**Exhibit10.13**

 

**AGREEMENTOF SALE AND PURCHASE**

**ANDJOINT ESCROW INSTRUCTIONS**

** **

**WATERFORD PLACE APARTMENTS, LLC**

 

**THIS AGREEMENT OF SALE AND PURCHASEAND JOINT ESCROW INSTRUCTIONS** (this “**Agreement**”), dated as of May 29, 2009(the “**Agreement Date**”), is between**WATERFORD PLACE APARTMENTS, LLC**, a California limited liability company (“**Seller**”), and **BEHRINGERHARVARD MULTIFAMILY OP I LP,**a Delaware limited partnership****(“**Buyer**”).

 

**ARTICLE 1****CERTAIN DEFINITIONS**

 

**1.1                  Definitions**.  The parties hereby agree that the followingterms shall have the meanings hereinafter set forth, such definitions to beapplicable equally to the singular and plural forms, and to the masculine andfeminine forms, of such terms:

 

**1.1.1      **“**AAA**” shall have the meaning ascribed in Section 10.22.2.

 

**1.1.2      ****“AdditionalDeposit”**shall have the meaning ascribed in Section 2.3.

 

**1.1.3      **“**Affiliate**”, except as set forth in Section 10.4with respect to an “affiliate of Buyer”, shall mean any person or entity thatdirectly, or indirectly through one or more intermediaries, controls, iscontrolled by or is under common control with Buyer or Seller, as the case maybe.  For the purposes of this definition,“control” means the possession, direct or indirect, of the power to direct orcause the direction of the management and policies of a person, whether throughthe ownership of voting securities, by contract, or otherwise, and the terms “controlling”and “controlled” have the meanings correlative to the foregoing.

 

**1.1.4       “AgreementDate”**shall have the meaning ascribed in theintroductory paragraph of this Agreement.

 

**1.1.5       “ApplicationDeadline”**shall have the meaningascribed in Section 2.4.1.

 

**1.1.6       “ApprovedContract”**shall have the meaningascribed in Section 4.6.

 

**1.1.7      **“**Assignment and Assumption of Contracts**”shall have the meaning ascribed in Section 9.5.1(d).

 

**1.1.8      **“**Assignment and Assumption of Leases**” shallhave the meaning ascribed in Section 9.5.1(c).

 

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**1.1.9      ****“AssumptionApproval Deadline”**shall have the meaning ascribed in Section 2.4.2.

 

**1.1.10    ****“AssumptionDocuments”** shall have the meaning ascribed in Section 9.5.1(g).

 

**1.1.11    **“**Bill of Sale**” shall have the meaningascribed in Section 9.5.1(b).

 

**1.1.12    **“**Broker**” shall mean Marcus &Millichap.

 

**1.1.13    **“**Broker’s Commission**” shall have the meaningascribed in Section 9.8.

 

**1.1.14     “Buyer’sConditions Precedent”**shall have the meaning ascribed in Section 9.3.

 

**1.1.15    ****“Certificateof Insurance”** shall have the meaning ascribed in Section 3.4.

 

**1.1.16    **“**Closing**” shall have the meaning ascribed inSection 9.4.1.

 

**1.1.17    **“**Closing Date**” shall mean the date set forthin Section 9.4.1.

 

**1.1.18    **“**Closing Statement**” shall have the meaningascribed in Section 9.7.1(a).

 

**1.1.19    **“**Code**” shall have the meaning ascribed in Section 5.4.

 

**1.1.20    **“**Commissions**” shall mean all commissions,referral or locator fees, payments and obligations of Seller or the PropertyManager to make payments to third party leasing agents, leasing brokers orother parties (not affiliated with the Property Manager) with respect to theleasing of all or any of the Property, whether such agreements are contained ina Lease or in any separate Commission Agreement.

 

**1.1.21    **“**Commission Agreements**” shall mean allwritten agreements and documents entered into by Seller or the Property Managerto pay Commissions that are not contained in a Lease, together with allamendments thereto or modifications thereof.

 

**1.1.22    ****“ComputerEquipment”** means all word processing and computing equipmentincluding, without limitation, all CPUs, monitors, printers, hubs, switches,firewalls, networking equipment and modems unless specifically listed onattached **Exhibit I**.

 

**1.1.23     “Contracts**” shall meanthe service contracts described in **Exhibit B**and all other service contracts entered into by Seller after theEffective Date with respect to the Property in accordance with Section 8.3.

 

**1.1.24    ****“CovenantRunning With The Land”**shall have the meaning ascribed in Section 10.23**.**

 

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**1.1.25    **“**Deed**” shall have the meaning ascribed in Section 9.5.1(a).

 

**1.1.26    **“**Deposit**” shall have the meaning ascribed inSection 2.3.

 

**1.1.27    ****“DepositDate”** shall have the meaning ascribed in Section 2.3.

 

**1.1.28     “DisapprovalNotice”****shallhave the meaning ascribed in Section 3.8.

 

**1.1.29    **“**Disclosure Items**” shall have the meaningascribed in Section 6.1.

 

**1.1.30     “Dispute”**shall have themeaning ascribed in Section 10.22.

 

**1.1.31    **“**Due Diligence**” shall have the meaningascribed in Section 3.1.

 

**1.1.32    **“**Due Diligence Items**” shall have the meaningascribed in Section 3.2.

 

**1.1.33    **“**Due Diligence Period**” shall mean the timeperiod provided for in Section 3.1 of this Agreement.

 

**1.1.34    **“**Effective Date**” shall mean the first dateon which Escrow Agent has in its possession afully executed original or copy of this Agreement.  Escrow Agent shall promptly notify Buyer andSeller in writing of the Effective Date.

 

**1.1.35    **“**Environmental Laws**” means all Federal,state and local environmental laws, rules, statutes, directives, bindingwritten interpretations, binding written policies, ordinances and regulationsissued by any Governmental Entity and in effect as of the date of thisAgreement with respect to or which otherwise pertain to or affect the RealProperty or the Improvements, or any portion thereof, the use, ownership, occupancyor operation of the Real Property or the Improvements, or any portion thereof,or any owner of the Real Property, and as same have been amended, modified orsupplemented from time to time prior to the date of this Agreement, includingbut not limited to the Comprehensive Environmental Response, Compensation andLiability Act of 1980 (42 U.S.C. § 9601 et seq.), the Hazardous SubstancesTransportation Act (49 U.S.C. § 1802 et seq.), the Resource Conservation andRecovery Act (42 U.S.C. § 6901 et seq.), the Water Pollution Control Act (33U.S.C. § 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.),the Clean Air Act (42 U.S.C. § 7401 et seq.), the Solid Waste Disposal Act (42U.S.C. § 6901 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 etseq.), the Emergency Planning and Community Right-to-Know Act of 1986 (42U.S.C. § 11001 et seq.), the Radon and Indoor Air Quality Research Act (42U.S.C. § 7401 note, et seq.), the Superfund Amendment Reauthorization Act of1986 (42 U.S.C. § 9601 et seq.), comparable state and local laws, and any andall rules and regulations which have become effective prior to the date ofthis Agreement under any and all of the aforementioned laws.

 

**1.1.36    **“**Escrow Agent**” shall mean Partners TitleCompany, Houston, Texas.

 

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**1.1.37    **“**Excluded Materials**” shall have the meaningascribed in Section 3.2.3.

 

**1.1.38    ****“ExtendedAssumption Approval Deadline”** shall have the meaningascribed in Section 2.4.2.

 

**1.1.39    **“**Fixtures**” shall mean the fixtures that arelocated at and affixed to any of the Improvements as of the Closing Date, butspecifically excluding any fixtures owned by any of the Tenants.

 

**1.1.40    **“**Governmental Entity**” means the variousgovernmental and quasi- governmental bodies or agencies having jurisdictionover Seller, the Real Property or any portion thereof.

 

**1.1.41    **“**Hazardous Materials**” means any pollutants,contaminants, hazardous or toxic substances, materials or wastes (includingpetroleum, petroleum by-products, radon, asbestos and asbestos containingmaterials, polychlorinated biphenyls (“**PCBs**”),PCB-containing equipment, radioactive elements, infectious agents, and ureaformaldehyde), as such terms are used in any Environmental Laws (excluding solvents,cleaning fluids and other lawful substances used in the ordinary operation andmaintenance of the Real Property, to the extent in closed containers).

 

**1.1.42    **“**Improvements**” shall mean all buildings,structures and improvements located on the Land not owned by a Tenant or anyother third party including, without, limitation, three hundred ninety (390)apartment units.

 

**1.1.43     “Indemnitor”** shall have themeaning ascribed in Section 7.3.4.

 

**1.1.44    ****“InitialDeposit”**shall have the meaning ascribed in Section 2.3.1.

 

**1.1.45    **“**Land**” shall mean that certain parcel orparcels of land and appurtenances thereto located at 4800 Tassajara Road,Dublin, California, and more particularly described on **Exhibit A**, including Seller’sright, title and interest, if any, in and to all rights-of-way, open orproposed streets (public or private), alleys, easements, strips or gores ofland adjacent thereto.  The Landexpressly excludes the ground floor retail condominiums and the common areas,if any, as described in the condominium plan attached as Exhibit A to TheWaterford Place Condominiums Declaration of Restrictions Recorded November 3,2003 as Series No. 2003653881 of the Official Records of AlamedaCounty.

 

**1.1.46     “Laws”**shall mean all****applicable federal, state or localstatutes, ordinances, codes, regulations, decrees, orders, laws, rulings,judgment or other governmental or judicial requirements affecting the Property.

 

**1.1.47    **“**Leases**” shall mean allunexpired leases, subleases, occupancy agreements, and any other agreements,including all modifications or amendments thereto, for the use, possession, oroccupancy of any portion of the Property as of the Closing Date.

 

**1.1.48    ****“Lender”** shall have themeaning ascribed in Section 2.2.

 

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**1.1.49    **“**Licensee Parties**” shall meanthose authorized agents, contractors, consultants and representatives of Buyerwho shall inspect, investigate, test or evaluate the Property on behalf ofBuyer in accordance with this Agreement.

 

**1.1.50    **“**Licenses and Permits**” shallmean, collectively, to the extent assignable, all licenses, permits, approvals,certificates of occupancy, dedications, subdivision maps and entitlements nowor hereafter issued, approved or granted by any Governmental Entity inconnection with the Real Property, together with all renewals and modificationsthereof.

 

**1.1.51    **“**Liens**” shall have the meaningascribed in Section 4.2.

 

**1.1.52    ****“Loan”** shall have themeaning ascribed in Section 2.2.

 

**1.1.53    ****“LoanDocuments”** shall have the meaning ascribed in Section 2.2.

 

**1.1.54     “Losses”** means claims,actions, causes of action, suits, proceedings, costs, expenses (including,without limitation, reasonable attorneys’ fees and costs), liabilities,damages, demands, rights and/or liens of any type, whether known or unknown,direct or indirect, absolute or contingent.

 

**1.1.55    **“**New Leases**” or “**New Lease**” shall mean, collectively, orsingularly, any Lease entered into after the Effective Date and before theClosing Date.

 

**1.1.56    ****“Non-TerminableContract”**shall have the meaning ascribed in Section 4.6.

 

**1.1.57    **“**Permitted Exceptions**” shallmean and include all of the following:  (a) applicablezoning and building ordinances and land use regulations; (b) such state offacts as would be disclosed by a physical inspection of the Property; (c) thelien of taxes and assessments not yet due and payable (it being agreed by Buyerand Seller that if any tax or assessment is levied or assessed with respect tothe Property after the date hereof and the owner of the Property has theelection to pay such tax or assessment either immediately or under a paymentplan with interest, Seller may elect to pay under a payment plan, whichelection shall be binding on Buyer); (d) any exclusions from coverage setforth in the jacket of any Owner’s Policy of Title Insurance, but excluding allspecific title exceptions in Schedules B and C of the Title Commitment on anystandard printed exceptions in the Title Commitment; (e) any exceptionscaused by Buyer, any Licensee Parties and their respective agents,representatives or employees; (f) such other exceptions as the TitleCompany shall commit to insure over, without any additional cost to Buyer,whether such insurance is made available in consideration of payment, bonding,indemnity of Seller or otherwise; (g) the rights of the Tenants under theLeases, as tenants only; (h) the Covenant Running With The Land; and (i) anymatters deemed to constitute Permitted Exceptions under Section 4.2hereof.

 

**1.1.58    **“**Permitted Outside Parties**”shall have the meaning ascribed in Section 3.7.

 

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**1.1.59    **“**Personal Property**” shall meanall of the right, title, and interest of Seller in and to the tangible personalproperty, which is located at and used exclusively in connection with theProperty as of the Closing Date a specific list thereof as of the EffectiveDate being attached hereto as **Exhibit I**,but specifically excluding (a) any personal property owned, financed orleased by any Tenant under any Lease, (b) the Computer Equipment, (c) anytangible personal property owned by the Property Manager, and (d) anytangible personal property owned by a third party.  Personal Property shall not include theExcluded Materials.

 

**1.1.60    **“**Pre-Effective Date Leases**” or“**Pre-Effective Date Lease**” shallmean, collectively, or singularly, any Lease in effect as of the EffectiveDate.

 

**1.1.61    ****“PrivateRestrictions”**shall mean (as they may exist from time to time) anyand all covenants, conditions and restrictions, private agreements, easements,and any other recorded documents or instruments affecting the use of theProperty.

 

**1.1.62    **“**Property**” shall mean theLand, the Improvements, the Personal Property, the Leases, the ApprovedContracts, and to the extent transferable, all of Seller’s right, title andinterest in and to all tangible and intangible assets of any nature relating tothe Property, including without limitation, (a) all warranties upon theImprovements or the Personal Property, (b) rights to any plans,specifications, engineering studies, reports, drawings, and prints relating tothe construction, reconstruction, modification, and alteration of Improvements,(c) all works of art, graphic designs, and other intellectual orintangible property owned and used by Seller exclusively in connection with theProperty, including any trade name associated with the Improvements, (d) allclaims and causes of action arising out of or in connection with the Propertyafter the Closing Date, and (e) the Licenses and Permits.

 

**1.1.63    **“**Property Manager**” shall meanthose individuals or entities which manage the Property.

 

**1.1.64    **“**Proration Items**” shall havethe meaning ascribed in Section 9.7.1(a).

 

**1.1.65    **“**Proration Time**” shall havethe meaning ascribed in Section 9.7.1(a).

 

**1.1.66    **“**Purchase Price**” shall havethe meaning ascribed in Section 2.2.

 

**1.1.67    **“**Reimbursable Lease Expenses**”shall mean any Commissions and locator fees payable pursuant to a CommissionAgreement or a Lease or a New Lease with respect to Tenants who are scheduledto take occupancy after Closing.

 

**1.1.68    **“**Rent Roll**” shall have themeaning ascribed in Section 3.2.1.

 

**1.1.69    **“**Rent**” or “**Rents**” shall mean and include fixed monthlyrentals, additional rentals, escalation rentals, retroactive rentals, all administrativecharges, utility charges, vending machine receipts and other sums and chargespayable by Tenants under the Leases.

 

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**1.1.70    ****“ReplacementGuarantor”** shall have the meaning ascribed in Section 2.4.1.

 

**1.1.71    **“**Reporting Person**” shall havethe meaning ascribed in Section 5.4.

 

**1.1.72     “Representative”** shall have themeaning ascribed in Section 10.22.1.

 

**1.1.73    ****“SellerGuarantors”**shall have the meaning ascribed in Section 2.4.1.

 

**1.1.74    ****“Servicer”** shall have themeaning ascribed in Section 2.3.

 

**1.1.75    ****“ShoppingCenter”** shall have the meaning ascribed in Section 10.23.

 

**1.1.76    ****“Survey”** shall have themeaning ascribed in Section 4.4 and means an ALTA/ACSM survey ofthe Land prepared by a surveyor licensed by the State of California.

 

**1.1.77    ****“SurveyObjections”**shall****have themeaning ascribed in Section 4.4.

 

**1.1.78    ****“Tenant”** or **“Tenants”**means all persons or entities occupying orentitled to possession of any portion of the Real Property pursuant to the Lease,including tenants, subtenants, and licensees.

 

**1.1.79    ****“TenantDeposit”**means all refundable deposits (whether cash ornon-cash and whether designated as security or otherwise) paid or deposited bya Tenant to Seller, as landlord, or any other person on Seller’s behalfpursuant to a Lease (together with any interest which has accrued thereon asrequired by the terms of such Lease, but only to the extent such interest hasaccrued for the account of the respective Tenant or as required by law).

 

**1.1.80    ****“TenantNotice”**shall have the meaning ascribed in Section 9.5.1(f).

 

**1.1.81    **“**Title Commitment**” shall havethe meaning ascribed in Section 4.1.

 

**1.1.82     “TitleCommitment Update”** shall have the meaning ascribed in Section 4.3.

 

**1.1.83     “TitleCommitment Update Review Period”** shall have the meaningascribed in Section 4.3.

 

**1.1.84    **“**Title Company**” shall meanChicago Title Company.

 

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**1.1.85    **“**Title Documents**” shall havethe meaning ascribed in Section 4.1.

 

**1.1.86    **“**Title Objections**” shall havethe meaning ascribed in Section 4.2.

 

**1.1.87    **“**Title Policy**” shall have themeaning ascribed in Section 4.5.

 

**1.2                  Rules ofConstruction**. Article and Section captions used in this Agreement are forconvenience only and shall not affect the construction of this Agreement.  All references to “Article” or “Sections”without reference to a document other than this Agreement, are intended todesignate articles and sections of this Agreement, and the words “herein,” “hereof,”“hereunder,” and other words of similar import refer to this Agreement as awhole and not to any particular Article or Section, unless specificallydesignated otherwise.  The use of theterm “including” shall mean in all cases “including but not limited to,” unlessspecifically designated otherwise.  No rules ofconstruction against the drafter of this Agreement shall apply in anyinterpretation or enforcement of this Agreement, any documents or certificatesexecuted pursuant hereto, or any provisions of any of the foregoing.  Any deletion of language from this Agreementprior to its execution by Buyer and Seller shall not be construed to raise anypresumption, canon of construction or implication, including, without limitation,any implication that the parties intended thereby to state the converse of thedeleted language.

 

**ARTICLE 2**

 

**AGREEMENTOF PURCHASE AND SALE; PURCHASE PRICE**

 

**2.1                  Agreementof Purchase and Sale**. Seller agrees to sell, transfer, assign and convey to Buyer, and Buyeragrees to purchase, accept and assume subject to the terms and conditionsstated herein, all of Seller’s right, title and interest in and to theProperty.

 

**2.2                  PurchasePrice**.  Buyer shallpay Seller the purchase price of EIGHTY MILLION DOLLARS ($80,000,000.00) (“**Purchase Price**”) at Closing in cash orother immediately available federal funds. Notwithstanding the foregoing, a portion of the Purchase Price shall bepaid by Buyer’s assumption of, and agreement to pay and perform, theobligations of Seller under the loan documents (the “**Loan Documents**”) evidencing two loans (the “**Loans**”) from Deutsche Bank BerkshireMortgage, Inc. (together with its successors and assigns, “**Lender**”) to Seller in the originalprincipal amounts of FIFTY TWO MILLION DOLLARS ($52,000,000.00) and THIRTEENMILLION TWO HUNDRED FORTY-FIVE DOLLARS ($13,245,000.00) having an approximateunpaid balance of FORTY-SEVEN MILLION FIVE HUNDRED TWENTY-THREE THOUSAND ANDTWELVE DOLLARS ($47,523,012.00) and THIRTEEN MILLION FORTY-NINE THOUSAND FOURHUNDRED EIGHTY-THREE DOLLARS ($13,049,483.00), respectively.  The Loans are serviced by a service (the “**Servicer**”).  Thebalance of the Purchase Price and such other funds as may be necessary to payBuyer’s expenses hereunder, subject to closing adjustments, shall be depositedwith the Escrow Agent no later than one (1) business day prior to theClosing Date in accordance with this Agreement and paid to Seller uponsatisfaction of all conditions precedent to the Closing as described herein.

 

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**2.3                  Deposits;Designation of Reporting Person & Contract Consideration**.

 

**2.3.1      ****Deposits**. Within two (2) business days after the Effective Date (the “**Deposit Date**”), Buyer shall deposit via wire transfer thesum of SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($750,000.00) in immediatelyavailable U.S. funds as a deposit (the “**Initial Deposit**”) with Escrow Agent whoseaddress is as indicated in Section 10.3, below.  By 5:00 p.m. Pacific Time on the lastday of the Due Diligence Period, Buyer shall deposit with Escrow Agent via wiretransfer an additional ONE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS($1,250,000.00) (the “**Additional Deposit**”)in immediately available funds.  TheInitial Deposit and the Additional Deposit shall be referred to herein collectivelyas the “**Deposit**”.  If Buyer fails to make the Initial Deposit onor before 5:00 p.m. Pacific Time on the Deposit Date or make theAdditional Deposit on or before 5:00 p.m. Pacific Time on the last day ofthe Due Diligence Period, then this Agreement shall terminate and shall be ofno further force and effect and the parties shall have no further obligationsto one another except to the extent expressly stated otherwise herein.  If and when made, the Deposit shall be heldby Escrow Agent in accordance with Section 2.3.2, below, and, oncemade, shall be non-refundable in all instances except (a) if Buyer electsto terminate this Agreement on or before the end of the Due Diligence Period inaccordance with the terms and conditions of Section 3.6, (b) ifthe Closing fails to occur solely as a result of a material default by Sellerhereunder that is not cured within all applicable notice and cure periods, and (c) asotherwise expressly stated otherwise in this Agreement, including specifically Section 2.4.2hereof.

 

**2.3.2       DepositInstructions**. The Escrow Agent shall invest the amount in escrow, including withoutlimitation the Deposit, in accounts which are federally insured or which investsolely in government securities and shall be applied in accordance with theterms of this Agreement.  Interest earnedon the Deposit shall be considered part of the Deposit and shall be deemed tohave been earned by, and constitute income of, Buyer.

 

**2.3.3       Designationof Reporting Person**. In order to assure compliance with the requirements of Section 6045of the Internal Revenue Code of 1986, as amended (for purposes of this Section 2.3.3,the “**Code**”), and any relatedreporting requirements of the Code, Seller and Buyer hereby designate EscrowAgent as the person to be responsible for all information reporting under Section 6045(e) ofthe Code (the “**Reporting Person**”).  In connection with the foregoing appointment,Seller and Buyer hereby agree: (a) to provide to the Reporting Person allinformation and certifications regarding such party, as reasonably requested bythe Reporting Person or otherwise required to be provided by a party to thetransaction described herein under Section 6045 of the Code; and (b) toprovide to the Reporting Person such party’s taxpayer identification number anda statement (on Internal Revenue Service Form W-9 or an acceptablesubstitute form, or on any other form the applicable current or future Codesections and regulations might require and/or any form requested by theReporting Person), signed under penalties of perjury, stating that the taxpayeridentification number supplied by such party to the Reporting Person iscorrect.  Each party hereto agrees toretain this Agreement for not less than four years from the end of the calendaryear in which the Closing occurred, and to produce it to the Internal RevenueService upon a valid request therefor.

