements present the financial position, results of operations, and cash flows fairly and in Attachment No. 4-2 0 0 accordance with generally accepted accounting principles. 4. Security. This Note is secured by a Deed of Trust (the "Deed of Trust") dated as of the same date as this Note. 5. Waivers a. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time at the Agency's sole discretion and that the Agency may accept security in consideration for any such extension or release any security for this Note at its sole discretion all without in any way affecting the liability of Borrower. b. No extension of time for payment of this Note made by agreement by the Agency with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part. C. The obligations of Borrower under this Note shall be absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reasons whatsoever. d. Borrower waives presentment, demand, notice of protest and nonpayment, notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or interest thereon, notice of dishonor, diligence in collection or in proceeding against any of the rights of interests in or to properties securing of this Note, and the benefit of any exemption under any homestead exemption laws, if applicable. C. No previous waiver and no failure or delay by Agency in acting with respect to the terms of this Note or the Deed of Trust shall constitute a waiver of any breach, default, or failure or condition under this Note, the Deed of Trust or the obligations secured thereby. A waiver of any term of this Note, the Deed of Trust or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver. 6. Attorneys' Fees and Costs. Borrower agrees that if any amounts due under this Note are not paid when due, to pay in addition, all costs and expenses of collection and reasonable attorneys' fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed. 7. Joint and Several Obligation. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their heirs, successors and assigns. 8. Amendments and Modifications. This Note may not be changed orally, but only by an amendment in writing signed by Borrower and by the Agency. 9. Agency May Assign. Agency may, at its option, assign its right to receive payment under this Note without necessity of obtaining the consent of the Borrower. 10. Borrower Assignment Prohibited. In no event shall Borrower assign or transfer Attachment No. 4-3 any portion of this Note without the prior express written consent of the Agency, which consent shall not unreasonably be withheld, except pursuant to a transfer which is permitted or approved under Section 805 of the Disposition and Development Agreement. 11. Terms. Any terms not separately defined herein shall have the same meanings as set forth in the Agreement. 12. Acceleration and Other Remedies. Upon: (a) the occurrence of an event of Default as defined in the Agreement, or (b) Borrower selling, contracting to sell, giving an option to purchase, conveying, leasing, further encumbering, mortgaging, assigning or alienating the Borrower's interest in the Housing Project (other than (i) financing approved by the Agency or otherwise permitted pursuant to Section 501 of the Agreement, (ii) leasing of individual Housing Units to tenants in the ordinary course of business, or (iii) a purchase option and/or right of first refusal granted to Borrower's general partner(s) or affiliates thereof), whether directly or indirectly, whether voluntarily or involuntarily or by operation of law, or any interest in the Housing Project, or suffering its title, or any interest in the Housing Project to be divested, whether voluntarily or involuntarily, without the consent of the Agency or as otherwise approved or permitted under the Disposition and Development Agreement, Agency may, at Agency's option, declare the outstanding principal amount of this Note, together with the then accrued and unpaid interest thereon and other charges hereunder, and all other sums secured by the Deed of Trust, to be due and payable immediately, and upon such declaration, such principal and interest and other sums shall immediately become and be due and payable without demand or notice, all as further set forth in the Deed of Trust. All costs of collection, including, but not limited to, reasonable attorneys' fees and all expenses incurred in connection with protection of, or realization on, the security for this Note, may be added to the principal hereunder, and shall accrue interest as provided herein. Agency shall at all times have the right to proceed against any portion of the security for this Note in such order and in such manner as such Agency may consider appropriate, without waiving any rights with respect to any of the security. Any delay or omission on the part of the Agency in exercising any right hereunder, under the Agreement or under the Deed of Trust shall not operate as a waiver of such right, or of any other right. No single or partial exercise of any right or remedy hereunder or under the Agreement or any other document or agreement shall preclude other or further exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of any sum payable hereunder, or part thereof, after the due date of such payment shall not be a waiver of Agency's right to either require prompt payment when due of all other sums payable hereunder or to declare an event of Default for failure to make prompt or complete payment. 13. Successors and Assigns. Whenever "Agency" is referred to in this Note, such reference shall be deemed to include the San Juan Capistrano Redevelopment Agency and its successors and assigns, including, without limitation, any subsequent assignee or holder of this Note. All covenants, provisions and agreements by or on behalf of Borrower, and on behalf of any makers, endorsers, guarantors and sureties hereof which are contained herein shall inure to the benefit of the Agency and Agency's successors and assigns. 14. Miscellaneous. Time is of the essence hereof. This Note shall be governed by and construed under the laws of the State of California except to the extent Federal laws preempt the laws of the State of California. Borrower irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of Orange or the United States District Court of the Central District of California, as Agency hereof may deem appropriate, in connection Attachment No. 4-4 0 0 with any legal action or proceeding arising out of or relating to this Note. Borrower also waives any objection regarding personal or in rem jurisdiction or venue, 15. No Personal Liability. In the event of any default under the terms of this Note or the Deed of Trust, the sole recourse of the Agency for any and all such defaults shall be by judicial foreclosure or by the exercise of the trustee's power of sale, and Borrower and its partners shall not be personally liable for the payment of this Note or for the payment of any deficiency established after judicial foreclosure or trustee's sale; provided, however, that the foregoing shall not in any way affect any rights the Agency may have (as a secured party or otherwise) hereunder or under the Agreement or Deed of Trust to recover directly from Borrower any amounts secured by the Deed of Trust, or any funds, damages or costs (including without limitation reasonable attorneys' fees and costs) incurred by Agency as a result of fraud, misrepresentation or waste (it shall not be waste if Borrower does not repair or restore the Housing Project after any destruction, damage or partial condemnation notwithstanding the availability of insurance or condemnation proceeds), and any costs and expenses incurred by the Agency in connection therewith (including without limitation reasonable attorneys' fees and costs). 16. Notice and Cure Rights of Borrower's Limited Partner. The provisions of Section 506 of the Agreement as they relate to the notice to and cure rights of the Borrower's limited partner are incorporated herein by this reference. FTITITt 1 ♦ ' SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership in Attachment No. 4-5 ATTACHMENT NO. 5 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director r� u This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383 DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING THIS DEED OF TRUST WITH ABSOLUTE ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING ("Deed of Trust"), made as of ,200 is entered into by and between SEASONS SENIOR APARTMENTS Il, L.P., a California limited partnership ("Trustor"), ("Trustee"), and the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic ("Beneficiary"). ARTICLE 1. GRANT IN TRUST 1.1 GRANT. For the purposes of and upon the terms and conditions in this Deed of Trust, Trustor irrevocably grants, conveys and assigns to Trustee, IN TRUST FOR THE BENEFIT OF BENEFICIARY, WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, all of Trustor's right, title and interest, whether now owned or hereafter acquired, in and to that certain real property located in the City of San Juan Capistrano, County of Orange, State of California, described on Exhibit A attached hereto (the "Real Property"), including, but not necessarily limited to, (i) Trustor's interest in the Real Property, (ii) all buildings and other improvements and fixtures now or hereafter located on the Real Property, including, but not limited to, all apparatus, equipment, and appliances used in the operation or occupancy of the Real Property, it being intended by the parties that all such items shall be conclusively considered to be a part of the Real Property, whether or not attached or affixed to the Real Property (collectively, the "Improvements"); (iii) all development rights or credits, air rights, water, water rights and water stock related to the Real Property or the Improvements (the Real Property and the Improvements are collectively referred to herein as the "Property"); (iv) all minerals, oil and gas, and other hydrocarbon substances in, on or under the Property, (v) all appurtenances, easements, rights and rights of way appurtenant or related to the Property; (vi) all interest or estate which Trustor may hereafter acquire in any of the property described above; and (vii) all additions and accretions to, and the proceeds of, any of the foregoing (all of the foregoing being collectively referred to as the "Subject Property"). The listing of specific rights or property shall not be interpreted as a limit of general terms. Attachment No. 5-1 0 0 1.2 ADDRESS. The subject property is located at , San Juan Capistrano, California. However, neither the failure to designate an address nor any inaccuracy in the address designated shall affect the validity or priority of the lien of this Deed of Trust on the Subject Property as described on Exhibit A. ARTICLE 2. OBLIGATIONS SECURED 2.1 OBLIGATIONS SECURED. Trustor makes this grant and assignment for the purpose of securing the following obligations ("Secured Obligations"): a. Payment to Beneficiary of all sums at any time owing under that certain Promissory Note ("Note") of even date herewith, in the principal amount of Dollars ($) executed by Trustor and payable to the order of Beneficiary, as lender; and b. Payment and performance of all covenants and obligations of Trustor under that certain "Disposition and Development Agreement' between Trustor and Beneficiary, of even date herewith; and C. Payment and performance of all covenants and obligations of Trustor under this Deed of Trust; and d. Payment and performance of all future advances and other obligations that the then owner of all or part of the Subject Property may agree to pay and/or perform (whether as principal, surety or guarantor) for the benefit of Beneficiary, when such future advance or obligation is evidenced by a writing which recites that it is secured by this Deed of Trust; and e. All modifications, extensions and renewals of any of the obligations secured hereby, however evidenced, including, without limitation: (i) modifications of the required principal payment dates or interest payment dates or both, as the case may be, deferring or accelerating payment dates wholly or partly; or (ii) modifications, extensions or renewals at a different rate of interest whether or not in the case of a note, the modification, extension or renewal is evidenced by a new or additional promissory note or notes. 2.2 OBLIGATIONS. The term "obligations" is used herein in its broadest and most comprehensive sense and shall be deemed to include, without limitation, all principal, interest, prepayment charges (if any), late charges, other charges, and loan fees at any time accruing or assessed on any of the Secured Obligations. 2.3 INCORPORATION. All terms of the Secured Obligations and the documents evidencing such obligations are incorporated herein by this reference. Any and all persons or entities who may have or acquire an interest in the Subject Property shall be deemed to have notice of the terms of the Secured Obligations and to have notice, if provided therein, that: (a) the Note may permit borrowing, repayment and re -borrowing so that repayments shall not reduce the amounts of the Secured Obligations; and (b) the rate of interest on one or more Secured Obligations may vary from time to time. Attachment No. 5-2 0 0 ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS 3.1 ASSIGNMENT. Trustor hereby irrevocably assigns to Beneficiary, subject to any prior assignment to Trustor's lenders, all of Trustor's right, title and interest in, to and under: (a) all leases and subleases of the Subject Property or any portion thereof, all licenses and agreements relating to the management, leasing or operation of the Subject Property or any portion thereof, and all other agreements of any kind relating to the use or occupancy of the Subject Property or any portion thereof, whether now existing or entered into after the date hereof ("Leases"); and (b) the rents, issues, deposits and profits of the Subject Property, including, without limitation, all amounts payable and all rights and benefits accruing to Trustor under the Leases ("Payments"). The term "Leases" shall also include all guarantees of and security for the lessees' performance thereunder, and all amendments, extensions, renewals or modifications thereto which are permitted hereunder. This is a present and absolute assignment, not an assignment for security purposes only, and Beneficiary's right to the Leases and Payments is not contingent upon, and may be exercised without possession of, the Subject Property. 3.2 GRANT OF LICENSE. Beneficiary confers upon Trustor a license ("License"), subject to any prior license conferred upon Trustor's lenders, to collect and retain the Payments as they become due and payable, until the occurrence of a Default (as hereinafter defined). Upon a Default, the License shall be automatically revoked and Beneficiary may collect and apply the Payments pursuant to Section 6.4 without notice and without taking possession of the Subject Property. Trustor hereby irrevocably authorizes and directs the lessees under the Leases to rely upon and comply with any notice or demand by Beneficiary for the payment to Beneficiary of any rental or other sums which may at any time become due under the Leases, or for the performance of any of the lessees' undertakings under the Leases, and the lessees shall have no right or duty to inquire as to whether any Default has actually occurred or is then existing hereunder. Trustor hereby relieves the lessees from any liability to Trustor by reason of relying upon and complying with any such notice or demand by Beneficiary. 3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable Assignment shall not cause Beneficiary to be: (a) a mortgagee in possession; (b) responsible or liable for the control, care, management or repair of the Subject Property or for performing any of the terms, agreements, undertakings, obligations, representations, warranties, covenants and conditions of the Leases; or (c) responsible or liable for any waste committed on the Subject Property by the lessees under any of the Leases or any other parties; for any dangerous or defective condition of the Subject Property; or for any negligence in the management, upkeep, repair or control of the Subject Property resulting in loss or injury or death to any Lessee, licensee, employee, invitee or other person or entity. Beneficiary shall not directly or indirectly be liable to Trustor or any other person or entity as a consequence of: (i) the exercise or failure to exercise any of the rights, remedies or powers granted to Beneficiary hereunder; or (ii) the failure or refusal of Beneficiary to perform or discharge any obligation, duty or liability of Trustor arising under the Leases. 3.4 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that as of the date of this Deed of Trust there are no existing Leases. 