Rancho Cordova City Council
May 16, 2022

City Council Staff Report - Page 2 of 2
As noted above, no specified use is currently proposed or being considered for the site by the City. Further, while future development of the site is assumed, the type and intensity of development cannot be determined and it would be speculative to identify the type and level of development that would ultimately be constructed on site and the potential effects of that development. Pursuant to CEQA Guidelines Section 15145, if an impact is too speculative for evaluation the agency not required to, nor should it, engage in speculation and should terminate the discussion. It should be noted that, at such time as development is proposed for the site, a project-level analysis can and will be prepared to disclose potential environmental impacts of that development. However, because the current action would only result in the change of ownership of the property and no physical changes would occur on the site that could result in physical environmental effects, the activity is not subject to CEQA pursuant to CEQA Guidelines section 15061(b)(3).

FISCAL IMPACT AND FUNDING SOURCE
The purchase price for the land is $582,615. It is anticipated that additional funds will be needed for closing costs, including legal and environmental review. The City’s General Fund reserves will be used to pay for the acquisition costs. A funding source for future improvements to this property has not been identified at this time.

If purchased, this property will require annual property maintenance and security costs not expected to exceed $3,500 per year until it is developed or disposed of in some other way.

ATTACHMENT(S)

1. Resolution

2. Site Diagram

3. CEQA Notice of Exemption

4. Purchase and Sale Agreement

ITEM 9.8. ATTACHMENT 1
Resolution No. XX-2022 Page 1 of 2

CITY OF RANCHO CORDOVA
RESOLUTION NO. XX-2022

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CORDOVA AUTHORIZING THE ACQUISITION OF PROPERTY AT 2925 KILGORE RD, AND

AUTHORIZING EXECUTION OF A PURCHASE AND SALE AGREEMENT, ASSIGNMENT

AND ASSUMPTION AGREEMENT, CERTIFICATE OF ACCEPTANCE, AND RECORDATION

OF A GRANT DEED
WHEREAS, the owner of the property at 2925 Kilgore Road (“Property”), located adjacent to the Kilgore Cemetery, is willing to sell the Property and the City of Rancho Cordova (“City”) desires to acquire the Property for a currently unspecified use; and WHEREAS, the Property provides opportunity to expand the Kilgore Cemetery in the future; and
WHEREAS, the Property is a vacant site; and
WHEREAS, pursuant to California Government Code Section 27281, a resolution or Certificate of Acceptance must be attached to any grant deed conveying an interest in real property to a government agency; and
WHEREAS, the acquisition and lack of identified proposed use of the Property are not inconsistent with the applicable general plan land use designation and zoning and the acquisition of the Property is exempt from the California Environmental Quality Act (CEQA) pursuant to Title 14 of the California Code of Regulations, Chapter 3, Division 6 (State CEQA Guidelines) Section 15061 (General Rule Exemption).

NOW, THEREFORE, BE IT HEREBY RESOLVED THE CITY COUNCIL OF THE CITY

OF RANCHO CORDOVA

1. Authorizes the City Manager and/or his designee to execute a Purchase and Sale Agreement for the acquisition of the Property at a purchase price not to exceed $582,615, which Agreement shall be in a form approved by the City Attorney, and to execute such other documents and to take such other actions as necessary to consummate the transaction contemplated by this resolution, including without limitation, the payment of deposits as required pursuant to the Purchase and Sale Agreement and the execution of contracts required in connection with any environmental evaluation and/or physical inspection of the Property.

2. Consents to the execution of a Certificate of Acceptance and the recordation of a grant deed conveying the Property to the City upon close of escrow for the purchase of property.

PASSED AND ADOPTED by the City Council of the City of Rancho Cordova on the 16th day of May 2022 by following vote:

AYES:

NOES:

ITEM 9.8. ATTACHMENT 1
Resolution No. XX-2022 Page 2 of 2
ABSENT:

ABSTAIN:

ATTEST:

Donald Terry, Mayor
Stacy Leitner, CMC
City Clerk

Site Diagram
2925 Kilgore Rd
ITEM 9.8. ATTACHMENT 2

ITEM 9.8. ATTACHMENT 3

ITEM 9.8. ATTACHMENT 3

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PURCHASE AND SALE AGREEMENT
By and Between
Jennifer Berrueta Vergara, as Trustee of the Jennifer Berrueta Vergara Living Trust dated 5/10/12, Maria C. Berrueta, Trustee of the Berrueta Family Revocable Trust dated 12/19/05 (By-pass Trust), and Francisco Berrueta, Jr., a married man as his sole and separate property, each as to an equal undivided interest
(collectively, “Seller”)
and
The City of Rancho Cordova, California
(“Buyer”)
ITEM 9.8. ATTACHMENT 4

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TABLE OF CONTENTS
Page

1. PURCHASE AND SALE ......................................................................................................... 1

1.1 Property ......................................................................................................................... 1

1.2 Assignment ................................................................................................................... 1

1.3 Excluded Property ......................................................................................................... 2

2. PURCHASE PRICE ................................................................................................................. 2

2.1 Deposit .......................................................................................................................... 2

2.2 Interest on Deposit ........................................................................................................ 2

2.3 Disposition of Deposit .................................................................................................. 2

2.4 Cash Balance ................................................................................................................. 2

3. TITLE ....................................................................................................................................... 3

3.1 Vesting of Title ............................................................................................................. 3

3.2 Buyer's Title Insurance ................................................................................................. 3

3.3 Permitted Exceptions .................................................................................................... 3

4. ESCROW .................................................................................................................................. 4

4.1 Opening of Escrow ....................................................................................................... 4

4.2 Instructions to the Title Company................................................................................. 4

5. CLOSING ................................................................................................................................. 4

5.1 Closing .......................................................................................................................... 4

5.2 Failure to Close ............................................................................................................. 4

6. DUE DILIGENCE .................................................................................................................... 4

6.1 Due Diligence Period .................................................................................................... 4

6.2 Confidentiality .............................................................................................................. 5

6.3 Title Review .................................................................................................................. 5

6.4 Inspection: Right of Entry ............................................................................................. 7

6.5 Buyer's Reports ............................................................................................................. 8

6.6 Indemnity ...................................................................................................................... 8

6.7 Approval by Buyer ........................................................................................................ 8

7. CONDITIONS TO CLOSING ................................................................................................. 9

7.1 Seller's Conditions ........................................................................................................ 9

7.2 Buyer's Conditions ........................................................................................................ 9

7.3 Failure of Conditions .................................................................................................. 10

7.4 Satisfaction of Conditions ........................................................................................... 10

8. DELIVERIES INTO ESCROW ............................................................................................. 10

8.1 Deliveries by Seller ..................................................................................................... 10 ITEM 9.8. ATTACHMENT 4

TABLE OF CONTENTS
(Continued)
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8.2 Deliveries by Buyer .................................................................................................... 11

8.3 Delivery to Buyer Upon Closing ................................................................................ 11

8.4 Delivery Following Closing ........................................................................................ 11

9. PRORATIONS: CLOSING COSTS: CREDITS .................................................................... 11

9.1 Prorations .................................................................................................................... 11

9.2 Closing Costs .............................................................................................................. 12

9.3 Other Expenses ........................................................................................................... 12

10. OPERATION OF PROPERTY PENDING THE CLOSING ................................................. 12

11. REPRESENTATIONS AND WARRANTIES....................................................................... 13

11.1 No Representations or Warranties by Seller ............................................................... 13

11.2 Seller's Representations and Warranties ..................................................................... 13

11.3 Buyer's Representations and Warranties ..................................................................... 13

12. INTENTIONALLY DELETED. ............................................................................................ 14

13. CONDEMNATION ................................................................................................................ 14

14. COMMISSIONS ..................................................................................................................... 14

15. NOTICES ................................................................................................................................ 15

16. LIMITATIONS ON REPRESENTATIONS AND WARRANTIES ..................................... 15

16.1 No Reliance on Documents ........................................................................................ 15

16.2 As-Is Sale: Disclaimers ............................................................................................... 16

16.3 Material Change .......................................................................................................... 17

16.4 Survival of Seller's Representations and Warranties .................................................. 17

16.5 Survival of Limitations ............................................................................................... 18

17. MISCELLANEOUS ............................................................................................................... 18

17.1 Time ............................................................................................................................ 18

17.2 Attorneys' Fees ............................................................................................................ 18

17.3 No Waiver ................................................................................................................... 18

17.4 Entire Agreement ........................................................................................................ 18

17.5 Survival ....................................................................................................................... 18

17.6 Successors and Assigns............................................................................................... 18

17.7 Severability ................................................................................................................. 19

17.8 Captions ...................................................................................................................... 19

17.9 Exhibits ....................................................................................................................... 19

17.10 Relationship of the Parties .......................................................................................... 19 ITEM 9.8. ATTACHMENT 4

TABLE OF CONTENTS
(Continued)
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17.11 Governing Law ........................................................................................................... 19

17.12 Review by Counsel ..................................................................................................... 19

17.13 Counterparts ................................................................................................................ 19

17.14 Filing of Reports ......................................................................................................... 19

17.15 Third Party Beneficiaries ............................................................................................ 19

17.16 Facsimile Signatures ................................................................................................... 19

18. DEFAULT .............................................................................................................................. 20

18.1 Liquidated Damages ................................................................................................... 20

18.2 Default by Seller ......................................................................................................... 20 ITEM 9.8. ATTACHMENT 4

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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of May ___, 2022 (the “Effective Date”) by and between Jennifer Berrueta Vergara, as Trustee of the Jennifer Berrueta Vergara Living Trust dated 5/10/12, Maria C. Berrueta, Trustee of the Berrueta Family Revocable Trust dated 12/19/05 (By-pass Trust), and Francisco Berrueta, Jr., a married man as his sole and separate property, each as to an equal undivided interest (collectively, the “Seller”), and The City of Rancho Cordova, California, a California municipal corporation (“Buyer”). Buyer and Seller are collectively referred to herein as the “Parties.”

RECITALS
This Agreement is made with respect to the following facts and circumstances:

A. Seller owns certain real property commonly known as the 2925 Kilgore Road, Rancho Cordova, California, also known as Sacramento County Assessor’s Parcel Numbers 072-0480-022- 0000 and 072-0480-002-0000, in the City of Rancho Cordova (the “Property”), as more particularly described in Exhibit 1.1 attached hereto and incorporated herein by this reference.

B. Buyer desires to purchase the Property and has agreed to pay Five Hundred EightyTwo Thousand Six Hundred Fifteen Dollars ($582,615) (the “Purchase Price”) to Seller for the purchase of the Property.

C. Upon the execution of this Agreement, Seller agrees that Seller will not market the Property to any other potential third party buyer so long as this Agreement is in full force and effect.