 

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**2.3.4      ****Contract Consideration**.  Notwithstanding anything in this Agreement tothe contrary, in any event where the Deposit, or any part thereof, is to bereturned to Buyer, ONE HUNDRED DOLLARS ($100.00) thereof shall be paid byEscrow Agent to Seller as consideration for the rights and privileges grantedto Buyer herein thus making this Agreement the valid and binding obligation ofBuyer and Seller even though Buyer may have certain unilateral terminationrights during certain periods under this Agreement.

 

**2.4                 ****LoanAssumption**.

 

**2.4.1       Applicationfor Loan Assumption**.  Within five(5) business days after Seller has provided Buyer the request forms andrequirements from Lender for the Loan Assumption (the “**Application Deadline**”), Buyer shall apply,in good faith, to the Lender for approval of the assignment by Seller, andassumption by Buyer, of Seller’s interest in the Loan.  Buyer and Seller agree to use commerciallyreasonable efforts to cooperate with each other in connection with saidapplication process and each party shall submit to Lender any informationreasonably requested by Lender to complete and approve said application by theAssumption Approval Deadline (as hereinafter defined).  Buyer agrees that Buyer shall pay anyrequired loan assumption review fee to the Lender as and when required by theLender and/or Servicer in accordance with the Loan Documents.  Seller has informed Buyer that certainAffiliates of Seller (each a “**SellerGuarantor**”) have provided certain standard non-recourse carve-outguaranties and/or environmental indemnities to the Lender with respect to theLoan and that Lender will require Buyer to provide a financially responsibleperson or entity to provide a substantially similar guaranty and indemnity (a “**Replacement Guarantor**”).  Buyer agrees that Buyer will offer aReplacement Guarantor who shall, in Lender’s sole discretion, satisfy thefinancial conditions currently required to be maintained by the applicableSeller Guarantor(s) pursuant to the Loan Documents.  Notwithstanding anything to the contrarycontained herein, provided that Seller and Buyer shall have satisfied itsobligations under this Section 2.4, the failure of Lender toapprove the assignment and assumption of the Loan by the Assumption ApprovalDeadline shall not constitute a default by either Seller or Buyer.

 

**2.4.2       CertainCondition Precedent Regarding Loan Assumption**.  Without limitation to any of the conditionsprecedent set forth in this Agreement, it shall be a condition to Buyer’s andSeller’s obligation to close the purchase and sale of the Property that theLender shall have approved, in writing, the assumption of the Loan by Buyer andthe release of Seller and Seller Guarantor and approval of Buyer’s ReplacementGuarantor within thirty (30) days of the Effective Date (the “**Assumption Approval Deadline**”).  If Lender fails to approve the assumption ofthe Loan, the release of Seller and Seller Guarantor and approval of Buyer’sReplacement Guarantor by Buyer on or before 5:00 p.m. Pacific Time on theAssumption Approval Deadline, then either Buyer or Seller, in their sole andabsolute discretion, may extend the Assumption Approval Deadline for ten (10) additionaldays (the “**Extended Assumption Approval Deadline**”)by notice in writing to the other party prior to the expiration of theAssumption Approval Deadline; provided, however, that if Lender fails toapprove the assumption of the Loan by Buyer, the release of Seller and theSeller Guarantor and approval of Buyer’s replacement Guarantor on or before5:00 p.m. Pacific Time on the Extended Assumption Approval Deadline, theneither Buyer or Seller may thereafter terminate this Agreement by deliveringwritten notice to the other at any time after the expiration of the ExtendedAssumption Approval Deadline; provided, however, that if the Lender approves 

 

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Buyer’s assumption of theLoan before the delivery of such termination notice, then such terminationnotice shall be null and void.  In theevent of such termination the Deposit shall be returned to Buyer so long as theBuyer is not otherwise in material default hereunder and the parties shall haveno further liability to each other except as set forth herein.

 

**2.4.3       Closing ofLoan Assumption**.  Upon Lender’sapproval of Buyer’s assumption of the Loan, Seller and Buyer agree to executesuch documentation as may be reasonably required by Lender pursuant to and inaccordance with the terms of the Loan Documents and to take all other stepsnecessary to promptly close the loan assumption on the Closing Date, thecompletion of which shall include Lender’s release of Seller and the SellerGuarantor from future liability with respect to the Loan.  Concurrent with the Closing of the assumptionof the Loan and provided the Lender shall agree, all reserve accountsmaintained by such Lender on behalf of Seller in connection with the Loan, ifany,  shall be assigned by Seller toBuyer at the Closing and Seller shall receive a credit at Closing equal to theamounts so assigned.  If the Lender shallnot so agree to the assignment and assumption of existing reserves at Closingas aforesaid, such reserves shall not be assigned to or assumed by Buyer andSeller shall not receive a credit therefor at Closing, and if required by Lender,Buyer shall establish replacement reserves in the amounts reasonably requiredby Lender but such amounts shall not be in excess of the amounts currentlyrequired by the Loan Documents, and if Lender requires such additionalreserves, Buyer shall have no obligation to agree thereto and such requirementshall be deemed to be a “material change” in the Loan Documents as contemplatedin Section 9.4.1 hereof, and Buyer shall upon Seller’s request andexpense, reasonably cooperate with Seller’s efforts to recover such Sellerreserves from Lender.  All costs and feesof assuming the Loan shall be at Buyer’s sole cost and expense and Buyer shallpay all assumption deposit fees, application fees, review processing fees,legal fees, and loan assumption fees when charged by the Lender and/or Servicerin accordance with the terms of the applicable Loan Documents in connectionwith the assumption thereof.

 

**2.4.4      ****Materiality.**  The provisions of this Section 2.4are material and included as a material portion of the consideration given byBuyer to Seller in exchange for Seller’s agreement to enter into and performunder this Agreement

 

**2.5                 ****GeneralAssumption**.  Asadditional consideration for the purchase and sale of the Property, at ClosingBuyer will: (a) assume and perform (i) all of the covenants andobligations of Seller, Seller’s predecessors in title and Seller’s Affiliatespursuant to the Leases and Approved Contracts (including, without limitation,those relating to any Deposits) which arise on or after the Closing Date, and (ii) allobligations under the Leases and Approved Contracts relating to the physicaland environmental condition of the Property arising on or after the ClosingDate; and (b) assume and agree to discharge, perform and comply with eachand every liability, duty, covenant, debt or obligation of Seller or any of itsAffiliates resulting from, arising out of, or in any way related to anyLicenses and Permits and arising on or after the Closing Date.  By closing under this Agreement, Buyer herebyindemnifies, defends, and holds Seller, Seller’s Affiliates and theirrespective partners, members, shareholders, officers, directors, managers,employees and agents harmless from and against any and all claims, liens,damages, demands, causes of action, liabilities, lawsuits, judgments, losses,costs and expenses (including but not limited to reasonable attorneys’ fees andexpenses) asserted against or incurred by Seller 

 

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and arising out of thefailure of Buyer to perform its obligations pursuant to this Section 2.5.  The provisions of this Section 2.5shall survive the Closing.

 

**ARTICLE 3****BUYER’S DUEDILIGENCE/CONDITION OF THE PROPERTY**

 

**3.1                  Buyer’sInspections and Due Diligence**.  Buyer acknowledges that commencing on theEffective Date and continuing until June 22, 2009 (which will expire at5:00 p.m. Pacific Time) on such date (the period of time from theEffective Date until such time shall be referred to herein as the “**Due Diligence Period**”), Buyer shall conductits examinations, inspections, testing, studies and investigations of theProperty, review information regarding the Property and such documentsapplicable to the Property, including, without limitation, the documents thatSeller delivers or makes available, as set forth in Section 3.2below (collectively, the “**Due Diligence**”).  Except for any limitations as may be imposedby this Article 3 below, Buyer may conduct such due diligenceactivities, inspections, and studies of the Property as it deems necessary orappropriate, and examine and investigate to its full satisfaction all facts,circumstances, and matters relating to the Property (including the physicalcondition and use, availability and adequacy of utilities, access, zoning,compliance with applicable laws, environmental conditions, accessibilitymatters, engineering and structural matters), title and survey matters, and anyother matters it deems necessary or appropriate for purposes of consummatingthis transaction.  The Due Diligence shallbe at Buyer’s sole cost and expense.

 

**3.2                  DeliveryPeriod**.

 

**3.2.1       DueDiligence Items**. To the extent Seller has not already done so, within three (3) businessdays of the Effective Date, Seller shall deliver to Buyer for the following: (i) themost recent rent roll statement (the “**RentRoll**”) with respect to the Property prepared by Seller, in the formand containing such information as maintained by Seller from time to time; (ii) copiesof all Contracts (including any Commission Agreements); and (iii) copiesof any of the following items pertaining to the Property to the extent theyexist and are in Seller’s or Property Manager’s possession: plans andspecifications; “as-built” plans and specifications; structural, seismic orgeological investigations and/or reports prepared by third parties;environmental investigations and/or reports prepared by third parties;warranties; income and expense statements for the prior three (3) years;current tax bill, and the Licenses and Permits (collectively, the “**Deliverable DueDiligence Items**”).  Sellershall also make available to Buyer for inspection at Seller’s primary office,the primary office of the Property Manager or the Property Managers on-siteoffice the following:  (i) copies ofall Leases referenced on the Rent Roll and copies of any subleases oramendments relating thereto and Tenant correspondence in Seller’s possession; (ii) maintenanceand renovations records; and (iii) subject to Section 3.2.3hereof, all other information relating to the operation of the Property(collectively, the “**Other Due Diligence Items**”).  The Deliverable Due Diligence Items and OtherDue Diligence Items are all collectively referred to herein as the “**Due Diligence Items**”.

 

**3.2.2       NoWarranty**. Buyer acknowledges that many of the Due Diligence Items were prepared bythird parties other than Seller.  Buyerfurther acknowledges 

 

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and agreesthat (a) except as specifically set forth in this Agreement, neitherSeller nor any of Seller’s respective agents, employees, contractors or anyother party has made any warranty or representation regarding the truth,accuracy or completeness of the Due Diligence Items or the source(s), and (b) Sellerhas not undertaken any independent investigation as to the truth, accuracy orcompleteness of the Due Diligence Items, and Seller is providing the DueDiligence Items or making the Due Diligence Items available to Buyer solely asan accommodation to Buyer.  Buyeracknowledges that the Due Diligence Items are subject to the confidentialityprovisions of Section 3.5 below.

 

**3.2.3      ****Excluded Materials**.  Notwithstanding any terms to the contrary inthis Agreement, (a) Seller shall not be obligated or otherwise required tofurnish or make available to Buyer any of the following (collectively, “**Excluded Materials**”):  (i) any appraisals or other economicevaluations of, or projections with respect to, all or any portion of theProperty, including, without limitation, budgets, prepared by or on behalf ofSeller or any Affiliate of Seller or any other party, (ii) any documents,materials or information which are subject to attorney/client, work product orsimilar privilege, which constitute attorney communications with respect to thepurchase of the Property by Seller, (iii) any information which Seller, ingood faith, considers proprietary and not related to the operation of theProperty, and (iv) any information which is subject to any otherconfidentiality obligations; (b) Due Diligence Items shall not include anyExcluded Materials; and (c) Seller shall have no obligation or liabilityof any kind to Buyer as a result of Seller not furnishing or making availableto Buyer the Excluded Materials.

 

**3.3                  SiteVisits**.  During thependency of this Agreement, Buyer and its Licensee Parties shall havereasonable access to the Property at agreed upon times for agreed upon purposeson at least one (1) business day prior notice to Seller.  Such notice shall describe the scope of theDue Diligence Buyer intends to conduct during Buyer’s access to theProperty.  Seller shall have the right tohave a representative present during any visits to or inspections of theProperty or any meetings or discussions with any Tenant by Buyer or anyLicensee Parties or any Governmental Entity. Buyer will conduct its Due Diligence in a manner so as to minimize, tothe extent reasonably possible to do so, any interference with the operationsand occupancy of the Property and to minimize, to the extent reasonablypossible to do so, any disturbance to Tenants. Buyer will not enter the Property or contact any leasing agents or theProperty Manager of the Property or any Governmental Entity without Seller’sprior written consent, which consent shall not be unreasonably withheld ordelayed.  Neither Buyer nor any LicenseeParties may contact any Tenants or make any inquiries of such Tenantsincluding, without limitation, those which in any way relate to the Property,without Seller’s prior written consent which consent may be withheld in Seller’ssole and absolute discretion.  In theevent Buyer desires to conduct any physically intrusive Due Diligence, such assampling of soils, other media, building materials, or the like, Buyer willidentify in writing exactly what procedures Buyer desires to perform andrequest Seller’s express written consent. Seller may withhold or condition consent to any physically intrusive DueDiligence in Seller’s sole and absolute discretion.  Upon receipt of Seller’s written consent,Buyer and all Licensee Parties shall, in performing such Due Diligence, complywith any agreed upon procedures and with any and all Laws including, withoutlimitation, any Environmental Laws.

 

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**3.4                  InsuranceRequirements**. As a condition precedent to any entry onto the Property by Buyer or anyLicensee Parties prior to the Closing, Buyer or any such Licensee Parties shallcarry worker’s compensation insurance in compliance with applicable law,liability insurance covering bodily injury, property damage, with a combinedsingle limit of $2,000,000, and automobile liability insurance in an amount notless than $1,000,000.00 covering all automobile and equipment owners and/oroperated by Buyer and any Licensee Parties in connection with the license grantedherein.  The liability policies describedherein shall name Seller and those reasonably designated by Seller as anadditional insured.  All such insuranceshall: (a) be primary and no insurance of Seller or any of the additionalinsured shall be called upon to contribute to a loss and (b) not becancelled or materially modified without first giving Seller thirty (30) days’advance written notice of cancellation or material modification.  Before entering the Property pursuant to thisSection 3.4, Buyer shall deliver copies of the policies orcertificates of insurance issued by the insurance carrier(s) to Sellerdemonstrating compliance with the terms of this Section.  In the event that, during the Due DiligencePeriod or at any other time during the pendency of this Agreement that Buyer orany Licensee Parties are entering the Property, Buyer or any Licensee Partiesfail to procure or maintain the insurance requirements as set forth in this Section orsuch insurance is modified such that it does not provide coverage to Seller andits additional insured as required herein, Seller shall have the right upontwenty-four (24) hours notice to immediately terminate this Agreement bywritten notice to Buyer whereupon Buyer shall immediately cease all operationson the Property and promptly remove all Licensee Parties from the Property(unless the subject insurance requirements are satisfied and evidence thereofdelivered to Seller before the expiration of said twenty-four (24) hour notice)and the Deposit shall be promptly returned to Buyer.

 

**3.5                  Restoration;No Liens**. Buyer shall promptly pay when due the costs of all entry and inspectionsand examinations done with regard to the Property and repair and/or restore theProperty to the condition in which the same were found before any such entryupon the Property and inspection or examination was undertaken.  Buyer shall not permit any mechanics’ orother liens to be filed against the Property as a result of labor or materialsfurnished in connection with its Due Diligence. If any such lien is filed against the Property as a result of theactivities of Buyer or any Licensee Parties, then within ten (10) daysafter receipt of written demand from Seller or any other notice of such lien,Buyer shall either cause the same to be discharged of record by payment of theclaim or posting of a bond, or will take such other action as may be reasonablyacceptable to protect Seller, Seller’s Affiliates and the Property from anyloss or damage arising from such lien. In the event Buyer fails to release any lien by payment, bond orotherwise as set forth herein, Seller may pay such amounts necessary to causethe release of the lien and Buyer shall promptly reimburse Seller one hundredpercent (100%) of the amount so paid, in addition to Seller’s other costs(including, but not limited to attorneys’ fees) necessary to discharge thelien(s)).  Buyer’s obligations under thisSection 3.5 shall expressly survive the Closing or, if the purchaseand sale is not consummated, any termination of this Agreement.  The provisions of this Section 3.5shall survive the Closing or, if the purchase and sale is not consummated, anytermination of this Agreement.

 

**3.6                  DueDiligence Indemnity**. Buyer shall defend, protect, indemnify, and hold harmless Seller, Seller’sAffiliates and their respective partners, shareholders, members, officers,directors, employees and agents, as applicable, and the Property Manager fromand against all Losses (whether arising out of injury or death to persons ordamage to the Property or 

 

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otherwise)including, but not limited to, costs of remediation, restoration and othersimilar activities, mechanic’s and materialmen’s liens and attorneys’ fees,arising out of or in connection with Buyer’s Due Diligence, Buyer’s breach ofits obligations under Section 3.7 or Buyer’s or any LicenseeParties’ entry upon the Property; provided, however, that Buyer shall have noobligations under this Section 3.6 to the extent the Losses are causedsolely by the negligence or willful misconduct of Seller, Seller’s Affiliates,Seller’s partners, shareholders, members, officers, directors, employees andagents, as applicable, and/or the Property Manager or result from the merediscovery by Buyer of pre-existing conditions at the Property and the Buyerpromptly notifies Seller in writing of such discovery.  The provisions of this Section 3.6shall survive the Closing or, if the purchase and sale is not consummated, anytermination of this Agreement.

 

**3.7                  Confidentiality**.  Buyer agrees that any informationobtained by Buyer or its Affiliates or their respective attorneys, partners,accountants, brokers, property management companies, third party consultants,lenders or investors (collectively, for purposes of this Section 3.7,the “**Permitted Outside Parties**”)in the conduct of its Due Diligence shall be treated as confidential pursuantto Section 10.11 of this Agreement and shall be used only toevaluate the acquisition of the Property from Seller.  Buyer further agrees that within itsorganization, or as to the Permitted Outside Parties, the Due Diligence Itemsand all other information obtained by Buyer pursuant to its Due Diligence willbe disclosed and exhibited only to those persons within Buyer’s organization orto those Permitted Outside Parties who are involved in determining thefeasibility of Buyer’s acquisition of the Property.  Buyer further acknowledges that the DueDiligence Items, all information relating to the leasing arrangements betweenSeller and any Tenant or prospective tenants, and all other informationobtained by Buyer pursuant to its Due Diligence are proprietary andconfidential in nature.  Buyer agrees notto divulge the contents of such Due Diligence Items or any other informationexcept in strict accordance with this Section 3.7 and Section 10.11of this Agreement.  In permitting Buyerand the Permitted Outside Parties to review the Due Diligence Items and otherinformation to assist Buyer, Seller has not waived any privilege or claim ofconfidentiality with respect thereto, and no third party benefits orrelationships of any kind, either express or implied, have been offered,intended or created by Seller and any such claims are expressly rejected bySeller and waived by Buyer and the Permitted Outside Parties, for whom, by itsexecution of this Agreement, Buyer is acting as an agent with regard to suchwaiver.  The provisions of this Section 3.7shall survive the Closing or, if the purchase and sale is not consummated, anytermination of this Agreement.

 

**3.8                  DueDiligence Period**. Unless Buyer delivers to Seller and Escrow Agent written noticeterminating this Agreement on or before the end of the Due Diligence Periodwhich notice may be for any reason, or no reason, (the “**DisapprovalNotice**”), this Agreement shall continue in full force andeffect.  If Buyer fails to give Sellerthe Disapproval Notice, then Buyer shall be deemed to have approved all of thematters described in Sections 3.1 and 3.2.  If Buyer timely elects to terminate itsobligations hereunder as described above, then Buyer shall be entitled to theimmediate return of the Deposit and Buyer shall return all Due Diligence Itemsto Seller and provide to Seller, promptly after receipt of a request fromSeller, originals of all third party reports, studies and appraisals relatingto the Property in its possession, without representation or warranty and at nocost to Seller.  The foregoing obligationshall survive any termination of this Agreement.  Subject to the terms of this Agreement,provided that Buyer has not delivered the Disapproval Notice, Buyer, after theexpiration of the 

 

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DueDiligence Period, may continue to conduct further physical Due Diligence orother examinations, inspections, tests, studies and investigations regardingthe Property; provided, however, that except as otherwise expressly provided inSections 5.1 and 10.2.2, in no event shall Buyer have any rightto terminate or otherwise modify its obligations hereunder after the end of theDue Diligence Period as a result of any such further Due Diligence or otherexaminations, inspections, tests, studies or investigations regarding theProperty, and the provisions of this Article 3, including, withoutlimitation, the indemnification provisions, shall continue to apply.

 

**3.9                 ****Delivery of Buyer’s Due Diligence Materials**.  Buyer agrees that if Buyerterminates this Agreement for any reason permitted hereunder, including Buyer’sdisapproval of its Due Diligence within the Due Diligence Period, then Buyershall, at Seller’s request and at no cost to Seller, assign to Seller all ofits rights, interest and title to copies of all third party drafts and finalsurveys, environmental site assessments, appraisals, examinations, inspections,tests, studies and investigations of the Property or any other similardocuments or materials applicable to the Property, obtained by Buyer during theDue Diligence Period (collectively, “**Buyer’s Due DiligenceMaterials**”).  Buyer’sobligations under this Section shall expressly survive the terminationand/or expiration of this Agreement.

 

**ARTICLE 4****TITLE, SURVEY & CONTRACTS**

 

**4.1                  Titleto Real Property**. Buyer shall obtain (a) a preliminary report or commitment to issuean owner’s policy of title insurance with respect to the Property issued by theTitle Company (the “**Title Commitment**”),and (b) copies of all recorded documents referred to on Schedule B of theTitle Commitment as exceptions to coverage (the “**Title Documents**”). Buyer shall instruct Escrow Agent to deliver a copy of the TitleCommitment and the Title Documents to Seller concurrent with its delivery ofthe same to Buyer.

 

**4.2                  CertainExceptions to Title**. Buyer shall have the right to object in writing to any title mattersthat are not Permitted Exceptions and that are disclosed in the TitleCommitment (herein collectively called “**Liens**”)on or before the tenth (10th) day prior to theexpiration of the Due Diligence Period. Buyer’s failure to disapprove the Liens in writing within such periodshall constitute Buyer’s approval of all such Liens.  All such Liens which are timely objected toby Buyer shall be herein collectively called the “**Title Objections**”. Seller, in its sole and absolute discretion, may elect (but shall not beobligated) to remove or cause to be removed, or insured over, at its expense,any Title Objections, and shall be entitled to a reasonable adjournment of theClosing for the purpose of such removal, which removal will be deemed effectedby, among other things, the issuance of title insurance reasonably acceptableto Buyer eliminating or insuring against the effect of the TitleObjections.  Seller shall notify Buyer inwriting within five (5) days after receipt of Buyer’s notice of Title Objections(the “**Title Cure Period**”), whether Sellerelects to remove the same.  If Seller isunable to remove or endorse over any Title Objections prior to the expirationof the Title Cure Period, or if Seller elects not to remove one or more Title Objectionsby the expiration of the Title Cure Period, Buyer may elect, as its sole andexclusive remedy therefore, to either (a) terminate this Agreement on orbefore the end of the Due Diligence Period, in which event the Deposit shall bepaid to Buyer and, 

 

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thereafter,the parties shall have no further rights or obligations hereunder except forthose obligations which expressly survive the termination of this Agreement, or(b) waive, in writing, such Title Objections, in which event such TitleObjections shall be deemed additional “Permitted Exceptions” and the Closingshall occur as herein provided without any reduction of or credit against thePurchase Price.  If before the end of theDue Diligence Period, Buyer elects to proceed with the transaction contemplatedherein, then Buyer shall be deemed to have elected to waive those TitleObjections Seller elected not to remove or endorse over and its right toterminate this Agreement pursuant to this Section 4.2.  Notwithstanding the foregoing, Seller shallbe obligated at Closing to cause the release of the Liens of any financingobtained by Seller which is secured by the Property other than the Loans.

