**Exhibit10.26**

 

Galleryat NoHo Commons

 

AGREEMENT OF SALE

 

THIS AGREEMENT, entered into as of the 12thday of August, 2009 (the “Effective Date”), by and between BEHRINGERHARVARD MULTIFAMILY OP I LP, a Delaware limited partnership (“Purchaser”) and SF NO HO LLC, a California limited liability company (“Seller”).

 

WITNESSETH:

 

1.             PURCHASE AND SALE.  Purchaser agrees to purchaseand Seller agrees to sell at the price (the “Purchase Price”) of Ninety-SixMillion and No/100 Dollars ($96,000,000.00), all of the following property(collectively, the “Property”):

 

(a)           That certain parcel of real propertylocated in North Hollywood, California, more particularly described on Exhibit Aattached hereto (the “Land”);

 

(b)           Thepersonal property (the “Personal Property”) located on the Improvements(hereinafter defined) which is used for operation and maintenance of theapartment project and is owned by Seller, including those items set forth on Exhibit B,which shall be transferred to Purchaser at Closing (as hereinafter defined) bya Bill of Sale;

 

(c)           Allrights and appurtenances pertaining to the Land, including, without limitation,any and all rights of Seller in and to all air and development rights, allmineral rights, roads, alleys, easements, streets and ways adjacent to theLand, rights of ingress and egress thereto, any strips and gores within orbounding the Land and in the profits or rights or other appurtenances connectedwith the beneficial use or enjoyment of the Land;

 

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(d)           Thosecertain apartment buildings containing approximately 438 apartment units, andthe other improvements, structures and fixtures placed, constructed orinstalled on the Land (collectively, the “Improvements”);

 

(e)           All ofSeller’s right, title and interest in all leases, licenses and concessionagreements (collectively, the “Leases”) covering space situated at or withinthe Land and Improvements under any existing Lease occupied by tenants(collectively, the “Tenants”) and all refundable security deposits deposited byTenants with respect to the Leases;

 

(f)            All ofSeller’s rights, title and interest in and to contractual rights andintangibles with respect to the operation, maintenance, and repair of the Landand the Improvements, including assignable service and maintenance agreementsbut excluding any Master Agreements as hereafter defined (collectively, “ServiceContracts”),  utility agreements,warranties and guaranties relating to the Property, assignable governmentalpermits, licenses, certificates and approvals in connection with the ownershipof the Property (collectively, the “Licenses”), any payments due to the ownerof the Property under or pursuant to the OPA (defined below) attributable tosuch owner for the period of such ownership from and after the Closing (“FuturePlan Payments”), and all development rights relating or appurtenant to the Landor the Improvements, but specifically excluding any warranties and/orguaranties from and/or claims against the general contractor affiliate ofSeller. As used herein, the term “Master Agreements” means agreementspertaining to operations, services, maintenance, or repair of multipleproperties of such Seller or affiliates of such Seller;

 

(g)           Seller’sright, title and interest, if any, to the use of the trade name “Gallery atNoHo Commons” (the “Trade Name”) in connection with the Property;

 

(h)           Theright, if assignable, to the use of all telephone numbers used by Seller at theProperty; and

 

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(i)            Subjectto the provisions of Paragraph 6 of this Agreement, all rights to any awardmade or to be made or settlement in lieu thereof for damage to the Land orImprovements by reason of condemnation, eminent domain, exercise of policepower or change of grade of any street.

 

2.             PURCHASE PRICE.  The Purchase Price shall bepaid as follows:

 

(a)           Within two (2) business days afterPurchaser’s receipt of a fully executed electronic or hard copy of thisAgreement, the sum of $2,000,000.00 (the “Earnest Money Deposit”) delivered toPartners Title Company (the “Escrow Agent”) byfederally wired immediately available funds to be held by the EscrowAgent, by and in accordance with the provisions of this Agreement.  Upon deposit, this Earnest Money Deposit of$2,000,000.00 is nonrefundable unless Seller is in default hereunder or if thisAgreement is terminated pursuant to any applicable provision of this Agreementwhich provides for a refund of the Earnest Money Deposit;

 

(b)           On the Closing Date (as hereinafter defined), the balance of thePurchase Price adjusted in accordance with the prorations by federally wiredimmediately available funds delivered to the Escrow Agent’s account.

 

(c)           Sellerand Purchaser acknowledge and agree that Purchaser’s agreement to perform itsobligations under this Agreement, including the obligation to deposit theEarnest Money, is adequate and sufficient consideration to support thisAgreement, notwithstanding Purchaser’s termination rights hereunder.  In addition to the foregoing consideration,at the same time Purchaser makes the Earnest Money Deposit with the EscrowAgent, Purchaser shall deliver to Seller cash in the amount of $100.00 (the “IndependentContract Consideration”) which amount has been bargained for and agreed to asconsideration for Purchaser’s exclusive right or option to purchase theProperty, the right to inspect the Property as provided herein, and 

 

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Purchaser’s other rights and remedies herein.  The Independent Contract Consideration is inaddition to and independent of all other consideration provided in thisAgreement, and is nonrefundable in all events.

 

(d)           TheEarnest Money Deposit is non-refundable when made, (as provided in Paragraph2(a)), except if Seller is in default hereunder or if this Agreement isterminated pursuant to any applicable provisions contained in this Agreementwhich provide for a refund of the Earnest Money Deposit.  All Earnest Money shall becredited to the balance of the Purchase Price at Closing.  All interest on the Earnest Moneyremains the sole and exclusive property of Purchaser, does not become part ofthe Earnest Money, and is payable to Purchaser upon the termination (forwhatever reason) or Closing.

 

(e)           If (i) Selleror an affiliate of Seller becomes a debtor in bankruptcy, whether voluntarilyor involuntarily, under Title 11 of the U.S. Code, as now constituted orhereafter amended, or under any other applicable federal or state bankruptcylaw or other similar law; (ii) a trustee or receiver of any propertyinterest is appointed; or (iii) Seller makes an assignment for the benefitof creditors and the Property constitutes property of thebankruptcy estate, then for purposes of this Agreement, the rejection of thisAgreement by court order or operation of law, shall constitute a “termination”hereunder and Purchaser shall be entitled to the return of the Earnest MoneyDeposit.  Seller acknowledges that itsrights and interest in and to the Earnest Money Deposit, are limited to a rightof payment only pursuant to the terms of this Agreement and the escrowprovisions and that the Earnest Money Deposit, shall not be property of thebankruptcy estate.

 

**3.****            **TITLE COMMITMENT AND SURVEY

 

(a)   Attached heretoas Exhibit E is an updated Commitment for Title Insurance Order No. 71075069-X59 dated July 16, 2009 (“Title Commitment”) for an owner’s 

 

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**CLTA**standard coverage title insurance policy (“Title Policy”) issued byChicago Title Insurance Company, with cooperation from Partners Title Company (“TitleInsurer”).  The owner’s Title Policy issued at Closing will be an ALTA 2006 owner’spolicy in the amount of the Purchase Price, dated effective as of the ClosingDate, subject only to: (i) real estate taxes and assessments not yet dueand payable; (ii) existing leases; and (iii) those title exceptionsset forth in Schedule B of the Title Commitment that are: (A) not objectedto by Purchaser within the time or manner set forth in this Agreement, or (B) aftersuch objection, are not timely cured (or timely agreed to be cured) by Sellerand ultimately waived by Purchaser in accordance with this Agreement.  All of the above are herein referred to asthe “Permitted Exceptions”.  Purchaserhas delivered a notice to Seller in the form of a letter dated March 19,2009, from Purchaser’s counsel (“Purchaser’s Notice”, a copy of which isattached hereto as Exhibit E-1) pertaining to an earlier version of theTitle Commitment dated February 13, 2009 (“Initial Title Commitment”)which lists those title matters in the Initial Title Commitment that are notapproved by Purchaser (“Unpermitted Exceptions”).  Seller has responded to the Purchaser’sNotice by a letter dated July 22, 2009 (“Seller’s Reply”, a copy of whichis attached hereto as Exhibit E-2) and included therewith the revisedTitle Commitment attached hereto as Exhibit E issued by the TitleCompany.  Purchaser issued a responseletter dated July 29, 2009 (“Purchaser’s Revised Notice”, a copy of whichis attached hereto as Exhibit E-3) setting forth Purchaser’s remainingUnpermitted Exceptions (“Purchaser’s Updated Title Objections”) based uponSeller’s Reply and the Title Commitment. Seller responded to Purchaser’sRevised Notice on August 3, 2009 (“Seller’s Response”, a copy of which isattached hereto as Exhibit E-4). Subject to Purchaser’s rights under Paragraph 20, Purchaser has approved all of the title exceptions set forth in Schedule B of theTitle Commitment as described in subparagraph (iii) above as modified byPurchaser’s Notice, Purchaser’s Revised Notice, Seller’s Reply and 

 

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Seller’s Response and agrees, subject toPurchaser’s rights under Paragraph 20 hereof, to take title to the Propertysubject to those Unpermitted Exceptions as modified by Seller’s Reply andSeller’s Response.  Seller shall be obligated to comply with theterms of Seller’s Reply and Seller’s Response with respect to the TitleCommitment; provided, however, Seller has disclosed to Purchaser that Sellerhas not caused the filtration units and filter inserts at the Property to beinspected and maintained in accordance with the Master Covenant and AgreementRegarding On-Site BMP Maintenance recorded as against the Property on December 14,2004 as Document 04 3220985 (“BMP Maintenance Covenant”). Notwithstanding theforegoing, no exceptions or liens related to financing on the Property or otherliens of a definite and ascertainable amount will be considered PermittedExceptions, and Seller shall Cure such items accordingly by fully paying forsuch items on or prior to the Closing Date or bonding around such items (butnot by insuring over) in a manner acceptable to Purchaser in Purchaser’s soleand absolute discretion on or prior to the Closing Date.  If any update to the Title Commitmentdiscloses matters which are not reflected on the Title Commitment and Purchaserobjects to the same (an “Additional Title Exception”), Purchaser shall givenotice (“Purchaser’s Additional Notice”) to Seller of such Additional TitleException within three (3) business days after the receipt of suchupdate.   Seller shall have three (3) businessdays after receipt of Purchaser’s Additional Notice (the “Additional Title CurePeriod”) to either (i) have the Additional Title Exceptions removed fromthe Title Commitment, or (ii) obtain a commitment from the Title Insurerto “insure over” the Additional Title Exceptions to Purchaser’s satisfaction,or (iii) commit to “bond over” the Additional Title Exceptions toPurchaser’s satisfaction (collectively, “Additional Title Cure”).  If, during the Additional Title Cure Period,Seller does not perform the Additional Title Cure or commit to perform theAdditional Title Cure all of the Additional Title Exceptions, then Purchasercan, 

 

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within three (3) business days after theexpiration of the Additional Title Cure Period, elect to either take title tothe Property subject to such uncured Additional Title Exceptions or terminatethis Agreement and receive a full refund of the Earnest Money.  Purchaser’s failure to deliver Purchaser’sAdditional Notice shall be conclusive evidence that Purchaser has approved allof the Additional Title Exceptions set forth in Schedule B of the updated TitleCommitment as described above, and its failure to terminate this Agreementwithin three (3) business days after expiration of the Additional TitleCure Period shall be deemed an election by Purchaser to take title to theProperty subject to the Additional Title Exceptions as modified by Seller’sAdditional Title Cure, if at all.   TheTitle Commitment shall be conclusive evidence of good title as therein shown asto all matters insured by the policy, subject only to the Permitted Exceptions.  On the Closing Date, Seller shall cause theTitle Insurer to issue the Title Policy or a “marked up” commitment inconformity with the updated Title Commitment attached as Exhibit E hereto,as modified in accordance with this Paragraph 3(a) and subject only to thePermitted Exceptions, providing an irrevocable commitment by the Title Insurerto issue the Title Policy in accordance with this Agreement.  Seller shall pay the costs of the TitlePolicy.  Purchaser shall pay theadditional costs of an “extended coverage” Title Policy and any specialendorsements which Purchaser requires.

 

(b)           Purchaseracknowledges receipt of a survey of the Property, updated January 8, 2009,prepared by Hovell & Pilarski Engineering (the “Survey”).  Purchaser approves the Survey; provided,however, upon execution of this Agreement by Seller and Purchaser, Purchasermay request the surveyor to update the Survey, have it recertified to Purchaserand the Title Company and show additional items on the Survey as noted inPurchaser’s Notice with respect to the Survey, all of the foregoing atPurchaser’s sole cost and expense. If the revised Survey discloses matterswhich are not reflected on the Survey and 

 

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demonstrate that the Property is not in compliance withapplicable building and zoning codes (a “Survey Defect”), Purchaser shall givenotice (“Survey Defect Notice”) to Seller of such Survey Defect.  Seller shall have five (5) business daysafter receipt of such Survey Defect Notice (“Survey Cure Period”) to eithercure or commit to cure (“Survey Cure”) the Survey Defects or advise Purchaserthat Seller will not cure the Survey Defects. If Seller fails to deliver written notice to Purchaser of its electionto either cure or not cure the Survey Defects prior to the expiration of theSurvey Cure Period, Seller will be deemed to have elected not to cure theSurvey Defects.  If Seller elects, or isdeemed to have elected, not to cure one or more of the Survey Defects, then Purchasershall have the right to terminate this Agreement within three (3) business days after expiration of the Survey CurePeriod and receive a full refund ofthe Earnest Money Deposit.  Purchaser’sfailure to terminate this Agreement within three (3) businessdays after expiration of the Survey Cure Period shall be deemed an election byPurchaser to accept the Survey, as modified by Seller’s Survey Cure, if at all.