D. Subject to the terms and conditions herein, Seller desires to sell and Buyer desires to purchase the Property.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, Seller and Buyer agree as follows:

1. PURCHASE AND SALE.

1.1 Property. Subject to the terms and conditions hereof, Seller hereby agrees to sell, convey and assign to Buyer, and Buyer hereby agrees to purchase and accept from Seller on the Closing Date (as defined below) the Property.

1.2 Assignment. In addition, Seller shall convey and assign to Buyer all of the right, title and interest of Seller, if any, in and to all assignable current licenses, permits, approvals and entitlements issued or granted in connection with the Property as well as any and all assignable development rights and any other intangible rights, interests or privileges relating to or used in connection with the Property. Such assignment shall be made pursuant to the Assignment and Assumption Agreement in the form described in Section 8.1.3 below (“Assignment”). All of the above interests as described in this Section 1.2 shall sometimes be referred to collectively as the “Intangible Property”.

ITEM 9.8. ATTACHMENT 4

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1.3 Excluded Property. Notwithstanding anything to the contrary set forth herein, the Property being conveyed pursuant to this Agreement does not include (and Seller expressly reserves all rights with respect thereto) any existing claims or causes of action with respect to the Property to the extent attributable to the period prior to the Closing Date including, without limitation, any tax rebates attributable to the period prior to the Closing.

2. PURCHASE PRICE. Buyer shall pay as the total purchase price for the Property (the “Purchase Price”) the sum of Five Hundred Eighty-Two Thousand Six Hundred Fifteen Dollars ($582,615). The Purchase Price shall be paid as follows:

2.1 Deposit. On or before ten (10) business days following the Effective Date, Buyer shall cause Thirty Thousand Dollars ($30,000) (the “Initial Deposit”) in immediately available funds to be delivered into Escrow (as defined below). On or before one (1) business day following the Due Diligence Date (as defined below) provided that Buyer has given the Approval Notice (as defined below), Buyer shall cause an additional Thirty Thousand Dollars ($30,000) (the “Additional Deposit”) in immediately available funds to be delivered into Escrow. The “Deposit” shall refer to the sum of the Initial Deposit and the Additional Deposit as each of said amounts are received by Escrow. The failure of Buyer to timely deliver any of the respective Deposits shall be a material default, and shall entitle Seller, at Seller's sole option, to terminate this Agreement immediately by giving written notice of such termination to Buyer and the Title Company (as defined below);

2.2 Interest on Deposit. The Deposit shall be held by the Title Company as an earnest money deposit towards the Purchase Price. The Deposit shall be held in Escrow in accordance with the provisions of this Agreement in a federally insured interest bearing account or other investment suitable for daily investment reasonably acceptable to Seller and Buyer (and in any event with any risk of loss for the account of Buyer) with any interest accruing thereon to be paid or credited, except as otherwise provided in this Agreement, to Buyer. The term “Deposit” shall include any and all interest then accrued;

2.3 Disposition of Deposit. At the Closing (as defined below) the Deposit shall be applied and credited toward the payment of the Purchase Price. If Escrow does not close, and this Agreement is terminated in a manner governed by Sections 7.3 or 13, the Deposit will be disbursed to Buyer as provided in such Sections. If the Escrow does not close and neither Section 7.3 nor Section 13 applies, the Deposit shall be returned to Buyer unless the provisions of Section 17.1 are applicable, in which case the disposition of the Deposit shall be governed by the provisions of Section 18.1; and

2.4 Balance of Purchase Price. On or before the Closing, Buyer shall deliver into Escrow in immediately available funds the balance of the Purchase Price. The Purchase Price, net of any prorations and closing costs to be paid by Seller as provided in this Agreement, shall be paid by the Title Company to Seller on the Closing Date by federal wire transfer of immediately available funds to a bank account(s) designated by Seller in a written notice to the Title Company given prior to the Closing.

ITEM 9.8. ATTACHMENT 4

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3. TITLE.

3.1 Vesting of Title. At Closing, Seller shall convey fee simple title to the Property to Buyer by execution and delivery of the Deed (as defined below). Issuance by the Title Company (or an unconditional commitment to issue) as of the Closing of the Buyer's Title Policy (as defined below) shall constitute evidence of delivery of title by Seller.

3.2 Buyer's Title Insurance. At Closing, the Title Company shall issue to Buyer a CLTA standard coverage owner's form of title insurance policy (or, if Buyer so elects pursuant to the next succeeding sentence, an ALTA owner's form of title insurance policy) in the amount of the Purchase Price insuring that fee simple title to the Property is vested in Buyer subject only to the Permitted Exceptions (as defined below) (“Buyer's Title Policy”). Buyer shall be entitled to request that the Title Company provide an ALTA title insurance policy and/or such endorsements to the Buyer's Title Policy as Buyer may reasonably require, provided that such ALTA policy and/or endorsements shall be at no cost or additional liability to Seller and the Closing shall not be delayed as a result of Buyer's request. In the event that Buyer elects to obtain an ALTA policy, notwithstanding any provision to the contrary of this Section 3.2, Buyer shall only be entitled to such ALTA policy if Buyer has timely obtained and reviewed an ALTA survey (and objected to any matters disclosed by the survey which Buyer desires to disapprove) prior to the expiration of the Title Review Period (as defined below).

3.3 Permitted Exceptions. As a condition precedent of Buyer's obligations as provided in Section 7.2.4 but not as a covenant of Seller, Seller shall convey the Property and Buyer shall accept the Property subject to the following matters, which are collectively referred to as the “Permitted Exceptions”:

3.3.1 all exceptions to title shown in the Title Report (as defined below) as it may be amended and on the Survey (as defined below) that are approved or deemed approved by Buyer as provided in Section 6.3 hereof;

3.3.2 the lien of non-delinquent real and personal property taxes and assessments;

3.3.3 local, state and federal laws, ordinances or governmental regulations, including but not limited to, building and zoning laws, ordinances and regulations, now existing or hereafter in effect with respect to the Property;

3.3.4 matters affecting the condition of title created by or with the written consent of Buyer;

3.3.5 water rights, and claims of title to water, whether or not shown by the public records;
ITEM 9.8. ATTACHMENT 4

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3.3.6 unless Buyer elects to obtain an ALTA policy of title insurance, discrepancies, conflicts in boundary lines, shortages in area, encroachments, and any state of facts which inspection of the Property would disclose and which are not shown by the public records; and

3.3.7 standard printed exclusions generally included in a CLTA owner's policy (or ALTA owner's policy, as the case may be).

4. ESCROW.

4.1 Opening of Escrow. Seller shall deliver a copy of a fully executed counterpart of this Agreement into escrow (“Escrow”) to be established at Placer Title Company, 301 University Avenue #120, Sacramento, California 95825, Attn: Jenny Vega (the “Title Company”).

4.2 Instructions to the Title Company. Seller and Buyer shall each be entitled to submit escrow instructions to the Title Company in connection with the Closing of the Escrow. Seller and Buyer shall in addition execute such further escrow instructions as the Title Company may reasonably require in connection with the Closing so long as such instructions are consistent with the provisions of this Agreement and the escrow instructions of Seller and Buyer. In the event of any conflict between the terms and conditions of this Agreement and the provisions of any escrow instructions prepared by Seller, Buyer or the Title Company, the terms and conditions of this Agreement shall control.

5. CLOSING.

5.1 Closing. The purchase and sale of the Property as contemplated by this Agreement, including but not limited to the recordation of the Deed and the completion of the other matters required by this Agreement to be done contemporaneously (the “Closing”) shall occur on or before the date that is thirty (30) days following the Due Diligence Date; provided that Seller, in its sole discretion, upon written notice to Buyer, may extend the Closing by up to five (5) business days.

The date on which the Closing actually occurs shall be referred to as the “Closing Date”.

5.2 Failure to Close. If the Closing does not occur on or before the date set forth in Section 5.1 above (as such date may be extended pursuant to the express provisions of this Agreement), then in the absence of a written agreement between the Parties to extend the Closing Date, either Party hereto (so long as such Party is not then in default pursuant to this Agreement), without waiving any rights it may otherwise have pursuant to the Agreement, may elect to terminate this Agreement by giving written notice of such termination to the other and to the Title Company.

6. DUE DILIGENCE.

6.1 Due Diligence Period. The period commencing as of the Effective Date and continuing through the date that is forty-five (45) days following the Effective Date (“Due Diligence Date”) shall be referred to as the “Due Diligence Period”.

ITEM 9.8. ATTACHMENT 4

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6.2 Confidentiality. To the extent permitted by law, Buyer and its representatives shall hold in strictest confidence all data and information obtained with respect to Seller or the Property whether obtained before or after the execution and delivery of this Agreement, and shall not disclose the same to others; provided, however, that it is understood and agreed that Buyer may disclose such data and information to the employees, lenders, investors, consultants, appraisers, accountants and attorneys of Buyer provided that such persons agree to treat such data and information confidentially.

Further, data and information obtained by Buyer with respect to Seller or the Property may be disclosed to the extent required by applicable law including, without limitation, as a response to service of process or subpoena and shall be further subject to disclosure in connection with any litigation between Seller and Buyer. In the event this Agreement is terminated or Buyer fails to perform hereunder, Buyer shall promptly return to Seller any statements, documents, schedules, exhibits and other written information obtained from Seller in connection with this Agreement or the transaction contemplated herein. The provisions of this Section 6.2 shall survive Closing or any termination of this Agreement, provided that following the Closing, Buyer shall be entitled to employ all data and information with respect to the Property as reasonably required in connection with the ownership and operation of the Property. Disclosure by Buyer in addition to that allowed above pursuant to provisions of this Section 6.2 will be allowed upon the prior consent of Seller which consent shall not be unreasonably withheld.

6.3 Title Review. The period commencing as of the Effective Date and continuing through the date which is thirty (30) days following the Effective Date shall be referred to as the "Title Review Period".

6.3.1 Title Material. Buyer acknowledges receipt of that certain preliminary title report ("Title Report") for the Property prepared by the Title Company as No. P-548232, dated March 16, 2022, together with a copy of the documents listed as exceptions therein. Buyer, at its election, and at its cost, may obtain a survey (“Survey”) of the Property prepared by a licensed engineer which Survey shall be sufficient to provide the basis for an ALTA owner's policy of title insurance. The Survey shall be obtained by Buyer, if at all, prior to the expiration of the Title Review Period and, if obtained, Buyer shall promptly deliver a copy of the Survey to Seller and the Title Company. It is acknowledged that Buyer will not be entitled to obtain an ALTA title insurance policy with respect to the Property if Buyer elects not to timely obtain a Survey with respect to such Property.