 

**4.3                  AdditionalExceptions**. In the event the Title Commitment is amended or updated after theexpiration of the Due Diligence Period (each, a “**Title****Commitment Update**”),Buyer shall furnish Seller with a written statement of approval or objectionsto any matter first raised in a Title Commitment Update that affects title tothe Real Property and that was not caused by Buyer or any Licensee Partieswithin five (5) business days after its receipt of such Title CommitmentUpdate together with a legible copy of each new exception raised therein (each,a “**Title****Commitment Update Review Period**”).  Should Buyer fail to notify Seller in writingof any objections to any matter first disclosed in a Title Commitment Updateprior to the expiration of the applicable Title Commitment Update ReviewPeriod, as applicable, Buyer shall be deemed to have approved such matterswhereupon they shall become Permitted Exceptions. If, however, Buyer objects tosuch new exception, then Seller shall have until 5:00 p.m. Pacific Time onthe fifth (5th) business day after Seller’s receipt of Buyer’s written objection in whichto notify Buyer, in Seller’s sole discretion, either (a) that Seller willremove the new disapproved exception(s) prior to the Close of Escrow and,thereafter, Seller shall be entitled to a reasonable adjournment of the Closingfor the purpose of such removal, which removal will be deemed effected by,among other things, the issuance of title insurance reasonably acceptable toBuyer eliminating or insuring against the effect of the Title Objections, or (b) thatSeller will not remove the new disapproved exception(s).  If Seller does not elect to do either (a) or(b), such silence shall be conclusively deemed to constitute Seller’s electionnot to remove any new exception(s) disapproved by Buyer.  If Seller elects not to remove any newdisapproved exception(s), whether by giving notice thereof or by failing togive notice, then Buyer shall have until 5:00 p.m. Pacific Time on thefifth (5th) business day after Seller’s election (or deemed election) not to cure thedisapproved exception in which to elect (y) to terminate this Agreement bywritten notice to Seller and Escrow Holder or (z) to waive in writingBuyer’s previous disapproval of (and thereby accept) any items that Seller doesnot elect to remove.  Buyer’s failure toterminate this Agreement by delivering written notice of such election on orbefore 5:00 p.m. Pacific Time on the fifth (5th) businessday after Seller’s election or deemed election not to remove the newdisapproved exception shall be deemed to constitute Buyer’s irrevocableelection to waive Buyer’s previous disapproval whereupon the disapprovedexception shall become a Permitted Exception. If, however, Buyer does elect to terminate this Agreement, then thisAgreement shall so terminate, the Deposit shall be returned to Buyer andneither party shall have any further obligations to the other hereunder exceptto the extent any such obligation expressly survives the termination of thisAgreement.

 

**4.4                 ****Survey Objections**.  Buyer shall have the right to obtain a newsurvey or an update of any survey provided by Seller (the “**Survey**”)at its sole cost and expense.  

 

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Promptlyupon receipt of the Survey, Buyer, at its sole cost and expense, shall delivera copy to Seller and to Escrow Agent.  Nolater than ten (10) days prior to the expiration of the Due DiligencePeriod, Buyer shall have the right to notify Seller, in writing, of any mattersdisclosed on the Survey that are not Permitted Exceptions and that affect Buyer’stitle to the Property.  Buyer’s failureto obtain the Survey or disapprove any matters disclosed by the Survey on orbefore such time shall constitute Buyer’s approval of the matters disclosed bythe Survey or matters that would have been disclosed had Buyer obtained aSurvey.  All such matters which aretimely objected to by Buyer shall be herein collectively called the “**Survey Objections**”. Seller, in its sole and absolute discretion, may within five (5) daysof receipt of Buyer’s notice of Survey Objection elect (but shall not beobligated) to remove or cause to be removed, or insured over, at its expense,any Survey Objections, and shall be entitled to a reasonable adjournment of theClosing for the purpose of such removal, which removal will be deemed effectedby, among other things, the issuance of title insurance reasonably acceptableto Buyer eliminating or insuring against the effect of the SurveyObjections.  Seller shall notify Buyer inwriting within five (5) days after receipt of Buyer’s notice of SurveyObjections (the “**Survey Cure Period**”), if any,whether Seller elects to cure the same. If Seller is unable to cure or endorse over any Survey Objections priorto the expiration of the Survey Cure Period, or if Seller elects not to removeone or more Survey Objections, Buyer may elect, as its sole and exclusiveremedy therefore, to either (a) terminate this Agreement by giving writtennotice to Seller and Escrow Agent on or before the end of the Due DiligencePeriod, in which event the Deposit shall be paid to Buyer and, thereafter, theparties shall have no further rights or obligations hereunder except for thoseobligations which expressly survive the termination of this Agreement, or (b) waive,in writing, such Survey Objections, in which event the Closing shall occur asherein provided without any reduction of or credit against the PurchasePrice.  If before the end of the DueDiligence Period, Buyer elects to proceed with the transaction contemplatedherein, then Buyer shall be deemed to have elected to waive those SurveyObjections Seller elected not to cure and its right to terminate this Agreementpursuant to this Section 4.4.

 

**4.5                  TitleInsurance**. At Closing, the Title Company shall issue to Buyer or be irrevocablycommitted to issue to Buyer a CLTA standard coverage form title policy (the “**Title Policy**”) in the amount of thePurchase Price, insuring that fee simple title to the Land is vested in Buyersubject only to the Permitted Exceptions. Buyer shall be entitled to request that the Title Company provide ALTAextended coverage and/or such endorsements (or amendments) to the Title Policyas Buyer may reasonably require and/or increased liability as Buyer mayreasonably require, provided that the same shall (a) be at no cost toSeller, (b) impose no additional liability on Seller, (c) not be acondition to the Closing and, accordingly, if Buyer is unable to obtain any ofthe foregoing, Buyer shall nevertheless be obligated to proceed to close thetransaction contemplated by this Agreement without reduction of or set offagainst the Purchase Price, and (d) the Closing shall not be delayed as aresult of Buyer’s request.

 

**4.6                 ****Contracts**. On or before the tenth (10th) day prior to the expiration of the DueDiligence Period, Buyer shall have the right to disapprove, by written noticeto Seller, any of the Contracts that are not terminable upon thirty (30) daysor less prior notice.  If Buyer desiresto have any Contract terminated that is not expressly terminable upon thirty(30) days’ or less notice (any, a “**Non-Terminable Contract**”),then Buyer shall notify Seller in writing of any such Non-Terminable Contractthat it desires to have terminated. Within five (5) days following receipt of any such Buyer notice,Seller shall notify Buyer in writing whether Seller, in 

 

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its soleand absolute discretion, is willing to terminate such Non-TerminableContract.  If Seller notifies Buyer thatit is unwilling to terminate any such Non-Terminable Contracts, then Buyershall have the right, until the expiration of the Due Diligence Period, eitherto waive in writing its prior disapproval of the corresponding Non-TerminableContract(s) or to terminate this Agreement by giving written notice toSeller and Escrow Holder as Buyer’s sole and exclusive remedy, in which eventthe Deposit shall be returned to Buyer. If Buyer fails to waive any such prior disapproval and does notterminate this Agreement before the expiration of the Due Diligence Period,then Buyer shall be deemed to have waived its prior disapproval of thecorresponding Non-Terminable Contract(s). All of the Contracts which are either terminable on thirty (30) days orless notice or which are not disapproved by Buyer, or with respect to whichBuyer’s initial disapproval is waived or deemed to be waived hereunder, arereferred to herein as the “**Approved Contracts**.”

 

**ARTICLE 5**

 

**REMEDIES**

 

**5.1                  PermittedTermination; Seller Default**.  If the sale of the Property is notconsummated due to the permitted termination of this Agreement by Buyer asherein expressly provided, then the Deposit shall be returned to Buyer andBuyer will have no liability hereunder except as otherwise expressly stated inthis Agreement.  If the sale of theProperty is not consummated due solely to Seller’s material default hereunderthat is not cured within all applicable notice and cure periods, then Buyershall have the right, to elect, as its sole and exclusive remedy, to (a) terminatethis Agreement by written notice to Seller, promptly after which the Depositshall be returned to Buyer, (b) waive the default and proceed to close thetransaction contemplated herein, or (c) provided that all of theconditions to Seller’s obligations to close have been satisfied and so long asBuyer is not then in default of any of its material obligations under thisAgreement, seek specific performance of Seller’s obligations under thisAgreement and record and maintain against the Property a notice of lis pendensin accordance with applicable law if Buyer further satisfies and continues tosatisfy each of the following obligations: (i) Buyer shall have reasonablydemonstrated that it is prepared to deliver into escrow all funds required bythis Agreement in order for the Closing to occur, Buyer shall have depositedall funds required by this Agreement in order for the Closing to occur, andBuyer shall be ready and willing in all other respects to close escrow inaccordance with the terms and conditions of this Agreement; and (ii) Buyershall have filed an action for specific performance (a “**SpecificPerformance Action**”) within sixty (60) days of the date the Closingwas to have occurred.  Notwithstandinganything to the contrary contained herein, Seller shall not be deemed indefault unless and until Buyer provides Seller with written notice of suchdefault and Seller fails to cure such default within five (5) businessdays of its receipt of such written notice.

 

**5.2                  BuyerDefault; Liquidated Damages**.  **IF THE SALEIS NOT CONSUMMATED DUE TO ANY DEFAULT BY BUYER HEREUNDER****ANDBUYER FAILS TO CURE SUCH BREACH WITHIN FIVE (5) BUSINESS DAYS AFTER BUYER’SRECEIPT OF WRITTEN NOTICE FROM SELLER SPECIFYING SUCH BREACH****(PROVIDED, HOWEVER, THAT THE FOREGOING NOTICE AND CURERIGHTS SHALL NOT APPLY TO BUYER’S FAILURE TO CLOSE ON THE CLOSING DATE), THENSELLER SHALL RETAIN THE DEPOSIT AS LIQUIDATED**

 

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**DAMAGES, WHICH RETENTION SHALL OPERATE TO TERMINATE THIS AGREEMENT ANDRELEASE BUYER FROM ANY AND ALL LIABILITY HEREUNDER, EXCEPT AS OTHERWISEEXPRESSLY PROVIDED IN THIS AGREEMENT. THE PARTIES HAVE AGREED THAT SELLER’S ACTUAL DAMAGES, IN THE EVENT OF AFAILURE TO CONSUMMATE THIS SALE DUE TO BUYER’S DEFAULT, WOULD BE EXTREMELYDIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THECIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE AMOUNT OF THE DEPOSITIS A REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCHEVENT.  BY PLACING THEIR INITIALS BELOW,EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE ANDTHE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIMETHIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGESPROVISION.  THE PARTIES ACKNOWLEDGE THATSUCH PAYMENT OF THE DEPOSIT IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHINTHE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TOCONSTITUTE LIQUIDATED DAMAGES TO SELLER UNDER CALIFORNIA CIVIL CODE SECTIONS1671, 1676 AND 1677.  THE FOREGOING ISNOT INTENDED TO LIMIT BUYER’S SURVIVING OBLIGATIONS UNDER THIS AGREEMENTINCLUDING, WITHOUT LIMITATION, ALL OF BUYER’S INDEMNITIES IN THIS AGREEMENT.**

 
| Initials: |   | Seller | RO, SDS |   | Buyer | MA |   |
|-----------|--------|--------|---------|--------|-------|----|--------|

 

**ARTICLE 6****REPRESENTATIONS AND WARRANTIES OF SELLER**

 

**6.1                  Representationsand Warranties of Seller**.  Subject to the provisions of this Agreementincluding, without limitation, Sections 6.2, 6.3, and Article 7,Seller makes the following representations and warranties with respect to theProperty:

 

**6.1.1       Status**.  Seller is a limited liabilitycompany organized or formed, validly existing and in good standing under thelaws of the State of California.

 

**6.1.2       Authority**.  The execution and delivery of thisAgreement and the performance of Seller’s obligations hereunder have been orwill be duly authorized by all necessary action on the part of Seller, and thisAgreement constitutes the legal, valid and binding obligation of Seller,subject to equitable principles and principles governing creditors’ rightsgenerally.

 

**6.1.3       Non-Contravention**.  The execution and delivery of thisAgreement by Seller and the consummation by Seller of the transactionscontemplated hereby will not, to Seller’s knowledge (i) violate any Lawsor (ii) conflict with, result in a breach of, or constitute a defaultunder the organizational documents of Seller, any note or other evidence ofindebtedness, any mortgage, deed of trust or indenture, or any lease or othermaterial agreement 

 

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orinstrument to which Seller is a party or by which Seller may be bound and, ineither case, that would have a material and adverse affect on Seller’s abilityto consummate the transactions contemplated by this Agreement.

 

**6.1.4       Non-ForeignEntity**.  Seller isnot a “foreign person” or “foreign corporation” as those terms are defined inthe Internal Revenue Code of 1986, as amended, and the regulations promulgatedthereunder.

 

**6.1.5       Consents**.  No consent, waiver, approval orauthorization is required from any person or entity (that has not already beenobtained or will be obtained) in connection with the execution and delivery ofthis Agreement by Seller or the performance by Seller of the transactionscontemplated hereby.

 

**6.1.6      ****Leases.** To Seller’s knowledge, true, correct and complete copies of the Leasesin Property Manager’s files have been or will be delivered or made available toBuyer in accordance with Section 3.2.1 above.  Except as set forth in the Rent Roll orotherwise disclosed to Buyer by Seller in writing prior to the expiration ofthe Due Diligence Period, to Seller’s knowledge, the Leases listed on the RentRoll are in full force and effect as of the date set forth on the RentRoll.  To Seller’s knowledge, Seller hasnot received written notice of any uncured default of Seller, as landlord,under any Lease.  Except as may be setforth in the Rent Roll or otherwise disclosed to Buyer by Seller in writingprior to the expiration of the Due Diligence Period, to Seller’s knowledge, noTenant has paid any rent, fees, or other charges for more than one month inadvance.  Seller is the landlord undereach of the Leases and, except for the security interests granted in connectionwith the Loans encumbering the Property, has not assigned, mortgaged, pledgedor otherwise encumbered any of its rights or interests under the Leases.

 

**6.1.7      ****Contracts**. To Seller’s knowledge, there are no Contracts except for the Contractsspecifically designated in **Exhibit B**attached hereto.  To Seller’s knowledge,true, correct and complete copies of the Contracts in Property Manager’s fileshave been or will be delivered to Buyer in accordance with Section 3.2.1,above.  To Seller’s knowledge, Seller hasnot received written notice of any uncured default of Seller under anyContracts.

 

**6.1.8      ****Notice of Violation**.  Except as may be disclosed in the DueDiligence Items, to Seller’s knowledge, Seller has not received written noticefrom any Governmental Entity having jurisdiction over the Property that theProperty is in violation of any Law regulating the operation or use thereof.

 

**6.1.9      ****Litigation**.  To Seller’s knowledge, there is no legalaction, suit, proceeding or claim affecting Seller or the Land, Improvements orPersonal Property or any portion thereof relating to or arising out of theownership, operation, use or occupancy of the Property being prosecuted in anycourt or by or before any federal, state, county or municipal department,commission, board, bureau or agency or other Governmental Entity.

 

**6.1.10    ****SpecialAssessments**.  To Seller’sknowledge and except as may otherwise be disclosed by the Due Diligence Itemsor the Title Documents, Seller has received 

 

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no written notice of anypending improvement liens or special assessments to be made against theProperty by any governmental authority.

 

**6.1.11    ****NoContracts.**  Except forthis Agreement, there are no options, contracts or other obligationsoutstanding for the sale, exchange or transfer of the Property or any portionthereof or the business operated thereon.

 

**6.1.12    ****EnvironmentalIssues**.  To Seller’s knowledge, Sellerhas not received any written notice from any Governmental Entity that there isa presence, release, threat of release, placement on or in the Property, of anyHazardous Materials in violation of any Laws.

 

**6.1.13     Prohibited Persons and Transactions**.  Neither Seller nor any of itsaffiliates, nor, to Seller’s knowledge, any of their respective partners,members, shareholders or other equity owners, and none of their respectiveemployees, officers, directors, representatives or agents is, nor will theybecome, a person or entity with whom U.S. persons or entities are restrictedfrom doing business under regulations of the Office of Foreign Asset Control (“**OFAC**”) of the Department of the Treasury(including those named on OFAC’s Specially Designated and Blocked Persons List)or under any statute, executive order (including the September 24, 2001,Executive Order Blocking Property and Prohibiting Transactions with Persons WhoCommit, Threaten to Commit, or Support Terrorism), or other governmental actionand is not and will not engage in any dealings or transactions or be otherwiseassociated with such persons or entities.

 

**6.2                  Seller’sKnowledge**. For purposes of this Agreement and any document delivered at Closing,whenever the phrase “to Seller’s knowledge,” or the “knowledge” of Seller orwords of similar import are used, they shall be deemed to refer to facts withinthe actual knowledge only of Steve Gilmore and Gina Costantino, therepresentatives or employees of the Seller who are most knowledgeable as to thestatus of the Property of Seller and no others, as of the Effective Date,without duty of inquiry whatsoever. Buyer acknowledges that the individual named above is named solely forthe purpose of defining and narrowing the scope of Seller’s knowledge and notfor the purpose of imposing any liability on or creating any duties runningfrom such individuals to Buyer.  Buyercovenants that it will bring no action of any kind against such individual, anyshareholder, partner or member of Seller related to or arising out of theserepresentations and warranties.

 

**6.3                 ****Seller’s Maximum Aggregate Liability**.  Notwithstanding any provision to the contrarycontained in this Agreement or any documents executed by Seller pursuant heretoor in connection herewith, the representations and warranties of Seller setforth in Section 6.1, together with Seller’s liability for anybreach of any of Seller’s interim operating covenants under Article 8,shall survive the Closing and not be merged into the deed for a period of nine (9) months.  Buyer shall have no right to bring any actionagainst Seller as a result of any untruth or inaccuracy of such representationsand warranties, or any such breach, unless (a) Buyer serves a writtenclaim on Seller within such nine (9) month period, (b) Buyer commencesand serves an action against Seller within thirty (30) days after Buyer givessuch notice, and (c) the aggregate amount of all liability and lossesarising out of any such untruth or inaccuracy, or any such breach, exceeds$25,000.  In addition, in no event shallSeller’s liability for all such breaches exceed, in the aggregate,$800,000.  Seller shall have no liabilitywith respect to any of 

 

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Seller’srepresentations, warranties and covenants herein if, prior to the Closing,Buyer has actual knowledge of any breach of a representation, warranty orcovenant of Seller herein, or Buyer obtains actual knowledge (from whateversource, including, without limitation, any of the Due Diligence Items, as a resultof Buyer’s Due Diligence, the inclusion of any information in or writtendisclosure by Seller or Seller’s agents and employees) that contradicts any ofSeller’s representations and warranties herein, and Buyer neverthelessconsummates the transaction contemplated by this Agreement.  The provisions of this Section 6.3shall expressly survive the Close of Escrow and shall not merger into the Deedor any of the other closing documents hereunder.

 

**ARTICLE 7****REPRESENTATIONS AND WARRANTIES OF BUYER**

 

**7.1                  Buyer’sRepresentations and Warranties**.  Buyer represents and warrants to Seller thefollowing:

 

**7.1.1       Status**.  Buyer is a limited partnershiporganized or formed, validly existing and in good standing under the laws ofthe State of Delaware and has, or will have at Closing, the authority totransact business in the State of California.

 

**7.1.2       Authority**.  The execution and delivery of thisAgreement and the performance of Buyer’s obligations hereunder have been orwill be duly authorized by all necessary action on the part of Buyer and thisAgreement constitutes the legal, valid and binding obligation of Buyer, subjectto equitable principles and principles governing creditors’ rights generally.

 

**7.1.3       Non-Contravention**.  The execution and delivery of thisAgreement by Buyer and the consummation by Buyer of the transactionscontemplated hereby will not, to Buyer’s knowledge, violate any Law or conflictwith, result in a breach of, or constitute a default under the organizationaldocuments of Buyer, any note or other evidence of indebtedness, any mortgage,deed of trust or indenture, or any lease or other material agreement orinstrument to which Buyer is a party or by which it is bound and, in eithercase, that would have a material and adverse affect on Buyer’s ability toconsummate the transaction contemplated by this Agreement.

 

**7.1.4       Consents**.  No consent, waiver, approval orauthorization is required from any person or entity (that has not already beenobtained or will be obtained) in connection with the execution and delivery ofthis Agreement by Buyer or the performance by Buyer of the transactionscontemplated hereby.

 

**7.1.5       Solvency**.  Buyer will not be renderedinsolvent in connection with, or as a result of, the performance by Buyer ofits obligations hereunder or the consummation of the transactions contemplatedhereby.

 

**7.1.6       ProhibitedPersons and Transactions**.  Neither Buyer nor any of its affiliates, nor,to Buyer’s knowledge without any duty to make diligent inquiry, any of theirrespective partners, members, shareholders or other equity owners, and none oftheir respective 

 

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employees,officers, directors, representatives or agents is, nor will they become, aperson or entity with whom U.S. persons or entities are restricted from doingbusiness under regulations of the Office of Foreign Asset Control (“**OFAC**”) of the Department of the Treasury(including those named on OFAC’s Specially Designated and Blocked Persons List)or under any statute, executive order (including the September 24, 2001,Executive Order Blocking Property and Prohibiting Transactions with Persons WhoCommit, Threaten to Commit, or Support Terrorism), or other governmental actionand is not and will not engage in any dealings or transactions or be otherwiseassociated with such persons or entities.

 

**7.1.7      ****Sophisticated Buyer**.  Buyer is an experienced purchaser, owner andoperator of multi-family housing communities and is familiar with the kinds oflegal, economic and other issues that typically impact one’s ability to own andoperate such communities.

 

Sellercovenants that it will bring no action of any kind against any individual,shareholder, partner or member of Buyer related to, or arising out of, theserepresentations and warranties.

 

**7.2                 ****Buyer’s Independent Investigation**.

 

**7.2.1      ****Investigations**.  By its election not to deliver theDisapproval Notice, Buyer represents and warrants that it has been given a fullopportunity to inspect and investigate each and every aspect of the Property,either independently or through agents of Buyer’s choosing, including, withoutlimitation:

 

(a)           All matters relating to title,together with all governmental and other legal requirements such as taxes,assessments, zoning, accessibility, rent control, use permit requirements, andbuilding codes;

 

(b)           The physical condition and aspects ofthe Property, including, without limitation, the interior, the exterior, thesquare footage within the Improvements, the structure, the paving, theutilities, and all other physical and functional aspects of the Property,including, without limitation, any seismic or retrofitting requirements and anexamination for the presence or absence of Hazardous Materials, which shall beperformed or arranged by Buyer at Buyer’s sole expense;

 

(c)           Any easements and/or access rightsaffecting the Property;

 

(d)           The Leases and all matters inconnection therewith;

 

(e)           The Contracts, the Licenses andPermits, the Commission Agreements and any other documents or agreements ofsignificance affecting the Property; and

 

(f)            All other matters of materialsignificance affecting the Property or delivered to Buyer by Seller inaccordance with Article 3 of this Agreement.