3.5 COVENANTS. Trustor covenants and agrees at Trustor's sole cost and expense to: (a) perform the obligations of lessor contained in the Leases and enforce by all available remedies performance by the lessees of the obligations of the lessees contained in the Leases; (b) exercise Attachment No. 5-3 0 0 Trustor's best efforts to lease all of the condominium units within the Subject Property at all times upon the completion of construction of the Improvements; (c) deliver to Beneficiary fully executed, counterpart copies of each and every Lease if requested to do so; and (d) execute and record such additional assignments of any Lease or specific subordinations of any Lease to the Deed of Trust, in form and substance acceptable to Beneficiary, as Beneficiary may request. Trustor shall not, without Beneficiary's prior written consent, except as otherwise permitted pursuant to the Disposition and Development Agreement: (i) enter into any Leases after the date of this Assignment except leases in the ordinary course of Trustor's business and on the lease form approved by Beneficiary; (ii) execute any other assignment relating to any of the Leases, except pursuant to the terns of any construction and/or permanent financing approved by Beneficiary; (iii) discount any rent or other sums due under the Leases or collect the same in advance, other than to collect rent one (1) month in advance of the time when it becomes due; (iv) terminate, modify or amend any of the terms of the Leases or in any manner release or discharge the lessees from any obligations thereunder except in the ordinary course of Trustor's business; (v) consent to any assignment or subletting by any lessee; or (vi) subordinate or agree to subordinate any of the Leases to any other deed of trust or encumbrance, except as required to obtain financing for the Subject Property. Any such attempted action in violation of the provisions of this Section 3.5 shall be null and void. Without in any way limiting the requirement of Beneficiary's consent hereunder, any sums received by Trustor in consideration of any termination (or the release or discharge of any lessee) modification or amendment of any Lease shall be applied to reduce the outstanding Secured Obligations and any such sums received by Trustor shall be held in trust by Trustor for such purpose. 3.6 ESTOPPEL CERTIFICATES. Within thirty (30) days after written request by Beneficiary, Trustor shall deliver to Beneficiary and to any party designated by Beneficiary estoppel certificates executed by Trustor, in recordable form, certifying (if such be the case): (a) that the foregoing assignment and the Leases are in full force and effect; (b) the date of each lessee's most recent payment of rent; (c) that there are no defenses or offsets outstanding, or stating those claimed by Trustor under the foregoing assignment or the Leases, as the case may be; and (d) any other information reasonably requested by Beneficiary. ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING 4.1 SECURITY INTEREST. Trustor hereby grants and assigns to Beneficiary, as of the effective date of the Disposition and Development Agreement, a security interest, to secure payment and performance of all of the Secured Obligations, in all of the following described personal property in which Trustor now or at any time hereafter has any interest (collectively, the "Collateral"): All goods, building and other materials, supplies, work in process, equipment, machinery, fixtures, furniture, furnishings, signs and other personal property, wherever situated, which are or are to be incorporated into, used in connection with, or appropriated for use thereon, (i) the Real Property described on Exhibit A attached hereto and incorporated by reference herein (to the extent the same are not effectively made a part of the Real Property pursuant to Section 1.1 above) or (ii) the improvements constructed or to be constructed on the Subject Property, as described in the Disposition and Development Agreement between Trustor and Beneficiary, dated , 2006 which real property and improvements are, pursuant to Section 1.1 above, collectively referred to herein, along with the other property described in Section 1.1 above, as the Subject Property); together with all rents, issues, Attachment No. 5-4 0 0 deposits and profits of the Subject Property (to the extent, if any, they are not subject to Article III); all inventory, accounts, cash receipts, deposit accounts, accounts receivable, contract rights, general intangibles, chattel paper, instruments, documents, notes, drafts, letters of credit, insurance policies, insurance and condemnation awards and proceeds, any other rights to the payment of money, trade names, trademarks and service marks arising from or related to the Subject Property or any business now or hereafter conducted thereon by Trustor; all permits consents, approvals, licenses, authorizations and other rights granted by, given by or obtained from, any governmental entity with respect to the Subject Property; all deposits or other security now or hereafter made with or given to utility companies by Trustor with respect to the Subject Property; all advance payments of insurance premiums made by Trustor with respect to the Subject Property; all plans, drawings and specifications relating to the Subject Property; all loan funds held by Beneficiary, whether or not disbursed; all funds deposited with Beneficiary pursuant to any loan agreement; all reserves, deferred payments, deposits, accounts, refunds, cost savings and payments of any kind related to the Subject Property or any portion thereof; together with all replacements and proceeds of, and additions and accessions to, any of the foregoing; together with all books, records and files relating to any of the foregoing. As to all of the above described personal property which is or which hereafter becomes a "fixture" under applicable law, this Deed of Trust constitutes a security agreement and a fixture filing under Sections 9105, 9313 and 9402(6) of the California Uniform Commercial Code, as amended or recodified from time to time, and is acknowledged and agreed to be a "construction mortgage" under such Sections. Trustor is the "debtor" and Beneficiary is the "secured party". Beneficiary's security interest in the Collateral shall be junior and subject to the prior security interest of Trustor's lender(s) for the Subject Property. 4.2 REPRESENTATIONS AND WARRANTIES. Trustor represents and warrants that: (a) Trustor has, or will have, good title to the Collateral; (b) Trustor has not previously assigned or encumbered the Collateral, and no financing statement covering any of the Collateral has been delivered to any other person or entity except to construction and permanent lenders approved by Beneficiary or otherwise permitted under the Disposition and Development Agreement; and (c) Trustor's principal place of business is located at the address shown in Section 7.8. 4.3 RIGHTS OF BENEFICIARY. In addition to Beneficiary's rights as a "secured party" under the California Uniform Commercial Code, as amended or recodified from time to time ("UCC"), Beneficiary may, but shall not be obligated to, at any time without notice and at the expense of Trustor: (a) give notice to any person or entity of Beneficiary's rights hereunder and enforce such rights at law or in equity; (b) insure, protect, defend and preserve the Collateral or any rights or interests of Beneficiary therein; (c) inspect the Collateral; and (d) endorse, collect and receive any right to payment of money owing to Trustor under or from the Collateral. Notwithstanding the above, in no event shall Beneficiary be deemed to have accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Beneficiary shall make an express written election of said remedy under UCC §9505, or other applicable law. 4.4 RIGHTS OF BENEFICIARY ON DEFAULT. Upon the occurrence of a Default (hereinafter defined) under this Deed of Trust, then in addition to all of Beneficiary's rights as a "secured party" under the UCC or otherwise at law: Attachment No. 5-5 0 0 a. Beneficiary may (i) upon written notice, require Trustor to assemble any or all of the Collateral and make it available to Beneficiary at a place designated by Beneficiary; (ii) without prior notice, enter upon the Subject Property or other place where any of the Collateral may be located and take possession of, collect, sell, and dispose of any or all of the Collateral, and store the same at locations acceptable to Beneficiary at Trustor's expense; (iii) sell, assign and deliver at any place or in any lawful manner all or any part of the Collateral and bid and become purchaser at any such sales; and b. Beneficiary may, for the account of Trustor and at Trustor's expense: (i) operate, use, consume, sell or dispose of the Collateral as Beneficiary deems appropriate for the purpose of performing any or all of the Secured Obligations; (ii) enter into any agreement, compromise, or settlement, including insurance claims, which Beneficiary may deem desirable or proper with respect to any of the Collateral; and (iii) endorse and deliver evidences of title for, and receive, enforce and collect by legal action or otherwise, all indebtedness and obligations now or hereafter owing to Trustor in connection with or on account of any or all of the Collateral. Notwithstanding any other provision hereof, Beneficiary shall not be deemed to have accepted any property other than cash in satisfaction of any obligation of Trustor to Beneficiary unless Trustor shall make an express written election of said remedy under UCC §9505, or other applicable law. 4.5 POWER OF ATTORNEY. Trustor hereby irrevocably appoints Beneficiary as Trustor's attorney-in-fact (such agency being coupled with an interest), and as such attorney-in-fact Beneficiary may, without the obligation to do so, in Beneficiary's name, or in the name of Trustor, prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve any of Beneficiary's security interests and rights in or to any of the Collateral, and, upon a Default hereunder, take any other action required of Trustor; provided, howeverthat Beneficiary as such attomey-in-fact shall be accountable only for such funds as are actually received by Beneficiary. 4.6 POSSESSION AND USE OF COLLATERAL. Except as otherwise provided in this Section, or any other Loan Documents (as defined in the Disposition and Development Agreement), so long as no Default exists under this Deed of Trust, Trustor may possess, use, move, transfer or dispose of any of the Collateral in the ordinary course of Trustor's business and in accordance with the Disposition and Development Agreement. ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES 5.1 TITLE. Trustor represents and warrants that, except as disclosed to Beneficiary in a writing which refers to this warranty, Trustor lawfully holds and possesses valid title to the Subject Property without limitation on the right to encumber, and that this Deed of Trust is a first and prior lien on the Subject Property. 5.2 TAXES AND ASSESSMENTS. Subject to Trustor's right to in good faith contest payment of taxes and claim exemptions pursuant to California Health and Safety Code Section 214, Trustor shall pay prior to delinquency all taxes, assessments, levies and charges imposed by any public or quasi -public authority or utility company which (i) are or which may become a lien upon or cause a loss in value of the Subject Property or any interest therein, or (ii) are required to be paid by Attachment No. 5-6 0 0 Trustor. Trustor shall also pay prior to delinquency all taxes, assessments, levies and charges imposed by any public authority upon Beneficiary by reason of its interest in any Secured Obligation or in the Subject Property, or by reason of any payment made to Beneficiary pursuant to any Secured Obligation; provided, however, Trustor shall have no obligation to pay taxes which may be imposed from time to time upon Beneficiary and which are measured by and imposed upon Beneficiary's net income. 5.3 TAX AND INSURANCE IMPOUNDS. Following a Default by Trustor, at Beneficiary's option and upon its demand and subject to the impound requirements of any of the Senior Obligations, Trustor, shall, until all Secured Obligations have been paid in full, pay to Beneficiary monthly, annually or as otherwise directed by Beneficiary an amount estimated by Beneficiary to be equal to: (a) all taxes, assessments and levies imposed by any public or quasi - public authority or utility company which are or may become a lien upon the Subject Property and will become due for the tax year during which such payment is so directed; and (b) premiums for fire, other hazard and mortgage insurance next due. If Beneficiary determines that any amounts paid by Trustor are insufficient for the payment in full of such taxes, assessments, levies and/or insurance premiums, Beneficiary shall notify Trustor of the increased amounts required to pay all amounts due, whereupon Trustor shall pay to Beneficiary within thirty (30) days thereafter the additional amount as stated in Beneficiary's notice. All sums so paid shall not bear interest, except to the extent and in any minimum amount required by law; and Beneficiary shall, unless Trustor is otherwise in Default hereunder or under any Secured Obligation, apply said funds to the payment of, or at the sole option of Beneficiary release said funds to Trustor for the application to and payment of, such sums, taxes, assessments, levies, charges, and insurance premiums. Upon Default by Trustor hereunder or under any Secured Obligation, Beneficiary may apply all or any part of said sums to any Secured Obligation and/or to cure such Default, in which event Trustor shall be required to restore all amounts so applied, as well as to cure any other events or conditions of Default not cured by such application. Upon assignment of this Deed of Trust, Beneficiary shall have the right to assign all amounts collected and in its possession to its assignee whereupon Beneficiary and its Trustee shall be released from all liability with respect thereto. Within ninety-five (95) days following full repayment of the Secured Obligations (other than full repayment of the Secured Obligations as a consequence of a foreclosure or conveyance in lieu of foreclosure of the liens and security interests securing the Secured Obligations) or at such earlier time as Beneficiary may elect, the balance of all amounts collected and in Beneficiary's possession shall be paid to Trustor and no other party shall have any right or claim thereto. 5.4 PERFORMANCE OF SECURED OBLIGATIONS. Trustor shall promptly pay and perform each Secured Obligation when due. 5.5 LIENS, ENCUMBRANCES AND CHARGES. Trustor shall immediately discharge any lien not approved by Beneficiary in writing that has or may attain priority over this Deed of Trust, subject to the requirements of the Disposition and Development Agreement with respect to mechanic's liens. Trustor shall pay when due all obligations secured by or reducible to liens and encumbrances which shall now or hereafter encumber or appear to encumber all or any part of the Subject Property or any interest therein, whether senior or subordinate hereto. 5.6 DAMAGES; INSURANCE AND CONDEMNATION PROCEEDS. a. The following (whether now existing or hereafter arising) are, in the amount Attachment No. 5-7 0 0 not to exceed any sums then owing under the Disposition and Development Agreement and Note, all absolutely and irrevocably assigned by Trustor to Beneficiary and, at the request of Beneficiary, shall be paid directly to Beneficiary, subject to the rights of the holders of Senior Obligations: (i) all awards of damages and all other compensation payable directly or indirectly by reason of a condemnation or proposed condemnation for public or private use affecting all or any part of, or any interest in, the Subject Property; (ii) all other claims and awards for damages to, or decrease in value of, all or any part of, or any interest in, the Subject Property; (iii) all proceeds of any insurance policies payable by reason of loss sustained to all or any part of the Subject Property; and (iv) all interest which may accrue on any of the foregoing. Subject to applicable law, and without regard to any requirement contained in Section 5.7(d), Beneficiary may at its discretion apply all or any of the proceeds it receives to its expenses in settling, prosecuting or defending any claim and may apply the balance to the Secured Obligations in any order, and/or Beneficiary may release all or any part of the proceeds to Trustor upon any conditions Beneficiary may impose. Beneficiary may commence, appear in, defend or prosecute any assigned claim or action and may adjust, compromise, settle and collect all claims and awards assigned to Beneficiary;rop vided, however, in no event shall Beneficiary be responsible for any failure to collect any claim or award, regardless of the cause of the failure. b. At its reasonable option, Beneficiary may permit insurance or condemnation proceeds held by Beneficiary to be used for repair or restoration but may condition such application upon reasonable conditions, including, without limitation: (i) the deposit with Beneficiary of such additional funds which Beneficiary determines are needed to pay all costs of the repair or restoration, (including, without limitation, taxes, financing charges, insurance and rent during the repair period); (ii) the establishment of an arrangement for lien releases and disbursement of funds acceptable to Beneficiary; (iii) the delivery to Beneficiary of plans and specifications for the work, a contract for the work signed by a contractor acceptable to Beneficiary, a cost breakdown for the work and a payment and performance bond for the work, all of which shall be acceptable to Beneficiary; and (iv) the delivery to Beneficiary of evidence acceptable to Beneficiary (aa) that after completion of the work the income from the Subject Property will be sufficient to pay all expenses and debt service for the Subject Property; (bb) of the continuation of Leases acceptable to and required by Beneficiary; (cc) that upon completion of the work, the size, capacity and total value of the Subject Property will be at least as great as it was before the damage or condemnation occurred; (dd) that there has been no material adverse change in the financial condition or credit of Trustor since the date of this Deed of Trust; and (ee) of the satisfaction of any additional conditions that Beneficiary may reasonably establish to protect its security. Trustor hereby acknowledges that the conditions described above are reasonable, and, if such conditions have not been satisfied within thirty (30) days of receipt by Beneficiary of such insurance or condemnation proceeds, then Beneficiary may apply such insurance or condemnation proceeds to pay down principal of the Secured Obligations in such order and amounts as Beneficiary in its sole discretion may choose. 