6.3.2 Review of Title. Buyer shall notify Seller in writing (the “Title Notice”) prior to the expiration of the Title Review Period which exceptions to title as shown on the Title Report and Survey, if any, will not be accepted by Buyer. If Buyer fails to notify Seller in writing of its disapproval of any exceptions to title by the expiration of the Title Review Period, Buyer shall be deemed to have approved the condition of title to the Property. If Buyer notifies Seller in writing that Buyer objects to any exceptions to title, Seller shall have two (2) business days after receipt of the Title Notice (but, in no event, later than two (2) business days prior to the Due Diligence Date) to notify Buyer (a) that Seller will remove such objectionable exceptions from title on or before the Closing, provided that Seller may extend the Closing for such period as shall be required to effect such cure, but not beyond ten (10) days; or (b) that Seller elects not to cause such exceptions to be removed.

If Seller fails to timely give such notice to Buyer, the Seller shall be deemed to have given notice to ITEM 9.8. ATTACHMENT 4

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Buyer under clause (b). Seller shall have no obligation to remove any title exceptions to which Buyer objects; provided, however, that Seller shall remove, as of the Closing, all liens evidencing any deed of trust (and related documents) or mortgages securing financing, as well as all judgment liens, mechanics' liens and liens evidencing delinquent taxes. The procurement by Seller of a commitment for the issuance of the Buyer's Title Policy (as defined in Section 3.2 hereof) or an endorsement thereto insuring Buyer against any title exception which was disapproved pursuant to this Section 6.3.2 shall be deemed a cure by Seller of such disapproval. If Seller gives or is deemed to have given Buyer notice under clause (b) above, Buyer shall have two (2) business days from the date on which such notice to Buyer is given (but in no event later than the Due Diligence Date) in which to notify Seller that Buyer will nevertheless proceed with the purchase and take title to the Property subject to such exceptions, or that Buyer will terminate this Agreement. If Buyer fails to timely give such notice, Buyer will be deemed to have elected to proceed with the purchase and take title to the Property subject to such exceptions. If this Agreement is terminated pursuant to the foregoing provisions of this Section 6.3.2, then neither Party shall have any further rights or obligations hereunder (except with respect to those matters expressly stated to survive such termination), the Deposit shall be returned to Buyer and each Party shall bear its own costs incurred hereunder.

6.3.3 Subsequent Title Defects. Buyer may, at or prior to Closing, notify Seller in writing (the “Subsequent Title Defects Notice”) of any objection(s) to title exceptions (a) raised by the Title Company between the expiration of the Title Review Period and the Closing and (b) not disclosed by the Title Company or the Survey or otherwise known to Buyer prior to the expiration of the Title Review Period, provided that Buyer must notify Seller of such objection(s) to title within two (2) business days of being made aware of the existence of such exception. If Buyer gives a Subsequent Title Defects Notice to Seller, Seller shall have two (2) business days after receipt of the Subsequent Title Defects Notice to notify Buyer (a) that Seller will remove such objectionable exceptions from title on or before the Closing, provided that Seller may extend the Closing for such period as shall be required to effect such cure, but not beyond ten (10) days; or (b) that Seller elects not to cause such exceptions to be removed. Seller shall have no obligation to remove any title exceptions to which Buyer objects; provided however, that Seller shall remove, as of the Closing, all liens evidencing any deed of trust (and related documents) securing financing, all mechanics liens and all judgment liens. The procurement by Seller of a commitment of the Title Company for Buyer's Title Policy or an endorsement thereto insuring Buyer against any title exception which was disapproved pursuant to this Section 6.3.3 shall be deemed a cure by Seller of such disapproval. If Seller gives notice under clause (b) above or fails to timely provide notice under clause (a) above.

Buyer shall have two (2) business days thereafter in which to notify Seller that Buyer will nevertheless proceed with the purchase and take title to the Property subject to such exceptions or that Buyer will terminate this Agreement. If Buyer fails to timely give such notice, Buyer shall be deemed to have elected to proceed with the purchase and take title to the Property subject to such exceptions. If this Agreement is terminated pursuant to the foregoing provisions of this Section 6.3.3 then neither Party shall have any further rights or obligations hereunder (except with respect to those matters expressly set forth to survive such termination), the Deposit shall be returned to Buyer and each Party shall bear its own costs incurred hereunder.

ITEM 9.8. ATTACHMENT 4

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6.4 Inspection: Right of Entry. Buyer and Buyer's agents, contractors, engineers, consultants, employees and other representatives (collectively, “Buyer's Representatives”) shall have the right, during the Due Diligence Period and subject to the terms and conditions of Section 6.6 below, to enter the Property to inspect the same (including the performance of environmental audits of the Property in accordance with the terms of Section 6.4.1 and 6.4.2 below), upon reasonable notice to Seller, provided that Seller shall be afforded the opportunity to participate in such visitations, and Buyer shall use best efforts to preserve the condition of the Property throughout the Due Diligence Period. Buyer shall keep the Property free and clear of any mechanics' liens, materialmen's liens or claims arising out of any of Buyer's activities or those of Buyer's Representatives on or with respect to the Property. All entries onto the Property by Buyer and all inspections and examinations thereof shall be at Buyer's sole cost and expense, shall be done in a workmanlike manner in accordance with all applicable codes, statutes, ordinances, rules, regulations and laws. Buyer shall not perform any test or inspection or carry out any activity at the Property which damages the Property in any way or which is physically intrusive into the soil of the Property without the prior written consent of Seller, which Seller may withhold in its sole and absolute discretion. After each entry onto any portion of the Property, Buyer, at its sole cost and expense shall repair (which shall include replacement where necessary) any damage to the Property arising from such entry. In connection with any inspections of the Property, Buyer and Buyer's Representatives will carry commercial general liability insurance adequate in Seller's reasonable judgment and name Seller as an additional insured thereon and will provide Seller with written evidence of same prior to any entry onto the Property. Buyer will give Seller reasonable prior notice of its intention to conduct any inspections or tests with respect to the Property and Seller reserves the right to have a representative present.

6.4.1 Phase I Environmental Audit. During the Due Diligence Period, Buyer may conduct (or have conducted on its behalf by an environmental auditor) a Phase I environmental audit of the Property, subject to the terms and conditions of Sections 6.4.2 and 6.6 below.

6.4.2 Environmental Conditions. In the event that Buyer shall enter the Property for purposes of conducting a Phase I environmental audit of the Property, Buyer shall provide Seller with at least forty-eight (48) hours' prior written notice of its intent thereof. Buyer shall not conduct a Phase II environmental audit of the Property without the prior written consent of Seller which consent may be withheld or granted in the sole and absolute discretion of Seller. To the extent permitted by law, Buyer shall not disclose to any third party, other than Buyer's consultants, agents and attorneys associated with any environmental investigation of the Property and other than as may be required by applicable law, the results of any of Buyer's inspections or testing of the Property.

Buyer shall in addition be entitled to disclose the results of Buyer's inspections or testing to investors, and potential lenders with respect to the Property and shall further be entitled to disclose such information as required by applicable law including, without limitation, as required by service of process or subpoena, and in connection with any litigation between Seller and Buyer. Following the Closing, Buyer shall further be entitled to use and disclose such information as reasonably required in connection with its ownership and operation of the Property. Prior to performing any environmental inspections or testing of the Property, Buyer shall obtain any required permits and authorizations and shall pay all applicable fees required by any public body or agency in connection therewith.

ITEM 9.8. ATTACHMENT 4

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6.4.3 Environmental and Natural Hazards Disclosure. California Health & Safety Code Section 25359.7 requires owners of non-residential real property who know, or have reasonable cause to believe, that any release of hazardous substances are located on or beneath the real property to provide written notice of same to the buyer of real property. Other applicable laws require Seller to provide certain disclosures regarding natural hazards affecting the Property. Seller agrees to make all necessary disclosures required by law within fifteen (15) business days after the Effective Date.

6.5 Buyer's Reports. If the Escrow fails to close for any reason other than Seller's material breach of this Agreement, then all studies, surveys (including, without limitation, the Survey), if any, reports, test results and analyses concerning the Property prepared by, for or on behalf of Buyer in connection with the Property (collectively, “Buyer's Reports”) shall at the option of Seller, immediately be delivered and assigned, to the extent assignable, to Seller free and clear of all claims and at no cost, expense or liability to Seller. Buyer shall not be required to deliver to Seller internally prepared reports or analyses concerning the valuation or potential performance of the Property, nor shall Buyer be required to deliver to Seller any document which is privileged or is otherwise legally protected from disclosure. Any Buyer's Reports delivered to Seller at Seller's request pursuant to this Section 6.5 shall be delivered without representation or warranty, nor shall Seller assert any warranty or rights against the consultants of Buyer who have prepared such Buyer's Reports.

6.6 Indemnity. Buyer shall indemnify, protect, defend by counsel reasonably acceptable to Seller, and hold Seller harmless from and against any and all costs, expenses, claims, demands, losses or liens (including, without limitation, mechanics' liens), including reasonable attorneys' fees, arising from or in any fashion related to the entry by Buyer or Buyer's Representatives on the Property or the performance by Buyer or Buyer's Representatives of any testing or investigations of the Property except with respect to any loss or liability incurred by Seller resulting from the mere discovery by Buyer or Buyer's Representatives of the presence of hazardous materials at the Property or the existence of other defects with respect to the Property. Without limiting the scope or generality of the foregoing indemnity, Buyer shall not permit any mechanics', materialmen's, or other lien against all or any part of the Property to exist as the result of any activity by Buyer or Buyer's Representatives undertaken in connection with the Property. If any such lien shall be filed against the Property or any portion of the Property, Buyer shall cause the lien to be discharged within five (5) business days after the filing thereof. The provisions of this Section 6.6 shall survive the Closing and delivery of the Deed and shall further survive any earlier termination of this Agreement.

6.7 Approval by Buyer. Buyer shall have the right to review and approve, in its sole, absolute and subjective discretion, during the Due Diligence Period all aspects of the Property, including, but not limited to, (i) the Due Diligence Materials, (ii) the physical and environmental condition of the Property, the condition of the soil, the condition of the ground water, and the presence or absence of any hazardous materials at the Property, (iii) the financial condition of the Property, including, without limitation, the feasibility, convertibility, desirability and suitability of the Property for Buyer's intended use and purposes, (iv) the legal condition of the Property, (v) the existence or non-existence of any governmental or quasi-governmental entitlements, if any, affecting the Property or any portion of the Property, (vi) any dimensions or specifications of the Property or any part thereof, ITEM 9.8. ATTACHMENT 4

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(vii) the zoning, building and land use restrictions applicable to the Property or any portion thereof, and (viii) all other matters which Buyer deems relevant to its purchase of the Property. In the event that Buyer elects to approve all of the matters as summarized in this Section 6.7 with respect to the Property, Buyer shall give written notice of such approval to Seller (“Approval Notice”) on or before the Due Diligence Date. The Approval Notice, if given by Buyer must be in the form of Exhibit 6.7 attached hereto. If Buyer fails to timely give the Approval Notice to Seller, Buyer shall conclusively be deemed to have disapproved the Property and more particularly the matters set forth in this Section 6.7 in which case this Agreement shall terminate, all rights and obligations hereunder of each Party shall be at an end (except those matters which are specifically stated in this Agreement to survive the termination), the Deposit shall be promptly returned to Buyer and each Party shall bear its own costs incurred hereunder. If Buyer timely gives the Approval Notice to Seller, then Buyer shall be considered to have elected to proceed with the purchase of the Property in accordance with the provisions of this Agreement, Buyer shall have no further rights with respect to this Section 6.7, the conditions for the benefit of Buyer as set forth in Section 7.2.5 shall be considered to have been satisfied and Buyer shall have no further rights to assert the conditions set forth in such Section.