 

**7.2.2      ****AS-IS SALE**. **EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIESOF SELLER UNDER SECTION 6.1,**

 

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**ABOVE,BUYER ACKNOWLEDGES AND AGREES THAT NEITHER SELLER, NOR ANYONE ACTING FOR OR ONBEHALF OF SELLER INCLUDING, WITHOUT LIMITATION, BROKER, HAS MADE ANYREPRESENTATIONS, WARRANTIES, OR PROMISES TO BUYER, OR TO ANYONE ACTING FOR ORON BEHALF OF BUYER, CONCERNING ANY ASPECT OF THE PROPERTY INCLUDING, WITHOUTLIMITATION, (A) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IFANY, INCORPORATED INTO THE PROPERTY; (B) COMPLIANCE WITH TITLE III OF THEAMERICANS WITH DISABILITIES ACT OF 1990 AND ALL SIMILAR STATE AND LOCALACCESSIBILITY LAWS; (C) COMPLIANCE WITH THE FAIR HOUSING ACT AND ALLSIMILAR STATE AND LOCAL LAWS; (D) COMPLIANCE WITH ANY “SOFT STORY”RETROFIT STANDARDS; (E) COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION,POLLUTION OR LAND USE LAWS, RULES, REGULATION, ORDERS OR REQUIREMENTS,INCLUDING, WITHOUT LIMITATION, CALIFORNIA HEALTH & SAFETY CODE, THEFEDERAL WATER POLLUTION CONTROL ACT, THE FEDERAL RESOURCE CONSERVATION ANDRECOVERY ACT, THE U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS AT 40C.F.R., PART 261, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATIONAND LIABILITY ACT OF 1980, AS AMENDED, THE RESOURCE CONSERVATION AND RECOVERYACT OF 1976, THE CLEAN WATER ACT, THE SAFE DRINKING WATER ACT, THE HAZARDOUSMATERIALS TRANSPORTATION ACT, THE TOXIC SUBSTANCE CONTROL ACT, AND REGULATIONSPROMULGATED UNDER ANY OF THE FOREGOING; (F) THE PRESENCE OR ABSENCE OFHAZARDOUS MATERIALS OR MOLD AT, ON, UNDER, OR ADJACENT TO THE PROPERTY; (G) THECONTENT, COMPLETENESS OR ACCURACY OF THE DUE DILIGENCE ITEMS, TITLE COMMITMENT,SURVEY OR UPDATED SURVEY; (H) THE SIZE AND/OR DIMENSIONS OF ANY OF THEIMPROVEMENTS, AND (I) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS ORSPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY HAVEBEEN OR MAY BE PROVIDED TO BUYER. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT THE PROPERTY WILL BEINDEPENDENTLY INVESTIGATED BY BUYER TO ITS FULL SATISFACTION PRIOR TOEXPIRATION OF THE DUE DILIGENCE PERIOD, OR THAT BUYER WILL TERMINATE THISAGREEMENT AS PROVIDED ABOVE, THAT BUYER WILL BE ACQUIRING THE PROPERTY BASEDSOLELY UPON AND IN RELIANCE ON ITS OWN INSPECTIONS, EVALUATIONS, ANALYSES ANDCONCLUSIONS, AND THAT SUBJECT TO SELLER’S EXPRESS OBLIGATIONS HEREUNDER, BUYERWILL BE ACQUIRING THE PROPERTY IN ITS “AS-IS” CONDITION AND STATE OF REPAIRINCLUSIVE OF ALL FAULTS AND DEFECTS, WHETHER KNOWN OR UNKNOWN, AS MAY EXISTAS OF THE CLOSING, AND BUYER EXPRESSLY ASSUMES THE RISK THAT ADVERSE PHYSICAL,ENVIRONMENTAL, FINANCIAL, LEGAL AND OTHER CONDITIONS MAY NOT BE REVEALEDBY BUYER’S INSPECTION OF THE PROPERTY.**

 

**BY INITIALING BELOW, THEBUYER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING ANDSIGNIFICANCE OF THIS SECTION 7.2.2 AND AGREES TO THE TERMS SETFORTH HEREIN.**

 

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Buyer: MA

 

**7.3                 ****Buyer’s Release of Seller; Indemnity**.

 

**7.3.1       SellerReleased From Liability**.  Seller is hereby released from allresponsibility and liability to Buyer regarding the condition (including,without limitation, its physical condition and its compliance with applicablelaws, and the presence in the soil, air, structures and surface and subsurfacewaters, of Hazardous Materials or substances that have been or may in thefuture be determined to be toxic, hazardous, undesirable or subject toregulation and that may need to be specially treated, handled and/or removedfrom the Property under current or future federal, state and local laws, regulationsor guidelines), valuation, salability or utility of the Property, or itssuitability for any purpose whatsoever except to the extent that suchresponsibility or liability is the result of the material inaccuracy (if any)of Seller’s representations under Section 6.1 hereof.

 

**7.3.2       Buyer’sWaiver of Objections**. Buyer acknowledges that its failure to deliver the Disapproval Noticeshall constitute Buyer’s representation and warranty to Seller that, prior tothe expiration of the Due Diligence Period, it will have inspected theProperty, observed its physical characteristics and existing conditions andhad, or will have, the opportunity to conduct such investigation and study onand of said Property and adjacent areas as it deemed necessary, and subject toSeller’s responsibility for any breach of the warranties and representationscontained in Section 6.1 of this Agreement, hereby waives any andall objections to, claims, causes of action or complaints (including but notlimited to actions based on federal, state or common law and any private rightof action under CERCLA, RCRA or any other state and federal law to which theProperty is or may be subject) regarding physical characteristics and existingconditions, including without limitation structural and geologic conditions,subsurface soil and water conditions and solid and hazardous waste andHazardous Materials on, under, adjacent to or otherwise affecting theProperty.  Buyer further hereby assumesthe risk of changes in applicable laws and regulations including, withoutlimitation, those relating to past, present and future environmental conditionson the Property, and subject to Seller’s specific representations andwarranties contained in Section 6.1 of this Agreement, the riskthat adverse physical characteristics and conditions, including withoutlimitation the presence of Hazardous Materials or other contaminants, may notbe revealed by its investigation.

 

**7.3.3       CivilCode Section 1542 Waiver**.  In connection with the releases and waiversset forth in this Section 7.3, Buyer, on behalf of itself, itssuccessors, assigns and successors-in-interest and such other persons andentities, waives the benefit of California Civil Code Section 1542, whichprovides as follows:

 

“A general release does not extend to claims which thecreditor does not know or suspect to exist in his or her favor at the time ofexecuting the release, which if known by him or her must have materiallyaffected his settlement with the debtor.”

 
| Buyer’s Initials: | MA |   |
|------------------------|----|--------|

 

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**7.3.4       Indemnity**.  Subject to Section 6.1hereof, Buyer and its successors and assigns (the “**Indemnitor**”) agree to indemnify, protect, defend and holdSeller, Seller’s Affiliates and each of their respective members, partners,shareholders, officers, directors, managers, employees and agents harmless fromany and all Losses, including without limitation suits and claims brought bythird parties related to, or in any way connected to the condition of theProperty arising from events occurring subsequent to Closing, including,without limitation, (a) the presence of Hazardous Materials thereon, (b) thematters released by Buyer above, (c) Buyer’s use, ownership, development,and sale of the Property, and (d) any claims or demands asserted oralleged by any purchasers or tenants from Buyer of any portion of the Propertyor any successors or assigns of any such persons.  In addition, Indemnitor agrees to indemnify,protect, defend and hold Seller, Seller’s Affiliates and each of theirrespective members, partners, shareholders, officers, directors, managers,employees and agents harmless from any and all Losses, including suits andclaims brought by third parties, related to, arising from or in any wayconnected to any inaccuracy in or breach of any representations or warrantiesof Buyer under this Agreement, or any breach or default by Buyer under theprovisions of this Agreement that state that they are to survive the Closing orthe earlier termination of this Agreement. Indemnitor’s obligations under this Section shall survive theClosing and the delivery of the Deed.

 

**7.3.5       Survival**.  The foregoing waivers, releasesand indemnities by Buyer shall survive either (a) the Closing and therecordation of the Deed, and shall not be deemed merged into the Deed upon itsrecordation, or (b) any termination of this Agreement.

 

**ARTICLE 8****LEASES; MAINTENANCE OF PROPERTY**

 

From the date hereof until theClosing, and except as otherwise consented to or approved by Buyer, Sellercovenants and agrees with Buyer as follows:

 

**8.1                  NewLeases; Lease Modifications**.  After the Effective Date and prior to the endof the Due Diligence Period, Seller, in its sole discretion, and without Buyer’sconsent shall have the right to enter into any New Lease or amend, modifyand/or extend any New Lease or any Pre-Effective Date Lease it deemsadvisable.  Seller shall provide Buyerwith notice thereof and an executed copy of any such New Lease or amendment,modification or extension promptly after the execution and delivery thereof,but in no event later than the next to last day of the Due DiligencePeriod.  Buyer’s sole remedy in the eventany New Lease is executed or if any New Lease or Pre-Effective Date Lease isamended, modified or extended by Seller after the Effective Date and prior tothe end of the Due Diligence Period shall be to terminate this Agreement on orbefore the end of the Due Diligence Period in accordance with Section 3.8.  No later than one (1) business day priorto the expiration of the Due Diligence Period, Seller shall provide Buyer withits then-current rent and concession schedule (the “**LeaseGuidelines**”).  The LeaseGuidelines shall be in the form of **Exhibit J**attached hereto and incorporated herein. Provided that Buyer does not elect to terminate this Agreement on orbefore the expiration of the Due Diligence Period, after the end of the DueDiligence Period Seller shall not enter into a New Lease unless such New Leaseis on Seller’s standard residential lease form and in compliance with the LeaseGuidelines unless Seller has obtained Buyer consent in accordance with Section 8.4

 

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below;modify or amend any Pre-Effective Date Lease or any New Lease entered intoprior to the end of the Due Diligence Period except pursuant to the exercise bya Tenant of a renewal, extension or other right contained in such Tenant’sLease; consent to any assignment or sublease in connection with anyPre-Effective Date Lease or New Lease; or remove a Tenant under anyPre-Effective Date Lease or New Lease, whether by summary proceedings orotherwise, except by reason of a default of the Tenant under the subjectPre-Effective Lease or New Lease.

 

**8.2                  LeaseExpenses**. At Closing, Buyer shall reimburse Seller for any and all ReimbursableLease Expenses to the extent that the same have been paid by Seller prior toClosing.  In addition, at Closing, Buyershall assume Seller’s obligations to pay, when due (whether on a stated duedate or by acceleration) any Reimbursable Lease Expenses unpaid as of theClosing, and Buyer hereby agrees to indemnify, defend and hold Seller harmlessfrom and against any and all claims for such Reimbursable Lease Expenses whichremain unpaid for any reason at the time of Closing, which obligations of Buyershall survive the Closing and shall not be merged therein.  Each party shall make available to the otherall Commission Agreements, records, bills, vouchers and other data in suchparty’s control verifying Reimbursable Lease Expenses and the payment thereof.

 

**8.3                  LeaseEnforcement**. Subject to the provisions of Section 8.1 above, prior to theClosing Date, Seller shall have the right, but not the obligation, to enforcethe rights and remedies of the landlord under any Pre-Effective Date Lease orNew Lease, by summary proceedings or otherwise (including, without limitation,the right to remove any Tenant), and to apply all or any portion of any TenantDeposits then held by Seller toward any loss or damage incurred by Seller byreason of any defaults by Tenants, and the exercise of any such rights orremedies shall not affect the obligations of Buyer under this Agreement in anymanner or entitle Buyer to a reduction in, or credit or allowance against, thePurchase Price or give rise to any other claim on the part of Buyer.

 

**8.4                  CertainInterim Operating Covenants**.  Seller covenants to Buyer that Seller willoperate the Property, from the Effective Date until Closing or earliertermination of this Agreement as follows: (i) continue to operate, manage and maintain the Property in a goodand workmanlike manner in the ordinary course of Seller’s business andsubstantially in accordance with Seller’s present practice, and will keep theImprovements and Personal Property in good order and operating condition,subject to ordinary wear and tear and further subject to Section 10.2and cause all necessary repairs, renewals and replacements to be promptly madewhich are required by the terms of the Leases; (ii) maintain propertyinsurance on the Property which is at least equivalent in all material respectsto the insurance policies covering the Property as of the Effective Date; (iii) notenter into any new contract for the provision of goods or services to or withrespect to the Property other than in the ordinary course of business or thatis to terminate upon the Closing, or renew, extend, modify or replace any ofthe Contracts unless such contract is an Approved Contract, is a contractterminable as of the Closing Date or Buyer consents thereto in writing, whichapproval shall not be unreasonably withheld, delayed or conditioned; ((iv) advise Buyerpromptly of any change in any applicable laws, regulations, restrictions,rulings, or orders that might have a material adverse change on the value oruse of the Property by Buyer of which Seller obtains written notice after theEffective Date and also advise Buyer promptly of any litigation, arbitration oradministrative hearing concerning or affecting the Property which would have amaterial adverse effect on the value or use of the 

 

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Property of which Sellerobtains written notice after the Effective Date; (v) subject to the prorations prescribed herein, cause to bepaid all trade accounts, costs and expenses of operation and maintenance of theProperty incurred and accruing or due prior to Closing; (vi) not knowingly take any action, which action would havethe effect of materially violating any of the representations and warranties ofSeller set forth in Section 6.1 of the Agreement unless such actionis required by any applicable Laws; (vii) withoutthe prior written consent of Buyer, not remove any equipment forming a part ofthe Property except such as is replaced by Seller by an article of substantiallyequal suitability and value, free and clear of any lien or security interest; and (viii) if any apartment unit is vacated more than five business (5) daysprior to Closing, then prior to Closing return such unit to rentable conditionin accordance with Seller’s customary cleaning, painting, and repair standardsfor vacant units (the condition of such an apartment unit after cleaning isreferred to herein as a “**Rent Ready Condition**”);provided if Seller fails to return any such vacated unit to a Rent ReadyCondition prior to Closing, or a unit is vacated within five (5) businessdays of Closing and Seller fails to return such unit to Rent Ready Condition byClosing, then at Closing Seller shall credit Buyer an amount equal to thereasonably estimated cost to return each such unit to a Rent Ready Condition,up to, but not to exceed, $1000.  In addition, Seller shall terminate anyleasing and/or management agreement with the Property Manager or any affiliateof Seller with respect to the Property effective as of the Closing Date and payany and all costs and expenses of termination thereof.

 

**8.5                 ****ActionsProhibited**.  Providedthat Buyer elects not to terminate this Agreement on or before the expirationof the Due Diligence Period, then from and after the expiration of the DueDiligence Period Seller shall not, without the prior written approval of Buyer:

 

**8.5.1      **make anymaterial structural alterations or additions to the Property except as (a) inthe ordinary course of operating the Property, (b) required for maintenanceand repair which are required by the terms of the Leases, (c) required byany of the Leases or the Contracts or (d) required by this Agreement;

 

**8.5.2      **sell, transferadversely encumber or adversely change the status of title of all or any portionof the Property;

 

**8.5.3      **change orattempt to change, directly or indirectly, the current zoning of the Land in amanner materially adverse to it; or

 

**8.5.4      **cancel, amendor modify, in a manner materially adverse to the Property, any License orPermit held by Seller with respect to the Property or any part thereof whichwould be binding upon Buyer after the Closing.

 

**ARTICLE 9**

 

**CLOSINGAND CONDITIONS**

 

**9.1                  EscrowInstructions**. Upon execution of this Agreement, the parties hereto shall deposit twoexecuted counterparts of this Agreement with the Escrow Agent, and thisAgreement shall serve as escrow instructions to the Escrow Agent as the escrowholder for 

 

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consummationof the purchase and sale contemplated hereby. Seller and Buyer agree to execute such reasonable additional andsupplementary escrow instructions as may be appropriate to enable the EscrowAgent to comply with the terms of this Agreement; provided, however, that inthe event of any conflict between the provisions of this Agreement and anysupplementary escrow instructions, the terms of this Agreement shall control.

 

**9.2                  Seller’sConditions to Closing**.  The Closing and Seller’s obligations withrespect to the transaction contemplated by this Agreement are subject to thetimely satisfaction or written waiver by the respective dates designated belowof the following conditions precedent for Seller’s benefit (the “**Seller Conditions Precedent**”).

 

**9.2.1       Buyer’sDeliveries**. On or before the Closing Date, Buyer shall have delivered to EscrowHolder all of the funds and documents as provided in Section 9.6hereof.

 

**9.2.2       Representationsand Warranties**. All representations and warranties of Buyer contained in this Agreementshall be true and correct in all material respects as of the date made and asof the Closing Date with the same effect as if those representations andwarranties were made at and as of the Closing Date.

 

**9.2.3       Performance**.  As of the Closing Date, Buyershall not be in material default in the performance of any material covenant oragreement to be performed by Buyer under this Agreement.

 

**9.2.4      ****Loan Assumption**.  Lender shall have agreed, by the AssumptionApproval Deadline, to consent to the assignment of Seller’s interest in theLoan to Buyer and to release the Seller and Seller Guarantors from futureliability with respect to the Loan.

 

Neither Buyer nor Seller shallwillfully or in bad faith act or fail to act for the purpose of permitting anyof Seller’s Conditions Precedent to fail. Except as otherwise provided herein, if any of the foregoing SellerConditions Precedent are not satisfied by the respective dates designatedhereunder for any reason other than a default by Seller or Buyer hereunder,this Agreement shall terminate, the Deposit shall be returned to Buyer and,neither party shall have any further rights or obligations under this Agreementexcept for those which this Agreement expressly provides shall survive anytermination.  Seller shall have the rightto waive any of the Seller Conditions Precedent, and the election by Seller toproceed with the Closing shall be deemed Seller’s waiver of any unsatisfiedSeller Conditions Precedent to the extent any such Seller Condition(s) Precedenthas(have) not been previously satisfied or waived.

 

**9.3                  Buyer’sConditions to Closing**.  The Closing and Buyer’s obligation toconsummate the transaction contemplated by this Agreement are subject to thetimely satisfaction or written waiver by the respective dates designated belowof the following conditions precedent for Buyer’s benefit (the “**Buyer Conditions Precedent**”):

 

**9.3.1       Seller’sDeliveries**. On or before the Closing Date, Seller shall have delivered to EscrowAgent the documents described in Section 9.5.1 below.

 

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**9.3.2       Representationsand Warranties**. All representations and warranties of Seller contained in Article 6of this Agreement shall be true and correct in all material respects as of thedate made and, subject to the provisions of this Agreement, shall remain trueand correct in all material respects as of the Closing Date and remade as ofthe Closing Date.

 

**9.3.3       Performance**.  As of the Closing Date, Sellershall not be in material default in the performance of any material covenant oragreement to be performed by Seller under this Agreement beyond all applicablenotice and cure periods.

 

**9.3.4       TitlePolicy**.  As of theClosing Date, the Title Company shall have issued or irrevocably committed toissue the Title Policy to Buyer as provided in Section 4.4 above.

 

**9.3.5      ****Loan Assumption**.  Lender shall have agreed as reflected in (a) and(b) in Section 9.4.1 below, by the Assumption ApprovalDeadline, to consent to the assignment of Seller’s interest in the Loan toBuyer.

 

Neither Buyer nor Seller shallwillfully or in bad faith act or fail to act for the purpose of permitting anyof the Buyer Conditions Precedent to fail. If any of the Buyer Conditions Precedent set forth in this Agreement arenot timely satisfied for any reason other than a default by Seller or Buyerhereunder, this Agreement shall terminate, the Deposit shall be returned toBuyer and neither party shall have any further rights or obligations under thisAgreement with respect to the Property except for those which this Agreementexpressly provides shall survive any termination.  Notwithstanding the foregoing, Buyer shallhave the right to waive, in its sole and absolute discretion, any of the BuyerConditions Precedent, and the election by Buyer to proceed with the Closingwith the actual knowledge that a Buyer Condition Precedent has not beensatisfied, shall be deemed Buyer’s waiver of such Buyer Condition Precedent tothe extent any such Buyer Condition Precedent has not been previously satisfiedor waived.

 

**9.4                  Closing**.

 

**9.4.1      **The closing hereunder (“**Closing**”)shall be held and delivery of all items to be made at the Closing under theterms of this Agreement shall be made through escrow at Escrow Agent’s officeon the tenth (10th) business day after (a) thereceipt by Buyer and Seller of Lender’s approval of the assumption of the Loanby Buyer and the release of the Seller and Seller Guarantors and (b) Lender,Buyer and Seller have agreed on the terms and conditions of the documents andinstruments necessary to cause Buyer to assume the Loan and Lender to releasethe Seller and Seller Guarantors (the “**ClosingDate**”); provided, however, that Buyer and Seller agree to use goodfaith efforts to agree on the terms and conditions of such documents andinstruments as soon as reasonably practicable but Buyer shall not be requiredto agree to any material change in Buyer’s reasonable discretion in the termsand conditions in the Loan Documents. Except as otherwise expressly provided in this Agreement, such date maynot be extended without the prior written approval of both Seller andBuyer.  If the Closing has not occurredby ten (10) business days after the Assumption Approval Deadline, theneither party, so long as such party is not then in material default of thisAgreement beyond all applicable notice and cure periods, if any, shall have theright to terminate this Agreement by delivering written 

 

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notice tothe other party.  If this Agreement is soterminated, then the Deposit shall be returned to Buyer if Buyer is not then indefault hereof and neither party shall have any liability to the otherhereunder except to extent otherwise expressly stated herein.

 

**9.4.2      **No later than 3:00 p.m. Pacific Time on the business day prior to theClosing Date, Buyer shall deposit in escrow with the Escrow Agent the PurchasePrice (subject to adjustments described in Section 9.7), togetherwith all other costs and amounts to be paid by Buyer at the Closing pursuant tothe terms of this Agreement, by Federal Reserve wire transfer of immediatelyavailable funds to an account to be designated by the Escrow Agent.  On the Closing Date,  Buyer will cause the Escrow Agent to (i) payto Seller by Federal Reserve wire transfer of immediately available funds to anaccount designated by Seller, the Purchase Price (subject to adjustmentsdescribed in Section 9.7 or otherwise hereunder), less any costs orother amounts to be paid by Seller at Closing pursuant to the terms of thisAgreement, and (ii) pay all appropriate payees the other costs and amountsto be paid by Buyer at Closing pursuant to the terms of this Agreement and  Seller will direct the Escrow Agent to pay tothe appropriate payees out of the proceeds of Closing payable to Seller, allcosts and amounts to be paid by Seller at Closing pursuant to the terms of thisAgreement as set forth on the Closing Statement.