 

(c)           Purchasershall pay for any additional work which Purchaser requires, except for thosematters that Seller timely cures or commits to cure as provided herein.

 

(d)           If Purchaserterminates this Agreement pursuant to subparagraph (a) or (b) underthis Paragraph 3, then the Earnest Money Deposit shall be returned to thePurchaser and this Agreement shall be terminated, and except as specificallyprovided for elsewhere in this Agreement, neither party shall have any furtherobligation or liability hereunder.

 

(e)           Notwithstandingthe foregoing, in no event will either of the following be deemed a PermittedException: (i) any title matter (whether an Unpermitted Title Exception oran Additional Title Exception) to which Purchaser objects in accordance withthe terms of this Agreement that Seller Cures or commits to Cure, or asotherwise set forth in Paragraph 20 hereof (unless expressly waived thereafterby Purchaser hereunder); or (ii) any Survey Defect 

 

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that Seller cures or commits to cure in accordanceherewith; provided, however, Purchaser shall accept all Unpermitted Exceptionsand all Survey Defects that have been Cured.

 

4.     CONDITION OF TITLE/CONVEYANCE.  Seller agrees to convey fee simple title to the Property by Grant Deed (“Deed”)in recordable form subject only to the Permitted Exceptions.  If Seller is unable to convey title to theProperty subject only to the Permitted Exceptions because of the existence ofan additional title exception not shown on the Title Commitment (“New Exception”),then Purchaser can elect to take title to the Property subject to the NewException or terminate this Agreement and receive a full refund of the EarnestMoney Deposit.  If Purchaser elects toterminate this Agreement pursuant to this Paragraph, then the Earnest MoneyDeposit shall be delivered to the Purchaser and except as specifically providedfor elsewhere in this Agreement, neither party shall have any furtherobligation or liability hereunder. Notwithstanding the aforesaid, all liens of a definite ascertainableamount which are New or Unpermitted Exceptions shall be fully paid for by Sellerat or before Closing or bonded around by Seller (but not insured over) at orbefore Closing in a manner acceptable to the Title Insurer to remove the samefrom the Title Commitment.  Purchaser’selection to terminate under this Paragraph 4 is not intended to limit anyremedy to which Purchaser may be entitled to under this Agreement, including(without limitation) any remedy for a Seller default.

 

5.     PAYMENT OF CLOSING COSTS. Seller shall pay: (a) thecosts of the transfer taxes or documentary stamps to be paid with reference tothe recording of the Deed, if any; and (b) any costs associated withSeller’s financing on the Property, including prepayment fees and per dieminterest.  Purchaser shall pay theclosing costs with reference to any loan which Purchaser obtains.  Purchaser and Seller shall equally share theEscrow Agent’s escrow fees.  Each partyshall pay its attorney’s fees and other legal costs in connection with thisAgreement (subject to the express limitations herein).  All other costs not expressly addressed inthis Paragraph 5 or 

 

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elsewhere in this Agreement will be the responsibilityof the party typically responsible for such costs in a transaction in thecounty where the Property is located.

 

6.             DAMAGE, CASUALTY AND CONDEMNATION.

 

(a)   The risk of loss or damageto the Property by fire or other casualty prior to Closing is borne by Seller;provided that the disposition of the Property following a fire or casualtyshall be governed by this Paragraph 6. Seller shall give Purchaser prompt notice of any destruction of any partof the Property or the commencement of any condemnation proceedings against theProperty between the date of this Agreement and the Closing Date.  If the Property suffers damage as a result ofany insured casualty prior to the Closing Date and can be repaired or restoredfor $250,000 or less, then Seller shall commence the repair or restoration in aexpeditious manner, pursuant to construction, repair and restoration contractsapproved in advance  by Purchaser, inPurchaser’s commercially reasonable judgment (“Repair Contracts”) (except nosuch advance approval shall be required in the case of an emergency, asdetermined by Seller in its commercially reasonable judgment, that requiresprompt repair or restoration by Seller, provided Seller provides copies of suchRepair Contracts to Purchaser promptly after obtaining the same) and theClosing will occur with no reduction in the Purchase Price, provided that, withrespect to such damage that has not been repaired or restored, at Closing: (i) Sellershall assign to Purchaser all proceeds of property insurance payable to Seller,less any amounts paid by Seller to repair, restore, or clean up the Property; (ii) Purchaserwill receive a credit against the Purchase Price equal to the amount of anydeductible under Seller’s property insurance policy; (iii) Purchaser shallaccept the Property and remaining Improvements in their damaged state; (iv) Sellerhas no further obligation to repair or restore any damaged or destroyedportions of the Property; and (v) Seller will assign to Purchaser all ofSeller’s rights, title and interest under the Repair Contracts, pursuant to anassignment document

 

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in substantially the same form as the assignment of Service Contractscontemplated by this Agreement.  If thecost of repair or restoration exceeds $250,000, then Purchaser can elect toeither: (a) terminate this Agreement within seven (7) business days afterreceipt of written notice of the cost to repair or restore such casualty and receive a full refund of the Earnest MoneyDeposit; or (b) proceed to Closing with no reduction in thePurchase Price and at Closing: (i) Seller shall assign to Purchaser allproceeds of property insurance payable to Seller, less any amounts paid bySeller to repair, restore, or clean up the Property; (ii) Purchaser willreceive a credit against the Purchase Price equal to the amount of anydeductible under Seller’s property insurance policy; (iii) Purchaser shallaccept the Property and remaining Improvements in their damaged state; and (iv) Sellerhas no further obligation to repair or restore any damaged or destroyedportions of the Property.

 

(b)   If condemnation proceedings(“Proceedings”) are instituted against the Property and Purchaser, in itscommercially reasonable judgment, determines that such  proceedings would have a material adverseimpact on the Property, then Purchaser can elect to either take the Propertysubject to the Proceedings along with an assignment of Seller’s interest in theProceedings or terminate this Agreement andreceive a full refund of the Earnest Money Deposit.  If Purchaser elects to terminate thisAgreement, it shall be by notice to the Seller within fifteen (15) businessdays after Seller notifies Purchaser of the Proceedings and Purchaser shall receive a full refund of the Earnest Money Deposit.  If Proceedings are instituted against theProperty and Purchaser does not have the option to terminate this Agreement asprovided above, then at Closing, Purchaser will take an assignment of Seller’sinterest in the Proceedings.

 

(c)   If theAgreement is terminated pursuant to this Paragraph, then the Earnest MoneyDeposit shall be delivered to the Purchaser and except as specifically provided for 

 

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elsewhere in this Agreement, neither party shallhave any further obligation or liability hereunder.

 

7.             AS-IS CONDITION.

 

(a)   Except as maybe specifically set forth in this Agreement or in any document executed bySeller in connection with the Closing (the “Closing Documents”), Purchaser is notrelying on Seller having made any inquiry as to the condition of the Propertyor the Leases, and except as may be specifically set forth in this Agreement orin any of the Closing Documents, Purchaser acknowledges and agrees that it willbe purchasing the Property based solely upon its inspection and investigationsof the Property and that Purchaser will be purchasing the Property “AS IS” and “WITHALL FAULTS” based upon the condition of the Property as of the date of thisAgreement, subject to reasonable wear and tear and, subject to the provisionsof Paragraph 6, loss by fire or othercasualty or condemnation from the date of this Agreement until the ClosingDate.  Without limiting the foregoing,Purchaser acknowledges that, except as may otherwise be specifically set forthin Paragraph 18 or elsewhere in thisAgreement or in any of the Closing Documents, neither Seller nor itsconsultants, brokers or agents have made any other representations orwarranties of any kind upon which Purchaser is relying as to any mattersconcerning the Property, including, but not limited to, any implied warranty asto the quality of the construction of the Property or its fitness for use as anapartment project, the condition of the Land or any of the Improvements,whether or not the Property is subject to airport corridor noise, the existenceor nonexistence of asbestos, lead in water, lead in paint, radon, undergroundor above ground storage tanks, petroleum, toxic waste or any HazardousMaterials or Hazardous Substances (as such terms are defined below), **whetheror not the Property is affected by the Natural Hazard Laws (as such term isdefined below),**the Tenants of the Property or the Leases affecting the Property, 

 

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economic projections or market studiesconcerning the Property, any development rights, taxes, **assessments under authority of the Mello RoosCommunity Facilities Act of 1982 or similar legislation,** bonds, covenants, conditions and restrictions affecting the Property,water or water rights, topography, drainage, soil, subsoil of the Property, theutilities serving the Property or any zoning, environmental or building laws, rules orregulations affecting the Property. Except as may be specifically set forth in this Agreement or in any ofthe Closing Documents, Seller makes no representation that the Propertycomplies with Title III of the Americans With Disabilities Act, the FairHousing Act of 1968 as amended, **theCalifornia Health and Safety Code Section 25249-6, California Proposition65, the California Fair Employment and Housing Act as amended** or any fire codes, building codes or health codes. Except as may bespecifically set forth in this Agreement or in any of the Closing Documents,Purchaser hereby releases Seller, which release shall also inure to the benefitof any member, manager, or partner of Seller, FF Development L.P., FFProperties L.P. and their affiliates (collectively referred to herein as the “RelatedParties”) from any and all liability in connection with any claims (includingbut not limited to all health and medical claims) which Purchaser may have againstSeller or any of the Related Parties, and Purchaser hereby agrees not to assertany claims (except as specifically set forth in this Agreement or in any of theClosing Documents), for damage, loss, compensation, contribution, cost recoveryor otherwise, against Seller or any of the Related Parties, whether in tort,contract, or otherwise, relating directly or indirectly to the condition of theProperty, including without limitation (i) claims relating to theexistence of asbestos; (ii) claims attributable to indoor air qualityissues, releases from building material and furnishings, releases fromcleaning, repairing, or decorating activities, and the operation of heating andcooling systems and humidifiers; or (iii) claims relating to HazardousMaterials or Hazardous Substances on, or environmental conditions of, theProperty, or arising under the 

 

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Environmental Laws (as such term ishereinafter defined), or relating in any way to the quality of the indoor oroutdoor environment at the Property including methane gas or any of itsderivatives; or (iv) claims relating to mold, fungus, bacteria and/orother biological growth or biological growth factors, or any other type ofindoor contaminants that may exist on the Property; or (v) claims relatingto latent or patent construction defects or any implied warranty as to fitnessfor use as an apartment project; or (vi) **claims related to Natural Hazard Laws;** or (vii) claims relating to the failure of Seller to disclose anyinformation relating to the Property, except as may otherwise be expressly setforth in Paragraph 18 or elsewhere in this Agreement. Notwithstanding anything to the contrary contained herein, Purchaser’swaivers and releases contained in this Agreement shall not apply to, andnothing contained in this Paragraph 7(a) shall constitute a waiver orrelease by Purchaser with respect to, (A) any claims arising out of Seller’sfraud, (B) any claims arising out of any breach of Seller’s representations,warranties, covenants or obligations specifically set forth in Paragraph 18 orelsewhere in this Agreement or in any of the Closing Documents, (C) anyclaims made or asserted against Purchaser by any third party (including,without limitation, any applicable governing local, state or federal authorityor agency) to the extent that such claims arise out of or in connection withany Hazardous Materials or Hazardous Substances actually brought, placed orreleased in, on, under or about the Land or the Improvements by Seller or itsRelated Parties or their respective agents, employees or contractors, or (D) anyclaims made or asserted against Purchaser by any third party for personalinjury or property damage sustained prior to the Closing Date that arise out ofor result from occurrences on all or any portion of the Land or theImprovements prior to the Closing Date, but only to the extent such claims donot arise or result from the negligence or willful misconduct of Purchaser orits agents, employees or contractors.  Asused in this paragraph the term “affiliates” means, with respect to Seller orany manager, member or partner 

 

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of Seller, any other entity or person whichdirectly or indirectly through one or more intermediaries controls, or iscontrolled by, or is under common control with Seller or any manager, member orpartner of Seller.  As used in theprevious sentence, “control” means the possession, directly or indirectly, ofthe power to cause the direction of the management of Seller or any manager,member or partner of Seller, whether through voting securities, by contract,family relationship or otherwise.  Thisrelease shall forever survive the Closing and the delivery and recording of theDeed.  **As used herein, the term “Natural Hazard Laws” meansGovernment Code Sections 8589.4; 8589.3; Government Code Section 51183.5(Fire Hazard Severity Zone); Public Resource Code Section 2621.9(Earthquake Fault Zone); Public Resource Code Section 2694 (Seismic HazardZone); and Public Resource Code Section 4136 (Wildland Area).** As used herein, the term “Hazardous Materials” or “HazardousSubstances” means (i) hazardous wastes, hazardous materials, hazardoussubstances, hazardous constituents, toxic substances or related materials,whether solids, liquids or gases, including but not limited to substancesdefined as “hazardous wastes,” “hazardous materials,” “hazardous substances,” “toxicsubstances,” “pollutants,” “contaminants,” “radioactive materials”, “toxicpollutants”, or other similar designations in, or otherwise subject toregulation under, the Comprehensive Environmental Response, Compensation andLiability Act of 1980, as amended (“CERCLA”), 42 U.S.C. § 9601 et seq.; the Toxic Substance Control Act (“TSCA”), 15 U.S.C. § 2601 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1802; theResource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 9601, et seq.; the Clean Water Act (“CWA”), 33 U.S.C. § 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq.; the Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq.; **[****the California Water ResourcesControl Board; any Regional Water Quality Control Board; the California AirResources Board; Cal/OSHA Standards Board Division of Occupational Safety andHealth; the California Department of Food and Agriculture;**