7. CONDITIONS TO CLOSING.

7.1 Seller's Conditions. The obligation of Seller to sell and convey the Property pursuant to this Agreement is subject to the satisfaction on or before the Closing Date (or such earlier date as is specifically set forth in this Agreement) of all of the following conditions precedent, which conditions are for the benefit of Seller only and the satisfaction of which may be waived only in writing by Seller:

7.1.1 Buyer's Deliveries. Delivery and execution by Buyer of all monies, items and instruments required to be delivered by Buyer pursuant to this Agreement;

7.1.2 Buyer's Representations. Buyer's warranties and representations set forth herein shall be true and correct in all material respects as of the Closing Date;

7.1.3 Buyer's Performance. Buyer shall have performed each and every agreement to be performed by Buyer pursuant to this Agreement; and

7.1.4 Approval Notice. Buyer shall have timely given the Approval Notice to Seller in accordance with the provisions of Section 6.7.

7.2 Buyer's Conditions. The obligation of Buyer to acquire the Property pursuant to this Agreement is subject to the satisfaction on or before the Closing Date (or such earlier date as is specifically set forth in this Agreement) of all of the following conditions precedent which conditions are for the benefit of Buyer only and the satisfaction of which may be waived only in writing by Buyer:

7.2.1 Seller's Deliveries. Delivery and execution by Seller of all instruments and other items required to be delivered by Seller pursuant to this Agreement; ITEM 9.8. ATTACHMENT 4

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7.2.2 Seller's Representations. Seller's warranties and representations set forth herein shall be true and correct in all material respects as of the Closing Date;

7.2.3 Seller's Performance. Seller shall have performed each and every agreement to be performed by Seller pursuant to this Agreement;

7.2.4 Buyer's Title Policy. As of the Closing, the Title Company shall have issued or shall have committed to issue, upon the sole condition of the payment of its regularly scheduled premium, the Buyer's Title Policy; and

7.2.5 Buyer's Approval. On or before the Due Diligence Date, Buyer shall have given the Approval Notice to Seller in accordance with the provisions of Section 6.7.

7.3 Failure of Conditions. If any of the conditions set forth in Sections 7.1 or 7.2 are not timely satisfied or waived, for any reason other than the default of Buyer or Seller under this Agreement, then this Agreement and the rights and obligations of Buyer and Seller shall terminate and be of no further force or effect except as to those matters as specifically stated in this Agreement to survive termination, in which case the Title Company is hereby instructed to return promptly to the Party which placed such items into Escrow all funds (including the Deposit which is to be promptly returned to Buyer) and documents which are held by the Title Company on the date of termination.

7.4 Satisfaction of Conditions. The occurrence of the Closing shall constitute satisfaction of conditions set forth in Sections 7.1 and 7.2 not otherwise specifically satisfied or waived by Buyer or Seller.

8. DELIVERIES INTO ESCROW.

8.1 Deliveries by Seller. On or before the Closing, Seller shall deliver or cause to be delivered into Escrow the following documents duly executed and acknowledged where appropriate:

8.1.1 Deed. A grant deed (the “Deed”) in the form attached hereto as Exhibit 8.1.1 conveying the Property to Buyer as provided in this Agreement which Deed is to be duly executed and acknowledged by Seller;

8.1.2 Assignment. The Assignment in the form attached hereto as Exhibit 8.1.3 which is to be duly executed by Seller and Buyer;

8.1.3 FIRPTA. A certificate of non-foreign status to confirm that Buyer is not required to withhold part of the Purchase Price pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended which is to be duly executed by Seller;

8.1.4 Form 590. Franchise Tax Board Form (590) which is to be duly executed by Seller;
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8.1.5 Seller's Authority. Such proof of Seller's authority and authorization to enter into this Agreement and consummate the transaction contemplated hereby and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Seller to act for and bind Seller as may be reasonably required by the Title Company; and

8.1.6 Other Documents. Such other documents as may be reasonably necessary and appropriate to complete the Closing of the transaction contemplated herein.

8.2 Deliveries by Buyer. On or before the Closing, Buyer shall deliver or cause to be delivered into Escrow the following funds and documents duly executed and acknowledged where appropriate:

8.2.1 Funds. Immediately available funds, which together with the Deposit equal the Purchase Price together with such additional sums as are necessary to pay the Buyer's share of closing costs, prorations and any fees as more particularly set forth in Section 9 below;

8.2.2 Assignment. The Assignment which is to be duly executed by Seller and Buyer;

8.2.3 Buyer's Authority. Such proof of Buyer's authority and authorization to enter into this Agreement and consummate the transaction contemplated by this Agreement, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Buyer to act for and bind Buyer as may be reasonably required by the Title Company or Seller;

8.2.4 PCOR. A preliminary change of ownership report in form and substance acceptable to Seller and suitable for filing in accordance with applicable law; and

8.2.5 Other Documents. Such other documents as may be reasonably necessary and appropriate to complete the Closing of the transaction contemplated herein.

8.3 Delivery to Buyer Upon Closing. Seller shall deliver possession of the Property to Buyer upon the Closing.

8.4 Delivery Following Closing. Promptly following the Closing, Seller shall deliver to Buyer: (i) all soils, seismic, and geologic reports in the possession of Seller; and (ii) such other matters and documents in the possession of Seller or reasonably accessible to Seller as Buyer may reasonably request which relate to the Property and are not confidential and/or proprietary.

9. PRORATIONS: CLOSING COSTS: CREDITS.

9.1 Prorations.

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9.1.1 Taxes and Assessments. All nondelinquent real estate taxes on the Property shall be prorated through Escrow based on the actual current tax bill as of 12:01 a.m. on the Closing Date with Seller responsible for all such taxes attributable to the period prior to such date and time and Buyer responsible for all such taxes attributable to the period following such date and time.

If after the Closing, supplemental real estate taxes are assessed against the Property by reason of any event occurring prior to the Closing Date, Buyer and Seller shall adjust the proration of the real estate taxes following the Closing. Any delinquent taxes on the Property shall be paid at the Closing from funds accruing to Seller. Any current installments with respect to assessments on the Property shall be prorated through Escrow as of 12:01 a.m. on the Closing Date and Seller shall have no obligation to pay any amount with respect to any such assessments other than the prorated current installment.

Any refund in connection with real estate taxes relating to the Property attributable to the period prior to the Closing Date shall be paid to Seller. Buyer does not pay ad valorem taxes.

9.1.2 Calculation of Prorations. All prorations shall be made on the basis of the actual number of days of the month which have elapsed as of 12:01 a.m. on the Closing Date.

9.1.3 Proforma Closing Statement. Buyer and Seller shall reasonably cooperate to produce at least one (1) business day prior to the Closing Date, a schedule of prorations in accordance with the provisions of this Agreement which is as complete and accurate as is then reasonably possible. All prorations which can be reasonably estimated as of the Closing Date shall be made in Escrow on the Closing Date. All other prorations and any adjustments to the initial estimated prorations, shall be made by Buyer and Seller within thirty (30) days following the Closing or such later time as may be reasonably required, in the exercise of due diligence to obtain the necessary information. Any net credit due one Party from the other as the result of such post-Closing prorations and adjustments shall be paid to the other in cash immediately upon the Parties' written agreement to a final schedule of post-Closing adjustments and prorations. The provisions of Section 9.1 shall survive the Closing and the recordation of the Deed.

9.2 Closing Costs. Seller shall pay (i) the premium for the standard coverage CLTA portion of the Buyer’s Title Policy; (ii) all documentary and transfer taxes; (iii) fifty percent (50%) of all escrow fees, costs and recording costs; and (iv) its own attorneys' fees. Buyer shall pay (i) fifty percent (50%) of all escrow fees, costs and recording costs; (ii) the incremental premium for the ALTA portion of the Buyer’s Title Policy, if applicable, including any endorsements; (iii) the cost of the Survey, if applicable; and (iv) its own attorneys' fees.

9.3 Other Expenses. Buyer and Seller shall each pay all legal and professional fees and fees of their consultants incurred by Buyer and Seller, respectively.

10. CONDITION OF PROPERTY PENDING THE CLOSING. Seller hereby represents and warrants to its actual knowledge, without inquiry, that, except as disclosed in writing to Buyer, as of the Effective Date: (i) Seller has received no written notice, warning, notice of violation, administrative complaint or judicial complaint alleging that conditions on the Property in violation of any law regarding the presence of hazardous materials or informing Seller that the Property is subject to investigation or inquiry regarding hazardous materials on the Property; (ii) there is no monitoring ITEM 9.8. ATTACHMENT 4

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program required by the Environmental Protection Agency or any other governmental agency concerning the Property; (iii) Seller has disclosed to Buyer all information, records, and studies in Seller’s possession or reasonably available to Seller relating to the Property concerning hazardous materials; (iv) except as set forth in the Title Report, no licenses, leases or other agreement allowing any third party rights to use the Property are in force; and (v) Seller has received no written notice of any threatened or pending condemnation, eminent domain, or similar proceedings affecting the Property or any portion thereof.

11. REPRESENTATIONS AND WARRANTIES.

11.1 No Representations or Warranties by Seller. Except as expressly set forth in this Agreement, Seller has not made any warranty or representation, express or implied, written or oral, concerning the Property.

11.2 Seller's Representations and Warranties. Seller represents and warrants to Buyer that:

11.2.1 Authority. This Agreement constitutes the valid and binding obligation of Seller and is enforceable against Seller in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforcement of creditors' rights generally and general equitable principles. Seller has full power, right and authority to enter into and perform this Agreement;

11.2.2 Foreign Person. Seller is not a “foreign person” as defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and the income tax regulations issued thereunder; and

11.2.3 OFAC. Seller is in compliance with the requirements of Executive Order No. 133224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the “Order”) and other similar requirements contained in the rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and in any enabling legislation or other Executive Orders or regulations in respect thereof (the Order and such other rules, regulations, legislation, or orders are collectively called the “Orders”). Seller: (a) is not listed on the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to the Order and/or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Orders (such lists are collectively referred to as the “Lists”); (b) is not a person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Orders; or (c) is not owned or controlled by, or acts for or on behalf of, any person or entity on the Lists or any other person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Orders.