 

**9.5                  Seller’sClosing Documents and Other Items**.

 

**9.5.1      **Not later than 3:00  p.m. Pacific Time, on the business day prior tothe Closing Date, Seller shall deposit into escrow the following items:

 

(a)           A duly executed and acknowledgedGrant Deed in the form attached hereto as **Exhibit C** (the “**Deed**”);

 

(b)           Two duly executed counterparts of aBill of Sale in the form attached hereto as **Exhibit D** (the “**Billof Sale**”);

 

(c)           Two (2) duly executedcounterparts of an Assignment and Assumption of Leases in the form attachedhereto as **Exhibit E**(the “**Assignment and Assumption of Leases**”);

 

(d)           Two (2) duly executedcounterparts of an Assignment and Assumption of Contracts, Warranties andGuaranties, Licenses and Permits and Other Intangible Property in the formattached hereto as **Exhibit F**(the “**Assignment and Assumption of Contracts**”);

 

(e)           One (1) duly executed andacknowledged counterpart of the Covenant Running With The Land.

 

(f)            An affidavit pursuant to Section l445(b)(2) ofthe Code, and on which Buyer is entitled to rely, stating that Seller is not a “foreignperson” within the meaning of Section l445(f)(3) of the Code and aCalifornia 597-W Certificate;

 

(g)           A generic notice addressed to theTenants and signed by Seller in the form attached hereto as **Exhibit G** (the “**Tenant Notice**”)that shall disclose that the Property hasbeen sold to Buyer and that, after the Closing, all rents should be paid toBuyer;

 

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(h)           With respect to the assumption byBuyer of the Loan, such documents, instruments and certificates required byLender pursuant to the Loan Documents (the “**AssumptionDocuments**”) to be delivered by Seller, any Seller Guarantor or anyAffiliate of the foregoing;

 

(i)            If applicable, duly completed andsigned real estate transfer tax declarations;

 

(j)            Such other documents as may bereasonably required by the Title Company or as may be agreed upon by Seller andBuyer to consummate the purchase of the Property as contemplated by thisAgreement; and

 

(k)           Two (2) duly executedcounterparts of the Closing Statement.

 

**9.5.2      ****Seller’s Post Closing Deliveries**.  As soon after the Closing as is reasonablypossible, Seller shall deliver to the offices of Buyer’s property manager: alloriginals of the Leases and Approved Contacts (or copies if no originals areavailable) and receipts for Tenant Deposits; all keys, if any, used in theoperation of the Property; and, if in Seller’s possession, a copy of any “as-built”plans and specifications of the Improvements. Seller shall remove from the Property prior to the Closing all ComputerEquipment, all active delinquency files (excluding only those for currentresidents), all incident reports and all employment files.

 

**9.6                  Buyer’sClosing Documents and Other Items**.  At or before Closing, Buyer shall depositinto escrow the following items:

 

**9.6.1      **The balance of the Purchase Price and such additional funds as arenecessary to close this transaction;

 

**9.6.2      **Two (2) duly executed counterparts of the Bill of Sale;

 

**9.6.3      **Two (2) duly executed counterparts of the Assignment and Assumption ofLeases;

 

**9.6.4      **Two (2) duly executed counterparts of the Assignment and Assumption ofContract;

 

**9.6.5      **One (1) duly executed and acknowledged counterpart of the CovenantRunning With The Land.

 

**9.6.6      **With respect to the assumption by Buyer of the Loan, such AssumptionDocuments to be delivered by Buyer and/or any Replacement Guarantor.

 

**9.6.7      **Documentation to establish to Seller’s and Escrow Holder’s reasonablesatisfaction the due authority of Buyer’s acquisition of the Property and Buyer’sdelivery of the documents required to be delivered by Buyer pursuant to thisAgreement including, but not limited to, the organizational documents of Buyer,as they may have been amended from time to time, resolutions of Buyer andincumbency certificates of Buyer;

 

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**9.6.8      **If applicable, duly completed and signed real estate transfer taxdeclarations;

 

**9.6.9      **Such other documents as may be reasonably required by the Title Company oras may be agreed upon by Seller and Buyer to consummate the purchase of theProperty as contemplated by this Agreement; and

 

**9.6.10    **Two (2) duly executed counterparts of the Closing Statement.

 

**9.7                 ****Prorations and Closing Costs.**

 

**9.7.1       Prorations**.

 

(a)           Seller and Buyer agree to adjust, asof 11:59 p.m. on the day immediately preceding the Closing Date (the “**Proration Time**”) on the then applicable six(6) month real property tax billing period, the following (collectively,the “**Proration Items**”):  real estate and personal property taxes andassessments (subject to the terms of Section 9.7.1(b) below),utility bills (except as hereinafter provided), and collected Rents (subject tothe terms of Section 9.7.1(b) below) payable by the owner ofthe Property.  Seller will be charged andcredited for the amounts of all of the Proration Items relating to the periodup to and including the Proration Time, and Buyer will be charged and creditedfor all of the Proration Items relating to the period after the Proration Time.Such preliminary estimated Closing prorations shall be set forth on apreliminary closing statement to be prepared by Seller and submitted to Buyerfor Buyer’s approval prior to the Closing Date (the “**Closing Statement**”). The Closing Statement, once agreed upon, shall be signed by Buyer andSeller and delivered to the Escrow Agent for purposes of making the preliminaryproration adjustment at Closing subject to the final cash settlement providedfor below.  The preliminary prorationshall be paid at Closing by Buyer to Seller (if the preliminary prorationsresult in a net credit to Seller) or by Seller to Buyer (if the preliminaryprorations result in a net credit to Buyer) by increasing or reducing the cashto be delivered by Buyer in payment of the Purchase Price at the Closing.  If the actual amounts of the Proration Itemsare not known as of the Proration Time, the prorations will be made at Closingon the basis of the best evidence then available; thereafter, when actualfigures are received (not to exceed 120 days after closing), re-prorations willbe made on the basis of the actual figures, and a final cash settlement will bemade between Seller and Buyer.  Noprorations will be made in relation to insurance premiums, and Seller’sinsurance policies will not be assigned to Buyer.  The provisions of this Section 9.7.1(a) willsurvive the Closing for a period of twelve (12) months.

 

(b)           Buyer will receive a credit on theClosing Statement for the prorated amount (as of the Proration Time) of allRent previously paid to or collected by Seller and attributable to any periodfollowing the Proration Time.  Rents are “**Delinquent**” when they were due prior to theClosing Date, and payment thereof has not been made on or before the ClosingDate.  Delinquent Rents will not beprorated.  All sums collected by Buyerfrom and after Closing from each Tenant will be applied first to currentamounts owed by such Tenant and then to Delinquent Rent owed by such Tenant tothe extent not previously collected by Seller. Buyer shall deliver to Seller all Delinquent Rent collected hereunder ona monthly basis within five (5) days of the end of each calendar month. Buyershall not have an exclusive right to collect 

 

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any sumsdue Seller from Tenant under the Leases and Seller hereby retains the right tocollect any sums due Seller from Tenants under the Leases for any sums dueSeller for period attributable to Seller’s ownership of the Property; provided,however, Seller shall not be permitted to commence or pursue any legalproceedings including eviction against any current Tenant.  The provisions of this Section 9.7.1(b) willsurvive the Closing.

 

(c)           All ad valorem real estate andpersonal property taxes with respect to the Property shall be prorated as ofthe Proration Time on a cash basis for the calendar year in which the Closingoccurs, regardless of the year for which such taxes are assessed.

 

(d)           Water, gas, steam, electricity andother public utility charges will be paid by the Seller to the utility companyto the Closing Date.  The Seller shallarrange for a final reading of all utility meters (covering gas, water, steamand electricity) as of the Closing.  Tothe extent required by the applicable utility company to maintain continuity ofservice to the Property, Seller and Buyer shall jointly execute a letter toeach of such utility companies advising such utility companies of thetermination of the Seller’s responsibility for such charges for utilitiesfurnished to the Property as of the date of the Closing and commencement of theBuyer’s responsibilities therefor from and after such date.  If a bill is obtained from any such utilitycompany as of the Closing, then Seller shall pay such bill on or before theClosing.  If such bill shall not havebeen obtained on or before the Closing, then Seller shall, upon receipt of suchbill, pay all such utility charges as evidenced by such bill or billspertaining to the period prior to the Closing, and the Buyer shall pay all suchutility charges pertaining to the period thereafter.  Any bill which shall be rendered which shallcover a period both before and after the date of Closing shall be apportionedbetween the Buyer and the Seller as of the Closing.  Seller will be entitled to all depositspresently in effect with the utility providers, and Buyer will be obligated tomake its own arrangements for deposits with the utility providers.

 

(e)           Revenues (but not up-front payments),if any, arising out of telephone booths, vending machines, washing machines orother income-producing agreements shall be adjusted and prorated on an if, asand when collected basis.  Without limitingthe foregoing, Buyer expressly acknowledges and agrees that the unit fee paidup-front by Comcast of California/Colorado/Texas/ Washington, Inc. (“Comcast”)under that certain Service Agreement by and between Seller and Comcast dated October 25,2007 shall not be prorated.

 

(f)            Buyer shall receive a credit againstthe Purchase Price at Closing for all Tenant Deposits then outstanding underthe Leases and for all Rent paid in advance (to the extent not prorated as setforth in (b) above).  As of the Closing,Buyer shall assume Seller’s obligations related to the Tenant Deposits.  Buyer shall indemnify, defend, and holdSeller harmless from and against all demands and claims made by Tenants arisingout of the transfer or disposition of such Tenant Deposits transferred toBuyer.  The provisions of this Section 9.7.1(f) shallexpressly survive the Closing.

 

(g)           Buyer shall receive a credit againstthe Purchase Price at Closing for all payments due or owing under any ApprovedContracts for periods prior to the Closing Date, which amounts shall beprorated as of the Proration Time.  IfSeller has paid any 

 

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amountsunder any Approved Contracts for periods after the Proration Time, Buyer shallpay such amounts to Seller at Closing in addition to the Purchase Price.

 

(h)           Seller shall receive a credit for anyand all Reimbursable Lease Expenses as set forth in Section 8.2 ofthis Agreement, to the extent that the same have been paid by Seller prior toClosing.  Each party shall make availableto the other all Commission Agreements, records, bills, vouchers and other datain such party’s control verifying Reimbursable Lease Expenses and the paymentthereof.

 

**9.7.2       ClosingCosts**.  Seller shallpay (a) the county transfer taxes, and (b) costs and chargescustomarily charged to sellers in accordance with common escrow practices inthe county in which the Property is located, other than those costs and chargesspecifically required to be paid by Buyer hereunder.  Buyer shall pay (a) the premiumassociated with the issuance of the Title Policy including, without limitation,the premium of any extended coverage, any coverage in excess of the PurchasePrice and all endorsements Buyer may require in accordance with Section 4.4,(b) Escrow Agent’s costs and fees, (c) the recording fees required inconnection with the transfer of the Property to Buyer, and (d) anyadditional costs and charges customarily charged to buyers in accordance withcommon escrow practices in the county in which the Property is located, otherthan those costs and charges specifically required to be paid by Sellerhereunder.

 

**9.8                  Broker**.  Buyer hereby represents andwarrants to Seller that (a) Broker is only representing Seller in thistransaction, (b) it did not employ or use any broker or finder to arrangeor bring about this transaction, and (c) there are no claims or rights forbrokerage commissions or finder’s fees in connection with the transactionscontemplated by this Agreement, other than the commission (“**Broker’s Commission**”) required to be paidby Seller to Broker pursuant to a separate agreement between Seller andBroker.  Seller hereby represents andwarrants to Buyer that Seller has not employed any broker with respect to thistransaction, other than Broker, and Seller shall only pay the Broker’sCommission.  If any person brings a claimfor a commission or finder’s fee based upon any contact, dealings, orcommunication with Buyer in connection with the transactions contemplated bythis Agreement, other than Broker, then Buyer shall defend Seller from suchclaim, and shall indemnify Seller and hold Seller harmless from any and allcosts, damages, claims, liabilities, or expenses (including, withoutlimitation, reasonable attorneys’ fees and disbursements) incurred by Sellerwith respect to the claim. If any person brings a claim for a commission orfinder’s fee against Seller based upon any contact, dealings, or communicationwith Seller in connection with the transactions contemplated by this Agreement,other than Broker, then Seller shall defend Buyer from such claim, and shallindemnify Buyer and hold Buyer harmless from any and all costs, damages,claims, liabilities, or expenses (including, without limitation, reasonableattorneys’ fees and disbursements) incurred by Buyer with respect to theclaim.  The provisions of this Section 9.8shall survive the Closing or, if the purchase and sale is not consummated, anytermination of this Agreement.

 

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**ARTICLE 10**

 

**MISCELLANEOUS**

 

**10.1                Amendmentand Modification**. This Agreement may be amended, modified, or supplemented only by awritten agreement signed by Buyer and Seller.

 

**10.2               ****Risk of Loss and Insurance Proceeds**.

 

**10.2.1     MinorLoss**.  Buyer shallbe bound to purchase the Property for the full Purchase Price as required bythe terms hereof, without regard to the occurrence or effect of any damage tothe Property or destruction of any improvements thereon or condemnation of anyportion of the Property, provided that: (a) the cost to repair any suchdamage or destruction, or the diminution in the value of the remaining Propertyas a result of a partial condemnation, equals $500,000 or less, and (b) uponthe Closing, there shall be a credit against the Purchase Price due hereunderequal to the amount of any insurance proceeds (other than business interruptionor rental loss insurance applicable to the period prior to Closing) orcondemnation awards collected by Seller as a result of any such damage or destructionor condemnation, plus the amount of any insurance deductible, less any sumsexpended by Seller directly toward the restoration or repair of theProperty.  If the proceeds or awards havenot been collected as of the Closing, then such proceeds (including businessinterruption or rental loss insurance of Seller which would be applicable toany period subsequent to Closing) or awards shall be assigned to Buyer, exceptto the extent needed to reimburse Seller for sums expended prior to the Closingto repair or restore the Property, without a reduction of the Purchase Price.

 

**10.2.2     MajorLoss**.  If theamount of the damage or destruction or condemnation as specified above exceeds$500,000, then Buyer may at its option, to be exercised by written notice to Sellerwithin ten (10) business days of Seller’s notice of the occurrence of thedamage or destruction or the commencement of condemnation proceedings,terminate this Agreement.  Buyer’sfailure to elect to terminate this Agreement within said ten (10) businessday period shall be deemed an election by Buyer to consummate this purchase andsale transaction.  If Buyer elects toterminate this Agreement within such ten (10) business day period, theDeposit shall be returned to Buyer and neither party shall have any furtherrights or obligations hereunder except as expressly provided elsewhere in thisAgreement.  If Buyer elects or is deemedto have elected to proceed with the purchase, then upon the Closing, thereshall be a credit against the Purchase Price due hereunder equal to the amountof any insurance proceeds (other than business interruption or rental lossinsurance applicable to the period prior to Closing) or condemnation awardscollected by Seller as a result of any such damage or destruction or condemnation,plus the amount of any insurance deductible, less any sums expended by Sellerdirectly toward the restoration or repair of the Property.  If the proceeds or awards have not beencollected as of the Closing, then such proceeds (including businessinterruption or rental loss insurance of Seller which would be applicable toany period subsequent to Closing) or awards shall be assigned to Buyer, exceptto the extent needed to reimburse Seller for sums expended prior to the Closingto repair or restore the Property, without a reduction to the Purchase Price.

 

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**10.2.3    ****Insurance Proceeds Assignment**.  With respect to therequirement of Seller under Sections 10.2.1 and 10.2.2 above, toassign to Buyer the right to receive insurance awards and payments to be dueSeller, Seller agrees that in the event that Seller’s insurance carrier(s) donot permit assignment thereof to Buyer, Seller agrees to request and obtainfrom the insurance carrier(s) a “policy endorsement” whereby Buyer shallbe added as a “loss payee” under the Seller’s policies effective as of theClosing Date.  Thereafter, Seller shalluse its good faith efforts to promptly pursue on behalf of Buyer and for Buyer’sbenefit such unpaid awards and payments including any payments under businessinterruption or rental loss insurance applicable to any period subsequent toClosing.

 

**10.3                Notices**.  All notices required or permittedhereunder shall be in writing and shall be served on the parties at the followingaddress:

 
| If to Seller:   |   | Waterford Apartments, LLC c/o Shea Properties 130 Vantis, Ste. 200 Aliso Viejo, CA 92656 Attn: Kirk Roloff Facsimile: (949) 389-7434 E-mail: kirk.roloff@sheaproperties.com                        |
|-----------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| With copies to: |   | Waterford Apartments, LLC c/o Shea Properties 130 Vantis, Ste. 200 Aliso Viejo, CA 92656 Attn: Julia Guizan, Esq. Facsimile: (949) 389-7466 E-mail: julie.guizan@jfshea.com                   |
| and to:         |   | Miller Starr Regalia 1331 N. California Blvd., Fifth Flr. Walnut Creek, CA 94596 Attn: Hans Lapping, Esq. Facsimile: (925) 933-4126 E-mail: hl@msrlegal.com                                   |
| If to Buyer:    |   | Behringer Harvard Multifamily OP I LP 15601 Dallas Parkway, #600 Addison, Texas 75001 Attn: Mark T. Alfieri, Senior Vice President Facsimile: (214) 655-1610 E-mail: malfieri@behringerharvard.com |
| with Copies to: |   | Robert L. Abbott PC 2828 Routh Street, Suite 500 Dallas, Texas 75201 Attn: Robert L. Abbott, Esq.                                                                                        |

 

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|                |   | Facsimile: (214) 849-9823                                                                                                                                         |
|---------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   | E-mail: abbott@rabbottpc.com                                                                                                                                      |
|                |   |                                                                                                                                                              |
| If to Escrow Agent: |   | Partners Title Company 712 Main Street, Suite 2000E Houston, Texas 77002-3218 Attn: Reno Hartfiel, Executive VP / General  Counsel Facsimile: (713) 238-9199 |

 

Any such notices may besent by (a) certified mail, return receipt requested, in which case noticeshall be deemed delivered five (5) business days after deposit, postageprepaid in the U.S. mail, (b) a nationally recognized overnight courier,in which case notice shall be deemed delivered one (1) business day afterdeposit for next business day delivery with such courier, (c) facsimiletransmission, in which case notice shall be deemed delivered upon electronicverification that transmission to recipient was completed, (d) electronicmail transmission, in which case notice shall be deemed delivered upontransmission so long as the sender does not receive a notification of adelivery error and, provided, further, that a copy of such transmission isconcurrently sent to the recipients by another of the methods for notice setforth above.  The above addresses,facsimile numbers and e-mail addresses may be changed by written notice to theother party; provided that no notice of a change of address or facsimile numbershall be effective until actual receipt of such notice.

 

**10.4                Assignment**.  Buyer shall not have the right toassign this Agreement, without the prior written consent of Seller whichconsent Seller may withhold in its sole and absolute discretion.  Notwithstanding the foregoing or any otherprovision hereof, Buyer may assign, upon written notice to Seller (a) itsinterests herein to an affiliate of Buyer, or (b) any entity in whichBuyer, or the principals thereof, have control as defined herein, or (c) itsrights (but not obligations) herein to any party which is not an Affiliate forthe purposes of effectuating an exchange of properties under Section 1031of the Code, provided that any such assignment does not relieve Buyer of itsobligations hereunder.  For purposes ofthis Section 10.4, an “affiliate of Buyer” means (i) anyentity that controls, is controlled by, or is under common control, with theentity in question, or (ii) any investment program or any of itsaffiliates, sponsored by Behringer Harvard Holdings, LLC.  The term “control”means the possession, directly or indirectly, of the power to direct or causethe direction of the management and policies of an entity, whether through theownership of voting securities or otherwise. This Agreement will be binding upon andinure to the benefit of Seller and Buyer and their respective successors andpermitted assigns, and no other party will be conferred any rights by virtue ofthis Agreement or be entitled to enforce any of the provisions hereof.  Whenever a reference is made in thisAgreement to Seller or Buyer, such reference will include the successors andpermitted assigns of such party under this Agreement.

 

**10.5                GoverningLaw and Consent to Jurisdiction**.  THIS AGREEMENT SHALL BE GOVERNED BY, ANDCONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS ORCHOICE OF 

 

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LAWS.  ANY ACTION ARISING OUT OF THIS AGREEMENT MUSTBE COMMENCED BY BUYER OR SELLER IN THE STATE COURTS OF THE STATE OF CALIFORNIAOR IN U.S. FEDERAL COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA AND EACH PARTYHEREBY CONSENTS TO THE JURISDICTION OF THE ABOVE COURTS IN ANY SUCH ACTION ANDTO THE LAYING OF VENUE IN THE STATE OF CALIFORNIA.  ANY PROCESS IN ANY SUCH ACTION SHALL BE DULYSERVED IF MAILED BY REGISTERED MAIL, POSTAGE PREPAID, TO THE PARTIES AT THEIRRESPECTIVE ADDRESS DESCRIBED IN SECTION 10.3 HEREOF.

 

**10.6                Counterparts**.  This Agreement may be executed intwo or more fully or partially executed counterparts, each of which will bedeemed an original binding the signer thereof against the other signingparties, but all counterparts together will constitute one and the sameinstrument.

 

**10.7                Exhibits;Entire Agreement**. The parties agree that all exhibits and schedules attached hereto areincorporated herein. The parties further agree that this Agreement and allother documents furnished or to be furnished pursuant to the provisions hereofembody the entire agreement and understanding of the parties hereto as to thesubject matter contained herein.  Thereare no restrictions, promises, representations, warranties, covenants, orundertakings other than those expressly set forth or referred to in suchdocuments.  This Agreement and suchdocuments supersede all prior agreements and understandings among the partieswith respect to the subject matter hereof.

 

**10.8                Severability**.  Any term or provision of thisAgreement that is invalid or unenforceable in any jurisdiction will, as to suchjurisdiction, be ineffective to the extent of such invalidity orunenforceability without rendering invalid or unenforceable the remaining termsand provisions of this Agreement, or affecting the validity or enforceabilityof any of the terms or provisions of this Agreement.

 

**10.9                AttorneyFees**.  If anyaction is brought by any party to this Agreement to enforce or interpret itsterms or provisions, the prevailing Party will be entitled to reasonableattorneys’ fees and costs incurred in connection with such action prior to andat trial and on any appeal therefrom. Except as expressly provided in this Agreement, each party to thisAgreement will be responsible for, and will pay, all of its own fees andexpenses, including those of its counsel and accountants, incurred in thenegotiation, preparation, and consummation of this Agreement and thetransaction contemplated hereunder including, without limitation, in the caseof Buyer, all third-party engineering and environmental review costs and allother Due Diligence costs.