5.7 MAINTENANCE AND PRESERVATION OF THE SUBJECT PROPERTY. Trustor covenants, subject to the provisions of the Disposition and Development Agreement: (a) to insure the Subject Property against such risks as Beneficiary may reasonably require and, at Beneficiary's request, to provide evidence of such insurance to Beneficiary, and to comply with the requirements of any insurance companies insuring the Subject Property; (b) to keep the Subject Property in good condition and repair; (c) not to remove or demolish the Subject Property or any part thereof, not to alter, restore or add to the Subject Property and not to initiate or acquiesce in any change in any zoning or other land classification which affects the Subject Property without Attachment No. 5-8 0 0 Beneficiary's prior written consent; (d) to complete or restore promptly and in good and workmanlike manner the Subject Property, or any part thereof which may be damaged or destroyed, without regard to whether Beneficiary elects to require that insurance proceeds be used to reduce the Secured Obligations as provided in Section 5.6; (e) to comply with all laws, ordinances, regulations and standards, and all covenants, conditions, restrictions and equitable servitudes, whether public or private, of every kind and character which affect the Subject Property and pertain to acts committed or conditions existing thereon, including, without limitation, any work, alteration, improvement or demolition mandated by such laws, covenants or requirements; (f) not to commit or permit waste of the Subject Property (it shall not be waste if Trustor does not repair or restore the Subject Property after any destruction, damage or partial condemnation notwithstanding the availability of insurance or condemnation proceeds); and (g) to do all other acts which from the character or use of the Subject Property may be reasonably necessary to maintain and preserve its value. 5.8 DEFENSE AND NOTICE OF LOSSES, CLAIMS AND ACTIONS. At Trustor's sole expense, Trustor shall protect, preserve and defend the Subject Property and title to and right of possession of the Subject Property, the security hereof and the rights and powers of Beneficiary and Trustee hereunder against all adverse claims. Trustor shall give Beneficiary and Trustee prompt notice in writing of the assertion of any claim, of the filing of any action or proceeding, of the occurrence of any damage to the Subject Property and of any condemnation offer or action. 5.9 ACCEPTANCE OF TRUST; POWERS AND DUTIES OF TRUSTEE. Trustee accepts this trust when this Deed of Trust is recorded. From time to time upon written request of Beneficiary and presentation of this Deed of Trust or a certified copy thereof for endorsement, and without affecting the personal liability of any person or entity for payment of any indebtedness or performance of any obligations secured hereby, Trustee may, without liability therefor and without notice: (a) reconvey all or any part. of the Subject Property; (b) consent to the making of any map or plat thereof; and (c) join in any grant of easement thereon, any declaration of covenants and restrictions, or any extension agreement or any agreement subordinating the lien or charge of this Deed of Trust. Except as may be required by applicable law, Trustee or Beneficiary may from time to time apply to any court of competent jurisdiction for aid and direction in the execution of the trust hereunder and the enforcement of the rights and remedies available hereunder, and may obtain orders or decrees directing or confirming or approving acts in the execution of said trust and the enforcement of said remedies. Trustee has no obligation to notify any party of any pending sale or any action or proceeding, including, without limitation, actions in which Trustor, Beneficiary or Trustee shall be a party unless held or commenced and maintained by Trustee under this Deed of Trust. Trustee shall not be obligated to perform any act required of it hereunder unless the performance of the act is requested in writing and Trustee is reasonably indemnified and held harmless against loss, cost, liability or expense. 5.10 COMPENSATION; EXCULPATION; INDEMNIFICATION. a. Trustor shall pay Trustee's fees and reimburse Trustee for expenses in the administration of this trust, including attorneys' fees. Trustor shall pay to Beneficiary reasonable compensation for services rendered concerning this Deed of Trust, including without limit any statement of amounts owing under any Secured Obligation. Beneficiary shall not directly or indirectly be liable to Trustor or any other person or entity as a consequence of (i) the exercise of the rights, remedies or powers granted to Beneficiary in this Deed of Trust; (ii) the failure or refusal of Beneficiary to perform or discharge any obligation or liability of Trustor under any agreement related Attachment No. 5-9 0 0 to the Subject Property or under this Deed of Trust; or (iii) any loss sustained by Trustor or any third party resulting from Beneficiary's failure to sell, lease or sublease the Subject Property after a Default (hereinafter defined) or from any other act or omission of Beneficiary in managing the Subject Property after a Default, unless the loss is caused by the gross negligence or willful misconduct of Beneficiary, and no such liability shall be asserted against or imposed upon Beneficiary, and all such liability is hereby expressly waived and released by Trustor. b. Subject to the provisions of Section 6.8 hereof, Trustor indemnifies Trustee and Beneficiary against, and holds Trustee and Beneficiary harmless from, all losses, damages, liabilities, claims, causes of action, judgments, court costs, attorneys' fees and other legal expenses, cost of evidence of title, cost of evidence of value, and other expenses which either may suffer or incur: (i) by reason of this Deed of Trust; (ii) by reason of the execution of this trust or in performance of any act required or permitted hereunder or by law; (iii) as a result of any failure of Trustor to perform Trustor's obligations; or (iv) by reason of any alleged obligation or undertaking on Beneficiary's part to perform or discharge any of the representations, warranties, conditions, covenants or other obligations contained in any other document related to the Subject Property, unless the loss is caused by the gross negligence or willful misconduct of Trustee or Beneficiary, as applicable. The above obligation of Trustor to indemnify and hold harmless Trustee and Beneficiary shall survive the release and cancellation of the Secured Obligations and the release and reconveyance or partial release and reconveyance of this Deed of Trust. Notwithstanding the foregoing, however, under no circumstances shall these indemnity obligations of Trustor include any obligation for payment of punitive damages assessed against Beneficiary or Trustee or their officers, employees, agents or representatives. C. Trustor shall pay all amounts and indebtedness arising under this Section 5.10 immediately upon demand by Trustee or Beneficiary together with interest thereon from the date the indebtedness arises at the rate of interest then applicable to the principal balance of the Note as specified therein. 5.11 SUBSTITUTION OF TRUSTEES. From time to time, by a writing, signed and acknowledged by Beneficiary and recorded in the Office of the Recorder of the County in which the Subject Property is situated, Beneficiary may appoint another trustee to act in the place and stead of Trustee or any successor. Such writing shall set forth any information required by law. The recordation of such instrument of substitution shall discharge Trustee herein named and shall appoint the new trustee as the trustee hereunder with the same effect as if originally named Trustee herein. A writing recorded pursuant to the provisions of this Section 5.11 shall be conclusive proof of the proper substitution of such new Trustee. 5.12 DUE ON SALE OR ENCUMBRANCE. If the Subject Property or any interest therein shall be sold, assigned, leased, subleased, transferred (including, without limitation, through sale or transfer of a majority or controlling interest of the corporate stock or general partnership interests or nonprofit public benefit corporation interests of Trustor), mortgaged, collaterally assigned, or further encumbered (other than leases of individual condominium units within the Improvements), whether directly or indirectly, whether voluntarily, involuntarily or by operation of law, without the prior written consent of Beneficiary, or without otherwise being approved or permitted pursuant to the Disposition and Development Agreement, THEN Beneficiary, in its sole discretion, may declare all Secured Obligations immediately due and payable. Attachment No. 5-10 0 0 5.13 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY. Without notice to or the consent, approval or agreement of any persons or entities having any interest at any time in the Subject Property or in any manner obligated under the Secured Obligations ("Interested Parties"), Beneficiary may, from time to time, release any person or entity from liability for the payment or performance of any Secured Obligation, take any action or make any agreement extending the maturity or otherwise altering the terms or increasing the amount of any Secured Obligation, or accept additional security or release all or a portion of the Subject Property and other security for the Secured Obligations. None of the foregoing actions shall release or reduce the personal liability of any of said Interested Parties, or release or impair the priority of the lien of this Deed of Trust upon the Subject Property. 5.14 RECONVEYANCE. Upon Beneficiary's written request, and upon surrender to Trustee for cancellation of this Deed of Trust or a certified copy thereof and any note, instrument, or instruments setting forth all obligations secured hereby, Trustee shall reconvey, without warranty, the Subject Property or that portion thereof then held hereunder. To the extent permitted by law, the reconveyance may describe the grantee as "the person or persons legally entitled thereto" and the recitals of any matters or facts in any reconveyance executed hereunder shall be conclusive proof of the truthfulness thereof. Neither Beneficiary nor Trustee shall have any duty to determine the rights of persons or entities claiming to be rightful grantees of any reconveyance. When the Subject Property has been fully reconveyed, the last such reconveyance shall operate as a reassignment of all future rents, issues and profits of the Subject Property to the person or persons legally entitled thereto. 5.15 SUBROGATION. Beneficiary shall be subrogated to the lien of all encumbrances, whether released of record or not, paid in whole or in part by Beneficiary pursuant to this Deed of Trust or by the proceeds of any loan secured by this Deed of Trust. 5.16 RIGHT OF INSPECTION. Beneficiary, its agents and employees, may enter the Subject Property at any reasonable time for the purpose of inspecting the Subject Property and ascertaining Trustor's compliance with the terms hereof. ARTICLE 6. DEFAULT PROVISIONS 6.1 DEFAULT. For all purposes hereof, the term "Default" shall mean (a) at Beneficiary's option, the failure of Trustor to make any payment of principal or interest on the Note or to pay any other amount due hereunder or under the Note when the same is due and payable, within ten (10) days after receipt of written notice from Beneficiary; or (b) the failure of Trustor to perform any non -monetary obligation hereunder, or the failure to be true of any representation or warranty of Trustor contained herein and the continuance of such failure for thirty (30) days after notice from Beneficiary (or such longer grace period as may be provided pursuant to the Disposition and Development Agreement for such failure or the existence of any default under the Disposition and Development Agreement), or if it is not reasonably practicable to cure or remedy such failure within such thirty (30) day period, then Trustor shall not be deemed to be in default if Trustor shall commence such cure within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. 6.2 RIGHTS AND REMEDIES. At any time after Default, Beneficiary and Trustee shall each have all the following rights and remedies: Attachment No. 5-11 a. With or without notice, to declare all Secured Obligations immediately due and payable; b. With or without notice, and without releasing Trustor from any Secured Obligation, and without becoming a mortgagee in possession, to cure any breach or Default of Trustor and, in connection therewith, to enter upon the Subject Property and do such acts and things as Beneficiary or Trustee deem necessary or desirable to protect the security hereof, including, without limitation: (i) to appear in and defend any action or proceeding purporting to affect the security of this Deed of Trust or the rights or powers of Beneficiary or Trustee under this Deed of Trust; (ii) to pay, purchase, contest or compromise any encumbrance, charge, lien or claim of lien which, in the sole judgment of either Beneficiary or Trustee, is or may be senior in priority to this Deed of Trust, the judgment of Beneficiary or Trustee being conclusive as between the parties hereto; (iii) to obtain insurance; (iv) to pay any premiums or charges with respect to insurance required to be carried under this Deed of Trust; or (v) to employ counsel, accountants, contractors and other appropriate persons. C. To commence and maintain an action or actions in any court of competent jurisdiction to foreclose this instrument as a mortgage or to obtain specific enforcement of the covenants of Trustor hereunder, and Trustor agrees that such covenants shall be specifically enforceable by injunction or any other appropriate equitable remedy and that for the purposes of any suit brought under this subparagraph, Trustor waives the defense of laches and any applicable statute of limitations; d. To apply to a court of competent jurisdiction for and obtain appointment of a receiver of the Subject Property as a matter of strict right and without regard to the adequacy of the security for the repayment of the Secured Obligations, the existence of a declaration that the Secured Obligations are immediately due and payable, or the filing of a notice of default, and Trustor hereby consents to such appointment; C. To enter upon, possess, manage and operate the Subject Property or any part thereof, to take and possess all documents, books, records, papers and accounts of Trustor or the then owner of the Subject Property, to make, terminate, enforce or modify Leases of the Subject Property upon such terms and conditions as Beneficiary deems proper, to make repairs, alterations and improvements to the Subject Property as necessary, in Trustee's or Beneficiary's sole judgment, to protect or enhance the security hereof, To execute a written notice of such Default and of its election to cause the Subject Property to be sold to satisfy the Secured Obligations. As a condition precedent to any such sale, Trustee shall give and record such notice as the law then requires. When the minimum period of time required by law after such notice has elapsed, Trustee, without notice to or demand upon Trustor except as required by law, shall sell the Subject Property at the time and place of sale fixed by it in the notice of sale, at one or several sales, either as a whole or in separate parcels and in such manner and order, all as Beneficiary in its sole discretion may determine, at public auction to the highest bidder for cash, in lawful money of the United States, payable at time of sale. Neither Trustor nor any other person or entity other than Beneficiary shall have the right to direct the order in which the Subject Property is sold. Subject to requirements and limits imposed by law, Trustee may from time to time postpone sale of all or any portion of the Subject Property by public announcement at such time and place of sale. Trustee shall deliver to the purchaser at such sale a deed conveying Attachment No. 5-12 0 0 the Subject Property or portion thereof so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person or entity, including Trustee, Trustor or Beneficiary may purchase at the sale; g. To resort to and realize upon the security hereunder and any other security now or later held by Beneficiary concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken non judicial proceedings, or both, and to apply the proceeds received upon the Secured Obligations all in such order and manner as Trustee and Beneficiary, or either of them, determine in their sole discretion. h. Upon sale of the Subject Property at any judicial or non judicial foreclosure, Beneficiary may credit bid (as determined by Beneficiary in its sole and absolute discretion) all or any portion of the Secured Obligations. In determining such credit bid, Beneficiary may, but is not obligated to, take into account all or any of the following: (i) appraisals of the Subject Property as such appraisals may be discounted or adjusted by Beneficiary in its sole and absolute underwriting discretion; (ii) expenses and costs incurred by Beneficiary with respect to the Subject Property prior to foreclosure; (iii) expenses and costs which Beneficiary anticipates will be incurred with respect to the Subject Property after foreclosure, but prior to resale, including, without limitation, costs of structural reports and other due diligence, costs to carry the Subject Property prior to resale, costs of resale (e.g. commissions, attorneys' fees, and taxes), costs of any hazardous materials clean-up and monitoring, costs of deferred maintenance, repair, refurbishment and retrofit, costs of defending or settling litigation affecting the Subject Property, and lost opportunity costs (if any), including the time value of money during any anticipated holding period by Beneficiary; (iv) declining trends in real property values generally and with respect to properties similar to the Subject Property; (v) anticipated discounts upon resale of the Subject Property as a distressed or foreclosed property; (vi) the fact of additional collateral (if any), for the Secured Obligations; and (vii) such other factors or matters that Beneficiary (in its sole and absolute discretion) deems appropriate. In regard to the above, Trustor acknowledges and agrees that: (w) Beneficiary is not required to use any or all of the foregoing factors to determine the amount of its credit bid; (x) this Section does not impose upon Beneficiary any additional obligations that are not imposed by law at the time the credit bid is made; (y) the amount of Beneficiary's credit bid need not have any relation to any loan -to -value ratios previously discussed between Trustor and Beneficiary; and (z) Beneficiary's credit bid may be (at Beneficiary's sole and absolute discretion) higher or lower than any appraised value of the Subject Property. 