11.3 Buyer's Representations and Warranties. Buyer represents and warrants to Seller that:

ITEM 9.8. ATTACHMENT 4

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11.3.1 Authority to Execute; Organization. This Agreement constitutes the valid and binding obligation of Buyer and is enforceable against Buyer in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforcement of creditors' rights generally and general equitable principles;

11.3.2 No Encumbrance. Prior to Closing, Buyer shall neither encumber nor cause any liens to be created against the Property in any way, nor shall Buyer, at any time, record this Agreement or a memorandum thereof;

11.3.3 Principal; Financial Resources. Buyer is acting as a principal in connection with the transaction as contemplated by this Agreement and presently possesses, and will possess as of the Closing, the financial resources to timely consummate the purchase and sale transaction contemplated by this Agreement; and

11.3.4 OFAC. Buyer is in compliance with the Orders. Buyer: (a) is not listed on the Lists; (b) is not a person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Orders; or (c) is not owned or controlled by, or acts for or on behalf of, any person or entity on the Lists or any other person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Orders.

12. INTENTIONALLY DELETED.

13. CONDEMNATION. In the event that all or any substantial portion of the Property shall be taken in condemnation or under the right of eminent domain after the Effective Date and before the Closing, Buyer may, at its option either (a) terminate this Agreement by written notice thereof to Seller and receive an immediate refund of the Deposit, together with any interest earned thereon, or (b) proceed to close the transaction contemplated herein pursuant to the terms hereof in which event Seller shall assign and turn over to Buyer, and Buyer shall be entitled to receive and keep all awards for the taking by eminent domain which accrue to Seller and there shall be no reduction in the Purchase Price. For purposes of this provision, a “substantial portion” of the Property shall mean (i) any material portion of the Property is taken; or (ii) the access to the Property is materially reduced or restricted.

In the event that a portion of the Property less than a substantial portion is taken, or Buyer elects not to terminate this Agreement, Buyer shall proceed to close the transaction contemplated herein and there shall be no reduction in the Purchase Price and Seller shall assign and turn over to Buyer and Buyer shall be entitled to receive and keep all awards for the taking by eminent domain which accrue to Seller.BROKER FEES AND COMMISSIONS. Buyer represents and warrants to the Seller that no real estate broker or agent has been authorized to act on Buyer's behalf except for Daniel Mueller of Century 21 Real Estate (“Buyer's Agent”). Seller shall be responsible upon Closing of the proposed transaction for the payment of any real estate brokerage commission due Buyer’s Agent and Seller's Broker, Newmark, pursuant to the terms of a separate written agreement. Buyer and Seller each indemnifies the other Party and agrees to defend and hold the other Party harmless from any and all demands or claims which now or hereafter may be asserted against the other Party for any brokerage fees, commissions or similar types of compensation which may be claimed by any broker as a result ITEM 9.8. ATTACHMENT 4

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of the indemnifying Party's acts in connection with this transaction, except as otherwise provided herein.

15. NOTICES. All notices, requests or demands to a Party hereunder shall be in writing and shall be given or served upon the other Party by personal service, by certified return receipt requested or registered mail, postage prepaid, or by Federal Express or other nationally recognized commercial courier, charges prepaid, addressed as set forth below, with a copy also sent by email. Any such notice, demand, request or other communication shall be deemed to have been given upon the earlier of personal delivery thereof, three (3) business days after having been mailed as provided above, or one (1) business day after delivery through a commercial courier, as the case may be. Each Party shall be entitled to modify its address by notice given in accordance with this Section 15.

If to Seller: Frank Berrueta
P.O. Box 61183
Sunnyvale, CA 94088
Email: [email protected]
With a copy to: Maria Berrueta
1600 Frontero Avenue
Los Altos, CA 94024
Email: [email protected]
and to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attn: Real Estate Department/SPR
Email: [email protected]
If to Buyer: City of Rancho Cordova
2729 Prospect Park Drive
Rancho Cordova, CA 94565
Attn: City Manager

16. LIMITATIONS ON REPRESENTATIONS AND WARRANTIES.

16.1 No Reliance on Documents. Except as expressly stated herein, Seller makes no representation or warranty as to the truth, accuracy or completeness of any materials, data or information delivered by Seller or its agents to Buyer in connection with the transaction contemplated hereby. Buyer acknowledges and agrees that all materials, data and information delivered by Seller to Buyer in connection with the transaction contemplated hereby are provided to Buyer as a convenience ITEM 9.8. ATTACHMENT 4

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only and that any reliance on or use of such materials, data or information by Buyer shall be at the sole risk of Buyer. Neither Seller, nor any affiliate of Seller, nor the person or entity which prepared any report or reports delivered by Seller to Buyer shall have any liability to Buyer for any inaccuracy in or omission from any such reports.

16.2 As-Is Sale: Disclaimers. EXCEPT AS EXPRESSLY SET FORTH IN THIS

AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND

HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY

KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY,

INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

BUYER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT THE PROPERTY “AS IS, WHERE IS, WITH ALL FAULTS”, EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT. BUYER HAS NOT RELIED AND WILL NOT RELY ON,

AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED

WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION

PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY,

WITHOUT LIMITATION, OFFERING PACKAGES DISTRIBUTED WITH RESPECT TO THE

PROPERTY) MADE OR FURNISHED BY SELLER OR ANY EMPLOYEES OR AGENTS

REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR

GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT. BUYER ALSO ACKNOWLEDGES THAT THE

PURCHASE PRICE REFLECTS AND TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD “AS-IS.”

BUYER REPRESENTS TO SELLER THAT BUYER HAS CONDUCTED, OR WILL

CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY,

INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL

CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY OR DESIRABLE TO SATISFY

ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR

NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY

HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND

WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY

OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO,

OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON CLOSING, BUYER SHALL

ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO,

CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL

CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER'S INVESTIGATIONS, AND

BUYER, UPON CLOSING (EXCEPT WITH RESPECT TO THE EXPRESS REPRESENTATIONS

AND WARRANTIES OF SELLER SET FORTH IN THIS AGREEMENT), SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND SELLER’S OFFICERS, ITEM 9.8. ATTACHMENT 4

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DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY

AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN

TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING

REASONABLE ATTORNEYS' FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN

OR UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST

SELLER (AND SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND

AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT

CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY

APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY. BUYER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 WHICH PROVIDES THAT:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO

EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE

AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY

AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”

BUYER'S INITIALS SELLER'S INITIALS

16.3 Material Change. Seller shall promptly notify Buyer of any change in any condition with respect to the Property or any event or circumstance which makes any representation or warranty of Seller as set forth in Section 11.2 of this Agreement materially untrue or misleading or any covenant of Seller under this Agreement incapable of being performed. In no event shall Seller be liable to Buyer for, or be deemed to be in default pursuant to this Agreement by reason of any inaccuracy of a representation or warranty which results from any change that (i) occurs between the Effective Date and the Closing Date; and (ii) is expressly permitted under the terms of this Agreement or is beyond the reasonable control of Seller to prevent; provided, however, that the occurrence of a material change which is not permitted hereunder shall constitute the non-fulfillment of the condition set forth in Section 7.2.2 hereof. If, in spite of such nonfulfillment of the conditions set forth in such Section 7.2.2 the Closing occurs, Seller's representations and warranties set forth in this Agreement shall be deemed to have been modified by all statements made in any notice or notices of modification as given by Seller to Buyer pursuant to this Section 16.3 prior to the Closing.

16.4 Survival of Seller's Representations and Warranties. The representations and warranties of Seller set forth in Section 11.2 hereof (as such may have been updated as of the Closing in accordance with Section 16.3) in accordance with the terms of this Agreement, shall survive Closing for a period of six (6) months. No claim for a breach of any representation or warranty of Seller shall be actionable or payable if the breach in question results from or is based on a condition, state of facts or other matter which was known to Buyer prior to Closing. Seller shall have no liability to Buyer for ITEM 9.8. ATTACHMENT 4

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a breach of any representation or warranty (a) unless the valid claims for all such breaches collectively aggregate more than Twenty-Five Thousand Dollars ($25,000), in which event the amount of such valid claims in excess thereof shall be actionable, up to the Maximum (as defined in this Section), and (b) unless written notice containing a description of the specific nature of such breach shall have been given by Buyer to Seller prior to the expiration of said six (6) month period and any action shall have been commenced by Buyer against Seller within eight (8) months of Closing. Buyer agrees to first seek recovery under any insurance policies prior to seeking recovery from Seller. As used herein, the term “Maximum” shall mean the total aggregate amount of Fifty Thousand Dollars ($50,000).

16.5 Survival of Limitations. The provisions of this Article 16 shall survive Closing or any termination of this Agreement.

17. MISCELLANEOUS.

17.1 Time. Time is of the essence in the performance of each Party's obligations hereunder; however, if the final date of any period which is set out in any provision of this Agreement falls on a Saturday, Sunday or legal holiday under the laws of the United States or the State in which the Property is located, then, in such event, the time of such period shall be extended to the next day which is not a Saturday, Sunday or legal holiday. The time in which any act provided under this Agreement is to be done, shall be computed by excluding the first day and including the last day, unless the last day is a Saturday, Sunday or legal holiday under the laws of the State of California, and then it is also so excluded. As used herein, “business days” shall mean days in which banks in the State of California are open.

17.2 Attorneys' Fees. If any legal action, arbitration or other proceeding is commenced to enforce or interpret any provision of this Agreement, the prevailing Party shall be entitled to an award of its attorneys' fees and expenses. The phrase “prevailing party” shall include a Party who receives substantially the relief desired whether by dismissal, summary judgment, judgment or otherwise.

17.3 No Waiver. No waiver by any Party of the performance or satisfaction of any covenant or condition shall be valid unless in writing and shall not be considered to be a waiver by such Party of any other covenant or condition hereunder.

17.4 Entire Agreement. This Agreement contains the entire agreement between the Parties regarding the Property and supersedes all prior agreements, whether written or oral, between the Parties regarding the same subject. This Agreement may only be modified in writing.

17.5 Survival. The provisions of this Agreement shall not merge with the delivery of the Deed but shall, except as otherwise provided in this Agreement, survive the Closing.

17.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators and successors and assigns of Seller and Buyer; provided, however, that Buyer shall not assign Buyer's rights and obligations pursuant to this Agreement to any Party without the prior written consent of Seller, which consent may be withheld in ITEM 9.8. ATTACHMENT 4

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its reasonable discretion. In no event, however, shall Buyer be relieved of any of its liability under this Agreement.

17.7 Severability. In the case that any one or more of the provisions contained in this Agreement are for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

17.8 Captions. Paragraph titles or captions contained in this Agreement are inserted as a matter of convenience only and for reference, and in no way define, limit, extend or describe the scope of this Agreement.