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**the CaliforniaDepartment of Health Services;** and in anypermits, licenses, approvals, plans, rules, regulations or ordinances adopted,or other criteria and guidelines promulgated pursuant to the preceding laws orother similar federal, state or local laws, regulations, rules orordinances now or hereafter in effect relating to environmental matters(collectively the “Environmental Laws”); and (ii) any other substances,constituents or wastes subject to any applicable federal, state or local law,regulation or ordinance, including any Environmental Law, now or hereafter ineffect, including but not limited to (A) petroleum, (B) refinedpetroleum products, (C) waste oil, (D) waste aviationor motor vehicle fuel and their byproducts, (E) asbestos, (F) leadin water, paint or elsewhere, (G) radon, (H) PolychlorinatedBiphenyls (PCB’s), (I) ureaformaldehyde, (J) volatileorganic compounds (VOC), (K) total petroleum hydrocarbons (TPH), (L) benzenederivative (BTEX), (M) petroleum byproducts and (N) methanegas or any of its derivatives.  With respect to Purchaser’srelease set forth in this Paragraph 7(a), **Purchaseralso hereby specifically waives the provisions of Section 1542 of theCalifornia Civil Code which provide:**

 

**“A GENERAL RELEASE DOES NOTEXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HISFAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVEMATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”**

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Purchaser hereby specifically acknowledgesthat Purchaser has carefully reviewed this subsection, and discussed its importwith legal counsel, is fully aware of its consequences, and that the provisionsof this subsection are a material part of this Agreement.

 
|   | Purchaser’s  Initials |     /s/  MA |
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(b)           Sellerhas provided to Purchaser certain unaudited historical financial informationregarding the Property relating to certain periods of time in which Sellerowned the Property.  Except as may beotherwise specifically set forth elsewhere in this Agreement or in any of theClosing Documents, Seller makes no representation or warranty that such materialis complete or accurate or that Purchaser will achieve similar financial orother results with respect to the operations of the Property, it beingacknowledged by Purchaser that Seller’s operation of the Property andallocations of revenues or expenses may be vastly different than Purchaser maybe able to attain.  Purchaseracknowledges that it is a sophisticated and experienced purchaser of realestate and further that Purchaser has relied upon its own investigation andinquiry with respect to the operation of the Property and releases Seller andthe Related Parties from any liability with respect to such historicalinformation.

 
|   | Purchaser’s  Initials |     /s/  MA |
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8.             CLOSING.

 

(a)           Theclosing (“Closing”) of this transaction shall be on the date that is ten (10) businessdays after the date on which Seller has provided Purchaser with a copy of boththe OPA Assignment executed by the Community Redevelopment Agency of the Cityof Los Angeles (“CRA”), and the MTA Assignment executed by the Los AngelesCounty Metropolitan  TransportationAuthority (“MTA”), as set forth more fullyin Paragraph 20(b) of this Agreement, whichever is the last to occur(“Closing Date”), at which time Sellershall deliver possession of the Property to Purchaser; provided, however, theClosing Date shall not be earlier than August 13, 2009 or later than October 30,2009.  There will be a “pre-closing” onthe first business day immediately preceding the Closing Date (“Pre-ClosingDate”) through the office of the Title Insurer. Receipt of the executed OPAAssignment and the MTA 

 

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Assignment are conditions precedent to the Closing, asset forth more fully in Paragraph 20(b) of this Agreement.

 

9.             CLOSING DOCUMENTS.

 

(a)           On orbefore the Closing Date, Purchaser shall deliver to Escrow Agent the balance ofthe Purchase Price plus or minus prorations, in accordance with the closingstatement prepared by Escrow Agent.

 

(b)           On theClosing Date, Seller shall deliver to Purchaser possession of the Property; allkeys used in connection with the Property; original Leases in Seller’spossession or control (and copies of each Lease for which an original is notdelivered), copies of the Tenants Lease files (which will be available at theProperty); originals of the Service Contracts to the extentretained by Purchaser (and copies of each Service Contract for which anoriginal was not retained by Purchaser), licenses, occupancy agreements, leasecommission agreements, permits, and other agreements executed by Selleraffecting the Property; and originals of all Licenses in Seller’s possession or control (and copies of each License for whichan original is not delivered).

 

(c)           On orbefore the Pre-Closing Date, Seller and Purchaser (where applicable) shalldeliver to Escrow Agent or the other party, as applicable, executed originalsof the following:

 

(i)            the Deed (in the form of Exhibit F attached hereto) executed bySeller subject only to the Permitted Exceptions and those UnpermittedExceptions waived by Purchaser, if any;

 

(ii)           the Bill of Sale (in the form of Exhibit G attached hereto) whichshall be executed by Seller and Purchaser;

 

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(iii)          a closing statement prepared by the Escrow Agent (the closing statementcan be sent by facsimile and no original is required);

 

(iv)          an assignment and assumption of all Service Contracts (in the form of Exhibit Hattached hereto) which shall be executed by Seller and Purchaser;

 

(v)           an assignment and assumption of all Leases and security deposits (in theform of Exhibit I attached hereto) which shall be executed by Seller andPurchaser;

 

(vi)          an updated rent roll, dated no earlier than three (3) business daysprior to Closing, certified by Seller as true and correct;

 

(vii)         anotice to the tenants of the transfer of title and the assumption by Purchaserof the landlord’s obligations under the Leases and the obligation to refund thesecurity deposits (in the form of Exhibit J attached hereto), which shallbe executed by Seller and Purchaser;

 

(viii)        anon-foreign affidavit (in the form of Exhibit K attached hereto), executedby Seller;

 

**(ix)****          ****California Form 593-C;**

 

(x)            an assignment of intangible property (in the form of Exhibit Lattached hereto), which shall be executed by Seller and Purchaser;

 

**(xi)****          ****an assignment of those warranties and guarantiesfrom the subcontractors relating to the construction of the Improvements (**in the form of Exhibit M attached hereto)**;**

 

(xii)          **an assignment of all additional assignable warrantiesor guaranties in connection with the Property and all**assignable governmental permits, licenses, certificates and approvalscovering the buildings and the Personal Property situated on 

 

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the Property, but excluding any warranties and/orguaranties from the general contractor affiliate of Seller (in the form of Exhibit M-1attached hereto), which shall be executed by Seller and Purchaser;

 

(xiii)         theProhibition Against Condominium Conversion Agreement in the form of Exhibit S,which shall be executed by Seller and Purchaser;

 

(xiv)        theOPA Assignment as further described in Paragraph 20(b) hereof which shallbe executed by Seller, Purchaser and the CRA;

 

(xv)         anassignment and assumption of the Greenway License Agreement, executed bySeller, Purchaser and the MTA, and any consent required by the MTA, as setforth more fully in Paragraph 20(b) hereof (in the form of Exhibit Yattached hereto);

 

(xvi)        a reaffirmation of therepresentations and warranties, executed by Seller;

 

(xvii)       evidence of the terminationof the property management agreement;

 

(xviii)      evidence satisfactory toPurchaser, in its commercially reasonable judgment, that any leases toemployees who will not be retained by Purchaser or Purchaser’s managementcompany have been amended to contain current “market” terms that are consistentin all material respects with the terms of new resident Leases;

 

(xix)         originals of the followingif they are in Seller’s possession or control (or copies to the extentoriginals are not in Seller’s possession or control): Licenses, leasingcommission agreements, permits, plans, warranties, and Service Contracts;

 

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(xx)          such other documents executed by Seller and/or Purchaser as may bereasonably required by the Title Insurer, including a Gap Indemnity fromSeller, in order to consummate the transaction as set forth in this Agreement.

 

(d)           At theClosing on the Closing Date, the Escrow Agent shall deliver the Purchase Priceto the Seller in accordance with the closing statement and closing instructionsof the Purchaser; provided, however that in no event shall any closinginstructions or funding by any lender include any condition which requires thatany documents be recorded as a pre-condition to funding.  The Closing will be deemed to have occurredwith respect to Purchaser or Seller (as applicable) if such party has: (i) compliedwith all of its obligations in connection with the Closing; and (ii) providedEscrow Agent with authorization to record the necessary documents and fund thetransaction at or before 5:00 p.m. Central Time on the Closing Date.

 

(e)           If asof the Closing Date (i) Seller shall have complied with all of itsobligations in connection with the Closing and shall have authorized funding ofthe transaction, and (ii) the Title Insurance Company is irrevocablycommitted to issue the Owner’s Title Policy subject only to the receipt ofsufficient funds to close or authorization to disburse, then if the transactionhas not funded (by wire transfer of the Purchase Price to Seller) on or before5:00 p.m. Central Time on the Closing Date, Purchaser shall be in defaulthereunder and the Escrow Agent shall deliver the Earnest Money to Seller.

 

10.           SELLER’S RIGHT TO CURE.  If on or priorto the Closing Date, Purchaser discovers that any representation or warranty ofSeller is untrue or misleading in any material respect or that Seller is indefault under this Agreement or that Seller has failed to perform a requiredcovenant (collectively, a “Breach”), then Purchaser shall give Seller notice ofsuch Breach (“Purchaser’s Notice”), or an event that with the passage of timeor notice, would be considered a default hereunder; provided, however,Purchaser’s failure to give such notice is not 

 

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adefault by Purchaser.  Upon receipt ofPurchaser’s Notice, Seller shall have the right to cure such Breach within tendays after receipt of such notice (or, if earlier, the Closing Date).   If Seller is unable to timely cure theBreach, then Seller shall so notify Purchaser (“Seller’s Notice”).  In the event of such an uncured Breach(regardless of whether Seller’s Notice is delivered), Purchaser can eitherwaive the Breach or, upon notice to Seller and to the Escrow Agent, terminatethis Agreement and seek any other remedy to which Purchaser is entitledhereunder.  In such event, the EarnestMoney Deposit shall be returned tothe Purchaser and except as specifically provided for elsewhere in thisAgreement, neither party shall have any further obligation or liabilityhereunder.

 

11.           DEFAULT BY PURCHASER.  ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO SECURE THE TIMELY PERFORMANCEBY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS UNDER THIS AGREEMENT.  IN THE EVENT OF ANY UNCUREDDEFAULT OF THE PURCHASER UNDER THE PROVISIONS OF THIS AGREEMENT, SELLER MAY,UPON NOTICE TO PURCHASER, TERMINATE THIS AGREEMENT AND RETAIN ALL OF THEEARNEST MONEY AS SELLER’S SOLE AND EXCLUSIVE RIGHT TO DAMAGES OR ANY OTHERREMEDY AND PURCHASER SHALL HAVE NO FURTHER RIGHTS TO PURCHASE THEPROPERTY.  FOR PURPOSES OF THIS SECTION,AN “UNCURED DEFAULT” IS ANY DEFAULT OR BREACH UNDER THIS AGREEMENT THAT IS NOTCURED BY PURCHASER WITHIN TEN (10) DAYS AFTER WRITTEN NOTICE FROM SELLERTO PURCHASER AND ESCROW AGENT WHICH SPECIFIES DETAILS OF SUCH DEFAULT, EXCEPTFOR THE FAILURE OF PURCHASER TO MAKE WHEN DUE HEREUNDER ANY PAYMENT OF EARNESTMONEY OR OF THE PURCHASE PRICE, OR FAILURE OF PURCHASER TO CLOSE UNDER THISAGREEMENT ON THE CLOSING DATE FOR ANY REASON 

 

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(OTHERTHAN A SELLER DEFAULT THAT HAS NOT BEEN CURED WITHIN ANY APPLICABLE CURE PERIODUNDER THIS AGREEMENT), NONE OF WHICH ARE ELIGIBLE TO BE CURED.  THE PARTIES HAVE AGREED THAT SELLER’S ACTUALDAMAGES, IN THE EVENT OF AN UNCURED DEFAULT BY PURCHASER, WOULD BE EXTREMELYDIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE,BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEYHAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE OFSELLER’S DAMAGES.

 
| Seller’s Initials |     /s/ GAB |   | Purchaser’s Initials |     /s/ MA |
|------------------------|---------------------------------|--------|---------------------------|--------------------------------|

 

12.        SELLER’S DEFAULT.  IN THE EVENT OF AN UNCURED DEFAULT BY SELLER, PURCHASER’S SOLE REMEDYSHALL BE THE RIGHT TO (A) COLLECT ACTUAL DAMAGES FROM SELLER NOT TO EXCEED$250,000.00 AND THE RETURN OF THE EARNEST MONEY DEPOSIT, AND THIS AGREEMENT SHALL TERMINATE AND EXCEPT ASSPECIFICALLY PROVIDED FOR ELSEWHERE IN THIS AGREEMENT, NEITHER PARTY SHALL HAVEANY FURTHER OBLIGATION OR LIABILITY TO EACH OTHER AT LAW OR IN EQUITY; OR (B) SUEFOR SPECIFIC PERFORMANCE OF ALL OF SELLER’S OBLIGATIONS HEREUNDER (AND SELLERHEREBY ACKNOWLEDGES THAT NO OTHER REMEDY AVAILABLE TO PURCHASER HEREUNDER SHALLBE CONSTRUED OR INTERPRETED AS AN ADEQUATE LEGAL REMEDY THAT WOULD PRECLUDEPURCHASER FROM PURSUING AN ACTION FOR SPECIFIC PERFORMANCE OF THISAGREEMENT).  FOR PURPOSES OF THIS SECTION,AN UNCURED DEFAULT IS ANY DEFAULT OR BREACH UNDER THIS AGREEMENT THAT IS NOTCURED BY SELLER WITHIN TEN (10) DAYS AFTER WRITTEN NOTICE FROM PURCHASERTO SELLER AND ESCROW AGENT WHICH 