6.3 APPLICATION OF FORECLOSURE SALE PROCEEDS. After deducting all costs, fees and expenses of Trustee, and of this trust, including, without limitation, cost of evidence of title and attorneys' fees in connection with sale and costs and expenses of sale and of any judicial proceeding wherein such sale may be made, Trustee shall apply all proceeds of any foreclosure sale: (a) to payment of all sums expended by Beneficiary under the terms hereof and not then repaid, with accrued interest at the rate of interest specified in the Note to be applicable on or after maturity or acceleration of the Note; (b) to payment of all other Secured Obligations; and (c) the remainder, if any, to the person or persons legally entitled thereto. 6.4 APPLICATION OF OTHER SUMS. All sums received by Beneficiary under Section 6.2 or Section 3.2, less all costs and expenses incurred by Beneficiary or any receiver under Section 6.2 or Section 3.2, including, without limitation, attorneys' fees, shall be applied in payment of the Secured Obligations in such order as Beneficiary shall determine in its sole discretion; Attachment No. 5-13 0 0 provided, however, Beneficiary shall have no liability for funds not actually received by Beneficiary. 6.5 NO CURE OR WAIVER. Neither Beneficiary's nor Trustee's nor any receiver's entry upon and taking possession of all or any part of the Subject Property, nor any collection of rents, issues, profits, insurance proceeds, condemnation proceeds or damages, other security or proceeds of other security, or other sums, nor the application of any collected sum to any Secured Obligation, nor the exercise or failure to exercise of any other right or remedy by Beneficiary or Trustee or any receiver shall cure or waive any breach, Default or notice of default under this Deed of Trust, or nullify the effect of any notice of default or sale (unless all Secured Obligations then due have been paid and performed and Trustor has cured all other defaults), or impair the status of the security, or prejudice Beneficiary or Trustee in the exercise of any right or remedy, or be construed as an affirmation by Beneficiary of any tenancy, lease or option or a subordination of the lien of this Deed of Trust. 6.6 PAYMENT OF COSTS, EXPENSES AND ATTORNEYS' FEES. Trustor agrees to pay to Beneficiary immediately and without demand all costs and expenses incurred by Trustee and Beneficiary pursuant to Section 6.2 (including, without limitation, court costs and attorneys' fees, whether incurred in litigation or not) with interest from the date of expenditure until said sums have been paid at the rate of interest then applicable to the principal balance of the Note as specified therein. In addition, Trustor shall pay to Trustee all Trustee's fees hereunder and shall reimburse Trustee for all expenses incurred in the administration of this trust, including, without limitation, any attorneys' fees. 6.7 POWER TO FILE NOTICES AND CURE DEFAULTS. Trustor hereby irrevocably appoints Beneficiary and its successors and assigns, as its attomey-in-fact, which agency is coupled with an interest, (a) to execute and/or record any notices of completion, cessation of labor, or any other notices that Beneficiary deems appropriate to protect Beneficiary's interest, (b) upon the issuance of a deed pursuant to the foreclosure of this Deed of Trust or the delivery of a deed in lieu of foreclosure, to execute all instruments of assignment or further assurance with respect to the Leases and Payments in favor of the grantee of any such deed, as may be necessary or desirable for such purpose, (c) to prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve Beneficiary's security interests and rights in or to any of the Collateral, and (d) upon the occurrence of an event, act or omission which, with notice or passage of time or both, would constitute a Default, Beneficiary may perform any obligation of Trustor hereunder; provided, however, that: (i) Beneficiary as such attorney-in-fact shall only be accountable for such funds as are actually received by Beneficiary; and (ii) Beneficiary shall not be liable to Trustor or any other person or entity for any failure to act under this Section. 6.8 NO PERSONAL LIABILITY. In the event of any default under the terms of the Note or this Deed of Trust, the sole recourse of the Beneficiary for any and all such defaults shall be by judicial foreclosure or by the exercise of the trustee's power of sale, and Trustor and its partners shall not be personally liable for the payment of the Note or for the payment of any deficiency established after judicial foreclosure or trustee's sale; provided, however, that the foregoing shall not in any way affect any rights the Beneficiary may have (as a secured party or otherwise) hereunder or under the Agreement or Note to recover directly from Trustor any amounts secured by this Deed of Trust, or any funds, damages or costs (including without limitation reasonable attorneys' fees and costs) incurred by Beneficiary as a result of fraud, misrepresentation or waste (provided that it shall Attachment No. 5-14 0 0 not be waste if Trustor does not repair or restore the Subject Property after any destruction, damage or partial condemnation, notwithstanding the availability of insurance or condemnation proceedings), and any costs and expenses incurred by Beneficiary in connection thereof (including without limitation reasonable attorneys' fees and costs). ARTICLE 7. MISCELLANEOUS PROVISIONS 7.1 NO MERGER. No merger shall occur as a result of Beneficiary's acquiring any other estate in, or any other lien on, the Subject Property unless Beneficiary consents to a merger in writing. If both the lessor's and lessee's estate under any lease or any portion thereof which now or hereafter constitutes a part of Subject Property shall at any time become vested in one owner, this Deed of Trust and the lien created hereby shall not be destroyed or terminated by application of the doctrine of merger unless Beneficiary so elects as evidenced by recording a written declaration so stating, and, unless and until Beneficiary so elects, Beneficiary shall continue to have and enjoy all of the rights and privileges of Beneficiary as to the separate estates. In addition, upon the foreclosure of the lien created by this Deed of Trust on the Subject Property pursuant to the provisions hereof, any leases or subleases then existing and affecting all or any portion of the Subject Property shall not be destroyed or terminated by application of the law of merger or as a matter of law or as a result of such foreclosure unless Beneficiary or any purchaser at such foreclosure sale shall so elect. No act by or on behalf of Beneficiary or any such purchaser shall constitute a termination of any lease or sublease unless Beneficiary or such purchaser shall give written notice thereof to such tenant or subtenant. 7.2 WAIVER OF MARSHALLING RIGHTS. Trustor, for itself and for all parties claiming through or under Trustor, and for all parties who may acquire a lien on or interest in the Subject Property, hereby waives all rights to have the Subject Property and/or any other property, including, without limitation, the Collateral, which is now or later may be security for any Secured Obligation ("Other Property") marshaled upon any foreclosure of this Deed of Trust or on a foreclosure of any other security for any of the Secured Obligations. Beneficiary shall have the right to sell, and any court in which foreclosure proceedings may be brought shall have the right to order a sale of, the Subject Property and any or all of the Collateral or Other Property as a whole or in separate parcels, in any order that Beneficiary may designate. 7.3 RULES OF CONSTRUCTION. When the identity of the parties or other circumstances make it appropriate the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. The term "Subject Property" means all and any part of the Subject Property and any interest in the Subject Property. 7.4 SUCCESSORS IN INTEREST. The terms, covenants, and conditions herein contained shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto; provided, however, that this Section 7.4 does not waive or modify the provisions of Section 5.12. 7.5 EXECUTION IN COUNTERPARTS. This Deed of Trust may be executed in any number of counterparts, each of which, when executed and delivered to Beneficiary, will be deemed to be an original and all of which, taken together, will be deemed to be one and the same instrument. Attachment No. 5-15 C� 0 7.6 CALIFORNIA LAW. This Deed of Trust shall be construed in accordance with the laws of the State of California, except to the extent that Federal law preempts the laws of the State of California. 7.7 INCORPORATION. Exhibit A and Schedule 1, all as attached, are incorporated into this Deed of Trust by this reference. 7.8 NOTICES. All notices or other communications required or permitted to be given pursuant to the provisions of this Deed of Trust shall be in writing and shall be considered as properly given if delivered personally or sent by first class U.S. mail, postage prepaid, except that notice of a Default may be sent by certified mail, return receipt requested, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon receipt at the addresses set forth below. For purposes of notice, the addresses of the parties shall be: Trustor: Seasons Senior Apartments II, L.P. 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention: Legal Department With Copy to Multi -Housing Investments, LLC Limited Partner: 320 Golden Shore, Suite 200 Long Beach, California 90802 Attention: Legal Department Beneficiary: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director Trustee: Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days notice to the other party in the manner set forth hereinabove. Trustor shall forward to Beneficiary, without delay, any notices, letters or other communications delivered to the Subject Property or to Trustor naming Beneficiary, "Lender" or the "Construction Lender" or any similar designation as addressee, or which could reasonably be deemed to affect the construction of the Improvements or the ability of Trustor to perform its obligations to Beneficiary under the Note. 7.10 NOTICE AND CURE RIGHTS OF TRUSTOR'S LIMITED PARTNER. The provisions of Section 506 of the Disposition and Development Agreement as they relate to the notice to and cure rights of the Truster's limited partner are incorporated herein by this reference. Attachment No. 5-16 0 0 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year set forth above. SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership 0 (ALL SIGNATURES MUST BE ACKNOWLEDGED) Attachment No. 5-17 r� L EXHIBIT A DESCRIPTION OF SUBJECT PROPERTY That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages 1 through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages 1 through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Exhibit A-1 STATE OF CALIFORNIA COUNTY OF On personally appeared ss. before me, Notary Public, (Print Name of Notary Public) ❑ personally known to me -or- F] 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT ❑ Individual ❑ Corporate Officer Title Or Type Of Document ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator Number Of Pages ❑ Other: Signer is representing: Name Of Person(s) Or Entdy(ies) Date Of Documents Signer(s) Other Than Named Above 0 0 ATTACHMENT NO. 6 FORM OF RESIDUAL RECEIPTS REPORT San Juan Capistrano Redevelopment Agency Housing Project Residual Receipts Report for the Year Ending Date Prepared Please complete the following information and execute the certification at the bottom of this form. Annual Project Revenue Please report Annual Project Revenue for the year ending Rent Payments (including Section 8 tenant assistance payments, if any) on the following lines: Interest Income (do not include interest income from replacement and operating reserves nor interest income on tenant security deposits) Additional Income Related to Project Operations (for example, vending machine income, tenant forfeited deposits, laundry income not paid to the residents' association) Total Annual Project Revenue (Add lines 1, 2, and 3) Operatine Expensesi Please report Operating Expenses incurred in relation to the operations of the Project for the year ending on the following lines: Operating and Maintenance Expenses Utilities Property management Expenses and On -Site Staff Payroll Administrative Expenses Incurred by Project Property Taxes Insurance Other Expenses Related to Operations of the Project Please list these expenses: (2) $ (3) $ (4) $ (5) (6) (7) (8) (9) (10) 0 Total Annual Operating Expenses (Add lines 5, 6, 7, 8, 9, 10, and 11) Net Operating Income (Subtract Line 12 from Line 4) Do not include expense unrelated to the Project's operations, such as depreciation, amortization, accrued principal and interest expense on deferred payment debt, or capital expenditures. Additional Cash Flow Payments Obligated Debt Service Payments (as approved by the Agency and other parties that may have such approval rights) Scheduled Deposits to Reserves (as approved by the Agency) Additional Payment Obligations (such as partnership management fees, deferred developer fees, or repayments on loans to partners, as approved by the Agency to have priority over Residual Receipt Payment to the Agency Total Additional Cash Flow Payments (Add lines 14, 15, and 16) Residual Receipts for Year Ending (Subtract Line 17 from Line 13) Percentage of Residual Receipts to be Paid to the Agency (as shown in the Promissory Note by and between the Agency and Borrower dated Amount Payable to the Agency (Multiply Line 18 by Line 19) (12) (13) $ (14) (15) (16) (17) $ (18) (19) The amount payable to the Agency listed on Line 2 is subject to payment according to the terms of the Promissory Note by and between the Agency and Borrower dated . If Line 20 is $0.00 or negative, you owe nothing to the Agency this year. If Line 20 is a positive number, remit check payable to and attach to this report. Exhibit D-2 0 0 Computation of Residual Receipts for the Year Ending The following certification should be executed by the Executive Director or Chief Financial Officer of the Borrower, or the Managing General Partner of the Borrower. I certify that the information provided in this form is true, accurate, and correct in all respects. (Print Name) (Title) Exhibit D-3 Date r� u ATTACHMENT NO. 7 SCHEDULE OF PERFORMANCE NOTES: 1. Days are calendar days unless specifically noted as business days. 2. The Agency and the Developer may, by mutual written agreement, amend or modify any item contained herein or the date for performance. The Executive Director of the Agency is hereby authorized to approve minor amendments as set forth in this Schedule of Performance on behalf of the Agency. Any amendments deemed major shall be submitted to the Agency Board of Directors for consideration. 3. The City is not a party to the Agreement and is not bound by the times set forth herein. GENERAL I Execution of this Agreement. This Agreement Not less than five (5) calendar days prior to shall be executed by the Developer and a copy the Agency's consideration of the of the executed Agreement shall be sent to the Agreement, but in no event later than Agency. 11/15/06. 2 Execution of Agreement by Agency. iter the Within seven (7) calendar days after Agreement has been approved, the Agency shall approval of this agreement by the Agency. execute the Agreement. FINANCING 3 Approval of Developer's Preliminary Financing Concurrent with approval of this Agreement. Plan. Agency shall approve, conditionally approve, or disapprove the Developer's Preliminary Financing Plan as required by the Agreement. 4 Approval of Changes to Developer's Developer shall submit changes on an as Preliminary Financing Developer shall warranted basis and the Agency shall have submit and Agency shall review and approve, thirty (30) calendar days to respond. conditionally approve, or disapprove changes to the Financing Plan and the Construction Cost Budget. 5 Submission of Application for HOME/AHP Not later than the scheduled closing of Funding (as applicable). The Developer and escrow on the site and close of construction City shall submit application for HOME grant financing funds. 