17.9 Exhibits. All exhibits attached hereto shall be incorporated herein by reference as if set out herein in full.

17.10 Relationship of the Parties. The Parties acknowledge that neither Party is an agent for the other Party, and that neither Party shall or can bind or enter into agreements for the other Party.

17.11 Governing Law. This Agreement and the legal relations between the Parties hereto shall be governed by and be construed in accordance with the laws of the State of California.

17.12 Review by Counsel. The Parties acknowledge that each Party and its counsel have reviewed and approved this Agreement, and the Parties hereby agree that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Agreement or any amendments or exhibits hereto.

17.13 Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original. This Agreement shall only be effective if a counterpart is signed by both Seller and Buyer.

17.14 Filing of Reports. The Title Company shall be solely responsible for the timely filing of any reports or returns required pursuant to the provisions of Section 6045(e) of the Internal Revenue Code of 1986 as amended (and any similar reports or returns required under any state or local laws) in connection with the Closing.

17.15 Third Party Beneficiaries. This Agreement is for the benefit of Buyer and Seller and their respective agents, employees, shareholders, officers, directors, partners and successors and no third party shall be entitled to the benefit of any of the provisions of this Agreement.

17.16 Facsimile Signatures. Seller and Buyer each (a) has agreed to permit the use from time to time, where appropriate, of facsimile signatures, including DocuSign, in order to expedite the transaction contemplated by this Agreement, (b) intends to be bound by its respective telecopy signature, (c) is aware that the other will rely on the telecopied signature, and (d) acknowledges such ITEM 9.8. ATTACHMENT 4

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reliance and waives any defenses to the enforcement of this Agreement and the documents affecting the transaction contemplated by this Agreement based on the fact that a signature was sent by facsimile only.

18. DEFAULT.

18.1 Liquidated Damages. FROM AND AFTER THE EXPIRATION OF THE

DUE DILIGENCE PERIOD, IN THE EVENT THE SALE OF THE PROPERTY AS

CONTEMPLATED HEREUNDER IS NOT CONSUMMATED DUE TO A DEFAULT OF BUYER,

THE DEPOSIT (INCLUDING ALL INTEREST EARNED FROM THE INVESTMENT THEREOF) SHALL BE PAID TO AND RETAINED BY SELLER AS LIQUIDATED DAMAGES. THE

PARTIES ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE EVENT THAT

THE SALE IS NOT CONSUMMATED WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY SEPARATELY EXECUTING THIS SECTION 18.1 BELOW, THE PARTIES ACKNOWLEDGE THAT THE NONREFUNDABLE

DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'

REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS SELLER'S EXCLUSIVE

REMEDY IN LAW OR IN EQUITY AGAINST BUYER IN THE EVENT THE CLOSING DOES

NOT OCCUR AND AS SELLER'S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER ARISING FROM SUCH FAILURE OF THE SALE TO CLOSE. IN ADDITION, BUYER SHALL PAY ALL TITLE, SURVEY AND ESCROW CANCELLATION CHARGES.

NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL THIS SECTION 18.1 LIMIT

THE DAMAGES RECOVERABLE BY EITHER PARTY AGAINST THE OTHER PARTY DUE

TO (A) THE OTHER PARTY'S OBLIGATION TO INDEMNIFY SUCH PARTY IN ACCORDANCE WITH THIS AGREEMENT, OR (B) THIRD PARTY CLAIMS. BY THEIR SEPARATELY EXECUTING THIS SECTION 18.1 BELOW, BUYER AND SELLER

ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTOOD THE ABOVE PROVISION

COVERING LIQUIDATED DAMAGES, AND THAT EACH PARTY WAS REPRESENTED BY

COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS EXECUTED.

BUYER'S INITIALS SELLER'S INITIALS

18.2 Default by Seller. In the event the sale of the Property as contemplated hereunder is not consummated due to Seller's default hereunder, Buyer shall be entitled, as its sole remedy, either (a) to receive the return of the Deposit, which return shall operate to terminate this Agreement and release Seller from any and all liability hereunder, or (b) to enforce specific performance of Seller's obligation to convey the Property to Buyer in accordance with the terms of this Agreement, it being understood and agreed that the remedy of specific performance shall not be available to enforce any other obligation of Seller hereunder. Buyer expressly waives its rights to seek damages in the event of Seller's default hereunder. Buyer shall be deemed to have elected to terminate ITEM 9.8. ATTACHMENT 4

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this Agreement and receive back the Deposit if Buyer fails to file suit for specific performance against Seller in a court having jurisdiction in the county and state in which the Property is located, on or before thirty (30) days following the date upon which Closing was to have occurred.

SIGNATURES ON FOLLOWING PAGE
ITEM 9.8. ATTACHMENT 4

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

SELLER:
___________________________________,
Jennifer Berrueta Vergara, as Trustee of the
Jennifer Berrueta Vergara Living Trust
dated 5/10/12, as to an undivided 1/3 interest
___________________________________,
Maria C. Berrueta, Trustee of the Berrueta
Family Revocable Trust dated 12/19/05 (Bypass Trust), as to an undivided 1/3 interest ___________________________________,
Francisco Berrueta, Jr., a married man as his
sole and separate property, as to an
undivided 1/3 interest
ITEM 9.8. ATTACHMENT 4

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Buyer:

City of Rancho Cordova
By:

City Manager
Attest:
___________________________________
City Clerk
Approved as to Form:
___________________________________
City Attorney
ITEM 9.8. ATTACHMENT 4

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LIST OF EXHIBITS
Exhibit 1.1 - Legal Description of Property
Exhibit 6.7 - Form of Approval Notice
Exhibit 8.1.1 - Form of Grant Deed
Exhibit 8.1.3 - Form of Assignment and Assumption Agreement ITEM 9.8. ATTACHMENT 4

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EXHIBIT 1.1

LEGAL DESCRIPTION OF PROPERTY
Order Number: P-548232
Exhibit “A”
Legal Description
The land described herein is situated in the State of California, County of Sacramento, City of Rancho Cordova, described as follows:

Parcel One:

Parcel 1, as shown on that certain map entitled "Parcel Map "Lot 5 & Por. Lot 4 of Block 3, Lots 1 and 3 & Por. Lots 2, 4 and 5 of Block 7, Natomas Consolidated of California Subdivision No. 2, recorded in Book 14 B.M. 20 and Por. of Proj. Sec. 36, T. 9N., R.6E., M.D.M." , which map was filed for record July 24, 1979 in Book 50 of Parcel Maps, at Page 26 APN: 072-0480-022-0000
Parcel Two:

Parcel 2, as shown on that certain map entitled "Parcel Map "Lot 5 & Por. Lot 4 of Block 3, Lots 1 and 3 & Por. Lots 2, 4 and 5 of Block 7, Natomas Consolidated of California Subdivision No. 2, recorded in Book 14 B.M. 20 and Por. of Proj. Sec. 36, T. 9N., R.6E., M.D.M.", which map was filed for record July 24, 1979 in Book 50 of Parcel Maps, at Page 26 APN: 072-0480-002-0000
ITEM 9.8. ATTACHMENT 4

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EXHIBIT 6.7

FORM OF APPROVAL NOTICE
_______________, 20__
[SELLER’S ADDRESS]
Re: Purchase and Sale Agreement (“Agreement”) dated ___________ by and between __________________ (“Seller”) and ____________________ (“Buyers”) Ladies and Gentlemen:

With reference to the above Agreement, and specifically with reference to Section 6.7 of the above Agreement, please consider this letter notice of Buyer's approval of all of the matters described in Section 6.7 of the Agreement.

This letter constitutes the “Approval Notice” as defined in the Agreement.

Very truly yours,
By:____________________________
Name: _________________________
Its: ____________________________
ITEM 9.8. ATTACHMENT 4

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EXHIBIT 8.1.1

FORM OF GRANT DEED

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Rancho Cordova
2729 Prospect Park Drive
Rancho Cordova, CA 94565
Attn: City Clerk

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
APN: _______________________________

GRANT DEED
The undersigned grantor(s) declare(s):

Documentary transfer tax is $_____________
City Transfer Tax is: $_______________
[ ] computed on full value of property conveyed, or
[ ] computed on full value less value of liens or encumbrances remaining at time of sale, [X] City of Rancho Cordova
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Jennifer Berrueta Vergara, as Trustee of the Jennifer Berrueta Vergara Living Trust dated 5/10/12, Maria C.

Berrueta, Trustee of the Berrueta Family Revocable Trust dated 12/19/05 (By-pass Trust), and Francisco Berrueta, Jr., a married man as his sole and separate property, each as to an equal undivided interest (collectively, “Grantor”) hereby grants to the City of Rancho Cordova, a California municipal corporation, that certain real property (the “Property”) located in the City of Rancho Cordova, County of Sacramento, State of California, as more particularly described on Exhibit A attached hereto, together with all of Grantor's right, title and interest in and to all rights, privileges and easements, appurtenant to the Property. The conveyance hereunder is made subject to matters of record or apparent from an inspection or survey as of the date hereof.

ITEM 9.8. ATTACHMENT 4

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IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of _______________, 2022.

GRANTOR:
________________________________________,
Jennifer Berrueta Vergara, as Trustee of the Jennifer
Berrueta Vergara Living Trust dated 5/10/12, as to
an undivided 1/3 interest
________________________________________,
Maria C. Berrueta, Trustee of the Berrueta Family
Revocable Trust dated 12/19/05 (By-pass Trust), as
to an undivided 1/3 interest
________________________________________,
Francisco Berrueta, Jr., a married man as his sole
and separate property, as to an undivided 1/3
interest
ITEM 9.8. ATTACHMENT 4

Exhibit A to Grant Deed
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EXHIBIT A
(To Be Attached)
ITEM 9.8. ATTACHMENT 4

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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
)
County of Santa Clara )
On _______________________ before me, ________________________________, a Notary Public, personally appeared _____________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing is true and correct.

Witness my hand and official seal.
(Seal)
(Signature)
ITEM 9.8. ATTACHMENT 4

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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
)
County of Santa Clara )
On _______________________ before me, ________________________________, a Notary Public, personally appeared _____________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing is true and correct.

Witness my hand and official seal.
(Seal)
(Signature)
ITEM 9.8. ATTACHMENT 4

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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
)
County of Santa Clara )
On _______________________ before me, ________________________________, a Notary Public, personally appeared _____________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing is true and correct.