 

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SPECIFIES THE DETAILS OF SUCH DEFAULT, EXCEPT FOR THE FAILURE OF SELLERTO CLOSE UNDER THIS AGREEMENT ON THE CLOSING DATE FOR ANY REASON OTHER THAN APURCHASER DEFAULT THAT HAS NOT BEEN CURED WITHIN ANY APPLICABLE CURE PERIODUNDER THIS AGREEMENT.

 
| Seller’s Initials |     /s/ GAB |   | Purchaser’s Initials |     /s/ MA |
|------------------------|---------------------------------|--------|---------------------------|--------------------------------|

 

13.        (a)              PRORATIONS. Rents actuallycollected for the calendar month in which the Closing occurs (exclusive ofDelinquent Rent, as hereinafter defined, but including prepaid rents covering aperiod subsequent to Closing); water and other utility charges; fuels; prepaidrevenues and expenses covering a period subsequent to Closing (includingpayments made to Seller arising out of or related to the OPA (defined below),the Redevelopment Plan (defined below) or any affordable housing regulations);real and personal property taxes (“Property Taxes”); and other similar revenueand expense items shall be adjusted ratably as of 11:59 P.M. Pacific Timeon the Closing Date (“Proration Date”), and credited or debited to the balanceof the cash due at Closing. All regular andsupplemental taxes and assessments attributable to the period prior to theClosing Date shall be the responsibility of Seller. All regular andsupplemental taxes and assessments attributable to the period after the ClosingDate shall be the responsibility of Purchaser. If the amount of any of the items to be proratedis not then ascertainable, the adjustment thereof shall be on the basis of themost recent ascertainable data.  Withrespect to Property Taxes, if Closing occurs before the current fiscal year’stax bills are available, the proration will be based upon the previous fiscalyear’s tax bill and the proration shall be readjusted and settled by Seller andPurchaser within ten (10) business days after such tax bill is issued. If special assessments have been levied againstthe Property for improvements, then the amount of any installments which areattributable to periods on or prior to the Closing Date shall be paid by theSeller; and the amount of installments which are attributable to periods 

 

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after the Closing Date shall be paid by thePurchaser.  If any charges, expenses orother items to be prorated hereunder are unavailable on the Closing Date, areadjustment will be made within ten (10) business days following theavailability of accurate bills and figures.

 

(b)           DELINQUENT RENTS.  If, as of the Closing Date, basic rent is in arrears (“Delinquent Rent”),then rents collected by Purchaser shall first be applied to rents currently dueto Purchaser and then to Delinquent Rent. Purchaser shall deliver Seller’s pro rata share within 10 days ofPurchaser’s receipt of that Delinquent Rent.  With respect to Delinquent Rent not more than60 days delinquent as of the Closing Date, Purchaser shall make an attempt tocollect same for Seller’s benefit after the Closing in the usual course of theoperation of the Property (but Purchaser is not required to incur any expensein the collection effort).  Purchaser’sobligation to remit Delinquent Rent payments to Seller terminates 90 days afterthe Closing.  Nothing contained hereinrequires Purchaser to institute any lawsuit or other collection procedure tocollect Delinquent Rents, and Seller shall, as of the Closing Date, abandon allefforts to collect Delinquent Rents.

 

(c)           SECURITY DEPOSITS.  The fullamount of the security deposits (and interest thereon if required by law) forthe return of which Purchaser or any subsequent owner of the Property could beheld accountable or responsible on or after the Closing Date will, at Closing,be paid to Purchaser by Seller and assumed by Purchaser.

 

This Paragraph 13 of this Agreement shall survive theClosing and the delivery and recording of the Deed.

 

14.           RECORDING.  This Agreement shall not berecorded and the act of recording by Purchaser shall be an act of defaulthereunder by Purchaser and shall be subject to the provisions of Paragraph 11.

 

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15.           ASSIGNMENT.  The Purchaser may not assign its interest in this Agreement without theprior written consent of the Seller. Notwithstanding the foregoing, Purchaser may, upon notice to Sellerwithin five (5) business days after the Effective Date, assign its rightsunder this Agreement to (a) any affiliate of Purchaser, or (b) anyentity in which Purchaser, or the principals thereof, have control as definedherein, provided that in each instance Purchaser shall remain liable forPurchaser’s obligations under this Agreement. For purposes of this Paragraph, an “affiliate” means (i) an entitythat controls, is controlled by, or is under common control, with the entity inquestion, (ii) any investment program or any of its affiliates, sponsoredby Behringer Harvard Holdings, LLC.   Theterm “control” means the possession, directly or indirectly, of the power todirect or cause the direction of the management and policies of an entity,whether through the ownership of voting securities or otherwise.  Except as provided above, any otherassignment or transfer of, or attempt to assign or transfer, Purchaser’sinterest in this Agreement shall be an act of default hereunder by Purchaserand subject to the provisions of Paragraph 11.

 

16.           BROKER. The parties hereto acknowledge that Multi Housing Capital Advisors (“Broker”)is the only real estate broker involved in this transaction.  The foregoing does not apply to any fee whichmay be paid by Seller to any affiliate of Seller or FF Properties L.P. or anexclusive broker engaged by an affiliate of Seller as a result of this transaction(collectively, an “Affiliate Broker”). Seller agrees to pay Broker a commission or fee (“Fee”) pursuant to anagreement between Seller and Broker. Purchaser agrees to indemnify, defend and hold harmless the Seller andany member, partner or affiliate or parent of Seller, and all shareholders,employees, officers and directors of Seller or Seller’s partner(s), ormember(s), or parent or affiliate (each of the above is individually referredto as a “Seller Indemnitee”) from all claims, including attorneys’ fees andcosts incurred by a Seller Indemnitee as a result of anyone’s claiming by orthrough Purchaser any fee, commission or compensation on account of this 

 

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Agreement, its negotiation or the sale herebycontemplated other than the Fee payable by Seller to Broker.  Purchaser does now and shall at all timesconsent to a Seller Indemnitee’s selection of defense counsel.  Seller agrees to indemnify, defend and holdharmless the Purchaser and all shareholders, employees, officers and directorsof Purchaser or Purchaser’s parent or affiliate (each of the above isindividually referred to as a “Purchaser Indemnitee”) from all claims,including attorneys’ fees and costs incurred by a Purchaser Indemnitee as aresult of anyone’s claiming by or through Seller any fee, commission orcompensation on account of this Agreement, its negotiation or the sale herebycontemplated, including (without limitation) any claims by Broker or anAffiliate Broker.  Seller does now andshall at all times consent to a Purchaser Indemnitee’s selection of defensecounsel.  Notwithstanding anythingcontained in this Agreement to the contrary, the provisions of this Paragraphshall forever survive the Closing and delivery of the Deed or earliertermination of this Agreement.

 

17.           DOCUMENTS, INSPECTION OF PROPERTY AND APPROVALPERIOD.

 

(a)           Sellerhas heretofore delivered originals or copies of the following documents to theextent in Seller’s possession or control or otherwise reasonably available toSeller (collectively the “Documents”):

 

(i)            Copies of the latest construction drawings for the Improvements.

 

(ii)           Copies of all certificates of occupancy.

 

(iii)          Copies of any third party environmental and seismic or soils (asapplicable) reports relating to the Property.

 

(iv)          Copies of the most recent real estate and personal property tax bills.

 

(v)           Copies of all Service Contracts pertaining to the Property and a schedulelisting all such Service Contracts.

 

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(vi)          A schedule listing all Personal Property.

 

(vii)         True,correct and complete copies of any Leases and licenses which are located at theProperty for Purchaser’s review.

 

(viii)        Acurrent rent roll (“Rent Roll”), certified by Seller to be true and correct inall materials respects as of the date thereof.

 

(ix)           If available, unaudited income and expense statements of operations(hereinafter referred to as the “Financial Statements”) for the Property forthe prior calendar year and the latest available current calendar year.

 

(x)            Such other non-confidential documents as Purchaser may have requested.

 

**(b)****          **Purchaser and its representatives and consultants have had theopportunity to inspect, test and conduct due diligence at the Property prior tothe date of this Agreement.  Accordingly,upon execution of this Agreement, it is deemed that Purchaser (i) hasapproved the Documents and the condition of the Property, (ii) has acknowledged and agreed that, prior to purchase,Purchaser has been given adequate access to inspect the Property, including theopportunity to conduct invasive testing to discover any patent or latentdefects in or on the Property, examine the books and records relating to theProperty; conduct interviews or take any other necessary steps to fully andadequately discover any and all latent or patent defects with the Property, (iii) hasacknowledged that it has the full and complete knowledge necessary to purchasethe Property, or has chosen not to obtain the full and complete knowledge,although provided with the opportunity by Seller, (iv) has conducted, orhad the opportunity to conduct, sufficient examination of the building,building envelope, building systems, building grounds, building components andsurrounding conditions including but not limited to soils, **and (v) has had the opportunity toindependently evaluate and investigate whether any or all of such**

** **

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** **

**Natural Hazard Laws affect theProperty.   The foregoingacknowledgements (a) shall not be construed to limit the representationsand warranties of Seller contained in this Agreement or the Closing Documents,and (b) are subject to the provisions of Paragraphs 3 and 4 hereofpertaining to the Title Commitment and Survey.**

 
|   |   |   | Purchaser’s Initials |     /s/ MA |
|--------|--------|--------|---------------------------|--------------------------------|

 

(c)           Uponnot less than 48 hours notice to the Seller, the Purchaser shall nonethelesshave the right to visit and inspect the Property during normal business hours,provided, however, that notwithstanding any provision of this Agreement to thecontrary, (i) except if Seller is in breach of its representations andwarranties set forth in Paragraph 18(b) of this Agreement, any visitationor inspection of the Property shall be for be for informational purposes onlyand shall not be or lead to a condition of Purchaser’s obligation to closeunder this Agreement, and (ii) Purchaser may not conduct or permit to beconducted any physical tests or inspections of the Property of any naturewhatsoever without Seller’s prior written consent.  Purchaser shall maintain public liabilityinsurance policies (in an amount of combined single limit coverage of not lessthan $1,000,000) insuring against claims arising as a result of damage orinjury caused by the visitations or inspections of the Property being conductedby Purchaser naming Seller and FF Properties L.P. as additional insureds.  Prior to any visitation or inspections,Purchaser shall deliver to Seller a certificate of insurance evidencing theexistence of the aforesaid policies, however, Purchaser’s failure to deliversaid certificate of insurance to Seller shall not in any way waive Purchaser’sobligation to maintain said public liability policies in accordance with theterms of the previous sentence. Purchaser agrees to indemnify, defend, protect and hold Seller, itspartners, members, shareholders, affiliates, officers, managers, employees,trustees and beneficiaries, and FF Properties L.P. and the respectivesuccessors and assigns of each of the foregoing (“Indemnified Parties”)harmless from any and 

 

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all loss, costs, including attorneys’ fees, liability ordamages which any of the Indemnified Parties may incur or suffer as a result ofdamage or injury caused by Purchaser’s or its engineers, architects, employees, contractors and agents presenceat the Property or conducting its inspection of the Property including theentry of Purchaser, its employees or agents and its lender onto the Property,including without limitation, liability for mechanic’s liens, butspecifically excluding any damage or injury caused by: (i) the negligentacts or omissions of Seller or its Indemnified Parties; or (ii) the merediscovery of conditions on the Property.   The right of Purchaser to inspect shallinclude, subject to the limitations set forth above, the right to inspect theapartment units (collectively, the “Units”); provided, however, in no eventshall Purchaser, without being accompanied by a representative of Seller, (i) contactany Tenant of the Property or (ii) enter any Unit whether or not occupiedby a Tenant.  Seller shall have theright, at its option, to cause a representative of Seller to be present at allon-site inspections, reviews and examinations conducted hereunder.  Purchaser shall use commercially reasonableefforts to keep all information or data received or discovered in connectionwith any of the inspections, reviews or examinations strictly confidential;provided, however, Purchaser’s confidentiality obligations in this sentenceshall be further limited by the terms of Paragraph 35 of this Agreement. Notwithstanding anything contained in thisAgreement to the contrary, Purchaser’s indemnity obligations under thisParagraph shall forever survive the Closing and delivery and recording of theDeed or the earlier termination of this Agreement.

 

(d)           Purchaseracknowledges that it is a sophisticated and experienced purchaser of realestate; that numerous apartment complexes contain mold; water damage, fungi, bacteriaand/or other biological growth or biological growth factors; and that theProperty may contain mold, water damage, fungi, bacteria, and/or otherbiological growth or biological growth factors which Purchaser may not havediscovered during its inspection of the Property.

 

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Purchaser agrees that in purchasing the Property fromthe Seller, it is assuming the risk (subject to the representations andwarranties of Seller contained in this Agreement and the Closing Documents)that the Property may contain mold, water damage, fungi, bacteria, and/or otherbiological growth or biological growth factors even as a result of a patent orlatent construction defect.

 

(e)           Purchaseragrees to restore any damage to the Property which may arise as a result ofPurchaser’s inspection of the Property.