6 Submission of 9% Tax Credit Application. Not later than the tax credit application Developer shall complete and submit an round following final City Council and application for Federal 9% Tax Credits Planning Commission project approval Attachment No. 7-1 11 • Attachment No. 7-2 including approval of the general plan amendment and zone change application. 7 Submittal of Final Financin Pg lan. Developer Not less than forty-five (45) calendar days shall submit a Final Financing Plan and prior to the scheduled closing of escrow on Construction Budget as required by Section 501 the Site and close of construction financing. of the Agreement, including copies of all commitment letters and conditions of approval and demonstrating sufficient debt and equity commitments required to complete the Project in accordance with the Scope of Development. 8 Approval of Final Financing Plan. Agency Within twenty-one (21) calendar days after shall approve, conditionally approve, or receipt of complete financing plan from disapprove Financing Plan. Developer and prior to the Close of Escrow. GRADING & IMPROVEMENTS 9 Approval of Plans. Developer shall have Prior to commencement of grading. approved plans for site grading, utilities and public improvements. 10 CEOA/NEPA approval (as applicable). Prior to commencement of grading. Developer shall receive authorization from City/State to proceed with site grading 11 Site Work Contract. Developer shall submit Within seven (7) calendar days after final contract to complete site work approval of this agreement by the Agency. Attachment No. 7-2 0 BUILDING APPROVALS 12 Submission of Preliminary Construction Within one hundred and twenty (I20)days Drawings to Agency/City. The Developer shall following Federal 9% Tax Credit Award. submit preliminary construction drawings, public improvement plans, landscape plans, and such other documents as may be reasonably required by the City for review and evaluation with respect to the construction of the Housing Complex pursuant to Section 402. Developer may submit these plans to the Agency and City concurrently for plan check. 13 Agency Approval of Preliminary Construction Not later than thirty (30) calendar days after Drawings. Agency shall approve, conditionally submission and acceptance as complete. approve, or disapprove preliminary construction plans. 14 City Plan Check Approval. City shall complete City shall provide comments on first plan its building plan check approval. check within 15 business days of submittal. Developer shall provide revisions to first plan check comments within 15 business days of receipt of comments. The City and Developer shall respond within 10 business days thereafter for each additional plan check round. 15 Completion of Building Plan Check and Upon satisfaction of all conditions of Issuance of Construction Permits. City shall approval for buildings, public improvement, issue construction permits. landscape and/or other required reviews and payment of all required building permit and development impact fees. 16 Submission of Certificates of Insurance. Prior to the commencement of construction. Developer shall submit Certificates of Insurance to Agency in accord with Section 306 of this Agreement. Attachment No. 7-3 0 0 ESCROW FOR PURCHASE OF LAND 17 Open Escrow. Agency will open escrow to sell land to Thirty (30) days prior to the Developer. submission of the Developer's first application for tax credits. 18 Title Exceptions. The Developer shall submit to the Within thirty (30) calendar days Agency its written approval or disapproval of the after the Developer receives the exceptions to title per Section 203. Agency shall Preliminary Title Report from the respond in accordance with Section 203. Agency. 19 Final Environmental Release. Developer shall complete Within sixty (60) calendar days after physical and environmental investigation of the Site and Opening of Escrow. provide a written release to the Agency. 20 Deposit of Documents into Escrow. Not less than three (3) business days The Agency and Developer shall execute and deposit prior to Close of Escrow. with Escrow the Regulatory Agreement, the Agency Loan Promissory Note, the Agency Loan Deed of Trust and such other documents required to be recorded at the Close of Escrow. 21 Close of Escrow. The Close of Escrow shall occur as Within thirty (30) calendar days specified in Section 205 of this agreement. after Agency and Developer have complied with all conditions precedent to closing as stated in Section 205 of this Agreement. CONSTRUCTION 22 Commencement of Construction. Developer shall Within one hundred fifty (15 0) commence Construction of building and common area calendar days after Federal 9% Tax improvements. Credit Award, if all City project approvals are obtained prior to the Tax Credit Application, otherwise no later than two hundred and seventy (270) days after Federal 9% Tax Credit Award. 23 Completion of Construction. Developer shall complete Not later than the last day of the Construction of the buildings and all site and off-site second calendar year after Federal improvements in accordance with all conditional 9% Tax Credit Award. approvals. 24 Certificate of Completion. Developer shall request and Upon written request from Agency shall issue a Release of Construction Covenants Developer and a determination by (Attachment No. 6) for completion of the Construction of the Agency that all conditions of the the Housing Complex per Section 311. Agreement have been satisfied. Attachment No. 7-4 0 ATTACHMENT NO.8 SCOPE OF DEVELOPMENT C] SEASONS SENIOR APARTMENTS II, SAN JUAN CAPISTRANO, CA Location The proposed site for the Seasons Senior Apartments Il is located at the corner of Paseo Espada and Rancho Viejo Road in San Juan Capistrano, California. The usable site is approximately 1.3 acres. Housine tvue The development will be an 38 -unit senior apartment community. Architectural Goals The award-winning KTGY Architects are designing the project. Careful consideration will be given to designing a project that meets the demands of affordability, yet has the architectural amenities to present itself as a quality market rate comparable apartment community. The Seasons phase one will serve as the architectural model for phase II. The Project The project will consist of one two-story building. Construction will be Type V, wood -frame construction, with clay tile roofs, stucco exterior and wood trim and accents. The design will be a Mediterranean style consistent with phase I. The balconies and patios will be framed and covered. The unit mix will be as follows: Number of units Bedrooms Unit size 30 1 552 ft 8 2 778 ft Parking will be consistent with City requirements, and will allow for 38 spaces. Phase II will offer residents shaded outdoor seating and community laundry facilities. All of the existing shared amenities of Phase I will be available to the residents of Phase II. Existing amenities include Community Room, Pool, and Spa. Management staff for Phase I will be responsible for management duties over Phase II. Attachment No. 8-1 0 0 Unit Amenities All units will feature: • covered interior entrances • plush carpeting in living areas • vinyl flooring in kitchens and baths • vertical blinds throughout • individually controlled heating • kitchen appliances including, range, refrigerator, dishwasher and disposal • cable television available • smoke alarms Project Amenities All common areas shall be professionally planned and decorated. Amenities will include: • Entry lobby with designer flooring, seating and decor • Elevator • Community laundry room Exterior common areas shall include: • Shaded outdoor seating area Attachment No. 8-2 0 ATTACHMENT NO.9 RECORDING REQUESTED BY: AND WHEN RECORDED MAIL TO: 0 This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. CERTIFICATE OF COMPLETION THIS CERTIFICATE OF COMPLETION (the "Certificate") is hereby made as of , 200_, by the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), in favor of SAN JUAN CAPISTRANO HOUSING INVESTORS Il, LP, a California limited partnership (the "Owner"). RECITALS A. The Agency and the Owner have entered into an Disposition and Development Agreement dated as of , 2006 (the "Agreement"), which Agreement provides for the development of a Housing Project on certain real property situated in the City of San Juan Capistrano, California, and more particularly described on Exhibit "A" attached hereto and made a part hereof by this reference (the "Development of the Housing Project"). As required in the Agreement, the Agency shall furnish the Owner with a Certificate of Completion upon completion of the Development of the Housing Project, which Certificate shall be in such form as to permit it to be recorded in the Orange County Recorder's Office. B. The Agency has conclusively determined that the Development of the Housing Project required by the Agreement to be made to the Housing Project has been satisfactorily completed. NOW, THEREFORE, the Agency hereto certifies as follows: 1. As provided in the Agreement, the Agency does hereby certify that the Development of the Housing Project has been fully and satisfactorily performed and completed in accordance with the Agreement. 2. After the recordation of this Certificate, any person or entity then owning or thereafter purchasing, or otherwise acquiring any interest in the Housing Project will not (because of such ownership, purchase, or acquisition) incur any obligation or liability under the Agreement, except that such party shall be bound by any and all of the covenants, conditions, and restrictions which survive such recordation. 3. This Certificate is not a notice of completion as referred to in Section 3093 of the Attachment No. 9-1 0 0 California Civil Code. 4. The recitals above are incorporated in full as part of the substantive text of this Release. IN WITNESS WHEREOF, the Agency has executed this Certificate as of the date set forth above. ATTEST: Margaret R. Monahan, Agency Secretary SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic Joe Soto, Chairman APPROVED FOR RECORDING: SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership Attachment No. 9-2 Exhibit "A" LEGAL DESCRIPTION OF PROPERTY That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages I through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages I through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Exhibit A-1 0 STATE OF CALIFORNIA COUNTY OF ORANGE I On personally appeared 0 ss. before me, , Notary Public, not Name of Notary Public) ❑ 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 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. WITNESS my hand and official seal. Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer Title(s) ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Number Of Pages Date Of Document Signer(s) Other Than Named Above ATTACHMENT NO. 10 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: San Juan Capistrano Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, California 92675 Attention: Executive Director This document is exempt from (he payment of a recording fee pursuant to Government Code Section 27383 REGULATORY AGREEMENT THIS REGULATORY AGREEMENT (the "Agreement") is entered into as of ,200_, by and between the SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), and SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership (the "Owner"). RECITALS A. Owner has acquired from the Agency certain real property located within the City of San Juan Capistrano, as particularly described in the Legal Description attached hereto as Exhibit A, which is incorporated herein by reference (the "Site"). B. Owner desires to construct a thirty-eight (38) unit multifamily affordable senior housing development on the Site (the "Housing Project"), and to make available and rent the apartment units within the Housing Project (the "Housing Units') for low and very low income persons at an affordable rent. C. Owner and Agency have entered into a Disposition and Development Agreement (the "DDA") dated as of November 7, 2006. Subject to the terms and conditions therein, the Owner has agreed to acquire the Site and construct and operate the Housing Project, the Agency has agreed to provide financial assistance to Owner, and the Owner has agreed to make available and lease twenty- eight (28) of the Housing Units to Very Low Income Households, and ten (10) of the Housing Units to Lower Income Households, all at an Affordable Rent (as those terms are defined herein). The execution and recording of this Agreement is a requirement of the DDA. NOW, THEREFORE, the parties hereto agree as follows: 1. Number of Affordable Units. Owner agrees to make available, restrict occupancy to, and rent twenty-eight (28) of the Housing Units to Very Low Income Households, and ten (10) of the Housing Units to Lower Income Households, all at an Affordable Rent. One of the Housing Units may be reserved for the on-site property manager, provided that such property manager meets the income requirements provided for such unit. Attachment No. 10-1 2. Duration of Affordability Requirements. The Housing Units shall be subject to the requirements of this Agreement for fifty-five (55) years from the date of the City's issuance of a final certificate of occupancy for the Housing Project. The duration of this requirement shall be known as the "Affordability Period." 3. Selection of Tenants. Owner shall be responsible for the selection of tenants for the Housing Units in compliance with lawful and reasonable criteria, as set forth in the Regulatory Agreement and the Management Plan which is required to be submitted and approved by the Agency pursuant to Section 10 hereof. 4. Household Income Requirements. Following the initial lease -up of the Housing Units, and annually thereafter, the Owner shall submit to Agency, at Owner's expense, a summary of the income, household size and rent payable by each of the tenants of the Housing Units. At the Agency's request, the Owner shall also provide to the Agency completed income computation and certification forms, in a form reasonably acceptable to the Agency, for any such tenant or tenants. Owner shall obtain, or shall cause to be obtained by the Property Manager, a certification from each household leasing an Affordable Unit demonstrating that such household is a Very Low Income Household or Lower Income Household, as applicable, and meets the eligibility requirements established for the Housing Unit. Owner shall verify, or shall cause to be verified by the Property Manager, the income certification of the household. 5. Affordable Rent. The maximum Monthly Rent chargeable for the Affordable Units shall be annually determined in accordance with the following requirements. The Monthly Rent for the Affordable Units to be rented to Very Low Income Households shall not exceed one -twelfth (1/12) of thirty percent (30%) of fifty percent (501/4) of Orange County Median Income for a family of a size appropriate to the unit. The Monthly Rent for the Affordable Units to be rented to Lower Income Households shall not exceed one -twelfth (1/12) of thirty percent (300/G) of sixty percent (60%) of Orange County Median Income for a family of a size appropriate to the unit. For purposes of this Agreement, "Monthly Rent" means the total of monthly payments for (a) use and occupancy of each Affordable Unit and land and facilities associated therewith, (b) any separately charged fees or service charges assessed by the Owner which are required of all tenants, other than security deposits, (c) a reasonable allowance for an adequate level of service of utilities not included in (a) or (b) above, including garbage collection, sewer, water, electricity, gas and other heating, cooking and refrigeration fuels, but not including telephone service, and (d) possessory interest, taxes or other fees or charges assessed for use of the land and facilities associated therewith by a public or private entity other than Owner. In the event that all utility charges are paid by the landlord rather than the tenant, no utility allowance shall be deducted from the rent. For purposes of this Agreement, "family of a size appropriate to the unit" means two parsons for a one -bedroom unit, and three persons for a two-bedroom unit. 6. Marketing Program. Each Affordable Unit shall be leased to tenants selected by the Owner who meet all of the requirements provided herein. Owner shall prepare and obtain Agency's approval, which approval shall not be unreasonably withheld, of a marketing program for the leasing of the Affordable Units at the Housing Project (the "Marketing Program"). The Marketing Program shall require the Owner to give priority notice to tenants of other affordable housing projects in the City. The leasing of the Affordable Units shall thereafter be marketed in accordance with the Marketing Program as the same may be amended from time to time with Agency's prior written Attachment No. 10-2 approval, which approval shall not unreasonably be withheld. Owner shall provide Agency with periodic reports with respect to the leasing of the Affordable Units. The Agency agrees to exercise reasonable efforts to assist Owner in connection with the implementation of the Marketing Program; provided, however, Agency shall not be under any obligation to incur any out-of-pocket expenses in connection therewith. 