 

**10.10              Waiverof Consequential and Punitive Damages**.  NOTWITHSTANDING ANYTHING TO THE CONTRARYCONTAINED HEREIN, IN NO EVENT SHALL EITHER SELLER OR BUYER OR ANY AFFILIATE OFSELLER OR BUYER OR THEIR RESPECTIVE MEMBERS, PARTNERS, SHAREHOLDERS, DIRECTORS,OFFICERS, MANAGERS, EMPLOYEES OR AGENTS BE LIABLE FOR ANY INDIRECT,CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES (INCLUDING BUT NOT LIMITED TODAMAGES FOR LOST PROFITS AND LOSS OF BUSINESS INFORMATION) ARISING OUT OF THETRANSACTION CONTEMPLATED

 

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HEREIN,EVEN IF SELLER OR BUYER OR ANY SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITYOF SUCH DAMAGES.

 

**10.11              ConfidentialInformation; Confidentiality. **The parties acknowledge that the transactiondescribed herein is of a confidential nature and, prior to Closing, shall notbe disclosed except (a) with the prior written consent of Seller (whichconsent may be withheld in Seller’s sole and absolute discretion), (b) tothe extent that such document or information is or becomes publicly availableother than the result of Buyer’s breach of this Agreement, (c) to thePermitted Outside Parties; (d) as may be necessary for Buyer or Buyer’srepresentatives to comply with applicable laws, including, without limitation,governmental regulatory, disclosure (including SEC rules), tax and reportingrequirements, to comply with other requirements of regulatory and supervisoryauthorities and self-regulatory organizations having jurisdiction over Buyer orBuyer’s representatives; or to comply with regulatory or judicial processes; or(e) as may be necessary in order to assume the Loan.  Except as set forth above, no party shallmake any public disclosure of the specific terms of this Agreement.  In connection with the negotiation of thisAgreement and the preparation for the consummation of the transactionscontemplated hereby, each party acknowledges that it will have access toconfidential information relating to the other party.  Each party shall treat such information asconfidential, preserve the confidentiality thereof, and not duplicate or usesuch information, except to Permitted Outside Parties in connection with thetransactions contemplated hereby.  In theevent of the termination of this Agreement for any reason whatsoever, Buyershall return to Seller, all documents relating to Seller, the Property or thetransactions contemplated by this Agreement including, without limitation, theDue Diligence Items, work papers, engineering and environmental studies andreports and all other materials (including all copies thereof obtained fromSeller in connection with the transactions contemplated hereby), and each partyshall use its best efforts, including instructing its employees and others whohave had access to such information, to keep confidential and not to use anysuch information.  Except as required byapplicable law, neither party shall issue any press release or make anystatement to the media in violation of the above restrictions without the otherparty’s consent, which consent shall not be unreasonably withheld.  The provisions of this Section shallsurvive the Closing or, if the purchase and sale is not consummated, anytermination of this Agreement.

 

**10.12              NoJoint Venture**. Nothing set forth in this Agreement shall be construed to create a jointventure between Buyer and Seller.

 

**10.13              LimitedLiability**. Neither the members, managers, employees nor agents of Seller, nor theshareholders, officers, directors, employees or agents of any of them shall beliable under this Agreement and all parties hereto shall look solely to theassets of Seller for the payment of any claim or the performance of anyobligation by Seller.

 

**10.14              GovernmentalApprovals**. Nothing contained in thisAgreement shall be construed as authorizing Buyer to apply for a zone change,variance, subdivision maps, lot line adjustment, condominium conversions orother discretionary governmental act, approval or permit with respect to theProperty prior to the Close of Escrow, and Buyer agrees not to do so withoutSeller’s prior written approval, which approval may be withheld in Seller’ssole and absolute discretion.  Buyeragrees not to submit any reports, studies or other documents, including,without limitation, plans and specifications, impact statements for water,sewage, 

 

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drainageor traffic, environmental review forms, or energy conservation checklists toany governmental agency, or any amendment or modification to any suchinstruments or documents prior to the Close of Escrow unless first approved bySeller, which approval Seller may withhold in Seller’s sole discretion.  Buyer’s obligation to purchase the Propertyshall not be subject to or conditioned upon Buyer’s obtaining any variances,zoning amendments, subdivision maps, lot line adjustment, or otherdiscretionary governmental act, approval or permit.

 

**10.15              Timeof Essence**. Time is of the essence of this Agreement.

 

**10.16              NoWaiver**.  No waiver ofany of the provisions of this Agreement shall be deemed, or shall constitute, awaiver of any other provision, whether or not similar, nor shall any waiverconstitute a continuing waiver, nor shall a waiver in any instance constitute awaiver in any subsequent instance.  Nowaiver shall be binding unless executed in writing by the party making thewaiver.

 

**10.17              Countingof Days.** Unless otherwise expressly specified in this Agreement, in computing anyperiod of time described in this Agreement, the day of the act or event afterwhich the designated period of time begins to run is not to be included and thelast day of the period so computed is to be included, unless such last day is aSaturday, Sunday or legal holiday under the laws of the State in which theProperty is located, in which event the period shall run until the end of the nextday which is neither a Saturday, Sunday or legal holiday.  The final day of any such period shall bedeemed to end at 5:00 p.m. Pacific Time.

 

**10.18              ElectronicSignatures**. Signatures to this Agreement, any amendment hereof and any notice givenhereunder, transmitted by telecopy or electronic mail shall be valid andeffective to bind the party so signing. Each party agrees to promptly deliver an execution original of thisAgreement (and any amendment hereto) with its actual signature to the otherparty, but a failure to do so shall not affect the enforceability of thisAgreement (or any amendment hereto), it being expressly agreed that each partyto this Agreement shall be bound by its own telecopied or e-mailed signatureand shall accept the telecopied or e-mailed signature of the other party tothis Agreement.

 

**10.19              NoReservation of Property.**  The preparation and/or delivery of unsigneddrafts of this Agreement shall not create any legally binding rights in theProperty and/or obligations of the parties, and Buyer and Seller acknowledgethat this Agreement shall be of no effect until it is duly executed by bothBuyer and Seller.

 

**10.20              NaturalHazard Disclosure**. Buyer and Seller acknowledge that Seller may be required to disclose ifthe property lies within the following natural hazard areas or zones:  (i) a special flood hazard areadesignated by the Federal Emergency Management Agency (California Civil Code Section 1103(c)(1));(ii) an area of potential flooding (California Government Code Section 8589.4);(iii) a very high fire hazard severity zone (California Government Code Section 51178et seq.); (iv) a wild land area that may contain substantial forest firerisks and hazards (Public Resources Code Section 4135; (v) earthquakefault zone (Public Resources Code Section 2622); or (vi) a seismichazard zone (Public Resources Code Section 2696) (sometimes all of thepreceding are herein collectively called the “**NaturalHazard Matters**”). Accordingly, Seller shall no later than ten (10) days prior to theexpiration 

 

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of the DueDiligence Period provide Buyer with a natural hazard disclosure report (the “**Natural Hazard Disclosure Statement**”) prepared by aprofessional consulting firm (the “**Natural Hazard Expert**”)relating to the Property.  Buyerexpressly acknowledges and agrees that (a) the Natural Hazard DisclosureStatement prepared by the Natural Hazard Expert will fully and completelydischarge Seller from its disclosure obligations referred to herein, if and tothe extent any such obligations exist, (b) for the purpose of thisAgreement, the provisions of Civil Code section 1103.4 regarding non-liabilityof Seller for errors or omissions not within its personal knowledge shall bedeemed to apply, and (c) the Natural Hazard Expert shall be deemed to bean expert, dealing with matters within the scope of its expertise with respectto the examination and written report regarding the natural hazards referred toabove.  Buyer agrees to provide Sellerwith a written acknowledgment of its receipt of the Natural Hazard DisclosureStatement.

 

**10.21             ****Third Party Beneficiaries**.  This Agreement is not intended to give orconfer any benefits, rights, privileges, claims, actions, or remedies to anyperson or entity as a third party beneficiary or otherwise.

 

**10.22             ****Resolution of Disputes**.  With the exception of a Specific PerformanceAction, any dispute, controversy or claim arising out of or relating to thisAgreement, including any dispute relating to interpretation of or performanceunder this Agreement (“**Dispute**”),shall be resolved in the manner set forth in this Section, which shall be inlieu of any form of litigation in any court, and the parties specificallywaive, to the fullest extent permitted under Applicable Law, any right to ajury trial of any Dispute between them.

 

**10.22.1 ****Negotiation**.  The partieswill attempt in good faith to resolve the Dispute promptly by negotiationsbetween senior representatives of the parties who have authority to settle theDispute (each a “**Representative**”).

 

**10.22.2 ****Mediation**.  If theRepresentatives are unable to resolve the Dispute through negotiation, theparties agree first to try in good faith to resolve the dispute by mediationadministered by the American Arbitration Association (“**AAA**”) under its Commercial MediationProcedures then in effect before resorting to arbitration pursuant to Section 10.22.3,below.

 

**10.22.3  JudicialReference. **In the eventthe Representatives are not able to resolve the Dispute within 30 days followingthe date one party first notifies the other party of the Dispute in writing,then the Dispute shall be resolved by general judicial reference pursuant toCode of Civil Procedure Sections 638 and 641 through 645.1, or any successorstatutes thereto, and as modified or as otherwise provided in thisSection.  Subject to the limitations setforth in this Section, the general referee shall have the authority to try allissues, whether of fact or law, and to report a statement of decision to thecourt.  The referee shall be the onlytrier of fact or law in the reference proceeding, and shall have no authorityto further refer any issues of fact or law to any other party, without themutual consent of all parties to the judicial reference proceeding.

 

(a)           **Place**.  The proceedings shall be heard in OrangeCounty, California.

 

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(b)           **Referee**.  The referee shall be a retired judge withexperience in relevant real estate matters. The referee shall not have any relationship to the parties to theDispute or interest in the Property.  Theparties to the Dispute participating in the judicial reference shall meet toselect the referee within ten (10) days after service of the Notice ofDispute or initial complaint on all defendants named therein.  Any dispute regarding the selection of thereferee shall be promptly resolved by the judge to whom the matter is assigned,or if there is none, to the presiding judge of the Superior Court of OrangeCounty who shall select the referee.

 

(c)           **Commencement and Timing ofProceeding**.  The referee shallpromptly commence the proceeding at the earliest convenient date in light ofall of the facts and circumstances and shall conduct the proceeding withoutundue delay.

 

(d)           **Pre-hearing Conferences**.  The referee may require one or morepre-hearing conferences.

 

(e)           **Discovery**.  The parties to the judicial referenceproceeding shall be entitled only to limited discovery, consisting of theexchange between such parties of only the following matters:  (i) witness lists; (ii) expertwitness designations; (iii) expert witness reports; (iv) exhibits; (v) reportsof testing or inspections of the property subject to the Dispute, including butnot limited to, destructive or invasive testing; and (vi) trialbriefs.  Any other discovery provided forin the California Code of Civil Procedure shall be permitted by the refereeupon a showing of good cause or based on the mutual agreement of the parties tothe judicial reference proceeding.  Thereferee shall oversee discovery and may enforce all discovery orders in thesame manner as any trial court judge

 

(f)            **Motions**.  The referee shall have the power to hear anddispose of motions, including motions relating to provisional remedies,demurrers, motions to dismiss, motions for judgment on the pleadings andsummary adjudication motions, in the same manner as a trial court judge, exceptthe referee shall also have the power to adjudicate summarily issues of fact orlaw including the availability of remedies, whether or not the issueadjudicated could dispose of an entire cause of action or defense.  Notwithstanding the foregoing, if prior tothe selection of the referee as provided herein, any provisional remedies aresought by the parties to the Dispute, such relief may be sought in the SuperiorCourt of Orange County, California.

 

(g)           **Rules of Law**.  The referee shall apply the laws of the Stateof California except as expressly provided herein including the rules ofevidence, unless expressly waived by all parties to the judicial referenceproceeding.

 

(h)           **Record**.  A stenographic record of the hearing shall bemade, provided that the record shall remain confidential except as may benecessary for post-hearing motions and any appeals.

 

(i)            **Statement of Decision**.  The referee’s statement of decision shallcontain findings of fact and conclusions of law to the extent required by lawif the case were tried to a judge.  Thedecision of the referee shall stand as the decision of the court, 

 

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and upon filing of thestatement of decision with the clerk of the court, judgment may be enteredthereon in the same manner as if the Dispute had been tried by the court.

 

(j)            **Post-hearing Motions**.  The referee shall have the authority to rule onall post-hearing motions in the same manner as a trial judge.

 

(k)           **Appeals**.  The decision of the referee shall be subjectto appeal in the same manner as if the Dispute had been tried by the court.

 

(l)            **Expenses**.  The fees and costs of the referee in anyjudicial reference proceeding hereunder shall be shared equally by the partiesto the judicial reference proceeding, subject to Section 10.9.

 

**WAIVER OF LEGAL RIGHTS.  BY INITIALING IN THE SPACE BELOW, THE PARTIESACKNOWLEDGE AND AGREE TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDEDOR DESCRIBED IN THIS ARTICLE DECIDED BY JUDICIAL REFERENCE AS PROVIDED UNDERCALIFORNIA LAW AND THAT THEY ARE WAIVING ANY RIGHTS THEY MAY POSSESS TOHAVE THE DISPUTE LITIGATED IN A COURT OR BY JURY TRIAL.  THE PARTIES FURTHER ACKNOWLEDGE AND AGREETHAT THEY ARE WAIVING THEIR JUDICIAL RIGHTS TO DISCOVERY EXCEPT TO THE EXTENTSUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THIS ARTICLE.  IF EITHER PARTY REFUSES TO SUBMIT TO JUDICIALREFERENCE AFTER EXECUTION OF THIS AGREEMENT AND INITIALING BELOW, SUCH PARTY MAY BECOMPELLED TO PROCEED WITH JUDICIAL REFERENCE UNDER THE AUTHORITY OF THECALIFORNIA CODE OF CIVIL PROCEDURE.  EACHPARTY’S AGREEMENT TO THIS ARTICLE IS VOLUNTARY. THE PARTIES HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMITDISPUTES ARISING OUT OF THE MATTERS INCLUDED OR DESCRIBED IN THIS ARTICLE TOJUDICIAL REFERENCE.**

 
|   | RO, SDS |   | Seller’s Initials | MA |   | Buyer’s Initials |
|--------|---------|--------|------------------------|----|--------|-----------------------|

 

**10.23             ****Covenantof Cooperation; Mixed Use Project**.  Buyer expressly acknowledges and agrees that (a) theProperty is part of a larger mixed-use project that includes the Property and aretail shopping center (the “**Shopping Center**”);(b) no later than upon the Close of Escrow, the Property and the ShoppingCenter will be owned by different parties; (c) in addition to therights-of-ways, easements, rights, obligations and other matters affecting theProperty and the Shopping Center that are disclosed in the Title Documents, theowners of the 

 

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Property and the ShoppingCenter may, from time-to-time, need to grant one another additional easements,rights-of-ways, rights etc. to ensure access to certain portions of theProperty and/or the Shopping Center (e.g. the roof of the Property) and theproper and equitable management and ownership of each asset; (d) Buyercovenants that Buyer will grant Seller and its successor and assigns sucheasements and rights-of-way and make such accommodations as may fromtime-to-time be reasonably necessary; provided, however, that no such grants oraccommodations shall (i) have a material adverse effect on the value ofthe Property, or (ii) materially interfere with the use of the Property asa residential community, and (e) the foregoing covenant shall run with theLand and shall be evidenced by a covenant recorded against the Land at theClosing (the “**Covenant Running With The Land**”)which covenant shall be in the form of **Exhibit H**whichshall be negotiated in good faith on the terms and conditions described hereinand if agreed upon shall be attached hereto as an amendment to this Agreementprior to the expiration of the Due Diligence Period.  In the event that the parties have not agreedupon such Exhibit by the expiration of the Due Diligence Period, eitherparty by notice to the other shall have the right to terminate this Agreementin which event the Deposit shall be returned to Buyer and the parties shallhave no further obligation to one another except as set forth herein.  Buyer agrees that its obligations hereundershall expressly survive the Closing and the delivery of the Deed.  Moreover, Buyer acknowledges and agrees thatits breach of the terms and conditions of this Section 10.23 willconstitute immediate and irreparable damage to the Seller and its successorsand assigns, which cannot be fully and adequately compensated in money damagesand which will warrant preliminary and other injunctive relief, an order forspecific performance, and other equitable relief.  In connection with the foregoing, Buyerfurther agrees that no bond or other security shall be required in obtainingsuch equitable relief and Buyer hereby consents to the issuance of suchinjunction and to the ordering of specific performance.  Buyer acknowledges that Seller’s remedieshereunder are cumulative and other action may be taken and remedies enforcedagainst it in the event of a breach of this Section.

 

**10.24             ****Prohibitionof Condominium Conversion**. Buyer represents, warrants and covenants to Seller that, to the fullestextent permitted by law, Buyer shall not, for a period of ten (10) yearsfrom August 1, 2003, the date of completion of construction of theImprovements (the “**Completion Date**”),convert the Property into condominiums or similar forms of subdividedownership.  In connection with theforegoing, Buyer further agrees that (a) the prohibition againstcondominium conversions is reasonable under the circumstances existing as ofthe Effective Date, (b) if Buyer sells or otherwise transfers the Propertywithin ten (10) years of the Completion Date, then Buyer shall notify itsbuyer in writing of this restriction and include a similar prohibition againstcondominium conversions in any purchase and sale or similar agreement to sotransfer the Property, (c) Buyer shall indemnify, defend, protect and holdSeller and its Affiliates harmless, from any and all Losses resulting fromBuyer’s breach of the representation, warranty and covenant contained in this Section 10.24,(d) without in any way limiting the materiality of the other provisions ofthis Agreement, the provisions of this Section 10.24 are materialand included as a material portion of the consideration given by Buyer toSeller in exchange for Seller’s performance under this Agreement, (e) Buyeracknowledges that Seller has given Buyer material concessions regarding thistransaction in exchange for Buyer agreeing to the provisions of this Section 10.24,and (f) Buyer’s obligations under this Section 10.24 shallexpressly survive the Closing and the deliver of the Deed.  In addition, Buyer acknowledges and agreesthat its breach of the terms and conditions of this Section 10.24will constitute immediate and irreparable damage to the Seller, which cannot befully and adequately 

 

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compensated in money damagesand which will warrant preliminary and other injunctive relief, an order forspecific performance, and other equitable relief.  In connection with the foregoing, Buyerfurther agrees that no bond or other security shall be required in obtainingsuch equitable relief and Buyer hereby consent to the remedy of an injunctionor specific performance to the extent Seller is entitled thereto.  Buyer acknowledges that Seller’s remedieshereunder are cumulative and other action may be taken and remedies enforcedagainst it in the event of a breach of this Section.  At the Closing, Buyer and Seller shall recorda memorandum of agreement (the “Memorandum”).

 

**10.25             ****Rule 3-14Audit**.  Seller acknowledges that underRule 3-14 of Regulation S-X, Buyer is required to obtain certaininformation in connection with reports Buyer is required to file with theSecurities and Exchange Commission. Accordingly, subject to the terms and conditions of this Section 10.25,Seller agrees to use commercially reasonable efforts to cooperate with Buyer’sauditors in the preparation of such audited financial statements.  In furtherance of the foregoing, (a) Sellershall, during normal business hours and upon not less than three (3) businessdays’ prior written notice, allow Buyer’s auditors reasonable access to suchbooks and records maintained by Seller and Property Manager exclusively inrespect of the Property solely to the extent necessary to prepare and file suchaudited financial statements in compliance with Rule 3-14 of RegulationS-X; and (b) if Seller has audited financial statements with respect tothe Property, Seller shall provide Buyer’s auditors with a copy of such auditedfinancial statements; provided, however, that Buyer expressly acknowledges andagrees that if Seller does not have audited financial statements with respectto the Property, Seller shall be under no obligation to cause such auditedfinancial statements to be prepared. Seller’s obligation to cooperate shall survive the Closing for a periodof one (1) year.  In considerationof the foregoing, Buyer agrees that Buyer shall indemnify, defend, protect andhold harmless Seller, Property Manager and their respective Affiliates,partners, shareholders, members, officers, directors, managers, agents, andemployees from and against any and all Losses of any kind or nature, arisingout of or in any way connected with Seller’s provision of the materialsrequired by this Section 10.25, including without limitationlawsuits by shareholders or regulators or any other persons whatsoever.  Notwithstanding anything to the contrarycontained herein, Seller shall only be obligated to provide to Buyer Seller’saccounting information at the Property level, and shall not be obligated toprovide any information concerning Seller’s capital structure or debt or any ofthe following: (i) information contained in Seller’s credit reports,credit authorizations, credit or financial analyses or projections, investmentanalyses, account summaries or other documents prepared solely for Seller’sinternal purposes and not directly related to the operation of the Property,including any valuation documents and information regarding the value of theProperty and the price paid by Seller therefor; (ii) material which issubject to attorney-client privilege or which is attorney work product; (iii) salescontracts, appraisal reports, letters or loan matters; (iv) financialstatements or information relating to Seller or any Affiliate of Seller otherthan those at the Property level; (v) Seller’s tax returns; or (vi) materialwhich Seller is legally or contractually required to maintain asconfidential.  Notwithstanding anythingto the contrary set forth herein, Buyer expressly agrees that Seller’s deliveryof any information under this Section 10.25 (X) shall besubject to the terms and conditions of Section 10.11, above; (Y) doesnot in any manner increase any liability of Seller under this Agreement, or (Z) obviateor waive the “AS IS” provisions of Section 7.2.2, above.  Subject to the terms of this Section 10.25,Seller’s and Buyer’s respective obligation under this Section 10.25shall expressly survive the Closing and the delivery of the Deed.