Witness my hand and official seal.
(Seal)
(Signature)
ITEM 9.8. ATTACHMENT 4

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CERTIFICATE OF ACCEPTANCE
This is to certify that the interest in real property conveyed by the Grant Deed dated ______________, 2022, from Jennifer Berrueta Vergara, as Trustee of the Jennifer Berrueta Vergara Living Trust dated 5/10/12, Maria C. Berrueta, Trustee of the Berrueta Family Revocable Trust dated 12/19/05 (By-pass Trust), and Francisco Berrueta, Jr., a married man as his sole and separate property, each as to an equal undivided interest, to the City of Rancho Cordova, a municipal corporation (“City”), is hereby accepted on behalf of the City by its City Manager pursuant to authority conferred by Resolution No. _________, adopted by the City Council of the City of Rancho Cordova on ____________, and that the City consents to recordation of the Grant Deed by its duly authorized officer.

Dated ______________, 2022

CITY OF RANCHO CORDOVA, a municipal corporation
By: __________________________________
City Manager
ITEM 9.8. ATTACHMENT 4

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EXHIBIT 8.1.3

FORM OF ASSIGNMENT & ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the “Assignment”) is dated as of ___________, 2022 by and between Jennifer Berrueta Vergara, as Trustee of the Jennifer Berrueta Vergara Living Trust dated 5/10/12, Maria C. Berrueta, Trustee of the Berrueta Family Revocable Trust dated 12/19/05 (Bypass Trust), and Francisco Berrueta, Jr., a married man as his sole and separate property, each as to an equal undivided interest (“collectively, Assignor”) and ____________________, a _______________________________ (“Assignee”).

RECITALS
A. Assignor and Assignee entered into that certain Purchase and Sale Agreement dated as of ______________, 2022 (“Agreement”) with respect to the sale of certain Property (as defined in the Agreement).

B. Pursuant to the Agreement, Assignor is obligated to assign to Assignee all assignable current licenses, permits, approvals and entitlements issued, granted or existing in connection with the Property (as defined in the Agreement) as well as any and all assignable development rights and other intangible rights, interests or privileges directly relating to or used directly in connection with the Property (collectively, the “Intangible Property”).

NOW THEREFORE, for good and valuable consideration, Assignor and Assignee agree:

AGREEMENT

1. Assignment of Intangible Property. Assignor hereby assigns, sells, transfers, sets over and delivers to Assignee all of Assignor's right, title and interest in and to the Intangible Property and Assignee hereby accepts such assignment.

2. Additional Assumption. Assignee hereby assumes and agrees to perform, fulfill and comply with all covenants and obligations to be performed, fulfilled or complied with by the owner of the Property with respect to the Intangible Property accruing from and after the Closing Date.

3. Binding Effect. This Assignment shall inure to the benefit of and shall be binding upon the Parties hereto and their respective successors and assigns.

4. Defined Terms. Except as otherwise specifically provided in this Assignment, defined terms employed in this Assignment shall have the same meaning as described in the Agreement.

5. Governing Law. This Assignment and the legal relations between the Parties hereto shall be governed by and be construed in accordance with the laws of the State of California.

ITEM 9.8. ATTACHMENT 4

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6. Counterparts. This Assignment may be executed in counterparts, each of which shall constitute an original. This Assignment shall only be effective if a counterpart is signed by both Assignor and Assignee.

7. Survival. The provisions of this Assignment shall survive the Closing.

ASSIGNOR: ASSIGNEE:

Jennifer Berrueta Vergara, By:
as Trustee of the Jennifer Berrueta Vergara Name:

Living Trust dated 5/10/12, as to an Its:
undivided 1/3 interest
By:

Name:

Its:

Maria C. Berrueta,
Trustee of the Berrueta Family Revocable Trust
Dated 12/19/05 (By-pass Trust), as to an
undivided 1/3 interest
By:

Name:

Its:

Francisco Berrueta, Jr.,
a married man as his sole and separate property,
as to an undivided 1/3 interest.

By:

Name:

Its:
5091584.2
ITEM 9.8. ATTACHMENT 4

MEMORANDUM
City Council Staff Report - Page 1 of 2

ITEM 9.9.

DATE: May 16, 2022
TO: Honorable Mayor and Council Members
FROM: Stefan Heisler, Housing Manager
SUBJECT: A RESOLUTION APPROVING A DISPOSITION, DEVELOPMENT AND

LOAN AGREEMENT BETWEEN THE CITY OF RANCHO CORDOVA

AND SUNRISE CROSSING AFFORDABLE, LP (ST ANTON

COMMUNITIES, LLC), FOR A RENTAL AFFORDABLE HOUSING
DEVELOPMENT LOCATED AT 11295 FOLSOM BOULEVARD

RECOMMENDATION
Adopt the Resolution.

RESULT OF RECOMMENDED ACTION
Adoption of the Resolution would authorize the City Manager to execute a Disposition, Development and Loan Agreement, and related documents, between the City of Rancho Cordova and St. Anton Communities, LLC, as Sunrise Crossing Affordable, LP (“Developer”) in the amount of $2,634,000, allowing the Developer to proceed with the construction of the Sunrise Crossings Apartments, an 82-unit rental affordable housing development located at 11295 Folsom Boulevard (the “Project”).

BACKGROUND
On February 22, 2021 the City issued a Notice of Funding Availability for rental affordable housing projects. Five projects were submitted and on April 27, 2021 the City Council selected two projects for City financial support, including the Sunrise Crossings Apartments project by St. Anton Communities, LLC. Projects selected at that time required only a letter of funding commitment to show local funding commitments for State funding programs. Formal funding commitments are now being requested through the recommended action now that the project has received state funding and is ready to begin construction.

The Sunrise Crossings Apartments Project is an 82-unit rental affordable housing development located on a 2.26-acre parcel at 11295 Folsom Boulevard, APN 058-0270-041-0000, on the site of a former transportation equipment dealer across the street from the Sunrise Regional Transit light rail station within one of the City’s Transit Oriented Development (“TOD”) overlays.

The Project will include a mix of studios, 1 bedroom, and 2 bedroom units. The income affordability levels will range from 30% area median income (AMI) to 70% AMI, or annual income of approximately $27,000 to $64,000 for a household of four.

City Council Staff Report - Page 2 of 2
The Project successfully applied for and received an allocation of private activity bonds from the California Debt Limit Allocation Committee (“CDLAC”) and 4% Federal and State tax credits from the California Tax Credit Allocation Committee (“CTCAC”) in September, 2021. The City subsequently held a public hearing on February 2, 2022 pursuant to the federal Tax Equity and Fiscal Responsibility Act (“TEFRA”) where the City Council adopted Resolution 14-2022 approving the issuance of multifamily housing revenue bonds by the California Public Finance Authority (“CALPFA”) to finance the construction of the Project.

This Project is the first multifamily development to apply for ministerial design review approval under the City’s new Multifamily Streamlined Design Review process, which was adopted by the City Council on August 16, 2021. On April 13, 2022 the City’s Planning Department issued a Notice of Decision providing Design Review approval for the Project and a CEQA exemption as a ministerial project pursuant to section 15268 of the California Environmental Quality Act Guidelines (Attachment 3).

This Project will also include a Right-of-Way Abandonment of an approximately 5,600 square foot City-owned parcel. The right-of-way parcel is located adjacent to the Project on the corner of Citrus Rd. and Folsom Blvd (Attachment 4). The right-of-way parcel is of limited use to the City and is currently a vacant corner prone to littering and illegal dumping. Abandonment of this parcel will clarify the Citrus Rd. intersection and allow the Project to create a logical second entry/exit point. Once the abandonment process is complete, this parcel will be sold to the Developer at the appraised value and the purchase amount will be added to the City Loan.

Adoption of the Resolution will allow the City Manager or his/her designee to execute the Disposition, Development and Loan Agreement (“DDLA”) which will commit City funding to the Project and make other project commitments through several exhibits including a Promissory Note, Deed of Trust, Regulatory Agreement, Scope of Development, and a Schedule of Performance.

Following execution of these documents, the Project is anticipated to begin construction in late June 2022 with occupancy expected in late 2023 or early 2024.

For the purposes of Article XXXIV of the State of California Constitution this City Loan commitment does not constitute a development of a low rent housing project by a state public body.

FISCAL IMPACT AND FUNDING SOURCE
The City will provide a loan of $2,634,000 for the construction of the project through a combination of the City’s General Fund from Measure R, deferred development impact fees, and the value of the right-of-way parcel that will be abandoned and sold to the Project. This loan will bear interest at 3% per annum and be repaid from 50% of the residual receipts of the Project beginning in Year 15.

ATTACHMENT(S)

1. Resolution

2. Disposition Development and Loan Agreement

3. Planning Department Notice of Decision

4. Right-of-Way Abandonment Parcel Site Diagram

ITEM 9.9. ATTACHMENT 1
Resolution No. XX-2022 Page 1 of 2

CITY OF RANCHO CORDOVA
RESOLUTION NO. XX-2022

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CORDOVA

AUTHORIZING EXECUTION OF A DISPOSITION, DEVELOPMENT AND LOAN

AGREEMENT AND RELATED INSTRUMENTS, WITH SUNRISE CROSSING AFFORDABLE, LP (“DEVELOPER”)
WHEREAS, the City of Rancho Cordova (“City”) issued a Notice of Funding Availability for affordable housing rental projects on February 22, 2021 and on April 27, 2021 selected the Sunrise Crossings Apartments project by St Anton Communities, LLC, as Sunrise Crossing Affordable, LP, for a City funding commitment of two million six hundred thirty-four thousand dollars ($2,634,000); and
WHEREAS, the Developer intends to construct an 82-unit rental affordable housing development located on a 2.26-acre parcel at 11295 Folsom Blvd, APN 058-0270-041-0000, on the site of a former transportation equipment dealer across the street from the Sunrise Regional Transit light rail station for Low, Very-Low, and Extremely-Low income households (the “Project”); and
WHEREAS, the Project is exempt from the California Environmental Quality Act (“CEQA”) under the exemption for ministerial development projects (CEQA Guidelines § 15268); and WHEREAS, Developer has secured State tax credit and bond financing and intends to begin construction on the Project; and
WHEREAS, on February 2, 2022 the City held a public hearing as required by the Tax Equity and Fiscal Responsibility Act and adopted Resolution 14-2022 approving the issuance of multifamily housing revenue bonds to finance the construction of the Project; and WHEREAS, the City’s Planning Department issued a Notice of Decision dated April 13, 2022 providing design review approval for the Project through the City’s Multifamily Streamlined Design Review process; and
WHEREAS, for the purposes of Article XXXIV of the State of California Constitution this City financial commitment does not constitute a development of a low rent housing project by a state public body; and
WHEREAS, the City desires to enter into a Disposition, Development and Loan Agreement (“DDLA”) with the Developer for development of the Project on the Property.

NOW, THEREFORE, BE IT HEREBY RESOLVED THE CITY COUNCIL OF THE CITY

OF RANCHO CORDOVA
Section 1 The City Council finds that the Project is exempt from CEQA under CEQA Guidelines Section 15268, Ministerial Projects. The City Council further finds that the Project is consistent with the City’s General Plan, and the City’s Zoning Code. The City certified an Environmental Impact Report (“EIR”) for the General Plan and conducted additional environmental review for the Zoning Code. Therefore, no additional CEQA environmental

ITEM 9.9. ATTACHMENT 1
Resolution No. XX-2022 Page 2 of 2
review is required.