 

(f)            Purchaser shall notexpressly request any governmental agency, governmental authority, governmentaldepartment or governmental employee to inspect any portion of theProperty.  Seller acknowledges andagrees, for purposes of this subparagraph (e), that Purchaser will not bedeemed to have expressly requested such an inspection if, as a result ofPurchaser’s mere request for information from a governmental authority ordepartment, such an inspection is carried out.

 

18.           SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

(a)           Anyreference in this Paragraph 18 or elsewhere in this Agreement to Seller’sknowledge or to the best of Seller’s knowledge shall only mean such actual (andnot constructive or imputed) knowledge of Gino Barra, Shannyn Henkel and StacyWells, who shall not have any duty to make any inquiry of any kind with respectto such matters.  Seller represents andwarrants that the parties listed above are the parties with the most knowledgeregarding the representations and warranties in this Paragraph 18.  Any knowledge of Seller’s agents, servants oremployees (other than knowledge of Gino Barra, Shannyn Henkel and Stacy Wells)shall not be construed or imputed to Seller or its constituent entities ortheir owners.

 

(b)           Subjectto the limitations set forth in subparagraph (a) above, Seller herebymakes the following representations, warranties and covenants:

 

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(i)            Seller has not received written notice from any governmental authoritythat the present use and occupancy of the Property do not conform withapplicable building and zoning laws.

 

(ii)           To Seller’s knowledge, except as may be set forth on the tax bills andthe Title Commitment, there are presently no pending, and Seller has receivedno written notice of, special assessments of any nature with respect to theProperty or any part thereof, nor has Seller received any written notice of anyspecial assessments being contemplated.

 

(iii)          The Rent Roll attached hereto as Exhibit O is true and accurate inall material respects as of the date and time thereof and will be updated andcertified as of the Closing Date and, except as set forth in the Leases, notenant is entitled to any concession, allowance, rebate or refund.

 

(iv)          Seller has furnished Purchaser with a complete and accurate report ofaged rent delinquencies as of the date and time of such report.

 

(v)           There are no leases, tenancies, licenses, or other rights of occupancy oruse for any portion of the Property other than the Service Contracts, andexcept as set forth in the Rent Roll as of the date and time of such reports.

 

(vi)          The Leases are valid and in full force and effect, and, except as setforth on the Rent Roll or list of aged rent delinquencies, as of the date andtime of such Rent Roll and rent delinquency report, each Tenant is in actualpossession of the leased unit or space and is not in default of its obligationto pay rent or other obligations.

 

(vii)         TheLeases made available for review by Purchaser are true and correct copies ofthe actual Leases in Seller’s possession or control and are the completewritten documentation of the agreement between the Seller and each of theTenants.

 

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(viii)        Exceptfor those claims identified on Exhibit V hereto (if any), no tenant hasasserted a claim of which Seller has written notice that could adversely affectthe right of landlord to collect rent from the tenant, and no notice of defaultor breach on the part of landlord under any of the Leases has been received bySeller; provided, however, that claims asserted by any tenant after theEffective Date of this Agreement shall be disclosed to Purchaser, within 2business days after Seller’s knowledge thereof, pursuant to Paragraph 18(c)(xii) of this Agreement and shall not be deemed a default by Seller unlessSeller fails to disclose the same.

 

(ix)           Except as set forth on the Rent Roll or any prepaid rent report ordelinquency report now or hereafter provided to Purchaser from time to time, notenant under any Lease has prepaid rent or other charges for more than thecurrent month.  The amount to be paid toor credited to Purchaser at Closing for security deposits will constitute the fullamount of the security deposits for the return of which Purchaser or anysubsequent owner of the Property could be held accountable or responsible afterthe Closing Date.

 

(x)            Seller has not received written notice of any pending litigation, and toSeller’s knowledge, there is no threatened litigation, affecting title to theProperty, except as may be set forth on Exhibit P attached hereto, theliability for which shall be retained by Seller subsequent to Closing, and forwhich Seller agrees to indemnify and hold Purchaser harmless.  The provisions and obligations of thissubparagraph (x) shall survive the Closing.

 

(xi)           There is no pending and, to Seller’s knowledge, no threatenedcondemnation or similar proceeding affecting the Property.

 

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(xii)          The existing casualty insurance for the Property is for full replacementvalue.

 

(xiii)         ThisAgreement has been duly authorized and executed on behalf of Seller andconstitutes a valid and binding agreement, enforceable in accordance with itsterms.  Seller has obtained (or willobtain prior to Closing) all consents, releases and permissions and given allrequired notifications, related to the transactions herein contemplated.

 

(xiv)        Sellerdoes not have any employees on site at the Property.

 

(xv)         To Seller’sknowledge, the Financial Statements delivered to Purchaser by Seller are trueand correct copies (in all material respects) of the Financial Statements whichSeller or its affiliate relies upon for the purposes of operating the Property,reporting to its investors and filing Federal income tax statements.

 

(xvi)        Sellerhas all required licenses, permits, authorizations, consents, certificates, andapprovals required for operation of the Property by Seller.

 

(xvii)       TheProperty is connected with and has water, sewage disposal, telephone, gas andelectrical services.

 

(xviii)      ToSeller’s knowledge, all of the books, records, information, data, and otheritems supplied by Seller to Purchaser, excluding any of the foregoing that havebeen prepared by third parties, are true and correct in all material respects.

 

(xix)         Thereare no unpaid charges, debts, liabilities, claims or obligations arising fromthe ownership or operation of the Property that could give rise to any mechanic’sor other statutory lien against the Property for which Purchaser would beresponsible, except as shown, if at all, on the Title Commitment (which shallbe cured by Seller in accordance with this Agreement) or on Exhibit Thereto, in each case, the 

 

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liability for which shall be retained by Sellersubsequent to Closing, and for which Seller agrees to indemnify and holdPurchaser harmless.  The provisions andobligations of this subparagraph (xix) shall survive the Closing.

 

(xx)          To Seller’s knowledge, the Property is not in violation of any applicableEnvironmental Law.  Further, to Seller’sknowledge, Seller has not received written notice from any governmentalauthority that it is in violation of any applicable Environmental Law.

 

(xxi)         ToSeller’s knowledge: (A) there is no active remediation in excess of$25,000 for the occurrence of mold, water damage, fungi, bacteria or otherbiological growth or biological growth factors at the Property; provided,however, notwithstanding any provision in this Agreement or any ClosingDocuments to the contrary, new remediation activities in excess of $25,000 forany single occurrence that commence after the Effective Date of this Agreementshall be disclosed to Purchaser pursuant to Paragraph 18(c)(xiii) of thisAgreement and shall not be deemed a default by Seller unless Seller fails todisclose the same; and (B) there has been no prior remediation in excessof $25,000 for the occurrence of mold, fungi, bacteria or other biologicalgrowth or biological growth factors at the Property.

 

(xxii)        Attachedhereto as Exhibit Q is a list of all current Service Contracts relating tothe management, maintenance, leasing or operation of the Property and anyMaster Agreements that will be terminated at Closing to the extent pertainingto the Property.

 

(xxiii)       Sellerhas obtained and properly recorded of record a Release of ConstructionCovenants and Quitclaim (Certificate of Completion) executed by the CRA 

 

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pertaining to the Property, in accordance withthe OPA (defined below) and the OPA Documents (defined below) (the “Release ofConstruction Covenants”).

 

(xxiv)       Sellerhas received the final certificate of occupancy (the “Final Certificate ofOccupancy”) for the Property from the City of Los Angeles.

 

(xxv)        ToSeller’s knowledge, Seller has complied in all material respects with allrequirements of the following to the extent they apply to the Property: (A) theOwner Participation Agreement dated as of December, 2001 (as supplemented andamended, the “OPA”), between the CRA and SL NO HO, LLC (“Original Developer”)and (B) all documents arising out of or related to the OPA, including(without limitation) the First Implementation Agreement to Owner ParticipationAgreement and the Second Implementation to Owner Participation Agreement(collectively, the “OPA Documents”).

 

(xxvi)       ToSeller’s knowledge, there is no outstanding default or breach of the OPA or OPADocuments by Seller or the CRA and there are no facts or circumstances that,with the passage of time or giving of notice or both, will result in a defaultor breach of the OPA or OPA Documents by Seller or the CRA.

 

(xxvii)      ToSeller’s knowledge, Seller has complied in all material respects with all requirementsof the following to the extent they apply to the Property: (A) theRedevelopment Plan for the North Hollywood Redevelopment Project, dated August 15,1979 and approved on February 21, 1979 (as supplemented and amended, the “RedevelopmentPlan”); and (B) all documents arising out of or relating to theRedevelopment Plan (the “Plan Documents”).

 

(xxviii)     ToSeller’s knowledge (a) there is no outstanding default or breach of theRedevelopment Plan or the Plan Documents by Seller or the CRA applicable to theProperty, and (b) there are no facts or circumstances that, with thepassage of time or 

 

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giving of notice or both, will result in adefault or breach of the Redevelopment Plan or Plan Documents by Seller or theCRA applicable to the Property.

 

(xxix)       To Seller’s knowledge,Seller has provided Purchaser with true and correct copies of all materialdocuments in Seller’s possession or control relating to the rights andobligations of Seller under the OPA or any other matters materially affectingthe Property under the OPA, the Redevelopment Plan or the affordable housingregulations that govern the Property.

 

(xxx)        ToSeller’s knowledge, Seller has complied in all material respects with allrequirements of those documents of record reflected by the Title Commitment orhereafter reflected by any update to the Title Commitment (collectively, the “TitleDocuments”), except that Seller has not caused the filtration units and filterinserts at the Property to be inspected and maintained in accordance with theBMP Maintenance Covenant as set forth more fully in Paragraph 3 of thisAgreement, and except as set forth on Exhibit P hereto.

 

(xxxi)       ToSeller’s knowledge, there is no outstanding default or breach of the TitleDocuments by Seller and there are no facts or circumstances that, with thepassage of time or giving of notice or both, will result in a default or breachof the Title Documents by Seller, except as set forth on Exhibit P hereto.

 

(xxxii)      To Seller’sknowledge, (A) the schedule attached to this Agreement as Exhibit Wand incorporated herein by reference discloses all of the payments previouslyreceived by Seller in connection with the OPA and the Redevelopment Plan (the “PastPlan Payments”); and (B)thescheduleattachedto thisAgreementas Exhibit W-1andincorporatedhereinby referencedisclosesHousing Subsidy Payments due the owner of the Propertycalculated by the CRA in accordancewith the calculations setforth in Section II of Attachment 8 to the OPA, as amended by 

 

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the Section 6 of the Second Implementation Agreement dated as of December 12,2003, and (C) the owner of the Property is eligible to receive repayment of aportion of the HUD Loan attributable to the Property during such owner’s periodof ownership as determined in accordance with and subject to the OPA, includingSection I.A. of Attachment 8 to the OPA, as amended by Section 22 ofthe Second Implementation Agreement dated as of December 12, 2003.

 

(xxxiii)     ToSeller’s knowledge, the reports listed on Exhibit R attached hereto arethe only environmental, soil and pre-development geotechnical reports in Seller’spossession or control pertaining to the Property; provided, however, Seller makes no representation or warranty that such reports areaccurate or complete.

 

(xxxiv)     ToSeller’s knowledge, the reports listed on Exhibit R-1 attached hereto arethe only third party property condition assessment reports in Seller’s possessionor control for the Property compiled subsequent to the issuance of thecertificate of occupancy; provided, however, Seller makes no representation or warranty that such reports areaccurate or complete.

 

(c)           Sellerhereby covenants that prior to the Closing:

 

(i)            At all times from the Effective Date to the Closing Date, Seller shallmaintain in force all existing fire and extended coverage insurance policiesand comprehensive general liability insurance policies covering the Property.

 

(ii)           Seller shall operate, lease and manage the Property (or to cause itsproperty manager to do so) in at least the same manner that Seller (or itsproperty manager, as the case may be) has heretofore operated, leased andmanaged the Property (wear and tear, and casualty excepted).  Seller shall not enter into Leases with aterm longer than eighteen (18) months, and at no time will there be more thanan aggregate 

 

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total of fifteen (15) Leases with original termsshorter than six (6) months.  Sellershall not modify, terminate, assign or amend existing Leases or provide newincentives to new or existing tenants that are inconsistent in any materialrespect with the rent and concession guidelines attached hereto as Exhibit Xwithout Purchaser’s prior written consent, which may be withheld in itscommercially reasonable discretion.

 

(iii)          Seller will not, without the prior written consent of Purchaser, whichconsent shall not be unreasonably withheld, delayed or conditioned, permit anymaterial structural modifications or additions to the Property.

 

(iv)          Seller will not remove any Personal Property, unless it is replaced bysimilar personal property of at least equal value.

 

(v)           Seller will not enter intoany new Service Contracts that are not terminable upon thirty (30) days priornotice, and without premium or penalty, or enter into any contracts related tothe Property whereby Seller or an affiliate receives any prepaid or up-frontfees.

 

(vi)          Seller shall deliver updatesof the following reports to Purchaser on a weekly basis (except for the reportsin (d) and (e) which shall be provided on a monthly basis):

 

a)             Rent Roll;

 

b)            aged rent delinquency report;

 

c)             weekly leasing activity report;

 

d)            current month and year-to-date operating statements;and

 

e)             trailing 12-month operating statements in columnformat.