 

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[SignaturePage To Follow]

 

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**IN WITNESSWHEREOF**, the parties hereto have caused this Agreement to beduly executed as of the Agreement Date.

 
| **SELLER:** | **WATERFORD PLACE APARTMENTS, LLC,**a California limited liability company |
|-------------|----------------------------------------------------------------------------|
| ** **  | ** **                                                                 |
|        | By:                                                                        | Shea  Properties Management Co., Inc., |
|        | ** **                                                                 | a  Delaware corporation |
|        | Its:                                                                       | Manager |
|        |                                                                       |   |
|        | ** **                                                                 | By: | /s/  Kirk Roloff |
|        | ** **                                                                 | Name: | Kirk  Roloff |
|        | ** **                                                                 | Its: | Assistant  Secretary |
|        |                                                                       |   |   |
|        | ** **                                                                 | By: | /s/  Stephen D. Stambaugh |
|        | ** **                                                                 | Name: | Stephen  D. Stambaugh |
|        | ** **                                                                 | Its: | Assistant  Secretary |

 

[Signature Page Continued On Following Page]

 

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| **BUYER**: | **BEHRINGER HARVARD MULTIFAMILY OP I LP,**a Delaware limited partnership |
|------------|--------------------------------------------------------------------------|
| ** ** | ** **                                                               |
|       | By:                                                                      | BHMF, Inc., a Delaware corporation, |
|       | ** **                                                               | its general partner |
|       |                                                                     |   |
|       |                                                                     | By: | /s/ Mark T. Alfieri |
|       | ** **                                                               | ** ** | Mark T. Alfieri |
|       | ** **                                                               | ** ** | Chief Operating Officer |

 

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**ESCROW AGENT:**

 

The Escrow Agent is executing thisAgreement to evidence its agreement to hold the Deposit and act as escrow agentin accordance with the terms and conditions of this Agreement.  Escrow Agent certifies that it is inpossession of a fully executed counterpart original or copy of the Agreementthis 29th day of May, 2009 and that this dateshall be deemed the “Effective Date” for purposes of this Agreement.

 
| ** ** | **PARTNERS TITLE COMPANY** |
|------------|----------------------------|
| ** ** | ** **                 |
| ** ** | ** **                 |
|       | By:                        | /s/ Carol Gonzales |
|       | Name:                      | Carol Gonzales |
|       | Title:                     | Escrow Officer |

 

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**EXHIBITA**

 

**Description of Land**

 

Realproperty in the City of Dublin, County of Alameda, State of California,described as follows:

 

PARCEL1:

 

CONDOMINIUMUNIT 1 OF PARCEL 1 OF PARCEL MAP 8187, FILED NOVEMBER 3, 2003, IN BOOK 274 OFPARCEL MAPS, PAGES 10 AND 11, OFFICIAL RECORDS, AS SUCH UNIT IS SHOWN ON THECONDOMINIUM PLAN (“PLAN”) ATTACHED AS EXHIBIT “A” TO THE WATERFORD PLACECONDOMINIUMS DECLARATION OF RESTRICTIONS (“DECLARATION”) RECORDED NOVEMBER 3,2003, SERIES NO. 2003653881, OFFICIAL RECORDS.

 

RESERVINGTHEREFROM MECHANICAL CHASE EASEMENTS AS SHOWN ON THE PLAN.

 

FURTHERRESERVING THEREFROM EASEMENTS FOR ENCROACHMENT, UTILITY, ROOF AND MAINTENANCE,AS DEFINED IN SECTIONS 2.4, 2.5 AND 2.6 OF THE DECLARATION.

 

PARCEL2:

 

ANUNDIVIDED 97% INTEREST AS TENANT IN COMMON IN AND TO THE COMMON AREA LYINGWITHIN SAID PARCEL 1 OF PARCEL MAP 8187 AS SHOWN ON THE PLAN AND DEFINED IN THEDECLARATION, EXCEPTING AND RESERVING THEREFROM THE FOLLOWING:

 

(A)ALL CONDOMINIUM UNITS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION.

 

(B)EXCLUSIVE USE COMMON AREAS FOR POSSESSION, USE AND ENJOYMENT OF THOSE AREASDESIGNATED ON THE PLAN AND DEFINED IN THE DECLARATION.

 

(C)NON-EXCLUSIVE EASEMENTS FOR USE, ENJOYMENT, INGRESS, EGRESS AND SUPPORT IN ANDTO THE COMMON AREA AS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION.

 

(D)ALL EASEMENTS AS DEFINED IN THE DECLARATION. 

 

PARCEL3:

 

(A)NON-EXCLUSIVE EASEMENTS FOR USE, ENJOYMENT, INGRESS, EGRESS AND SUPPORT IN ANDTO THE COMMON AREA, AS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION, FORTHE BENEFIT OF PARCEL 1 HEREINABOVE.

 

(B)NON-EXCLUSIVE EASEMENTS FOR ENCROACHMENT AND UTILITY, ALONG WITH A MAINTENANCEEASEMENT DEFINED IN THE DECLARATION.

 

APN:986-0017-014 and 986-0017-018

 

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**EXHIBITB**

 

**List of Contracts**

 

**WaterfordApartments**

*Dublin, CA*

 
| **Property Contract** | ** **                                    | **Term** | ** ** | **Terminable** | ** ** | **Notes** | ** ** |
|-----------------------|-----------------------------------------------|----------|------------|----------------|------------|-----------|------------|
| **1**                 | Cable Contract - Comcast                      |     | 10/25/2007 |           | 2/20/2019  |      |       |   | No cancelation. Default must be cured. 90 day auto  renewal. |   |
| **2**                 | ISTA (Utility Agreement)                      |     | 5/10/2001  |           | Ongoing    |      | P          |   | 30 day written notice. |   |
| **3**                 | Patrol Services - Night Private Security Inc. |     | 10/23/2008 |           | 12/31/2009 |      | P          |   | Cancel upon sale or 30 day written notice. |   |
| **4**                 | Fitness Maintenance - Fitguard                |     | 10/31/2008 |           | 12/31/2009 |      | P          |   | Cancel upon sale or 30 day written notice. |   |
| **5**                 | Landscape - Valley Crest                      |     |       |           | MTM        |      | P          |   | Cancel with 30 day written notice. |   |
| **6**                 | Pest Control - Terminix                       |     | 8/1/2008   |           | 12/31/2009 |      | P          |   | Cancel with 30 day written notice. |   |
| **7**                 | Pool Service - Dave’s Pools Service      |     | 1/15/2009  |           | 12/31/2009 |      | P          |   | Cancel with 30 day written notice. |   |
| **8**                 | Turnover - PS2                                |     | 1/22/2009  |           | 12/31/2009 |      | P          |   | Cancel with 30 day written notice. |   |
| **9**                 | Apartment Guide                               |     | 11/7/2008  |           | 10/9/2009  |      | P          |   | 45 day written notice if change in ownership. MTM @ expiration. |   |
| **10**                | For Rent Magazine                             |     | 4/30/2008  |           | MTM        |      | P          |   | Cancel with 30 day written notice. |   |
| **11**                | Move.com                                      |     | 5/15/2007  |           | MTM        |      | P          |   | Cancelable at any time. |   |
| **12**                | Apartments.com                                |     | 11/1/2008  |           | 4/30/2009  |      | P          |   | Cancel with 30 day written notice. |   |
| **13**                | Copier - Rabbit                               |     | 4/30/2009  |           | 4/30/2010  |      |       |   | Automatic renewal for one year. Cancel in writing 30  days prior to expiration date. |   |
| **14**                | Master Agreement: Lead Tracking Solutions     |     | 1/21/2008  |           | 1/20/2009  |      | P          |   | Cancel with 60 day written notice if property is  sold. Lapsed. |   |
| **15**                | Master Agreement: CORT                        |     | 4/19/2007  |           | 4/19/2008  |      | P          |   | Cancel with 7 day written notice. |   |
| **16**                | Master Agreement: Rent.com                    |     | Ongoing    |           | Ongoing    |      | P          |   | Cancel with 30 days notice. |   |
| **17**                | Master Agreement: Vaultware                   |     | 1/1/2009   |           | 12/31/2009 |      | P          |   | Right to terminate at any time. Must pay full annual  license fee upon termination. |   |

 

----

 

**EXHIBIT C**

 

**Form of Grant Deed**

 

RECORDING REQUESTED BY AND

WHEN RECORDED RETURN TO:

 

 

 

 

 

MAIL TAX STATEMENTS TO:

 

 

 

 

 
| APN:                                                                                                                   |   |
|------------------------------------------------------------------------------------------------------------------------|--------|
| The undersigned grantor declares:                                                                                      |   |
| Documentary  Transfer Tax not shown pursuant to Section 11932 of the Revenue and  Taxation Code, as amended. |   |

 

**GRANT DEED**

 

FOR VALUABLE CONSIDERATION,receipt of which is hereby acknowledged, WATERFORD PLACE APARTMENTS, LLC, aCalifornia limited liability company, does hereby GRANT to                                              ,a(n)                                        ,all of that certain real property in the City of Dublin, County of Alameda,State of California, as more particularly described in Exhibit Aattached hereto and made a part hereof, and all improvements thereon (the “Property”).

 

THIS PROPERTY IS CONVEYEDTO GRANTEE SUBJECT TO:

 

(A) All liens, leases,encumbrances, easements, covenants, conditions and restrictions and othermatters of record or otherwise known to Grantee, including any and all mattersshown on any subdivision or parcel map or maps affecting the Property;

 

(B) All exceptionsappearing in a certain policy of title insurance for the Property issued to theGrantee as of the date hereof;

 

(C) All matters whichare or would be revealed or disclosed in any survey or physical inspection ofthe Property;

 

(D) Interests oftenants in possession as tenants only under lease agreements; and

 

(E) A lien not yetdelinquent for taxes for real property and personal property, and any generalor special assessments against the Property, as well as any lien not yetdelinquent for 

 

----

 

supplementaltaxes assessed pursuant to Chapter 3.5, commencing with Section 75, of theCalifornia Revenue and Taxation Code.

 

[Signature Page To Follow]

 

----

 

IN WITNESS WHEREOF, Grantorhas caused this instrument to be executed on this         day of                ,200 .

 
| **GRANTOR:** | **WATERFORD PLACE APARTMENTS, LLC,**a California limited liability company |
|--------------|----------------------------------------------------------------------------|
| ** **   | ** **                                                                 |
|         | By:                                                                        | Shea  Properties Management Co., Inc., |
|         | ** **                                                                 | a  Delaware corporation |
|         | Its:                                                                       | Manager |
| ** **   | ** **                                                                 | ** ** |
|         | ** **                                                                 | By: | ** ** |
|         | ** **                                                                 | Name: | ** ** |
|         | ** **                                                                 | Its: | ** ** |
|         | ** **                                                                 |   |   |
|         | ** **                                                                 | By: | ** ** |
|         | ** **                                                                 | Name: | ** ** |
|         | ** **                                                                 | Its: | ** ** |

 

----

 

**Exhibit A to Grant Deed**

 

**Legal Description**

 

Realproperty in the City of Dublin, County of Alameda, State of California,described as follows:

 

PARCEL1:

 

CONDOMINIUMUNIT 1 OF PARCEL 1 OF PARCEL MAP 8187, FILED NOVEMBER 3, 2003, IN BOOK 274 OFPARCEL MAPS, PAGES 10 AND 11, OFFICIAL RECORDS, AS SUCH UNIT IS SHOWN ON THECONDOMINIUM PLAN (“PLAN”) ATTACHED AS EXHIBIT “A” TO THE WATERFORD PLACECONDOMINIUMS DECLARATION OF RESTRICTIONS (“DECLARATION”) RECORDED NOVEMBER 3,2003, SERIES NO. 2003653881, OFFICIAL RECORDS.

 

RESERVINGTHEREFROM MECHANICAL CHASE EASEMENTS AS SHOWN ON THE PLAN.

 

FURTHERRESERVING THEREFROM EASEMENTS FOR ENCROACHMENT, UTILITY, ROOF AND MAINTENANCE,AS DEFINED IN SECTIONS 2.4, 2.5 AND 2.6 OF THE DECLARATION.

 

PARCEL2:

 

ANUNDIVIDED 97% INTEREST AS TENANT IN COMMON IN AND TO THE COMMON AREA LYINGWITHIN SAID PARCEL 1 OF PARCEL MAP 8187 AS SHOWN ON THE PLAN AND DEFINED IN THEDECLARATION, EXCEPTING AND RESERVING THEREFROM THE FOLLOWING:

 

(A)ALL CONDOMINIUM UNITS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION.

 

(B)EXCLUSIVE USE COMMON AREAS FOR POSSESSION, USE AND ENJOYMENT OF THOSE AREASDESIGNATED ON THE PLAN AND DEFINED IN THE DECLARATION.

 

(C)NON-EXCLUSIVE EASEMENTS FOR USE, ENJOYMENT, INGRESS, EGRESS AND SUPPORT IN ANDTO THE COMMON AREA AS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION.

 

(D)ALL EASEMENTS AS DEFINED IN THE DECLARATION.

 

PARCEL3:

 

(A)NON-EXCLUSIVE EASEMENTS FOR USE, ENJOYMENT, INGRESS, EGRESS AND SUPPORT IN ANDTO THE COMMON AREA, AS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION, FORTHE BENEFIT OF PARCEL 1 HEREINABOVE.

 

(B)NON-EXCLUSIVE EASEMENTS FOR ENCROACHMENT AND UTILITY, ALONG WITH A MAINTENANCEEASEMENT DEFINED IN THE DECLARATION.

 

APN: 986-0017-014 and 986-0017-018

 

----

 

**STATEMENT OF TAX DUE ANDREQUEST THAT TAX DECLARATIONNOT BE MADE A PART OF THE PERMANENT RECORDIN THE OFFICE OF THE COUNTY RECORDER(PURSUANT TO SECTION 11932 REVENUE AND TAXATION CODE)**

 
| TO:    | Recorder           |
|--------|--------------------|
|   | County  of Alameda |

 

Request is hereby made inaccordance with the provisions of the Documentary Transfer Tax Act that theamount of the tax due not be shown on the original document which names:

 

Grantor:                                                     WATERFORD PLACEAPARTMENTS, LLC, a California limited liability company

 

Grantee:                                            ,a                                            

 

The property described inthe accompanying document is located in the City of Dublin, APN No:                                                    .

 

The amount of tax due on theaccompanying document is$                      .

 
| o      | Computed  on full value of property conveyed.                                       |
|--------|-------------------------------------------------------------------------------------|
|   |                                                                                |
| x      | Computed  on full value, less liens and encumbrances remaining at the time of sale. |

 

Ideclare under penalty of perjury under the laws of the State of California thatthe foregoing is true and correct.

 
| ** ** | **WATERFORD PLACE APARTMENTS, LLC,**a California limited liability company |
|------------|----------------------------------------------------------------------------|
| ** ** | ** **                                                                 |
|       | By:                                                                        | Shea  Properties Management Co., Inc., |
|       | ** **                                                                 | a  Delaware corporation |
|       | Its:                                                                       | Manager |
| ** ** | ** **                                                                 |
|       | ** **                                                                 | By: | ** ** |
|       | ** **                                                                 | Name: | ** ** |
|       | ** **                                                                 | Its: | ** ** |
| ** ** | ** **                                                                 | ** ** | ** ** |
|       | ** **                                                                 | By: | ** ** |
|       | ** **                                                                 | Name: | ** ** |
|       | ** **                                                                 | Its: | ** ** |

 

----

 

| STATE  OF CALIFORNIA | ) |   |
|----------------------|---|--------|
|                 | ) | ss.    |
| COUNTY  OF           | ) |   |

 

On                            , 2009 before me,                              ,Notary Public, personally appeared                                                                                        ,who proved to me on the basis of satisfactory evidence to be the person(s) whosename(s) is/are subscribed to the within instrument and acknowledged to methat he/she/they executed the same in his/her/their authorized capacity(ies),and that by his/her/their signature(s) on the instrument the person(s), orthe entity upon behalf of which the person(s) acted, executed theinstrument.

 

Icertify under PENALTY OF PERJURY under the laws of the State of California thatthe foregoing paragraph is true and correct.

 

Witnessmy hand and official seal.

 

 
|   |   |
|--------|--------|

NotaryPublic

 

----

 

**EXHIBIT D**

 

**Form of Bill of Sale**

 

For good and valuableconsideration, the receipt of which is hereby acknowledged, WATERFORD PLACEAPARTMENTS, LLC, a California limited liability company (“**Seller**”), does hereby sell, transfer, andconvey to                                            ,a(n)                                       (“**Buyer**”) any and all PersonalProperty (as defined in the Purchase Agreement (as hereinafter defined)).

 

Seller has executed thisBill of Sale and **BARGAINED, SOLD,TRANSFERRED, CONVEYED and ASSIGNED** the Personal Property and Buyerhas accepted this Bill of Sale and purchased the Personal Property **AS IS AND WHEREVER LOCATED, WITH ALL FAULTS ANDWITHOUT ANY REPRESENTATIONS OR WARRANTIES OF WHATSOEVER NATURE, EXPRESS,IMPLIED, OR STATUTORY, EXCEPT AS EXPRESSLY SET FORTH IN THE AGREEMENT OF SALEAND PURCHASE AND JOINT ESCROW INSTRUCTIONS BETWEEN SELLER AND BUYER, DATED ASOF                                         ,2009 (the “PURCHASE AGREEMENT”) AND THE WARRANTIES SET FORTH HEREIN, IT BEINGTHE INTENTION OF SELLER AND BUYER TO EXPRESSLY NEGATE AND EXCLUDE ALLWARRANTIES WHATSOEVER, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OFMERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, ANY IMPLIED OR EXPRESSWARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, ANY RIGHTS OF BUYERUNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, ANY CLAIM BYBUYER FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN WITH RESPECT TOTHE PERSONAL PROPERTY, WARRANTIES CREATED BY AFFIRMATION OF FACT OR PROMISE ANDANY OTHER WARRANTIES CONTAINED IN OR CREATED BY THE UNIFORM COMMERCIALCODE AS NOW OR HEREAFTER IN EFFECT IN THE STATE IN WHICH THE PERSONAL PROPERTYIS LOCATED, OR CONTAINED IN OR CREATED BY ANY OTHER LAW.**

 

[Signature Page To Follow]

 

----

 

Dated this              day of                                        ,200 .

 
| **SELLER:** | **WATERFORD PLACE APARTMENTS, LLC,**a California limited liability company |
|-------------|----------------------------------------------------------------------------|
| ** **  | ** **                                                                 |
|        | By:                                                                        | Shea  Properties Management Co., Inc., |
|        | ** **                                                                 | a  Delaware corporation |
|        | Its:                                                                       | Manager |
| ** **  | ** **                                                                 | ** ** |
|        | ** **                                                                 | By: | ** ** |
|        | ** **                                                                 | Name: | ** ** |
|        | ** **                                                                 | Its: | ** ** |
| ** **  | ** **                                                                 | ** ** | ** ** |
|        | ** **                                                                 | By: | ** ** |
|        | ** **                                                                 | Name: | ** ** |
|        | ** **                                                                 | Its: | ** ** |
| ** **  | ** **                                                                 |
| ** **  | ** **                                                                 |
| **BUYER**:  | ** **                                                                 |
|        | a(n)                                                                       |   |
|        |                                                                       |   |
|        |                                                                       |   |
|        | By:                                                                        |   |
|        | Name:                                                                      |   |
|        | Title:                                                                     |   |
|        |                                                                       |   |
|        | By:                                                                        |   |
|        | Name:                                                                      |   |
|        | Title:                                                                     |   |

 

----

 

**EXHIBIT E**

 

**Form of Assignment and Assumption of Leases**

 

THIS ASSIGNMENT AND ASSUMPTION OFLEASES (this “**Assignment**”) datedas of                                ,200   , is between WATERFORD PLACE APARTMENTS, LLC, a Californialimited liability company (“**Assignor**”),and                                        ,a(n)                                   (“**Assignee**”).

 

**A**.            Assignor is the lessorunder certain leases executed with respect to that certain apartment and retailcomplex known as Waterford Place Apartments, Dublin, California, and moreparticularly described in Exhibit A attached hereto (the “**Property**”), which leases (the “**Leases**”) are described in the current RentRoll attached hereto as Schedule 1, which Assignor by its executionhereof hereby certifies to Assignee to be true, complete and correct in allmaterial respects as of the date thereof.

 

**B**.            Assignor and Assigneeentered into an Agreement of Sale and Purchase and Joint Escrow Instructionsdated as of                            ,2009 (the “**Purchase Agreement**”),pursuant to which Assignee agreed to purchase the Property from Assignor andAssignor agreed to sell the Property to Assignee, on the terms and conditionscontained therein.

 

**C**.            Assignor desires toassign its interest as lessor in the Leases to Assignee, and Assignee desiresto accept the assignment thereof, on the terms and conditions below.

 

ACCORDINGLY, the parties herebyagree as follows:

 

**1**.             Assignor hereby assignsto Assignee all of its right, title, and interest in and to the Leases, and Assigneehereby accepts such assignment and (a) assumes all of the lessor’sobligations under the Leases arising from and after the date hereof, and (b) assumesall obligations under the Leases relating to the physical and environmentalcondition of the Property arising on or after the date hereof.

 

**2**.             In the event of anydispute between Assignor and Assignee arising out of the obligations of theparties under this Assignment or concerning the meaning or interpretation ofany provision contained herein, the losing party shall pay the sole prevailingparty’s costs and expenses of such dispute, including, without limitation,reasonable attorneys’ fees and costs.

 

**3**.             Any rental and otherpayments under the Leases shall be prorated between the parties as provided inthe Purchase Agreement.

 

**4**.             The covenants,agreements, representations, warranties, indemnities and limitations providedin this Assignment with respect to the property conveyed hereunder (including,without limitation, the limitations of liability provided in the PurchaseAgreement), are hereby incorporated herein by this reference as if herein setout in full and shall insure to the benefit of and shall be binding upon Buyerand Seller and their respective successors and assigns.

 

----

 

**5.**             This Assignment shall be bindingupon and inure to the benefit of the parties hereto and their respectivesuccessors and assigns.

 

**6**.             This Assignment shall begoverned and construed in accordance with the internal laws of the State ofCalifornia without reference to its choice of law or conflict of lawprovisions.

 

**7**.             This Assignment may beexecuted in any number of counterparts, each of which shall be deemed anoriginal, but all of which taken together shall constitute one and the sameinstrument.

 

[Signature Page To Follow]

 

----

 

IN WITNESS WHEREOF, Assignor andAssignee have executed this Assignment the day and year first above written.

 
| **ASSIGNOR**: | **WATERFORD PLACE APARTMENTS, LLC,**a California limited liability company |
|---------------|----------------------------------------------------------------------------|
| ** **    | ** **                                                                 |
|          | By:                                                                        | Shea  Properties Management Co., Inc., |
|          | ** **                                                                 | a  Delaware corporation |
|          | Its:                                                                       | Manager |
| ** **    | ** **                                                                 | ** ** |
|          | ** **                                                                 | By: | ** ** |
|          | ** **                                                                 | Name: | ** ** |
|          | ** **                                                                 | Its: | ** ** |
| ** **    | ** **                                                                 | ** ** | ** ** |
|          | ** **                                                                 | By: | ** ** |
|          | ** **                                                                 | Name: | ** ** |
|          | ** **                                                                 | Its: | ** ** |
| ** **    | ** **                                                                 |
| ** **    | ** **                                                                 |
| **ASSIGNEE**: | ** **                                                                 |
|          | a(n)                                                                       |   |
|          |                                                                       |   |
|          |                                                                       |   |
|          | By:                                                                        |   |
|          | Name:                                                                      |   |
|          | Title:                                                                     |   |
|          |                                                                       |   |
|          | By:                                                                        |   |
|          | Name:                                                                      |   |
|          | Title:                                                                     |   |

 

----

 

Exhibit A to Assignment and Assumption of Leases

 

**Description of Real Property**

 

Realproperty in the City of Dublin, County of Alameda, State of California,described as follows: 

 

PARCEL1:

 

CONDOMINIUMUNIT 1 OF PARCEL 1 OF PARCEL MAP 8187, FILED NOVEMBER 3, 2003, IN BOOK 274 OFPARCEL MAPS, PAGES 10****AND 11, OFFICIAL RECORDS, ASSUCH UNIT IS SHOWN ON THE CONDOMINIUM PLAN (“PLAN”) ATTACHED AS EXHIBIT “A” TOTHE WATERFORD PLACE CONDOMINIUMS DECLARATION OF RESTRICTIONS (“DECLARATION”)RECORDED NOVEMBER 3, 2003, SERIES NO. 2003653881, OFFICIAL RECORDS.