7. Design and Occupancy of Senior Units. Owner shall restrict occupancy of all Housing Units to "Senior Citizens" and "Qualified Permanent Residents" (as those terms are or may be defined in California Civil Code Section 51.3). California Civil Code Section 51.3 presently provides as follows: At least one person in residence in each dwelling unit must be a Senior Citizen, and other residents in the same dwelling unit who are not Senior Citizens must be Qualified Permanent Residents. Temporary guests of a Senior Citizen or Qualified Permanent Resident shall be allowed for a period of not more than sixty (60) days in any twelve (12) month period. Upon the death, dissolution of marriage, hospitalization or other prolonged absence of the Senior Citizen in a dwelling unit, any Qualified Permanent Resident who has continuously resided in the dwelling unit with such Senior Citizen shall be permitted to continue as a resident of that dwelling unit. "Permitted Health Care Residents" (as that term is or may be defined in California Civil Code Section 51.3) shall be permitted to occupy any dwelling unit during any period that such person is actually providing live in, long term or hospice health care to a Senior Citizen tenant or Qualified Permanent Resident tenant for compensation. Notwithstanding the foregoing, however, in the event that the Owner in its sole discretion elects to provide one of the Housing Units for residency by an on-site manager, the manager's unit shall not be required by this Agreement to be restricted to Senior Citizens and Qualified Permanent Residents. 8. Relationship to Tax Credit Requirements. Notwithstanding any other provisions of this Agreement, to the extent that the regulatory agreement executed by the Owner as a requirement of receiving the Tax Credits (the "Tax Credit Regulatory Agreement") is less restrictive with respect to the requirements applicable to tenant selection, tenant income levels and unit rent levels than as provided in this Agreement and the DDA, this Agreement and the DDA shall control. 9. Maintenance. The Owner shall maintain the Housing Project or cause it to be maintained in a decent, safe and sanitary manner, and in accordance with the standard of maintenance of first class senior apartment units within Orange County, California. If at any time Owner fails to maintain the Housing Project in accordance with this Agreement and such condition is not corrected within five days after written notice from the Agency with respect to graffiti, debris, and waste material, or thirty days after written notice from the Agency with respect to general maintenance, landscaping and building improvements, then the Agency, in addition to whatever remedy it may have at law or at equity, shall have the right to enter upon the applicable portion of the Housing Project and perform all acts and work necessary to protect, maintain, and preserve the Housing Project, and to attach a lien upon the Housing Project, or to assess the Housing Project, in the amount of the expenditures arising from such acts and work of protection, maintenance, and preservation by the Agency and/or costs of such cure, including a reasonable administrative charge, which amount shall be promptly paid by Owner to the Agency upon demand. 10. Management Plan; Property Management. The Owner shall submit for the reasonable approval of the Agency a "Management Plan" which sets forth in detail the Owner's property management duties, a tenant selection process in accordance with Section 6 hereof, a security system and crime prevention program, the procedures for the collection of rent, the procedures for eviction of tenants, the rules and regulations of the Housing Project and manner of Attachment No. 10-3 0 0 enforcement, a standard lease form, an operating budget, the identity of the manager of the Housing Project (the "Property Manager"), the social services program to be provided pursuant to Section 13 hereof, and other matters relevant to the management of the Housing Project. The Management Plan shall require the Owner to adhere to a fair lease and grievance procedure and provide a plan for tenant participation in management decisions. The management of the Housing Project shall be in compliance with the Management Plan which is approved by the Agency. If the Agency determines that the performance of the Property Manager is deficient based upon the standards set forth in the Management Plan and in this Agreement, the Agency shall provide notice to the Owner of such deficiencies, and the Owner shall use its best efforts to correct such deficiencies. In the event that such deficiencies have not been cured within the time set forth in Section 701 of the DDA, the Agency shall have the right to require the Owner to immediately remove and replace the Property Manager with another property manager or property management company which is reasonably acceptable to the Agency, which is not related to or affiliated with the Owner, and which has not less than five (5) years experience in property management, including significant experience managing housing facilities of the size, quality and scope of the Housing Project. 11. Capital Reserve Requirements. The Owner shall also, or cause the Property Manager to, annually set aside an amount of Two Hundred Fifty Dollars ($250) per Housing Unit (or such larger amount as may be required by TCAC or a Housing Project lender), from the gross rents received from the Housing Project, into a separate interest-bearing trust account in the name of the Owner (the "Capital Replacement Reserve"); provided, however, to the extent the Owner is required by any lender to maintain a separate account to hold deposits for capital reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be adjusted annually by the Consumer Price Index (or such larger amount as may be required by TCAC or a Housing Project lender). Funds in the Capital Replacement Reserve shall be used for capital replacements to the Housing Project fixtures and equipment which are normally capitalized under generally accepted accounting principles. The non-availability of funds in the Capital Replacement Reserve does not in any manner relieve the Owner of the obligation to undertake necessary capital repairs and improvements and to continue to maintain the Housing Project in the manner prescribed herein. Not less than once per year, Owner, at its expense, shall submit to the Agency an accounting for the Capital Replacement Reserve. Capital repairs to and replacement of the Housing Project shall include only those items with a long useful life, including without limitation the following: carpet and drape replacement; appliance replacement; exterior painting, including exterior trim; hot water heater replacement; plumbing fixtures replacement, including tubs and showers, toilets, lavatories, sinks, faucets; air conditioning and heating replacement; asphalt repair and replacement, and seal coating; roofing repair and replacement; landscape tree replacement; irrigation pipe and controls replacement; gas line pipe replacement; lighting fixture replacement; elevator replacement and upgrade work; miscellaneous motors and blowers; common area furniture replacement; common area repainting, and uninsured losses due to casualties such as earthquakes. 12. Operating Budget and Reserve. The Owner shall submit to Agency on not less than an annual basis an operating budget for the Housing Project, which budget shall be subject to the written approval of the Agency Executive Director or designee, which approval shall not be unreasonably withheld, conditioned or delayed. The Owner shall, or shall cause the Property Manager to, set aside in a separate interest-bearing trust account in the Owner's name, commencing upon the rental of the Housing Units, the sum of Seventy -One Thousand Dollars ($71,000), or such larger amount as may be required by TCAC or a Housing Project lender (the "Operating Reserve"), Attachment No. 10-4 0 0 and shall make further deposits from the Annual Project Revenue, to the extent available, to replenish the Operating Reserve to the amount existing in such account prior to the withdrawal of funds; provided, however, to the extent the Owner is required by any lender to maintain a separate account to hold deposits for operating reserves, the amount of such deposits shall be credited towards Owner's obligations under this section. Such amount shall be retained in the Operating Reserve to cover shortfalls between Housing Project income and actual operating expenses, and emergency expenses (such as uninsured casualties), but shall in no event be used to pay for capital items properly payable from the Capital Replacement Reserve. Owner shall, not less than once per every twelve (12) months, submit to the Agency evidence reasonably satisfactory to the Agency of compliance herewith. 13. Social Services. At all times during the Affordability Period, Owner shall provide, or cause to be provided, activities and programs appropriate to the needs of the residents of the Housing Project, with the selection of such activities and programs to he determined by Owner in collaboration with the residents of the Housing Project and the adjacent senior housing development owned by an affiliate of the Owner. The specific types of social services to be provided shall be submitted to and approved by the Agency, and may be revised with the prior approval of the Agency, which approval shall not be unreasonably withheld. 14. Prohibited Uses. None of the Housing Units in the Housing Project shall at any time be utilized on a transient basis, nor shall the Housing Project or any portion thereof ever be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium or rest home. 15. Non Discrimination Covenants. Owner covenants by and for itself, its successors 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, religion, sex, marital status, familial status, disability, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Housing Project, nor shall Owner itself or any person claiming under or through it, 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 Housing Project. The Owner shall refrain from restricting the rental, sale or lease of the Housing Project on the basis of race, color, creed, religion, sex, marital status, familial status, disability, national origin or ancestry of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (i) 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, familial status, disability, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself 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 land herein conveyed. The foregoing covenants shall run with the land." (ii) 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 Attachment No. 10-5 • Cl her, and this lease is made and accepted upon and subject to the following conditions: "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, familial status, disability, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, 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." (iii) In contracts: "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, familial status, disability, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself 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 of the premises." The covenants established in this Section 15 shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency and its successors and assigns, and shall remain in effect in perpetuity. 16. Monitoring and Recordkeeping. Throughout the Affordability Period, Owner shall comply with all applicable recordkeeping and monitoring requirements set forth in Health and Safety Code Section 33418 and shall annually complete and submit to Agency a report, prior to April 15 of each year, which includes the name, address, income and age of each occupant of an Affordable Unit, identifying the bedroom count and Monthly Rent for such Affordable Unit. Agency agrees that the Owner may submit reporting forms prepared and submitted in connection with the Tax Credits, to the extent those forms contain the information required hereunder. Representatives of the Agency shall be entitled to enter the Housing Project, upon at least seventy-two (72) hours prior written notice, to monitor compliance with this Agreement, to inspect the records of the Housing Project, and to conduct an independent audit or inspection of such records. The Owner agrees to cooperate with the Agency in making the Housing Project available for such inspection or audit. Owner agrees to maintain records in businesslike manner, and to maintain such records for the term of this Agreement. 17. Compliance With Laws and DDA. The Owner shall carry out the design, development and operation of the Housing Project in conformity with the DDA and all applicable laws, including all applicable state labor standards, City zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of the City Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seg., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. 18. Duty to Prevent Hazardous Material Contamination. During the development and operation of the Housing Project, the Owner shall take all necessary precautions to prevent the release of any Hazardous Materials into the environment on or under the Site. Such precautions shall include compliance with all Governmental Requirements with respect to Hazardous Materials. The Owner shall notify the Agency, and provide to the Agency a copy or copies, of any notices of Attachment No. 10-6 0 0 violation, notices to comply, citations, inquiries, clean-up or abatement orders, cease and desist orders, reports filed pursuant to self -reporting requirements and reports filed or applications made pursuant to any Governmental Requirement relating to Hazardous Materials and underground tanks, and the Owner shall report to the Agency, as soon as possible after each incident, any unusual, potentially important incidents in the event of a release of any Hazardous Materials into the environment. For purposes of this Section 18, "Governmental Requirements" shall mean all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the state, the county, the City, or any other political subdivision in which the Housing Project is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over the Agency, the Owner or the Housing Project. For purposes of this Section 18, "Hazardous Materials" means any substance, material, or waste which is or becomes, regulated by any local governmental authority, the State of California, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law)), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter -Presley -Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) polychlorinated byphenyls, (viii) methyl tertiary butyl ether, (ix) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Division 4, Chapter 20, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. § 1317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §§6901, et seq. (42 U.S.C. §6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§9601, et seq. Notwithstanding the foregoing, "Hazardous Materials" shall not include such products in quantities as are customarily used in the construction, maintenance, Rehabilitation or management of residential developments or associated buildings and grounds, or typically used in residential activities in a manner typical of other comparable residential developments, or substances commonly ingested by a significant population living within the Housing Project, including without limitation alcohol, aspirin, tobacco and saccharine. 19. Successors and Assigns. This Agreement shall run with the land, and all of the terms, covenants and conditions of this Agreement shall be binding upon the Owner and the Agency and the permitted successors and assigns of the Owner and the Agency. Whenever the term "Owner," or "Agency" is used in this Agreement, such term shall include any other successors and assigns as herein provided. 20. No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the Agency and its successors and assigns, and Owner and its successors and assigns, and no other person or persons shall have any right of action hereon. 21. Partial Invalidity. If any provision of this Agreement shall be declared invalid, Attachment No. 10-7 0 0 illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. 22. Governing Law. This Agreement and the documents and other instruments given pursuant hereto shall be construed in accordance with and be governed by the laws of the State of California. Any references herein to particular statutes or regulations shall be deemed to refer to successor statutes or regulations, or amendments thereto. 