 

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(vii)         Seller shall deliver toPurchaser, within a reasonable time after receipt thereof, copies of writtennotices which Seller has received with reference to any pending or threatenedlitigation affecting the Property.

 

(viii)        Eachapartment unit will contain a working range/oven, refrigerator, dishwasher,garbage disposal, and microwave; provided, however that if any unit does notcontain such working items, Seller will provide a credit to Purchaser at theClosing for the amount of the replacement of such nonworking or missing itemwith a new item of similar quality and utility or, if commercially reasonableto repair such item, the amount of such repair.

 

(ix)           Each vacant apartment unitin the Property that is vacant five (5) days or more prior to the ClosingDate must be in a “made ready” rentable condition on the Closing Date.  To the extent any applicable unit is not in “madeready” rentable condition on the Closing Date, Purchaser will receive a creditagainst the Purchase Price at Closing in the amount of $750.00 to put the unitin a “made ready” rentable condition; provided, however, Seller shall only beentitled to provide Purchaser with such a credit with respect to five (5) applicableunits, and Seller must place all additional units in “made ready” rentablecondition as of the Closing Date.

 

(x)            At Closing, Seller shall (a) terminatethe employer/employee relationship of all employees providing services to theProperty (b) convert any below market leases to employees who will not beretained by Purchaser or Purchaser’s management company to “market” leases withterms and conditions similar to terms and conditions of non-employee leasesthat are consistent in all material respects with the terms of new non-employeeresident Leases, (c) cause all management agreements covering the Propertyto be terminated as of the Closing Date, and (d) cooperate with

 

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Purchaser in facilitating any discussions Purchaser or its affiliatesmay have with all management personnel with respect to the potential hire ofthe personnel by Purchaser’s affiliated management company.  Additionally, prior to Closing, Seller shallcause the management personnel to cooperate with Purchaser’s management companyin the transition of the management of the Property.

 

(xi)           From the Effective Datethrough the Closing Date, Seller shall not create any additional encumbranceson the Property, without the prior written consent of Purchaser, to be given orwithheld in Purchaser’s sole and absolute discretion.

 

(xii)          Inaddition to any claim or notice identified on Exhibit V hereto, Sellerwill, prior to Closing, but in any event within 2 business days after Seller’sknowledge thereof, notify Purchaser of any claim asserted by a tenant of whichSeller has written notice that could adversely affect the right of landlord tocollect rent from such tenant, and of any written notice of default or breachon the part of landlord under any of the Leases (collectively, a “Tenant Claim”).

 

(xiii)         Sellerwill, prior to Closing, notify Purchaser of any remediation activities withrespect to mold, water damage, fungi, bacteria or other biological growth orbiological growth factors at the Property.

 

(xiv)        Seller shall terminate allMaster Agreements, to the extent they affect the Property, effective as of theClosing;

 

(d)           Purchaser’s right to make aclaim against Seller for a breach of an indemnity (except for Seller’sindemnity for a brokerage commission), representation, warranty or covenantunder this Agreement or the Exhibits attached hereto (“Claim”) shall expire onthe one year anniversary of the Closing and delivery of the Deed (“SurvivalDate”).  As to any Claim, Purchaser must:(i) notify Seller of the existence of the Claim in question (“Claim 

 

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Notice”);and (ii) if not otherwise resolved, then Purchaser may, at its option,institute legal proceedings in a court of competent jurisdiction within one (1) yearafter the Survival Date (“Judicial Proceedings Date”).  Any Claim for which a Claim Notice is notdelivered by Purchaser to Seller on or prior to the Survival Date or for whichlegal proceedings are not instituted on or prior to the Judicial ProceedingsDate, then such Claim shall be deemed to have been waived by Purchaser andrendered null and void and of no further force or effect.  Seller’s total liability in the aggregate forall Claims shall not exceed One Million ($1,000,000.00) Dollars.  Seller shall not be liable for any Claim(s) untilthe aggregate of all Claims exceeds Twenty Thousand ($20,000.00) Dollars.  Theterms and limitations placed upon Seller in this Paragraph 18(d) shallapply notwithstanding anything to the contrary in this Agreement.  Fairfield California Housing Fund LLC (“FCHF”)irrevocably and absolutely guarantees to Purchaser the timely payment infull for all amounts due and payable to Purchaser in connection with a Claim(subject to the aggregate limitation on liability of $1,000,000 set forthabove).  FCHF represents and warrants that FCHF, as an affiliate of Seller, derives substantial benefit inconsideration for the foregoing guaranty.

 

19.           COMPLIANCE WITH OFAC.

 

To the best of the knowledge of Purchaser,without any duty to make diligent inquiry, Purchaser represents and warrantsthat (a) Purchaser is currently in compliance with the regulations ofthe Office of Foreign Asset Control, Department of the Treasury (“OFAC”)(including those named on the OFAC’s Specially Designated and Blocked PersonsList) and any statute, executive order (including the September 24, 2001,Executive Order No. 13224 Blocking Property and Prohibiting Transactionswith Persons Who Commit, Threaten to Commit or Support Terrorism (the “ExecutiveOrder”)), or other governmental action relating thereto; and (b) Purchaseris not, and will not be, a person with whom Seller is restricted fromdoing business 

 

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under the Uniting and Strengthening Americaby Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Actof 2001 (USA Patriot Act), H. R. 3152, Public Law 107-56, and the ExecutiveOrder and the regulations promulgated thereunder and including persons andentities named on the OFAC Specially Designated Nations and Blocked PersonsList.  If Purchaser obtains knowledgethat Purchaser has become listed on the Lists or has been indicted, arraigned,or custodially detained on charges involving money laundering or predicatecrimes to money laundering, Purchaser shall immediately notify Seller and insuch event, Seller shall have the right to terminate this Contract withoutpenalty or liability to Seller immediately upon delivery of written noticethereof to Purchaser.  In such event theEarnest Money Deposit shall bereturned to Purchaser.

 

To the best of the knowledge of Seller,without any duty to make diligent inquiry, Seller represents and warrants that (a) Selleris currently in compliance with the regulations of OFAC (including thosenamed on the OFAC’s Specially Designated and Blocked Persons List) and anystatute, Executive Order, or other governmental action relating thereto; and (b) Selleris not, and will not be, a person with whom Seller is restricted fromdoing business under the Uniting and Strengthening America by ProvidingAppropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USAPatriot Act), H. R. 3152, Public Law 107-56, and the Executive Order and theregulations promulgated thereunder and including persons and entities named onthe OFAC Specially Designated Nations and Blocked Persons List. If Sellerobtains knowledge that Seller has become listed on the Lists or has beenindicted, arraigned, or custodially detained on charges involving moneylaundering or predicate crimes to money laundering, Seller shall immediatelynotify Purchaser and in such event, Purchaser shall have the right to terminatethis Contract without penalty or liability to Purchaser immediately upondelivery of written notice thereof to Seller. In such event the Earnest Money Depositshall be returned to Purchaser.

 

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20.           CONDITIONS PRECEDENT TO CLOSING.

 

(a)           Inaddition to any conditions provided in other provisions of this Agreement,Purchaser’s obligation to purchase the Property is and shall be conditioned onthe following (each a “Closing Condition”):

 

(i)            That at no time prior to the Closing shall any of the following have beendone by or against or with respect to Seller or an affiliate of Seller and, asa result thereof, Seller cannot perform its obligations under this Agreement(collectively, an “Insolvency Event”): (i) the commencement of a caseunder Title 11 of the U.S. Code, as now constituted or hereafter amended, orunder any other applicable federal or state bankruptcy law or other similarlaw; (ii) the appointment of a trustee or receiver of any propertyinterest; or (iii) an assignment for the benefit of creditors.

 

(ii)           On the Closing Date, there shall not be any uncured Unpermitted Exceptionor any violation of law, ordinance, order or requirement relating to theProperty which is imposed in writing and delivered to Seller by anygovernmental authority relating to the Property, which is not remedied bySeller.

 

(iii)          If the transaction contemplated hereby shall require authorization orapproval of any governmental agency having jurisdiction, all suchauthorizations and approvals shall have been obtained and shall be in fullforce and effect on and as of the Closing Date. If such authorizations and approvals shall not have been obtained on orprior to the last day for Closing hereinabove provided, the Closing Date may bedeferred, at the election of either party, for an additional period of time,not to exceed 30 days, as shall be necessary to obtain any authorizations orapprovals not then obtained.

 

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(iv)          There shall be no more than five (5) Tenant Claims, or any number ofTenant Claims in excess of $25,000 in the aggregate, outstanding at Closingthat have not been cured by Seller.

 

(v)           There shall be no active remediation activities at the Property in anamount more than $25,000 for any single occurrence with respect to mold, waterdamage, fungi, bacteria or other biological growth or biological growth factorsat the Property.

 

(vi)          Occupancy ofthe apartment units within the Improvements (model units shall be consideredunoccupied and units occupied by employees shall be considered occupied forpurposes of the occupancy calculation) shall be no less than 85% as of theClosing Date.

 

(vii)         Schedule B-II exception numbers 15-18 in the TitleCommitment shall have been released of record on or before the Closing Date.

 

(viii)        Seller shall, prior to the Closing Date, (1) havecaused the filtration units and filterinserts to be inspected by a licensed third party inspector and an inspectionreport issued by such inspector indicating that the filtration units and filterinserts referred to in the BMP Maintenance Covenant are in operating conditionand not disclosing any corrective actions that must be undertaken pursuant tothe protocol set forth in the BMP Maintenance Covenant, unless such correctiveactions, if any, have been satisfied prior to the Closing Date, and (2) providePurchaser with a copy of such inspection report and all maintenance records inconnection with the filtration units and filter inserts, pursuant to the BMPMaintenance Covenant.

 

(b)           Seller’s and Purchaser’sobligation to close under this Agreement are conditioned upon the following (“AdditionalClosing Conditions”):

 

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(i)            The CRA shall have approved for execution, andexecuted and delivered to the Escrow Agent for Closing, a Partial Assignment ofOwner Participation Agreement and Consent to Assignment (“OPA Assignment”) ofthe OPA, in substantially the same form as the form attached hereto as Exhibit U,which is hereby approved by Seller and Purchaser, subject to modification asrequired by the CRA.  Seller andPurchaser covenant and agree to cooperate in good faith to diligently resolveany changes to the OPA Assignment required by the CRA, and Seller further covenantsto use best efforts to obtain the approval and execution of the OPA Assignment,in the form attached hereto (as required to be modified by the CRA), by the CRAprior to the Closing Date; and

 

(ii)           The MTA shall have approved for execution, andexecuted and delivered to the Escrow Agent for Closing, an assignment andassumption of the Greenways License Agreement (“MTA Licensee Agreement”)between the Seller and Purchaser substantially in the form of Exhibit Yhereto (the “MTA Assignment”), which is substantially the same form as the Assignmentand Assumption of the Greenway License Agreement and MTA Consent dated July 1,2008 between Seller and CRA, a copy of which Seller has provided to Purchaser,and Seller further covenants to use best efforts to obtain the approval andexecution of the MTA Assignment by the MTA prior to the Closing Date.

 

(c)           If there is a failure of aClosing Condition, Purchaser can either (i) waive such failure and closethis transaction, or (ii) notify Seller in writing that Purchaser haselected to terminate this Agreement and obtain a return of the Earnest Money Deposit (which notice shall specify thedetails of such failure); provided, however, that a termination by Purchaserfor a failure of a Closing Condition shall not become effective until the timeand date scheduled for 

 

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Closing,and then only if the Closing Condition shall not have been satisfied by suchtime and date.  In event of terminationfor a failure of a Closing Condition, Purchaser shall receive a full refund ofthe Earnest Money Deposit, andexcept as may be specifically set forth elsewhere in this Agreement, neitherparty shall have any further liability hereunder; provided, however, anInsolvency Event shall not be deemed a Seller default under any provision ofthis Agreement, including without limitation, Paragraph 18(b)(xiii) hereof.

 

(d)           Notwithstandingany provision hereof to the contrary, if despite the cooperation and good faithefforts of the Seller and Purchaser to satisfy the Additional ClosingConditions, the same have not been satisfied as of the October 15, 2009,then either party may terminate this Agreement by written notice to the otherparty on or before the October 16, 2009, whereupon the Earnest Money Deposit shall be returned to Purchaserand neither party shall have any further obligations under this Agreement.

 

(e)           A failure ofany Closing Condition or Additional Closing Condition under this Paragraph 20shall not limit or supersede any remedy to which either party is otherwiseentitled under this Agreement, including (without limitation) any remedy for adefault or breach.

 

21.           ENVIRONMENTAL AND****OTHER****REPORTS.  Seller has delivered toPurchaser at Purchaser’s request the environmental and other reports (the “Reports”)listed on Exhibit R and Exhibit R-1. Except for Sellerrepresentations and warranties contained in this Agreement or the ClosingDocuments, Purchaser hereby releases Seller from any liability whatsoever withrespect to the Reports, including, without limitation, the matters set forth inthe Reports or the accuracy and/or completeness of the Reports.

 

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22.           ORGANIZATIONAL DOCUMENTS.  At least three (3) businessdays prior to the Closing Date, Purchaser and Seller will provide Title Insurerwith copies of their respective organizational documents as required by TitleInsurer.