 

RESERVINGTHEREFROM MECHANICAL CHASE EASEMENTS AS SHOWN ON THE PLAN.

 

FURTHERRESERVING THEREFROM EASEMENTS FOR ENCROACHMENT, UTILITY, ROOF AND MAINTENANCE,AS DEFINED IN SECTIONS 2.4, 2.5 AND 2.6 OF THE DECLARATION.

 

PARCEL2:

 

ANUNDIVIDED 97% INTEREST AS TENANT IN COMMON IN AND TO THE COMMON AREA LYINGWITHIN SAID PARCEL 1 OF PARCEL MAP 8187 AS SHOWN ON THE PLAN AND DEFINED IN THEDECLARATION, EXCEPTING AND RESERVING THEREFROM THE FOLLOWING:

 

(A)ALL CONDOMINIUM UNITS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION.

 

(B)EXCLUSIVE USE COMMON AREAS FOR POSSESSION, USEAND ENJOYMENT OF THOSE AREAS DESIGNATED ON THE PLAN AND DEFINED IN THE****DECLARATION.

 

(C)NON-EXCLUSIVE EASEMENTS FOR USE, ENJOYMENT, INGRESS, EGRESS AND SUPPORT IN ANDTO THE COMMON AREA AS SHOWN ON THE PLAN AND DESCRIBED IN THEDECLARATION.

 

(D)ALL EASEMENTS AS DEFINED IN THE DECLARATION.

 

PARCEL3:

 

(A)NON-EXCLUSIVE EASEMENTS FOR USE, ENJOYMENT, INGRESS, EGRESS AND SUPPORT IN ANDTO THE COMMON AREA, AS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION, FORTHE BENEFIT OF PARCEL 1 HEREINABOVE.

 

(B)NON-EXCLUSIVE EASEMENTS FOR ENCROACHMENT AND UTILITY, ALONG WITH****A MAINTENANCEEASEMENT DEFINED IN THE DECLARATION.

 

APN: 986-0017-014 and 986-0017-018

 

----

 

Schedule 1 to Assignment andAssumption of Leases

**List of Leases**

 

----

 

**EXHIBIT F**

 

**Form of Assignment andAssumption of Contracts****Warranties and Guaranties, Licensesand Permits and Other Intangible Property**

 

THIS ASSIGNMENT AND ASSUMPTION(this “**Assignment**”) dated as of                                    ,200 , is between WATERFORD PLACE APARTMENTS, LLC, a California limitedliability company (“**Assignor**”),and                                      ,a(n)                                   (“**Assignee**”).

 

**A**.                                    Assignor owns certain apartment and retail complex commonly known asWaterford Place Apartments, Dublin, California, and more particularly describedin Exhibit A attached hereto (the “**Property**”).

 

**B**.                                    Assignor has entered into certain contracts which are more particularlydescribed in Schedule l attached hereto (the “**Contracts**”),which affect the Property.

 

**C**.                                    Assignor and Assignee entered into an Agreement of Sale and Purchase andJoint Escrow Instructions dated as of                                  ,2009 (the “**Purchase Agreement**”),pursuant to which Assignee agreed to purchase the Property from Assignor andAssignor agreed to sell the Property to Assignee, on the terms and conditionscontained therein.

 

**D**.                                    Assignor desires to assign to Assignee its interest, if any, and to theextent assignable, in (a) the Contracts, (b) certain warranties,guaranties, and intangible personal property with respect to the Property, and (c) alllicenses, permits, approvals, certificates of occupancy, dedications, subdivisionmaps and entitlements now or hereafter issued, approved or granted by anygovernmental entity in connection with the Property (the “**Licenses and Permits**”), and Assigneedesires to accept the assignment thereof, on the terms and conditions below.

 

ACCORDINGLY, the parties herebyagree as follows:

 

**1**.                                      Assignor hereby assigns to Assignee all of Assignor’s right, title, andinterest, if any, in and to the following, from and after the date hereof, tothe extent the same are assignable:

 

(a)                                  the Contracts;

 

(b)                                 any warranties and guaranties (“**Warrantiesand Guaranties**”) made by or received from any third party withrespect to any improvements owned by Assignor on the Property; and

 

(c)                                  the Licenses and Permits.

 

**2**.                                      Assignee hereby accepts the foregoing assignment by Assignor and assumesall of the Assignor’s obligations under (a) the Contracts arising from andafter the date hereof, (b) the Contracts relating to the physical andenvironmental condition of the Property arising on or after the date hereof, (c) theWarranties and Guaranties on or after the date hereof, and (d) theLicenses and Permits arising on or after the date hereof.

 

----

 

**3**.                                      In the event of any dispute between Assignor and Assignee arising out ofthe obligations of the parties under this Assignment or concerning the meaningor interpretation of any provision contained herein, the losing party shall paythe sole prevailing party’s costs and expenses of such dispute, including,without limitation, reasonable attorneys’ fees and costs.

 

**4**.                                      The covenants, agreements, representations, warranties, indemnities andlimitations provided in this Assignment with respect to the property conveyedhereunder (including, without limitation, the limitations of liability providedin the Purchase Agreement), are hereby incorporated herein by this reference asif herein set out in full and shall insure to the benefit of and shall bebinding upon Buyer and Seller and their respective successors and assigns.

 

**5.****                                     **This Assignment shall be binding upon and inure to the benefit of theparties hereto and their respective successors and assigns.

 

**6**.                                      This Assignment shall be governed and construed in accordance with theinternal laws of the State of California without reference to its choice of lawor conflict of law provisions.

 

**7**.                                      This Assignment may be executed in any number of counterparts, each ofwhich shall be deemed an original, but all of which taken together shallconstitute one and the same instrument.

 

[Signature Page To Follow]

 

----

 

IN WITNESS WHEREOF, Assignor and Assigneehave executed this Agreement the day and year first above written.

 
| **ASSIGNOR**: | **WATERFORD PLACE APARTMENTS, LLC,**a California limited liability company |
|---------------|----------------------------------------------------------------------------|
| ** **    | ** **                                                                 |
| ** **    | By:                                                                        | Shea  Properties Management Co., Inc., a Delaware corporation |
| ** **    | Its:                                                                       | Manager |
| ** **    |                                                                       |   |
| ** **    |                                                                       | By: |   |
| ** **    |                                                                       | Name: |   |
| ** **    |                                                                       | Its: |   |
| ** **    |                                                                       |   |   |
| ** **    | ** **                                                                 | By: | ** ** |
| ** **    |                                                                       | Name: |   |
| ** **    | ** **                                                                 | Its: | ** ** |
| ** **    | ** **                                                                 |
| ** **    |                                                                       |
| **ASSIGNEE**: |                                                                       |
| ** **    | a(n)                                                                       |   |
| ** **    |                                                                       |
| ** **    |                                                                       |
| ** **    | By:                                                                        |   |
| ** **    | Name:                                                                      |   |
| ** **    | Title:                                                                     |   |
| ** **    |                                                                       |   |
| ** **    | By:                                                                        |   |
| ** **    | Name:                                                                      |   |
| ** **    | Title:                                                                     |   |
|               |                                                                            |  |  |  |  |  |

 

----

 

Exhibit A to Assignment and Assumption of Contracts, Warrantiesand Guaranties,

Licenses and Permits and Other Intangible Property

 

**Description of Real Property**

 

Realproperty in the City of Dublin, County of Alameda, State of California,described as follows:

 

PARCEL1:

 

CONDOMINIUMUNIT 1 OF PARCEL 1 OF PARCEL MAP 8187, FILED NOVEMBER 3, 2003, IN BOOK 274 OFPARCEL MAPS, PAGES 10 AND 11, OFFICIAL RECORDS, AS SUCH UNIT IS SHOWN ON THECONDOMINIUM PLAN (“PLAN”) ATTACHED AS EXHIBIT “A” TO THE WATERFORD PLACECONDOMINIUMS DECLARATION OF RESTRICTIONS (“DECLARATION”) RECORDED NOVEMBER 3,2003, SERIES NO. 2003653881, OFFICIAL RECORDS.

 

RESERVINGTHEREFROM MECHANICAL CHASE EASEMENTS AS SHOWN ON THE PLAN.

 

FURTHERRESERVING THEREFROM EASEMENTS FOR ENCROACHMENT, UTILITY, ROOF AND MAINTENANCE,AS DEFINED IN SECTIONS 2.4, 2.5 AND 2.6 OF THE DECLARATION.

 

PARCEL2:

 

ANUNDIVIDED 97% INTEREST AS TENANT IN COMMON IN AND TO THE COMMON AREA LYINGWITHIN SAID PARCEL 1 OF PARCEL MAP 8187 AS SHOWN ON THE PLAN AND DEFINED IN THEDECLARATION, EXCEPTING AND RESERVING THEREFROM THE FOLLOWING:

 

(A)ALL CONDOMINIUM UNITS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION.

 

(B)EXCLUSIVE USE COMMON AREAS FOR POSSESSION, USE AND ENJOYMENT OF THOSE AREASDESIGNATED ON THE PLAN AND DEFINED IN THE DECLARATION.

 

(C)NON-EXCLUSIVE EASEMENTS FOR USE, ENJOYMENT, INGRESS, EGRESS AND SUPPORT IN ANDTO THE COMMON AREA AS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION.

 

(D)ALL EASEMENTS AS DEFINED IN THE DECLARATION.

 

PARCEL3:

 

(A)NON-EXCLUSIVE EASEMENTS FOR USE, ENJOYMENT, INGRESS, EGRESS AND SUPPORT IN ANDTO THE COMMON AREA, AS SHOWN ON THE PLAN AND DESCRIBED IN THE DECLARATION, FORTHE BENEFIT OF PARCEL 1 HEREINABOVE.

 

(B)NON-EXCLUSIVE EASEMENTS FOR ENCROACHMENT AND UTILITY, ALONG WITH A MAINTENANCEEASEMENT DEFINED IN THE DECLARATION.

 

APN: 986-0017-014 and 986-0017-018

 

----

 

Schedule 1 to Assignment andAssumption of Contracts, Warranties and Guaranties,Licenses and Permits and Other Intangible Property

 

**List of Contracts**

 

----

 

**EXHIBIT G**

 

**Notice to Tenants**

 

Residents of Waterford Place Apartments

4800 Tassajara Road

Dublin, California 94568

 

Dear Residents:

 

Notice is hereby given to the residents and tenants of Waterford PlaceApartments (the “Property”) that Waterford Place Apartments, LLC, the currentowner of the Property, has sold the Property to                                                        (“Purchaser”) effective                            .  Purchaser has assumed all of the obligationsof landlord under your lease arising after such date, including any obligationswith respect to your security deposit, if any, which have been transferred toPurchaser.

 

You are further notifiedthat all rental payments and inquires under your lease shall hereafter bedirected or paid to the following account, at the address below:

 

 

 

 

 

Very truly yours,

 
| **WATERFORD PLACE APARTMENTS, LLC,**a California limited liability company |                                                               |
|----------------------------------------------------------------------------|--------------------------------------------------------------------|
| ** **                                                                 |                                                               |
| By:                                                                        | Shea  Properties Management Co., Inc., a Delaware corporation |   |
| Its:                                                                       | Manager                                                            |   |
| ** **                                                                 | ** **                                                         |   |
| ** **                                                                 | By:                                                                | ** ** |   |
|                                                                       | Name:                                                              |   |   |
|                                                                       | Its:                                                               |   |   |
|                                                                       |                                                               |   |   |
|                                                                       | By:                                                                |   |   |
|                                                                       | Name:                                                              |   |   |
|                                                                       | Its:                                                               |   |   |

 

----

 

**EXHIBIT H**

 

**Covenant Running With TheLand**

 

[To Be Agreed Upon DuringThe Due Diligence Period]

 

----

 

**EXHIBIT I**

 

**Personal Property**

 

**May 14, 2009**

 

**FrontOffice/Lobby;**

2Leasing Desk Workstations

2Task Chairs

2Computers

4Armless Guest Chairs

1Ottoman

1Sofa

1Coffee Table

1Large Side Table

1Accent Chair

2Arm Chairs

3Large Pictures

1Property Layout Picture

1Large Arial Picture of Dublin

1Set of Window treatments

2Ceramic Urns

2Glass Hurricane Candle Holders with Candles

4Large Trees with Baskets

7Small Plants with Baskets

1Hand Painted Silk Chandelier

2Silver trays and Stands

2Horse Figurines

2Ceramic Art

2Sofa Pillows

2Chair Pillows

2Knit Caddies

2Area Rugs

1Tray

1Decorative Mesh Trunk

28Books

2Large Black Urns

 

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**PrivateOffices (3);**

3Valances

9Large Pictures

3Desks

3Task Chairs

3Computers

2Credenzas

1Large Filing Cabinet

6Armless Guest Chairs

 

**Kitchen/CopyRoom;**

2Valances

1Small Dining Table

3Dining Chairs

1Copy Machine/Scanner/Fax

1Keysafe

1Safe

1Refrigerator

1Microwave

1Dishwasher

1Small Oven (Otis Spunkmeyer)

1Computer (gate system)

1Coffee Maker

1Framed Corkboard

MiscOffice Supplies

 

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**1Bedroom Model;**

 

*Livingroom/Dining Room*

2(pairs) Drapery Panels on rod

1Dining Table

2Dining Chairs with Cushions

1Planter

1Adirondak Art

1Black Rice Bucket with magazines

1Sofa with Pillows

1Lounge Chair with Cushion and Pillow

1End Table

1Cocktail Table

1Media Cabinet

2Barstools

1Floor Lamp

2tabel lamps

1Large Flower Art

1Large Bevel Mirror

1Small Mirror

Misc.Books

1Black Frame

1Hammered Frame

Stackof Books

Daffodilsin a Pot

1Hurricane with Candle

Stackof Cocktail Books

2Black Boxes

 

*Kitchen*

Rugand grabber

GreenPalecheck Box

GreenCeramic Bowl Set-Up

Jarwith Limes and Lemons

CookBook in Stand

JuicerTray Set-Up

LondonSign

VintageFan

 

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**1 BedroomModel Cont...**

 

*Deck*

Bistrotable  with Two Chairs

GreenLantern

 

*Bathroom*

TubTreatment

DoorArt

SmallPurse with Wash and Brush

BlackTowel with Tea Towel

StackTowels with Tea Towels

Rugand Grabber

SilverMirror in Stand

BlackTray Set-Up

 

*Bedroom*

Queenbed

Dresser

2Night Stands

Pairof panels on Rod

LargeArt

PegRack with Hat

LargeMirror

2Table Lamps

NickelDesk lamp

QueenBedding

Duster

Bedcap

BackShams

FrontShams

AccentPillow

MiscBooks

Frame

CoveredJar

2Pins

2Black Boxes

Clock

 

*BedroomCloset*

GardenBoots

WickerHat Boxes (set of three)

Bucketwith Towels and Thermos

Basketwith Towels

 

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**2Bedroom Model;**

 

*LivingRoom/Dining Room*

Sofa

Endtable

Cocktailtable

DiningChairs

Fabricfor Chair Seats

DiningTable Base with Glass Top

Pillowsfor Sofa (three)

LoungeChair with Pillows and Cushions

MediaCabinet

FloorLamp

2Table Lamps

4Floral Art

FramedMirror

LargeFloral Framed Mirror

MirrorSconces

2pair Window treatments — Panels

SmallBicycle

FrenchMirror

Whiteplanter

IronObelisk

2Grass patches

2Cocktail Books

Misc.Books

VenetianFrame

FleurDe Lys

4Dining Set-Ups

 

*Kitchen*

2Stools with Seat Covers

3x5Rug with Grabber

Pairof ceramic Roosters

Wickerfood Cover and Mat

TraySet-Up with Jars and Apples

FramedArt

WoodIron and Tray Set-Up

MetalFloral Plate and Stand

2Counter Set-Ups

 

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**2Bedroom Model Cont...**

 

*Deck*

Glider

Tableand Lantern

 

*Laundry*

Jarwith Clothes Pins

ChapesElyse Sign

Basketwith Towels

Stackof Towels

 

*BathTwo*

Pairof Fleur De Lys

Mirror

ChairArt

Tubtreatment

Rugwith Grabber

WireBath Container filled

BathLotion with Wash

AntiqueJars

YellowOrganic Vase with Hydrangeas

Towelsfor Bar

 

*Bedroom# 2*

Queenbed

Chest

2Night Stands

2Panels on Rod

3Table Lamps

GolfCourse Art

FloralArt

QueenBedding

Comforter

Sheet

Duster

BlackShams

FrontShams

AccentPillow

Basketwith Throw and Book

2Frames

MercuryGlass Vase

MiscBooks

SilverLoving Cup

Jarwith Sheus

SilverClock

 

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**2Bedroom Model Cont...**

 

*Bedroom#2 Closet*

TennisOutfit with hangers

Tennisbag with towel

LargeJar with Tennis Balls

GolfBalls

TennisRacquet

 

*MasterBedroom*

QueenBed

Dresser

Console/Desk

Skirtedtable with Glass

LargeMirror

DeskChair with Pillow

Blackand White Art (set of three)

2Table Lamps

WallSconce

PropLaptop

Frame

Candlewith Clouche

DraperyPanel on Rod (1 pair)

QueenBedding

Duster

Comforter

BlackShams

FrontShams

AccentPillows

YellowGlass jars

FrenchMirror

MiscBooks

Frame

 

*MasterBath*

Blackand White Art

Runnerwith grabber

Tubtreatment

SilverBath Tower with Misc Accessories

3Bath Jars

Loofawith Wash

2Canvas bags

Robewith Hangers

Slippers

TeakStool

 

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**BusinessCenter;**

1Computer

2Task Chairs

1Copy machine

1Printer

1Typewriter

1Fax Machine

2Pictures

MiscSupplies

1Valance

 

**ConferenceRoom;**

1Large Conference Table

1Drop Down Projector Screen

1Television

8Conference Room Chairs

3Large Pictures

2Large Ceramic Urns

1White Board with Stand

1Conference Phone

2Sets of Window Treatments

 

**MediaRoom;**

1Large Screen TV

12Chairs

9Small Round Tables

2Large Pictures

 

**ConciergeOffice**;

 

3Task Chairs

2Computers

1Picture

1Shelf Unit

MiscMovies/DVD’s

1Folding table

3Folding Chairs

2Shelving Units

1Dry-cleaning Rack

1Vacuum

 

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**Clubhouse;**

 

2Brown Sofas

4Armchairs

1Round Table

1Round End Table

2Barstools

1Upholstered Bench

2Credenzas

4Chrome Lamps

1Glass Lamp

4Pairs Gold Drapes

2Gold Window Treatments

5Large Pictures

1Large Silver Bowl

1Ceramic Snail

2White Platter & Black Stand

4Cooking Trays

4Plastic Juice Containers

1Fry pan and Lid

2Pots

1Wood Tray

2White Vases

1Strainer

2Measuring Cups

1Square basket with Books

2Leather Bowls

6Small Plants and Baskets

5Large Trees and Baskets

1Stainless Dishwasher

1Stove Gas Top

1Stainless Side by Side Refrigerator

1Stainless Microwave

1Stainless Oven

 

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**GymEquipment;**

2Flexdeck Life Fitness 9100 Treadmills

1Flexdeck Treadmill with LCD Screen

1Life cycle 9500 HR

1Seated Leg Curl

1Leg Extension

1Seated Leg Press

1Life Fitness Weight Machine (Double Pulley System)

1Life Fitness Squat/bench Press Machine

3Workout Benches

3Cardio Elliptical Machines (9500HR)

1Cardio Elliptical machine with LCD Screen (93xi)

20Free Weights ranging from 5 lbs to 50 lbs

7Equipment Mats

 

**Pool;**

1Pool

1Large Spa

24Lounge Chairs

24Chairs

6Large Tables

5Umbrellas

11Small Tables

4TrashCans

NetPole

LifeSaver

 

**Appliances;**

391Refrigerators

391Microwaves

392Water Heaters

42Stackable Washer/Dryer Units

353Washers

351Dryers

392Stoves

392Dishwashers

393Garbage Disposals

 

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**Tools &Euipment:**

1Key Cutting Machine

62-Way Radio

1Multi Function Center

1Windows 2000

13 Speed Turbo Air Dryer

1Shop Vacuum

1Manifold gauge set w/ 36” hose

16.0 CFM Vacuum Pump 1/3 h.p.

1Extractor Recovery Unit

1Powered Drain Cleaner

2Ladder 4 Feet

1Ladder 6 Feet

1Shampoo Carpet Cleaner

1Refrigerator 5 c.u. Feet

1Microwave Oven

1Tug

2EZ-GO TXT

3EZ-GO Textron Charger

1275 HP 8 gls Air Compressor

1Ladder 4 Feet

1Reciprocating Saw

1Power Blower

1Carpet Knee Kicker

13/8” Maxim Drill 120 V

1Sweeper Washer

1Stripping Pain Machine

1Power Washer

1Paint Sprayer

 

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EXHIBIT J

 

Lease Guidelines

 

**WATERFORD PRICING - (TBD)**

 

**NO APPLICATION FEE!**

 
| ** **                       | ** ** | **SF** | ** ** | **UNITS  AVAILABLE** | ** ** | **PRICE** | ** ** | **CONCESSION *** | ** ** | **NET EFFECTIVE** | ** ** |
|----------------------------------|------------|--------|------------|----------------------|------------|-----------|------------|------------------|------------|------------------------|------------|
| ***JUNIOR,  ONE BATH***          |       |   |       |                 |       |      |       |             |       |                   |       |
| Ashford  (41 units)              |       | 599    |       |                 |       |      |       |             |       |                   |       |
| *** ***                     |       |   |       |                 |       |      |       |             |       |                   |       |
| ***ONE BEDROOM,******ONE BATH*** |       |   |       |                 |       |      |       |             |       |                   |       |
| BALLYMORE  (114 units)           |       | 708    |       |                 |       |      |       |             |       |                   |       |
|                             |       |   |       |                 |       |      |       |             |       |                   |       |
| CARLTON  (40 units)              |       | 807    |       |                 |       |      |       |             |       |                   |       |
|                             |       |   |       |                 |       |      |       |             |       |                   |       |
| DUBLIN  (34 units)               |       | 922    |       |                 |       |      |       |             |       |                   |       |
| ** **                       |       |   |       |                 |       |      |       |             |       |                   |       |
| ***TWO******BEDROOM, TWO BATH*** |       |   |       |                 |       |      |       |             |       |                   |       |
| ENNIS  (34 units)                |       | 1040   |       |                 |       |      |       |             |       |                   |       |
|                             |       |   |       |                 |       |      |       |             |       |                   |       |
| FRESHFORD  (100)                 |       | 1097   |       |                 |       |      |       |             |       |                   |       |
|                             |       |   |       |                 |       |      |       |             |       |                   |       |
| GLENMORE  (27)                   |       | 1367   |       |                 |       |      |       |             |       |                   |       |

 

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** Concessionslisted are for 12 month lease terms ONLY (7-11 mo get half)*

 

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