23. Amendment. This Agreement may not be changed orally, but only by agreement in writing signed by Owner and the Agency. IN WITNESS WHEREOF, the parties hereto have executed this Regulatory Agreement effective as of the date and year set forth above. ATTEST: Margaret R. Monahan, Agency Secretary APPROVED AS TO FORM: Stradling Yocca Carlson & Rauth Jon Goetz, Agency Counsel OWNER: SEASONS SENIOR APARTMENTS II, L.P., a California limited partnership AGENCY: SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY, a public body, corporate and politic Joe Soto, Chairman Attachment No. 10-8 Exhibit "A" LEGAL DESCRIPTION OF PROPERTY That real property located in the State of California, County of Orange, City of San Juan Capistrano, and described as follows: Parcel 17 of Parcel Map No. 79-856, in the City of San Juan Capistrano, County of Orange, State of California, as shown on a map filed in Book 143, Pages I through 8, inclusive, of Parcel Maps and as amended by that certain amended map filed in Book 176, Pages 1 through 8 inclusive of Parcel Maps, in the office of the County Recorder of said County. Exhibit A-1 0 0 STATE OF CALIFORNIA ss. COUNTY OF ORANGE On , before me, , Notary Public, nn[ Name o Notary Public) personally appeared ❑ personally known to me -or- F-1 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. WITNESS my hand and official seal. OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER ❑ Individual ❑ Corporate Officer Title(s) ❑ Partner(s) ❑ Limited ❑ General ❑ Attorney -In -Fact ❑ Trustee(s) ❑ Guardian/Conservator ❑ Other: Signer is representing: Name Of Person(s) Or Entity(ies) DESCRIPTION OF ATTACHED DOCUMENT Title Or Type Of Document Number Of Pages Date Of Document Signer(s) Other Than Named Above Message • • Page 1 of 1 Maria Morris From: Douglas Dumhart Sent: Monday, November 13, 2006 8:58 AM To: Maria Morris Cc: Joan Ross; Meg Monahan Subject: Seasons DDA Maria, there is no more action needed on the DDA or its attachments at this time. Just file in our records. Joan will need an executed final copy for our working files. Thank you, Douglas. -----Original Message ----- From: Goetz, Jon E. [mailto:JGOETZ@SYCR.com] Sent: Thursday, November 09, 2006 4:03 PM To: Douglas Dumhart Subject: RE: Seasons DDA You really don't need to do much with the DDA right now. You don't need to open escrow until Simpson is ready to submit its tax credit application. I would just make sure that Simpson is involved in reviewing title, soils and environmental condition of the property so that you know it is satisfactory to them prior to closing on the land purchase. You may want to talk to the title officer to see if you can get some sort of title insurance binder which will reduce the price of the title policy you provide to Simpson. Jon 11/13/2006 Today's Date: 10/19/06 0 CONTRACT TRANSMITTAL • Transmittal Routing (Check All That Apply) ® City Attorney ® City Manager ® City Clerk Disposition & Development Agreement B tween CRA & Seasons SJC 11, L.P. Project Manager's Last Name: Douglas Dumharhone Extension: X 6316 Council or CRA Meeting Date (if applicable): 11/07/06 APPROVING AUTHORITY: (Check One) R3 Mayor CRA Chair City Manager (. Provide (1) executed original contract for each signing party, and Escrow: Name(s) Street City St Zi Seasons SJC II L.P. 320 Golden Shore, Ste. 200 Long Beach CA 90802 Attn: Legal Pept. 320 Golden Shore, Ste. 200 Long Beach CA 90802 Fi t A rican Title Insurance 26440 La Alameda, Ste. 250 Mission Viejo CA 92691 ComVQq1y, Attn: Teresa M a h Please provide executed copies to: Names Street city St Zi Stradling Yocca Carlson & Rauth, Attn: Jon Goetz 660 Newport Center Drive, Ste. 1600 Newport Beach CA 92660 Multi -Housing Investments 320 Golden Shore, Ste. 200 Long Beach CA 90802 OTHER INSTRUCTIONS: Three originals attached. 0 32400 PASEO ADEI-ANTO SAN JUAN CAPISTRANO, CA 92675 (949) 493-1171 (949) 493-1053 FAx H°WW.sanluurlbapislrano. org TRANSMITTAL TO Seasons SJC II L.P. Attn: Legal Department 320 Golden Shore, Suite 200 Long Beach, CA 90802 DATE: November 13, 2006 Invon9ED ESTABLISHED 1961 1776 FROM: Maria Morris, Deputy City Clerk (949) 443-6309 RE: Disposition & Development Agreement — Seasons Phase II MEMBERS OF THE CITY COUNCIL Enclosed for your record is an original Disposition & Development Agreement SAM ALLEVATO DIANE BATHGATE WYATT HART JOE SOTO DAVID M. SWERDLIN If you have questions concerning the agreement, please contact Douglas D. Dumhart, Economic Development Manager (949) 443-6316. Cc: Jon Goetz, Stradling Yocca Carlson & Rauth Multi -Housing Investments Douglas D. Dumhart, Economic Development Manager San Juan Capistrano: Preserving the Past to Enhance the Future AFFIDAVIT OF PUBLICATION STATE OF CALIFORNIA, ) ) ss. County of Orange ) I am a citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the above entitled matter. I am the principal clerk of the Capistrano Valley News, a newspaper that has been adjudged to be a newspaper of general circulation by the Superior Court of the County of Orange, State of California, on June 7, 1984, Case No. A-122949 in and for the City of San Juan Capistrano, County of Orange, State of California; that the notice, of which the annexed is a true printed copy, has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to wit: March 8, 2007 "I certify (or declare) under the penalty of perjury under the laws of the State of California that the foregoing is true and correct": Executed at Santa Ana, Orange County, California, on Date: March 8, 2007 Signature J C�, Capistrano Valley News 625 N. Grand Ave. Santa Ana, CA 92701 (714)796-2209 �J PROOF OF PULL TION 2007 APR 19 A 90 514 CITY CLERK SAN JUAN CAPISTRANO NOTMEOF PUBLIC J PUBLIC XiARINO MY OF IIAM IOAM "PlW M11M0 MOI*{ = WM=W OIYM11, that on the 20th day of March, 2607, at 7W P.M. n the City Council Chamber, 32400 Paseo Adelanto, San Juan CapWeno, California, the City Caocl will Fold a public hearing un Mo, following: 00=T N7*YMTM W/.1w�AMu1 of REPUNitillillilli YYLIVAIMI NYtNUG ST M1111 OLhLORMA O MT AYINOMR7110 1 MIIRIM mop 11N tMg7� AMM*M 1 Iw h.n 6wwbn, LPI Pumuara W Section 1/7 of t o kdemal Revenue Code of 1358, as amaded, ilio Y . Council will hes andy consider brMa Sh4 old, narN� ibs� DevabpnlentaAumarny CCWlae bor ryoned« maa aeries in tide wgereg eo,ppnrn'icipel moor, of pppmxinately $5,400,000 (Me "numahty Bdda•) p . Qd`.Prt 2 of Divisio t 24 of she The morn. ds tan the eels of such Authority, Bads. it any ye Mor, LP, a Callan a Iknted paMars". Those de*w. be heard n fawx of, a opposition to, this 4ern w51 be ah oppodunity b do so during sues hear- ln%p W Mm mfMfldial paialallg to this Lela must be anb- m44d b IM CRI; Cork by 6:00 p.m., on Monday, Mach 19, 2007 at 32400 Paeao Adelarhto, San Juan Capistrano, CA 92676. Email wtmpondaoemay be sent to: issitessesIndnduels desir- n9 lab wrift, tnfamaton m the meeting must or- euy repueM auoh action. For furter inlomt�m yyoouu may contact Cindy Russell, AdmWetrstva Services Oirectar a (049) 443-5391. /N Ma9erat A Monahan CITYCLEflK- Published: Capistrano Valley Navas, March S. 2997 0303348 3-054 FEB -28-2907 09:27 OCR 7147962238 F.02 • NOTICE OF t PUBLIC HEARING CITY OF SAN JUAN CAPISTRANO NOTICE IS HEREBY GIVEN, that on the 20th day of March, 2007, at 7:00 P.M. in the City Council Chamber, 32400 Paseo Adelanto, San Juan Capistrano, California, the City Council will hold a public hearing on the following: CONSIDERATION OF THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE REFUNDING BONDS BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO ASSIST IN THE REFINANCING OF THE SEASONS SENIOR APARTMENTS • PHASE IPROJECT (San Juan Capiatrano Housing Invaatora, LP) Pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended, the City Council will hear and consider information concerning the proposed issuance by the Cali- fornia Statewide Communities Development Authority(the ndi "Authority") of its multifamily housing revenue refungg bonds in one or more series in the aggregate principal amount of approximately $5,400,000 (the "Authority Bonds") pursuant to Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code. The proceeds from the sale of such Authority Bonds, if any are issued, are intended to be used to assist in the refinanc- ing of the acquisition, construction and development of a 112 -unit multifamily rental housing development commonly known as SEASONS Senior Apartments located in San Juan Capistrano at 31641 Rancho Viejo Road in the City of San Juan Capistrano, California (the "Project"). The project is owned and operated by San Juan Capistrano Housing In- vestor. LP. a California limited nartnershin. Those desiring to be heard in favor of, or opposition to, this item will be given an opportunity to do so during such hear- ing Written information pertaining to this item must be sub- mitted to the City Clerk byy 5:00 p.m., on Monday, March 19, 2007 at 32400 Paseo Adelanto, San Juan Capistrano, CA 92675. E-mail correspondence may besent to: cityclork@aanjunncapistrano.org. Individuals desir- ing to submit late written information at the meeting must or- ally request such action. For further information you may contact Cindy Russell, Administrative Services Director at (949) 443.6301. /s/ Mearet R. Monahan RTY RK Published: Capistrano Valley News, March 8, 2007 8303348 3-054 lZZ IIA t2,� 7— 0� TOTAL P.02 0 NOTICE OF TRANSMITTAL CAPISTRANO VALLEY NEWS Legal Publications CHARGE TO ACCOUNT NO. FOR PUBLICATION ON: DOCUMENT TO BE PUBLISHED PROOF OF PUBLICATION 0041125000 THURSDAY, MARCH 8, 2007 NOTICE OF PUBLIC HEARING - CONSIDERATION OF THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE REFUNDING BONDS BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO ASSIST IN THE REFINANCING OF THE SEASONS SENIOR APARTMENTS — PHASE I PROJECT(San Juan Capistrano Housing Investors, LP) Please send to: City Clerk's Division, City Hall 32400 Paseo Adelanto San Juan Capistrano, CA 92675 (94 4 11 1 AUTHORIZED BY: DATE: February 27, 2007 Date of Public Hearing Date notice published Date affidavit received Date notice posted in designated posting places (3) Date of mailing notice to interested parties Date notice transmitted to City Manager's Office - 03/20/2007 - 03/08/2007WWO -03/08/200 - n/a - 02/27/2007 IV' 0 0 NOTICE OF PUBLIC HEARING CITY OF SAN JUAN CAPISTRANO NOTICE IS HEREBY GIVEN, that on the 20th day of March, 2007, at 7:00 P.M. in the City Council Chamber, 32400 Paseo Adelanto, San Juan Capistrano, California, the City Council will hold a public hearing on the following: CONSIDERATION OF THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE REFUNDING BONDS BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO ASSIST IN THE REFINANCING OF THE SEASONS SENIOR APARTMENTS — PHASE I PROJECT (San Juan Capistrano Housing Investors, LP) Pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended, the City Council will hear and consider information concerning the proposed issuance by the California Statewide Communities Development Authority (the "Authority") of its multifamily housing revenue refunding bonds in one or more series in the aggregate principal amount of approximately $5,400,000 (the "Authority Bonds") pursuant to Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code. The proceeds from the sale of such Authority Bonds, if any are issued, are intended to be used to assist in the refinancing of the acquisition, construction and development of a 112 -unit multifamily rental housing development commonly known as SEASONS Senior Apartments located in San Juan Capistrano at 31641 Rancho Viejo Road in the City of San Juan Capistrano, California (the "Project'). The project is owned and operated by San Juan Capistrano Housing Investor, LP, a California limited partnership. Those desiring to be heard in favor of, or opposition to, this item will be given an opportunity to do so during such hearing. Written information pertaining to this item must be submitted to the City Clerk by 5:00 p.m., on Monday, March 19, 2007 at 32400 Paseo Adelanto, San Juan Capistrano, CA 92675. E-mail correspondence may be sent to: cityclerk@sanivancapistrano.org. Individuals desiring to submit late written information at the meeting must orally request such action. For further information you may contact Cindyu77,7, I, Administrative Services Director at (949) 443-6301. M R ARET R. MONAHAN, CITY CLERK FOR OFFICE USE ONLY: STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF SAN JUAN CAPISTRANO ) ss. AFFIDAVIT OF POSTING AND PUBLICATION I, MARGARET R. MONAHAN, declare that I am the duly appointed and qualified City Clerk of the City of San Juan Capistrano; that on March 8, 2007, 1 caused the above Notice to be posted in three (3) public places in the City of San Juari Capistrano, to wit: City Hall; Community Center Reception Area; Orange County Public Library AND, that on March 8, 2007, the above Notice was published in the Capistrano Valley News newspaper. I declare under penalty of perjury that the foregoing is true and correct. MARGARET R. MONAHAN, CITY CLERK City of San Juan Capistrano, California 0 0 NOTICE OF TRANSMITTAL CAPISTRANO VALLEY NEWS Legal Publications CHARGE TO ACCOUNT NO. FOR PUBLICATION ON: DOCUMENT TO BE PUBLISHED: PROOF OF PUBLICATION AUTHORIZED BY: DATE: February 13, Date of Public Hearing Date notice published Date affidavit received Date notice posted in designated posting places (3) Date of mailing notice to interested parties GI11151 .9ifill THURSDAY, FEBRUARI, 2007 NOTICE OF PUBLIC HEARING - CONSIDERATION OF THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE REFUNDING BONDS BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO ASSIST IN THE REFINANCING OF THE SEASONS SENIOR APARTMENTS — PHASE I PROJECT(San Juan Capistrano Housing Investors, LP) Please send to: City Clerk's Division, City Hall 32400 Paseo Adelanto San Juan Capistrano, CA 92675 (949) X193--1171 - 03/06/2007 - 02/22/2007411I " - 02/22/200tx - n/a Date notice transmitted to v) - City Manager's Office - 02007/ • / J NOTICE OF PUBLIC HEARING CITY OF SAN JUAN CAPISTRANO NOTICE IS HEREBY GIVEN, that on the 6t' day of March, 2007, at 7:00 P.M. in the City Council Chamber, 32400 Paseo Adelanto, San Juan Capistrano, California, the City Council will hold a public hearing on the following: CONSIDERATION OF THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE REFUNDING BONDS BY THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO ASSIST IN THE REFINANCING OF THE SEASONS SENIOR APARTMENTS — PHASE PROJECT (San Juan Capistrano Housing Investors, LP) Pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended, the City Council will hear and consider information concerning the proposed issuance by the California Statewide Communities Development Authority (the "Authority") of its multifamily housing revenue refunding bonds in one or more series in the aggregate principal amount of approximately $5,400,000 (the "Authority Bonds") pursuant to Chapter 1 of Part 2 of Division 24 of the California Health and Safety Code. The proceeds from the sale of such Authority Bonds, if any are issued, are intended to be used to assist in the refinancing of the acquisition, construction and development of a 112 -unit multifamily rental housing development commonly known as SEASONS Senior Apartments located in San Juan Capistrano at 31641 Rancho Viejo Road in the City of San Juan Capistrano, California (the "Project"). The project is owned and operated by San Juan Capistrano Housing Investor, LP, a California limited partnership. Those desiring to be heard in favor of, or opposition to, this item will be given an opportunity to do so during such hearing. Written information pertaining to this item must be submitted to the City Clerk by 5:00 p.m., on Monday, March 5, 2007 at 32400 Paseo Adelanto, San Juan Capistrano, CA 92675. Individuals desiring to submit late written information at the meeting must orally request such action. For further information you may contact Cindy Ry�ss�, Administrative Services Director at (949) 443-6301. �� t i , i , R. MONAHAN, CITY FOR OFFICE USE ONLY: STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss CITY OF SAN JUAN CAPISTRANO ) AFFIDAVIT OF POSTING AND PUBLICATION I, MARGARET R. MONAHAN, declare that I am the duly appointed and qualified City Clerk of the City of San Juan Capistrano; that on February 22, 2007, 1 caused the above Notice to be posted in three (3) public places in the City of San Juan Capistrano, to wit: City Hall; Community Center Reception Area; Orange County Public Library AND, that on February 22, 2007, the above Notice was published in the Capistrano Valley News newspaper. I declare under penalty of perjury that the foregoing is true and correct. MARGARET R. MONAHAN, CITY CLERK City of San Juan Capistrano, California r .. AFFIDAVIT OF PUBLICATION STATE OF CALIFORNIA, ) ) ss. County of Orange ) I am a citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the above entitled matter. I am the principal clerk of the Capistrano Valley News, a newspaper that has been adjudged to be a newspaper of general circulation by the Superior Court of the County of Orange, State of California, on June 7, 1984, Case No. A-122949 in and for the City of San Juan Capistrano, County of Orange, State of California; that the notice, of which the annexed is a true printed copy, has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to wit: February 22, 2007 "I certify (or declare) under the penalty of perjury under the laws of the State of California that the foregoing is true and correct": Executed at Santa Ana, Orange County, California, on Date: February 22, 2007 i Signature �\ Capistrano Valley News 625 N. Grand Ave. Santa Ana, CA 92701 (714)796-2209 LJ PROOF OF RftW' ff6 ' 10" MAR —8 A R: 3S SAN JUA CAPISTRANO Proof of Publication of Mo UOCF rueuc xewroxo env OF "N JUAN CoPMRANO Mond D Noun WAN, did w da an ary ar Mach, 2007. at 7;00 P.M. In the Coy C r,04 CIWnEsr 32400 Pomo Adelnb, SM Jun CVSprarn, Cd1aNa, 6: Chy Ccundl wN hold a pubic hwlp n ma MWxkq: n WMN n M CALWON nA71l�D[ 0014 IIIM111u/ o1Y60l1DIR AUTH01 t M ANDY N M OF M NAWID ep011 APAKF 1fA• PNA1u 1►MoJEW (Mw Aaaw Cy-atrn(wfj NOUN" dwNan, LP) 1SM as rr i7ad Ne C4Y�Cto xO wo b*WYWbandy CW*k%Code r mmleImWmadon s -axlaa comms=="==v "CZ bur in •cne Or mora � OIp a� Borida'1 p�uwvrt ro CMPbr 7 a Pamir 20x1 ONYbn 24 d the Ce4bmle HeeM and Sally Code For IuMx Nlarmadon you may co nwt Ck* Runell, A6 minidmWe Servicm Oirm 0"H3930i. WWIR. Morrtlwa�_ ET R. MONAFMN, CRY CIERK Pub4ehed: Capiatr Valey News, Februvy 22,20(n 8241600 - 3-000 OCT -19-2006 08:55 OCR • RECEIVED IMI OCT 19 A 113 05 CITY CLERK SAN JUAN CAPISTRANO 7147962230 P.02 � 1 Notice at JOINT PUBLIC HEARING . CH7 of San Joum Caplabom am O Son Juan gedorretoM•aM AyrtLy ON NOVEMBER 7, 2006 AT 7100 P.M., A JOINT REAMNCOUNCIL MBMS WILL B A 324007HELD X Pilll ADELANTO. SAN JUAN CAPISTRANO, BY THE CITY COUNCIL AND THE BOARD OF DIRECTORS OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SAN JUAN CAPISTRANO TO CON. SIDER THE FOLLOWING PROJBOT- A copy of the proposed Agreement, together with a summa- ry of the Agreement, and supporting documentation is avail- able for public inspection dunng business hours at the San Juan Capistrano Library located at 31495 FJ Camino Real, The Community Center located at 25925 Camino Del Avion, the Planning Department and City Clerk's Office located at 32400 Paseo Adelarao, San Juan Capistrano, CA 92675. The purpose of the joint public hearing is to receive tesfimo- ny from the public