 

23.           TIME OF ESSENCE.  Time is of the essence of thisAgreement.

 

24.           NOTICES.  Any notice or demand whicheither party hereto is required or may desire to give or deliver to or makeupon the other party shall be in writing and may be personally delivered orgiven or made by overnight courier such as Federal Express or by facsimile ormade by United States registered or certified mail addressed as follows:

 
| TO SELLER:      | Fairfield Residential LLC                |
|-----------------|------------------------------------------|
|            | 5510 Morehouse Drive                     |
|            | Suite 200                           |
|            | San Diego, California 92121              |
|            | Attn: Gino A. Barra                      |
|            | 858/457-2123                             |
|            | 858/457-3982 (FAX)                       |
|            | E-mail: gbarra@ffres.com                 |
|            |                                     |
| with a copy to: | Meltzer, Purtill &  Stelle LLC  |
|            | 1515 East Woodfield Road                 |
|            | Second Floor                             |
|            | Schaumburg, Illinois  60173-5431         |
|            | Attn: Michael J. Wolfe                   |
|            | 847/330-6052                             |
|            | 847/330-1231 (Fax)                       |
|            | E-mail: mwolfe@mpslaw.com                |
|            |                                     |
| TO PURCHASER:   | Behringer Harvard Multifamily  OP I LP   |
|            | 15601 Dallas Parkway,  Suite 600    |
|            | Addison, Texas 75001                     |
|            | Attention: Mark Alfieri                  |
|            | 469/341-2471                             |
|            | 214/655-1610 (FAX)                       |
|            | Email: malfieri@bhfunds.com              |
|            |                                     |
| with a copy to: | Munsch Hardt Kopf &  Harr, P.C. |
|            | 3800 Lincoln Plaza                       |
|            | 500 N. Akard                             |
|            | Dallas, Texas 75201                      |
|            | Attention: Gregg Cleveland               |
|            | 214/855-7537                             |

 

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|   | 214/978-4364 (FAX)           |
|--------|------------------------------|
|   | Email: gcleveland@munsch.com |

 

subject to the right of either party to designate adifferent address for itself by notice similarly given.  Any notice or demand so given shall be deemedto be delivered or made on the next business day if sent by overnight courier,or on the same day if sent by facsimile and confirmation of sending isgenerated before the close of business (5 p.m. Pacific time), or the nextday if sent by facsimile and confirmation is generated after the close ofbusiness, or on the 4th business day after the same is deposited in the UnitedStates Mail as registered or certified matter, addressed as above provided,with postage thereon fully prepaid.  Anysuch notice, demand or document not given, delivered or made by registered orcertified mail or by overnight courier or by facsimile as aforesaid shall bedeemed to be given, delivered or made upon receipt of the same by the party towhom the same is to be given, delivered or made.  Copies of all notices shall be served uponthe Escrow Agent.

 

25.           EXECUTION OF AGREEMENT.  The parties hereto will eachexecute three (3) copies of this Agreement and forward them to the EscrowAgent.  Seller’s three (3) executedcopies of this Agreement will be accompanied with a direction to deliver afully executed copy of this Agreement to the Purchaser and to the Seller.

 

26.           GOVERNING LAW.  The provisions of thisAgreement shall be governed by the laws of the state in which the Property islocated.

 

27.           ENTIRE AGREEMENT.  This Agreement constitutes theentire agreement between the parties and supersedes all other negotiations,understandings and representations made by and between the parties and theagents, servants and employees.

 

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28.           COUNTERPARTS.  This Agreement may be executedin multiple counterparts, each of which shall be deemed an original but all ofwhich shall constitute one and the same instrument.

 

29.           CAPTIONS.  Paragraph titles or captionscontained herein are inserted as a matter of convenience and for reference, andin no way define, limit, extend or describe the scope of this Agreement or anyprovision hereof.

 

30.           NON-BUSINESS DAYS.  Whenever action must be taken(including the giving of notice of the delivery of documents) under thisAgreement during a certain period of time (or by a particular date) that ends(or occurs) on a non-business day, then such period (or date) shall be extendeduntil the immediately following business day. As used herein, “business day” means any day other than a Saturday,Sunday or federal holiday.

 

31.           SEVERABILITY.  If any term or provision ofthis Agreement or the application thereof to any person or circumstance shall,to any extent, be invalid or unenforceable, the remainder of this Agreement, orthe application of such term or provision to persons or circumstances otherthan those as to which it is held invalid or unenforceable, shall not beaffected thereby, and each such term and provision of this Agreement shall bevalid and be enforced to the fullest extent permitted by law.

 

32.           NO WAIVER.  No waiver by a party of anybreach of this Agreement or of any warranty or representation hereunder by theother party shall be deemed to be a waiver of any other breach by such otherparty (whether preceding or succeeding and whether or not of the same orsimilar nature), and no acceptance of payment or performance by a party afterany breach by the other party shall be deemed to be a waiver of any breach ofthis Agreement or of any representation or warranty hereunder by such otherparty, whether or not the first party knows of such breach at the time itaccepts such payment or performance.  Nofailure or delay by

 

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a party to exercise any right it may have byreason of the default of the other party shall operate as a waiver of defaultor modification of this Agreement or shall prevent the exercise of any right bythe first party while the other party continues to be so in default.

 

33.           ATTORNEYS’ FEES.  In the event either partycommences legal proceedings against the other party pursuant to any right to doso under this Agreement, then the prevailing party shall be entitled to recoverreasonable attorneys’ fees and costs.

 

34.           TAX DEFERRED EXCHANGE.  Purchaser and Seller may usethe Property in connection with a 1031 or 1033 tax deferred exchange (“Exchange”).  The parties agree to cooperate with eachother and will execute such documents as may reasonably be required by eachother in order to effectuate an Exchange, provided that no later then five (5) businessdays prior to the Closing Date, the party (“Exchange Party”) seeking toeffectuate an Exchange, delivers to the other party (“Cooperating Party”)copies of all of the documents which the Cooperating Party is required toexecute in order to effectuate an Exchange. The Cooperating Party will not assume any liability or cost inconnection with an Exchange and the Closing will not be delayed in order toeffectuate an Exchange.  Either party’sinability to obtain any benefits for an Exchange under Sections 1031 or 1033 ofI.R.C. will not relieve such party of any of its obligations under thisAgreement.

 

35.           CONFIDENTIALITY.  Purchaser andSeller each hereby agree to use commercially reasonable efforts to keep theterms and conditions of this Agreement and any information obtained withreference to the Property, including but not limited to the Reports,confidential, provided that the parties may reveal such information regardingthe terms and provisions of this Agreement: (a) as may be necessary intheir reasonable discretion to comply with the provisions of this Agreement; (b) inthe ordinary course of business; or (c) to parties (or their employees,agents, due diligence analysts or other representatives) from or through whom 

 

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Purchaseror its affiliates (as defined in Paragraph 15) are or may receive debt orequity capital or other investment.  Further, Purchaser shall be permittedto disclose such information as may be recommended by Purchaser’s legal counselin order to comply with all financing, reporting, securities laws and otherlegal requirements applicable to Purchaser, including any required disclosuresto the Securities and Exchange Commission. Notwithstanding anything to the contrary contained herein, any duty ofconfidentiality set forth in this Agreement shall terminate upon Closing.

 

36.           RESTRICTION ON CONVERSION OF THE PROPERTY TOCONDOMINIUM.  Purchaser represents that it is purchasing theProperty as an apartment rental project and agrees not to convert the Propertyto condominiums prior to December 31, 2018.  Purchaser acknowledges that Seller is relyingon this representation as partial consideration of the Purchase Price, and onthe Closing Date will execute the Prohibition Against Condominium ConversionAgreement attached hereto as Exhibit S (the “Condominium Agreement”) whichwill be recorded in conjunction with the recordation of the Deed.

 

37.           SURVIVAL OF INDEMNIFICATION.  Notwithstanding anythingcontained in this Agreement to the contrary, subject to the limitations setforth in Paragraph 18(d) hereof, all of Purchaser’s, Seller’s and FCHF’s indemnity obligationscontained in this Agreement and the Exhibits attached hereto shall foreversurvive the Closing and the delivery and recording of the Deed or the earliertermination of this Agreement.

 

38.           MISCELLANEOUS PROVISIONS.  This Agreement shall not be construed more strictly against any partymerely by virtue of the fact that the same has been prepared by such party orits counsel, it being recognized that each party hereto has contributedsubstantially and materially to the preparation of this Agreement, 

 

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and that each party heretoacknowledges and waives any claim contesting the existence and the adequacy ofthe consideration given by the other parties hereto in entering into thisAgreement.Except as to those obligations which specifically survive theClosing, all of Seller’s other obligations hereunder shall merge with the Deed.

 

39.           BACK-UP OFFERS.  Seller will discontinuemarketing the Property for sale but may accept back-up offers for the Propertyprovided they are subject and subordinate to this Agreement between Purchaserand Seller.

 

40.           MTA ASSUMPTION OF RISK,RELEASE AND WAIVER.  To themaximum extent allowed by law, Purchaser and any and all successors, heirs andassigns of such Purchaser (individually and collectively, “Releasing Party”)hereby assumes, for the benefit of the Los Angeles County MetropolitanTransportation Authority (the “MTA”) any and all risk of loss, damage or injuryof any kind to any person or property (including, without limitation, theimprovements located on the Property) and any other property of, or under thecontrol or custody of, the Releasing Party, which is located on or within theProperty, resulting from MTA’s normal and customary operation, use,maintenance, repair, restoration or construction of a transit corridor andvarious modes of transportation on the transit corridor, including withoutlimitation, buses, light rail cars and/or trains (the “Assumed TransitProximity Risks”) including, without limitation, loss, damage or injury of anykind caused by bus exhaust, bus, light rail cars or train use, noise or, vibration; provided, however, that theforegoing assumption of risk shall not apply to (and the Assumed TransitProximity Risks shall not include) any claims to the extent of the intentionalmisconduct or gross negligence of the MTA. The term “MTA” as usedherein shall include: (i) any transit company validly operating buses ortrains or other modes of transportation within the transit corridor, (ii) anyother persons or companies employed, retained or engaged by MTA for suchpurpose, and (iii) MTA’s successors and assigns.  Releasing Party, on behalf of 

 

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itselfand its officers, directors, affiliates, employees, agents, independent contractorsand subcontractors and anyone directly employed by Releasing Party at theProperty or for whose acts at the Property Releasing Party is liable(collectively, “Personnel”), as a material part of the consideration for thisAgreement, hereby releases and waives all claims and demands against MTA forany loss, damage or injury of Releasing Party and/or its Personnel arising outof an Assumed Transit Proximity Risk. Without limiting the generality of theforegoing:

 

THE UNDERSIGNED ACKNOWLEDGES THAT IT HAS BEENADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIACIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMSWHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIMEOF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTEDHIS SETTLEMENT WITH THE DEBTOR.”

 

THE UNDERSIGNED, BEING AWARE OF THIS CODE SECTION,HEREBY EXPRESSLY WAIVES ANY RIGHTS IT MAY HAVE AGAINST THE RELEASEDPARTIES THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAWPRINCIPLES OF SIMILAR EFFECT.

 
| Purchaser’s  Initials |     /s/ MA |   | Seller’s  Initials |     /s/ GAB |
|----------------------------|--------------------------------|--------|-------------------------|---------------------------------|

 

Theprovisions of this Paragraph shall forever survive the delivery and recordingof the Deed.

 

41.           NONDISCRIMINATION ANDNONSEGREGATION.  Purchaseracknowledges and agrees that there shall be no discrimination against orsegregation of, any person, or group of 

 

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personson account of race, color, creed, religion, sex, sexual preference/orientation,age, disability, medical condition, Acquired Immune Deficiency Syndrome (AIDS)acquired or perceived, retaliation for having filed a discrimination complaint,marital status, national origin or ancestry in the sale, lease, sublease,transfer, use, occupancy, tenure or enjoyment of the Property, nor shall thePurchaser or any person claiming under or through Purchaser establish or permitany such practice or practices of discrimination or segregation with referenceto the selection, location, number, use or occupancy of tenants, lessees,subtenants, sublessees or vendees of the land.

 

42.           RIGHTTO AUDIT.  At Purchaser’s request, at any time beforeClosing or within three (3) years after Closing, and without cost orexpense to Seller, Seller shall provide to Purchaser’s designated independentauditor reasonable access to the books and records of the Property to theextent in Seller’s possession, and all related information in Seller’spossession regarding the period for which Purchaser is required to have theProperty audited under the regulations of the Securities and ExchangeCommission.  Purchaser agrees toindemnify and hold harmless Seller from any claim, damage, loss, or liability towhich Seller is at any time subjected by any person who is not a party to thisAgreement as a result of Seller’s compliance with this Paragraph, except to theextent any such claim, damage, loss, or liability arises from Seller’s fraud orintentional misrepresentation.  Theprovisions of this Paragraph shall survive the Closing or any earliertermination of this Agreement.

 

43.           PAST PAYMENTS AND FUTURE PAYMENTS.

 

(a)           Purchaser shall have noliability for nor any right, title or interest in any Past Plan Payments (asdefined herein) or any other amounts due Seller under the OPA attributable tothe period of Seller’s ownership of the Property, and on and after the ClosingDate, Purchaser shall be entitled to all Future Plan Payments (as definedherein) attributable to 

 

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Purchaser’s period of ownership of the Propertyrelating to the Property.  Seller shallhave no right, title or interest in any Future Plan Payments from and after theClosing Date, nor shall Seller have any liability to Purchaser for any failureby Purchaser to receive any or all of such Future Plan Payments, unless thereason that Purchaser did not receive such Future Plan Payments was also abreach by Seller of a specific representation or warranty under this Agreement.

 

(b)           Purchaser acknowledges that Seller has not yet received, but expects toreceive, payments under the HUD Loan with respect to the tax year July 1,2008 through June 30, 2009, which Seller anticipates to be approximately$204,849.00 (the “2009 Payments”), which payments are not a Future Plan Paymentand is the property of Seller.  In theevent that the CRA pays any of the 2009 Payments after the Closing toPurchaser, regardless of whether such payments are more or less than theamounts anticipated by Seller as provided herein, Purchaser shall promptlyremit the full amount of same to Seller. Seller also has not received such payments with respect to the tax year July 1,2009 through June 30, 2010, which Seller anticipates to be approximately$208,946 (the “2010 Payments”), which payments, upon receipt by eitherPurchaser or Seller (unless received prior to the Closing Date, then on theClosing Date), are to be prorated as of the Closing Date and the Seller’sprorated amount of the 2010 payments is also not a Future Plan Payment and isthe property of Seller. In the event that the CRA pays any of the 2010 Paymentsafter the Closing to Purchaser, Purchaser shall prorate the same as of theClosing Date and promptly remit the prorated amount due Seller to Seller togetherwith back up documentation in support of the prorated amount.  In the event that the CRA pays any of the2010 Payments after the Closing to Seller, Seller shall prorate the same as ofthe Closing Date and promptly remit the prorated amount due Purchaser toPurchaser together with back up documentation in support of the proratedamount.

 

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(c)           The CRA annual subsidy payment of $1,988,276.24 for the CRAfiscal year July 1, 2009 - June 30, 2010 (“CRA 2009/10 Payment”) isexpected to be paid by CRA on or about September 30, 2009 which payment, uponreceipt by either Purchaser or Seller (unless received prior to the ClosingDate, then on the Closing Date), is to be prorated between Seller and Purchaseras of the Closing Date. Seller’s prorated amount of the CRA2009/10 Payment isnot a Future Plan Payment and is the property of Seller.  In the event that the CRA pays any of the CRA2009/10 Paymentafter the Closing to Purchaser, Purchaser shall prorate the same as of theClosing Date and promptly remit the prorated amount due Seller to Sellertogether with back up documentation in support of the prorated amount. In theevent that the CRA pays any of the CRA 2009/10 Payment after theClosing to Seller, Seller shall prorate the same as of the Closing Date andpromptly remit the prorated amount due Purchaser to Purchaser together withback up documentation in support of the prorated amount.

 

[signature pages follow]

 

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IN WITNESS WHEREOF, theparties hereto have put their hand and seal as of the date set forth above.

 
| Executed by Purchaser on                     |   | PURCHASER:                                                              |
|----------------------------------------------|--------|-------------------------------------------------------------------------|
| August 7, 2009.                         |   |                                                                    |
|                                         |   | BEHRINGER HARVARD MULTIFAMILY OP I LP, a   Delaware limited partnership |
|                                         |   |                                                                    |   |
|                                         |   | By:                                                                     | BHMF Inc., |
|                                         |   |                                                                    | a Delaware corporation, |
|                                         |   |                                                                    | its general partner |
|                                         |   |                                                                    |   |
|                                         |   |                                                                    | By: | /s/ Mark T. Alfieri |
|                                         |   |                                                                    | Name: | Mark T. Alfieri |
|                                         |   |                                                                    | Title: | Chief Operating Officer |
|                                         |   |                                                                    |   |   |
| Executed by Seller on  August 12, 2009. |   | SELLER:                                                                 |
|                                         |   |                                                                    | SF  NO HO LLC, |
|                                         |   |                                                                    | a  California limited liability company |
|                                         |   |                                                                    |   |
|                                         |   |                                                                    | By: | FF  CALIFORNIA HOUSING FUND LLC, |
|                                         |   |                                                                    |   | a  Delaware limited liability company, |
|                                         |   |                                                                    |   | its  Manager |
|                                         |   |                                                                    |   |   |
|                                         |   |                                                                    |   | By: | FF  PROPERTIES, INC., a Delaware   corporation, its Manager |
|                                         |   |                                                                    |   |   |   |
|                                         |   |                                                                    |   |   | By: | /s/  Gino A. Barra |
|                                         |   |                                                                    |   |   |   | Gino  A. Barra |
|                                         |   |                                                                    |   |   |   | Vice  President |
|                                              |        |                                                                         |  |  |  |  |  |  |  |

 

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JOINDER SIGNATURES

 

Multi Housing Capital Advisors (“Broker”) executes this Agreement inits capacity as a real estate broker and acknowledges that the fee orcommission (“Fee”) due to it as a result of the transaction described in thisAgreement **is the amount as set forth in theagreement between Broker and Seller**.  Broker also acknowledges thatpayment of the aforesaid Fee is conditioned upon the Closing and the receipt ofthe Purchase Price by the Seller.  Brokeragrees to deliver a receipt to the Seller at the Closing for the Fee and arelease stating that no other fees or commissions are due to Broker from Selleror Purchaser.

 
|   | MULTI HOUSING CAPITAL ADVISORS |
|--------|--------------------------------|
|   |                           |
|   | By:                            | /s/ Curtis Palmer |
|   | Name:                          | Curtis Palmer |
|   | Title:                         | Principal |

 

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Fairfield California Housing Fund LLC, a Delawarelimited liability company, joins in the execution of thisAgreement solely to acknowledge and consent to its obligation to guaranty of aClaim as set forth in Paragraph 18(d) of this Agreement, and that it ishereby bound to the terms and conditions of Paragraph 18(d) of thisAgreement for that purpose.  Fairfield California Housing Fund LLCacknowledges and agrees that it is the owner of a direct or indirect interestin Seller and will materially benefit from the sale of the Property.

 

 
|   | Fairfield California Housing Fund LLC, |
|--------|----------------------------------------|
|   | a Delaware limited liability company   |
|   |                                   |
|   | By:                                    | FF California Housing Fund LLC, |
|   |                                   | a Delaware limited liability company, |
|   |                                   | Manager |
|   |                                   |   |   |
|   |                                   | By: | FF Properties, Inc., |
|   |                                   |   | a Delaware corporation, |
|   |                                   |   | its Manager |
|   |                                   |   |   |
|   |                                   |   | By: | /s/ Gino A. Barra |
|   |                                   |   |   |   |
|   |                                   |   | Name: | Gino A. Barra |
|   |                                   |   |   |   |
|   |                                   |   | Title: | Vice President |

 

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Theundersigned agrees to hold and disburse the Earnest Money Deposit in accordancewith the terms of this Agreement.

 
|   | PARTNERS TITLE COMPANY |
|--------|------------------------|
|   |                   |
|   | By:                    | /s/ Reno Hartfiel |
|   | Name:                  | Reno Harfiel |
|   | Title:                 | Executive  Vice President/General Counsel |

 

August 12,2009.

 

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EXHIBITS

 
| A   | - | Legal                                                                  |
|-----|---|------------------------------------------------------------------------|
| B   | - | Personal Property                                                      |
| C   | - | Intentionally omitted                                                  |
| D   | - | Intentionally omitted                                                  |
| E   | - | Title  Commitment                                                      |
| E-1 | - | Purchaser’s  Notice                                               |
| E-2 | - | Seller’s  Reply                                                   |
| E-3 | - | Purchaser’s  Revised Notice                                       |
| E-4 | - | Seller’s  Response                                                |
| F   | - | Deed                                                                   |
| G   | - | Bill of Sale                                                           |
| H   | - | Assignment and Assumption of Service Contracts                         |
| I   | - | Assignment and Assumption of Leases and Security  Deposits             |
| J   | - | Notice to Tenants                                                      |
| K   | - | Non-Foreign Affidavit                                                  |
| L   | - | Assignment of Intangible Property                                      |
| M   | - | Assignment  of Subcontractors’ Guaranties and Warranties          |
| M-1 | - | Assignment of Guaranties, Warranties, Permits,  Licenses and Approvals |
| N   | - | Intentionally omitted                                                  |
| O   | - | Rent Roll                                                              |
| P   | - | Litigation                                                             |
| Q   | - | Service Contracts                                                      |
| R   | - | Environmental, Soil and Pre-Development Geotechnical  Reports          |
| R-1 | - | Third Party Property  Condition Assessment Reports After C/O           |
| S   | - | Prohibition Against Condominium Conversion Agreement                   |
| T   | - | Lien Claims                                                            |
| U   | - | Form of  OPA Assignment                                           |
| V   | - | Schedule  of Tenant Claims or Breaches                                 |
| W   | - | Schedule  of Payments from OPA to Seller                               |
| W-1 | - | Housing  Subsidy Payments under OPA                                    |
| X   | - | Rent  Guidelines                                                       |
| Y   | - | Form of  MTA Assignment                                           |

 

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**TABLE OF CONTENTS**

 
| ** ** | ** **                                                  | **Page** |
|------------|-------------------------------------------------------------|----------|
|       |                                                        |     |
| 1.         | **PURCHASE AND SALE**                                       | **1**    |
|       |                                                        |     |
| 2.         | **PURCHASE PRICE**                                          | **3**    |
|       |                                                        |     |
| 3.         | **TITLE COMMITMENT AND SURVEY**                             | **4**    |
|       |                                                        |     |
| 4.         | **CONDITION OF TITLE/CONVEYANCE**                           | **9**    |
|       |                                                        |     |
| 5.         | **PAYMENT OF CLOSING COSTS**                                | **9**    |
|       |                                                        |     |
| 6.         | **DAMAGE,  CASUALTY AND CONDEMNATION**                      | **10**   |
|       |                                                        |     |
| 7.         | **AS-IS CONDITION**                                         | **12**   |
|       |                                                        |     |
| 8.         | **CLOSING**                                                 | **17**   |
|       |                                                        |     |
| 9.         | **CLOSING DOCUMENTS**                                       | **18**   |
|       |                                                        |     |
| 10.        | **SELLER’S RIGHT TO CURE**                             | **21**   |
|       |                                                        |     |
| 11.        | **DEFAULT BY PURCHASER**                                    | **22**   |
|       |                                                        |     |
| 12.        | **SELLER’S DEFAULT**                                   | **23**   |
|       |                                                        |     |
| 13.        | **PRORATIONS**                                              | **24**   |
|       |                                                        |     |
| 14.        | **RECORDING**                                               | **25**   |
|       |                                                        |     |
| 15.        | **ASSIGNMENT**                                              | **26**   |
|       |                                                        |     |
| 16.        | **BROKER**                                                  | **26**   |
|       |                                                        |     |
| 17.        | **DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD**   | **27**   |
|       |                                                        |     |
| 18.        | **SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS** | **31**   |
|       |                                                        |     |
| 19.        | **COMPLIANCE WITH OFAC**                                    | **42**   |
|       |                                                        |     |
| 20.        | **CONDITIONS PRECEDENT TO CLOSING**                         | **44**   |
|       |                                                        |     |
| 21.        | **ENVIRONMENTAL AND [SEISMIC OR] OTHER REPORTS**            | **47**   |
|       |                                                        |     |
| 22.        | **ORGANIZATIONAL DOCUMENTS**                                | **48**   |
|       |                                                        |     |
| 23.        | **TIME OF ESSENCE**                                         | **48**   |
|       |                                                        |     |
| 24.        | **NOTICES**                                                 | **48**   |
|       |                                                        |     |
| 25.        | **EXECUTION OF AGREEMENT**                                  | **49**   |
|       |                                                        |     |
| 26.        | **GOVERNING LAW**                                           | **49**   |
|       |                                                        |     |
| 27.        | **ENTIRE AGREEMENT**                                        | **49**   |
|       |                                                        |     |
| 28.        | **COUNTERPARTS**                                            | **50**   |
|       |                                                        |     |
| 29.        | **CAPTIONS**                                                | **50**   |
|       |                                                        |     |
| 30.        | **NON-BUSINESS DAYS**                                       | **50**   |
|       |                                                        |     |
| 31.        | **SEVERABILITY**                                            | **50**   |

 

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**TABLE OF CONTENTS**

(continued)

 
| ** ** | ** **                                                   | **Page** |
|------------|--------------------------------------------------------------|----------|
|       |                                                         |     |
| 32.        | **NO WAIVER**                                                | **50**   |
|       |                                                         |     |
| 33.        | **ATTORNEYS’ FEES**                                     | **51**   |
|       |                                                         |     |
| 34.        | **TAX DEFERRED EXCHANGE**                                    | **51**   |
|       |                                                         |     |
| 35.        | **CONFIDENTIALITY**                                          | **51**   |
|       |                                                         |     |
| 36.        | **RESTRICTION ON CONVERSION OF THE PROPERTY TO CONDOMINIUM** | **52**   |
|       |                                                         |     |
| 37.        | **SURVIVAL OF INDEMNIFICATION**                              | **52**   |
|       |                                                         |     |
| 38.        | **MISCELLANEOUS PROVISIONS**                                 | **52**   |
|       |                                                         |     |
| 39.        | **BACK-UP OFFERS**                                           | **53**   |
|       |                                                         |     |
| 40.        | **MTA ASSUMPTION OF RISK, RELEASE AND WAIVER**               | **53**   |
|       |                                                         |     |
| 41.        | **NONDISCRIMINATION  AND NONSEGREGATION**                    | **54**   |
|       |                                                         |     |
| 42.        | **RIGHT TO AUDIT**                                           | **55**   |
|       |                                                         |     |
| **43.**    | **PAST PAYMENTS AND FUTURE PAYMENTS**                        | **55**   |

 

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