regarding the proposed disposition and development of properly as set forth in the proposed Agree- ment. All interested parties are invited and encouraged to attend said meeting to express their opinion on this matter. On the basis of the entire environmental review record, the proposed project will either have a less than significant Im- ped upon the environment or any identified intppaaccttss can be mitigated to a less than significant level. Addnlonally there are no long-term environmental goals that would be com- promised by the project nor cumulative impacts are antick oared in connection with the project. The mitigation meas- or by e-mail at It you chalienge action on any project in court, you may be limited to raising only those Issues which you, or someone else raised at the public hearing desodbed fn this notice, or in written correspondence delivered at or prior to the hear- ing. Vou aro imbto attend the public hearing to learn more about how thioed projects) may affectyou. You will have the opportunity to express your support or opposition by der to provide testimony at the hearing, please call cnnny Swanson, Secretary at (949) 493-1171. /s/ Margaret R. Monahan MARGARET R. MONAHAN CITY CLERK Published: Capistrano Valley News, October 26, 2006 and November 2, 2006 9194289 3-215 20(. GO TOTAL P.02 r� u CHARGE TO ACCOUNT NO. FOR PUBLICATION ON: 0 NOTICE OF TRANSMITTAL CAPISTRANO VALLEY NEWS Legal Publications 0041125000 THURSDAY, OCTOBER 26, 2006 THURSDAY, NOVEMBER 2, 2006 DOCUMENT TO BE PUBLISHED: NOTICE OF PUBLIC HEARING — JOINT PUBLIC HEARING BETWEEN THE CITY OF SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY CONCERNING DEVELOPMENT AND DISPOSITION AGREEMENT. PROOF OF PUBLICATION AUTHORIZED BY: DATE: October 13, Please send to: City Clerk's Division, City Hall 32400 Paseo Adelanto San Juan Capistrano, CA 92675 (949) 493-1171 �� R. Monahan. Citv Clerk Date of Public Hearing - 11/07/2006 Date notice published 10/26/2006 11/02/2006 Date affidavit received - Date notice posted in designated posting places (3) - 10/19/20062K Date notice posted on property - n/a Date of mailing notice to interested parties - 10/19/200 Date notice transmitted to City Manager's Office - 10/19/2001 ! / Notice of JOINT PUBLIC HEARING City of San Juan Capistrano San Juan Capistrano Community Redevelopment ON NOVEMBER 7, 2006 AT 7:00 P.M., A JOINT PUBLIC HEARING WILL BE HELD IN THE CITY COUNCIL CHAMBERS AT 32400 PASEO ADELANTO, SAN JUAN CAPISTRANO, BY THE CITY COUNCIL AND THE BOARD OF DIRECTORS OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SAN JUAN CAPISTRANO TO CONSIDER THE FOLLOWING PROJECT: Disposition and Development Agreement (the "Agreement") by and between the San Juan Capistrano Community Redevelopment Agency (the "Agency") and San Juan Capistrano Housing Investors 11, LP, a California limited partnership (the "Developer") for the development of Season's Senior Affordable Apartments Phase I I on approximately 1.2 acres of vacant property located on the corner of Rancho Viejo Road and Paseo Espada (APN 666-241-07). The Agreement will also require the initiation of a General Plan Amendment to change the property's Land Use Designation from General Commercial to Multi-Family/Senior Affordable. A copy of the proposed Agreement, together with a summary of the Agreement, and supporting documentation is available for public inspection during business hours at the San Juan Capistrano Library located at 31495 EI Camino Real, The Community Center located at 25925 Camino Del Avion, the Planning Department and City Clerk's Office located at 32400 Paseo Adelanto, San Juan Capistrano, CA 92675. The purpose of the joint public hearing is to receive testimony from the public regarding the proposed disposition and development of property as set forth in the proposed Agreement. All interested parties are invited and encouraged to attend said meeting to express their opinion on this matter. The Disposition and Development Agreement has been reviewed pursuant to California Environmental Quality Act (CEQA). An Initial Study and Mitigated Negative Declaration (MND) have been prepared in compliance with CEQA, the State CEQA Guidelines, and City environmental procedures. The MND was prepared for the Project pursuant to and in accordance with the California Environmental Quality Act (Public Resources Code Section 21000 et seq.) ("CEQA") and the Guidelines for Implementation of the California Environmental Quality Act (Title 14, California Code of Regulations, Sections 15000 et seq.) ("the CEQA Guidelines"). On the basis of the entire environmental review record, the proposed project will either have a less than significant impact upon the environment or any identified impacts can be mitigated to a less than significant level. Additionally, there are no long-term environmental goals that would be compromised by the project nor cumulative impacts are anticipated in connection with the project. The mitigation measures have been incorporated into a Mitigation Monitoring and Reporting Program (MMRP). For more information, please contact Douglas Dumhart, Economic 0 contact Douglas Dumhart, Economic Development Manager at (949) 443-6316 or by e-mail at ddumhart@sanjuancapistrano.org. if you challenge action on any project in court, you may be limited to raising only those issues which you, or someone else raised at the public hearing described in this notice, or in written correspondence delivered at or prior to the hearing. You are invited to attend the public hearing to learn more about how the project(s) may affect you. You will have the opportunity to express your support or opposition by speaking at the hearing or by submitting written comments. Should you have special needs to be accommodated in order to provide testimony at the hearing, please call Christy Swanson, Secretary at (949) 493-1171. R. MONAHAN CLERK Capistrano Valley News: October 26, 2006 and November 2, 2006 0 0 STATE OF CALIFORNIA COUNTY OF ORANGE ) ss AFFIDAVIT OF POSTING CITY OF SAN JUAN CAPISTRANO (Pursuant to Government Code Section 65091) I, Nicholas Taylor, hereby declare that on October 17, 2006, 1 posted at least one (1) copy of the attached Notice of Public Hearing. The Public Hearing Notice was for consideration of a Disposition and Development Agreement for the addition of 38 units to the Season's Senior Affordable Apartments at not less than 300 feet apart. The DDA would require a General Plan Amendment to change the Land Use Designation from General Commercial to Multi Family/ Senior Affordable. I declare under penalty of perjury that the foregoing is true and correct. Dated this 23rd day of October, 2006. olas Taylor, Ailmiestrafive Intern San Juan Capistrano, California 9 0 Notice of JOINT PUBLIC HEARING City of San Juan Capistrano San Juan Capistrano Community Redevelopment Agency ON NOVEMBER 7, 2006 AT 7:00 P.M., A JOINT PUBLIC HEARING WILL BE HELD IN THE CITY COUNCIL CHAMBERS AT 32400 PASEO ADELANTO, SAN JUAN CAPISTRANO, BY THE CITY COUNCIL AND THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SAN JUAN CAPISTRANO TO CONSIDER THE FOLLOWING PROJECT: Disposition and Development Agreement (the "Agreement") by and between the San Juan Capistrano Community Redevelopment Agency (the "Agency") and San Juan Capistrano Housing Investors II, LP, a California limited partnership (the "Developer") for the development of Season's Senior Affordable Apartments Phase II on approximately 1.2 acres of vacant property located on the corner of Rancho Viejo Road and Paseo Espada (APN 666-241-07). The Agreement will also require the initiation of a General Plan Amendment to change the property's Land Use Designation from General Commercial to Multi-Family/Senior Affordable. A copy of the proposed Agreement, together with a summary of the Agreement, and supporting documentation is available for public inspection during business hours•at the San Juan Capistrano Library located at 31495 EI Camino Real, The Community Center located at 25925 Camino Del Avion, the Planning Department and City Clerk's Office located at 32400 Paseo Adelanto, San Juan Capistrano, CA 92675. The purpose of the joint public hearing is to receive testimony from the public regarding the proposed disposition and development of property as set forth in the proposed Agreement. All interested parties are invited and encouraged to attend said meeting to express their opinion on this matter. The Disposition and Development Agreement has been reviewed pursuant to California Environmental Quality Act (CEQA). An Initial Study and Mitigated Negative Declaration (MND) have been prepared in compliance with CEQA, the State CEQA Guidelines, and City environmental procedures. The MND was prepared for the Project pursuant to and in accordance with the California Environmental Quality Act (Public Resources Code Section 21000 at seq.) ("CEQA") and the Guidelines for Implementation of the California Environmental Quality Act (Title 14, California Code of Regulations, Sections 15000 at seq.) ("the CEQA Guidelines"). On the basis of the entire environmental review record, the proposed project will either have a less than significant impact upon the environment or any identified impacts can be mitigated to a less than significant level. Additionally, there are no long-term environmental goals that would be compromised by the project nor cumulative impacts are anticipated in connection with the project. The mitigation measures have been incorporated into a Mitigation Monitoring and Reporting Program (MMRP). For more 0 0 information, please contact Douglas Dumhart, Economic Development Manager at (949) 443-6316 or by e-mail at ddumhart@sanjuancapistrano.org. If you challenge action on any project in court, you may be limited to raising only those issues which you, or someone else raised at the public hearing described in this notice, or in written correspondence delivered at or prior to the hearing. You are invited to attend the public hearing to learn more about how the project(s) may affect you. You will have the opportunity to express your support or opposition by speaking at the hearing or by submitting written comments. Should you have special needs to be accommodated in order to provide testimony at the hearing, please call Christy Swanson, Secretary at (949) 493-1171. Publish: Capistrano Valley News Post: [ ] City Hall [ ] Public Library [ ] Community Center [ ] Property site 0 0 17/20 -1 In- "- 4 . r n, v K , `;- ir 4,. N 10/17/2006 0 AFFIDAVIT OF PUBLICATION STATE OF CALIFORNIA, ) ss. County of Orange ) I am a citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the above entitled matter. I am the principal clerk of The Orange County Register, a newspaper of general circulation, published in the city of Santa Ana, County of Orange, and which newspaper has been adjudged to be a newspaper of general circulation by the Superior Court of the County of Orange, State of California, under the date of 1/18/52, Case No. A-21046, that the notice, of which the annexed is a true printed copy, has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to wit: October 19, 2006 "I certify (or declare) under the penalty of perjury under the laws of the State of California that the foregoing is true and correct": Executed at Santa Ana, Orange County, California, on Date: October 19, 2006 �l —b ziga The Orange County Register 625 N. Grand Ave. Santa Ana, CA 92701 (714) 796-7000 ext. 2209 PROOF OF PUBLICATION This space is for the County Clerk's Filing Stamp RECEIVED N OCT 23 P Z. I l CITY CLERK SAN JUAN CAPISTRANO Proof of Publication of Rafee od amfr pffuc HKARUM MaJ ft J fapWre" .., f.e.aNepmn�it � fenxnunRll wWw Espada . the it OT by 0 0 NOTICE OF TRANSMITTAL The Register Legal Publications CHARGE TO ACCOUNT NO. FOR PUBLICATION ON: DOCUMENT TO BE PUBLISHED: PROOF OF PUBLICATION 0041125000 THURSDAY, OCTOBER 19, 2006 NOTICE OF PUBLIC HEARING — JOINT PUBLIC HEARING BETWEEN THE CITY OF SAN JUAN CAPISTRANO REDEVELOPMENT AGENCY CONCERNING DEVELOPMENT AND DISPOSITION AGREEMENT. Please send to: City Clerk's Division, City Hall 32400 Paseo Adelanto San Juan Capistrano, CA 92675 (949) 493-1171 AUTHORIZED BY: /s/ Margaret R. Monahan DATE: October 17, 2006 Date of Public Hearing - 11/07/2006 Date notice published -10/19/06 Date affidavit received - Date notice posted in designated posting places (3) - 10/19/2006 Date notice posted on property - n/a Date of mailing notice to interested parties - 10/19/2006 Date notice transmitted to City Manager's Office - 10/19/2006 • 11 Notice of JOINT PUBLIC HEARING City of San Juan Capistrano San Juan Capistrano Community Redevelopment Agency ON NOVEMBER 7, 2006 AT 7:00 P.M., A JOINT PUBLIC HEARING WILL BE HELD IN THE CITY COUNCIL CHAMBERS AT 32400 PASEO ADELANTO, SAN JUAN CAPISTRANO, BY THE CITY COUNCIL AND THE BOARD OF DIRECTORS OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SAN JUAN CAPISTRANO TO CONSIDER THE FOLLOWING PROJECT: Disposition and Development Agreement (the "Agreement") by and between the San Juan Capistrano Community Redevelopment Agency (the "Agency") and San Juan Capistrano Housing Investors II, LP, a California limited partnership (the "Developer") for the development of Season's Senior Affordable Apartments Phase II on approximately 1.2 acres of vacant property located on the corner of Rancho Viejo Road and Paseo Espada (APN 666-241-07). The Agreement will also require the initiation of a General Plan Amendment to change the property's Land Use Designation from General Commercial to Multi-Family/Senior Affordable. A copy of the proposed Agreement, together with a summary of the Agreement, and supporting documentation is available for public inspection during business hours at the San Juan Capistrano Library located at 31495 EI Camino Real, The Community Center located at 25925 Camino Del Avion, the Planning Department and City Clerk's Office located at 32400 Paseo Adelanto, San Juan Capistrano, CA 92675. The purpose of thejoint public hearing is to receive testimonyfrom the public regarding the proposed disposition and development of property as set forth in the proposed Agreement. All interested parties are invited and encouraged to attend said meeting to express their opinion on this matter. The Disposition and Development Agreement has been reviewed pursuant to California Environmental Quality Act (CEQA). An Initial Study and Mitigated Negative Declaration (MND) have been prepared in compliance with CEQA, the State CEQA Guidelines, and City environmental procedures. The MND was prepared for the Project pursuant to and in accordance with the California Environmental Quality Act (Public Resources Code Section 21000 et seq.) ("CEQA") and the Guidelines for Implementation of the California Environmental Quality Act (Title 14, California Code of Regulations, Sections 15000 et seq.) ("the CEQA Guidelines"). On the basis of the entire environmental review record, the proposed project will either have a less than significant impact upon the environment or any identified impacts can be mitigated to a less than significant level. Additionally, there are no long-term environmental goals that would be compromised by the project nor cumulative impacts are anticipated in connection with the project. The mitigation measures have been incorporated into a Mitigation Monitoring and Reporting Program (MMRP). For more information, please contact Douglas Dumhart, Economic Development Manager at (949) 443-6316 or by e-mail at ddumhart@sanjuancapistrano.org. if you challenge action on any project in court, you may be limited to raising only those issues which you, or someone else raised at the public hearing described in this notice, or in written correspondence delivered at or prior to the hearing. You are invited to attend the public hearing to learn more about how the project(s) may affect you. You will have the opportunity to express your support or opposition by speaking at the hearing or by submitting written comments. Should you have special needs to be accommodated in order to provide testimony at the hearing, please call Christy Swanson, Secretary at (949) 493- 1171. /s/ Margaret R. Monahan MARGARET R. MONAHAN CITY CLERK Publish: The Register: October 19, 2006 Today's Date: 10/19/06 • • Transmittal Routing (Check All That Apply) ❑ City Attorney ❑ City Manager ® City Clerk CONTRACT TRANSMITTAL Purchase and Sales Agreement Between Ortega Land Company and CRA Project Manager's Last Name: Douglas Dumhatophone Extension: X 6315 Council or CRA Meeting Date (if applicable): 11/07/06 APPROVING AUTHORITY: (Check One) Mayor CRA Chair City Manager Provide (1) executed original contract for each signing party, Agency and one (1) executed original to Escrow. Please provide the mailing address of any party to receive an agreement — unless the mailing address is included within the body of the agreement: (Not necessary if information is included in the contract) Originals to: Names Street city St Zi Buie Stoddard Attn: Bob Irish 11260 EI Camino Real, Ste. 200 San Diego CA 92130- 2676 First American Title Insurance Company Attn: Teresa Mona han 26440 La Alameda, Ste. 250 Mission Viejo CA 92691 OTHER INSTRUCTIONS: Copies to: Hecht Solberg Robinson Goldberg & Bagley LLP, Attn: Michael Maher, 600 West Broadway, 8th Floor, San Diego, CA 92101 and Stradling Yocca Carlson & Rauth, Attn: Jon Goetz, 660 Newport Center Drive, Ste. 1600, Newport Beach, CA 92660. 1. Please return a copy of executed agreements for RDA files. 2. Note: There are three original Purchase & Sales Agreements. 0 MEMORANDUM Reference to File Folders: 600.40 Purchase & Sale Agreement 2006 ORTEGA LAND CO. LLC Seasons Phase 11 600.40 Disposition & Development Agreement 2006 SEASONS SENIOR APARTMENTS Phase II 440.25 GPA Initiation SEASONS PHASE II AP 666-241-07 Christy Swanson Secretary, City Clerk's Office November 9, 2006