Section 2 The City Council authorizes the City Manager, on behalf of the City, to execute with Developer a DDLA, substantially in the form on file with the City Clerk, and to execute such other instruments including without limitation an Affordable Housing Regulatory Agreement, substantially in the form of Exhibit F to the DDLA, and to take such other actions as are necessary to carry out the intent of this Resolution.

Section 3 If any provision, sentence, clause, section or part of this Resolution is found to be unconstitutional, illegal or invalid, such finding shall affect only such provision, sentence, clause, section or part, and shall not affect or impair any of the remaining parts.

Section 4 The above recitals are true and correct. The City Clerk shall certify to the passage and adoption of this Resolution, and the minutes of this meeting shall so reflect the above City Council action.

PASSED AND ADOPTED by the City Council of the City of Rancho Cordova on the 16th day of May 2022 by following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST:

Donald Terry, Mayor
Stacy Leitner, CMC
City Clerk

DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT
by and between

THE CITY OF RANCHO CORDOVA
and

SUNRISE CROSSING AFFORDABLE, LP
ITEM 9.9. ATTACHMENT 2

2 Exhibits
Exhibit A Legal Description
Exhibit B Grant Deed
Exhibit C Memorandum of Agreement
Exhibit D City Loan Promissory Note
Exhibit E City Loan Deed of Trust
Exhibit F Regulatory Agreement
Exhibit G Scope of Development
Exhibit H Schedule of Performance
Exhibit I Financing Plan
Exhibit J Certificate of Completion
Exhibit K Performance Guaranty

ITEM 9.9. ATTACHMENT 2

3 DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT
THIS DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT (this
“Agreement”) is entered as of __________________, 2022 (“Effective Date”) by and between the City of Rancho Cordova, a California municipal corporation (“City”), and Sunrise Crossing Affordable, LP, a California limited partnership (“Developer”). City and Developer are hereinafter individually referred to as “Party” and collectively referred to as the “Parties.”

RECITALS
A. Developer has entered into an agreement to purchase an approximately 2.26 acre parcel located at 11295 Folsom Boulevard, Rancho Cordova, California (the “Developer Parcel”). The Developer Parcel is more fully described in Exhibit A attached hereto and incorporated by reference.

B. City is the owner of an approximately 5,600 square foot parcel of real property located adjacent to the Developer Parcel (the “City Parcel”). The City Parcel is more fully described in Exhibit A attached hereto and incorporated by reference. Developer desires to acquire the City Parcel from City. The Developer Parcel and City Parcel are referred to collectively as the “Property”.

C. Developer desires to acquire the Developer Parcel and the City Parcel, and to construct thereon a rental affordable housing development (the "Project"). The Project will consist of eighty-two (82) apartment units, together with all associated landscaping, parking and associated improvements, including a clubhouse, fitness center, leasing office, swimming pool, full kitchen, and employment and educational training classrooms. Twelve (12) of the apartment units will be studio units, fifty (50) of the apartment units will be one bedroom units, and twenty (20) of the apartment units will be two bedroom units.

D. All of the apartment units in the Project, except for one manager’s unit (the “Affordable Units”), will be restricted for occupancy by eligible very low income and lower income households, for a period of fifty-five (55) years from issuance of a final certificate of occupancy for the Project. Developer and City will enter into a “Regulatory Agreement” which sets forth the affordable housing obligations and other requirements for operation of the Project and Affordable Units.

E. The Parties desire for the City to provide a loan of Two Million Six Hundred Thirty-Four Thousand Dollars ($2,634,000) (the “City Loan”) for the construction of the Project. The City Loan will accrue simple interest at the rate of three percent (3%) per annum, for a term ending fifty-five (55) years from the completion of the Project, and will be repaid from a portion of the residual receipts of the Project as set forth in the City Loan Promissory Note.

F. Developer has represented to the City, and the City has determined that the Developer has the necessary expertise, skill and ability to carry out the commitments set forth in this Agreement. The City has further determined that this Agreement is in the best interests, and ITEM 9.9. ATTACHMENT 2

4 will materially contribute to the improvement of the City by improving the supply of affordable housing therein.

G. A material inducement to the City to enter into this Agreement is Developer’s agreement to develop the Project within the time periods specified herein and in accordance with the provisions hereof, and the City would be unwilling to enter into this Agreement in the absence of an enforceable commitment by Developer to complete the Project in accordance with such provisions and within such time periods, subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows.

ARTICLE I

DEFINITIONS

1. Definitions. The following terms shall have the meanings set forth in the Sections referenced below whenever used in this Agreement and the Exhibits attached hereto. Additional terms are defined in the Recitals and text of this Agreement. (a) “Affordable Units” is defined in Recital D.
(b) “Bankruptcy Law” is defined in Section 11.1(g).
(c) “CEQA” is defined in Section 5.1.
(d) “Certificate of Completion” is defined in Section 5.12. (e) “City” is defined in the Preamble.
(f) “City Council” means the Rancho Cordova City Council.

(g) “City Documents” means this Agreement, the City Loan Promissory Note, the City Loan Deed of Trust, the Regulatory Agreement, and any other debt, loan or security instruments between City and Developer relating to the Property. (h) “City Loan” is defined in Recital E.
(i) “City Loan Deed of Trust” is defined in Section 6.1. (j) “City Loan Proceeds” is defined in Section 6.1.
(k) “City Loan Promissory Note” is defined in Section 6.1. (l) “City Title Policy” is defined in Section 4.8(m).
(m) “Claims” is defined in Section 5.14.

ITEM 9.9. ATTACHMENT 2

5 (n) “Closing” or “Close of Escrow” is defined in Section 4.5. (o) “Conditions of Approval” is defined in Section 5.1. (p) “Construction Contract” is defined in Section 4.8(g). (q) “Construction Plans” is defined in Section 5.8.
(r) “Controlled Affiliate” is defined in Section 8.3.
(s) “Developer” is defined in the Preamble.
(t) “Developer Parcel” is defined in Recital A.
(u) "Due Diligence Period" is defined in Section 3.3.
(v) “Effective Date” is defined in the preamble.
(w) “Environmental Laws” is defined in Section 10.4.
(x) “Event of City Default” is defined in Section 11.2. (y) “Event of Developer Default” is defined in Section 11.1. (z) “Escrow Agent” is defined in Section 4.4.
(aa) “Financing Plan” is defined in Section 3.4
(bb) “General Contractor” is defined in Section 4.8(f). (cc) “Grant Deed” is defined in Section 4.4.
(dd) “Hazardous Materials” is defined in Section 10.3.
(ee) “Improvements” is defined in Section 5.1.
(ff) “Indemnitees” is defined in Section 5.14.
(gg) “Management Agreement” is defined in Section 4.8(k) (hh) “Memorandum of Agreement” is defined in Section 2.2. (ii) “Official Records” means the Official Records of Sacramento County. (jj) “Party” and “Parties” are defined in the Preamble. (kk) “Permitted Exceptions” is defined in Section 4.1.
(ll) “Prevailing Wage Laws” is defined in Section 5.14.

ITEM 9.9. ATTACHMENT 2

6 (mm) “Property” is defined in Recital B.
(nn) “Project” is defined in Recital C.
(oo) “Purchase Price” is defined in Section 4.3.
(pp) “Regulatory Agreement” is defined in Section 7.2 and is in the form of Exhibit F.
(qq) “Request for Notice” is defined in Section 4.8(l). (rr) “Scope of Development” is defined in Section 5.1, and attached hereto as Exhibit G.
(ss) “Title Company” is defined in Section 4.4.
(tt) “Title Notice” is defined in Section 3.3.
(uu) “Transfer” is defined in Section 8.2.

ARTICLE II
REPRESENTATIONS; EFFECTIVE DATE; MEMORANDUM.

2.1 Developer’s Representations. Developer represents and warrants to City as follows, and Developer covenants that until the expiration or earlier termination of this Agreement, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 2.1 not to be true, Developer shall immediately give written notice of such fact or condition to City. Developer acknowledges that City shall rely upon Developer’s representations made herein notwithstanding any investigation made by or on behalf of City. (i) Authority. Developer is a limited liability company, duly organized and in good standing under the laws of the State of California. Developer has the full right, power and authority to undertake all obligations of Developer as provided herein, and the execution, performance and delivery of this Agreement by Developer has been duly authorized by all requisite actions. The persons executing this Agreement on behalf of Developer have been duly authorized to do so. This Agreement and the other City Documents constitute valid and binding obligations of Developer, enforceable in accordance with their respective terms. (ii) No Conflict. Developer’s execution, delivery and performance of its obligations under this Agreement will not constitute a default or a breach under any contract, agreement or order to which Developer is a party or by which it is bound. (iii) No Litigation or Other Proceeding. No litigation or other proceeding (whether administrative or otherwise) is outstanding or has been threatened which would prevent, hinder or delay the ability of Developer to perform its obligations under this Agreement.

ITEM 9.9. ATTACHMENT 2

7 (iv) No Developer Bankruptcy. Developer is not the subject of a bankruptcy or insolvency proceeding.

2.2 Effective Date; Memorandum. The obligations of Developer and City hereunder shall be effective as of the Effective Date. The Parties shall execute a Memorandum of this Agreement (“Memorandum of Agreement”) substantially in the form attached hereto as Exhibit C and incorporated herein by this reference, which shall be recorded in the Official Records against the Property concurrently with the City’s conveyance of the City Parcel to Developer. The City will not withhold consent to reasonable requests for subordination of the Memorandum of Agreement to deeds of trust, regulatory agreements and related documents provided for the benefit of Project lenders in accordance with Section 9.1.1 hereof.

ARTICLE III

PREDISPOSITION ACTIVITIES

3.1 Schedule of Performance. Certain tasks described in this Agreement must be completed no later than the dates set forth in the Schedule of Performance attached to this Agreement as Exhibit H, subject to events of forced delay as set forth in Section 13.2. The Schedule of Performance may be modified by the Developer and by the City Manager on behalf of the City without formal amendment of this Agreement.

3.2 Developer Due Diligence. Prior to the conveyance of the City Parcel from the City to the Developer, representatives of the Developer have had the right of access to the City Parcel at all reasonable times to inspect and conduct such studies of the City Parcel as the Developer, in its sole discretion, has desired. The Developer shall indemnify, defend and hold the City and its officers, employees, agents, consultants, and contractors harmless for any injury or damages arising out of any activity pursuant to this Section, provided however the Developer shall not be responsible for any injury or damage that may occur solely from discovery of existing conditions on the City Parcel provided the Developer does not exacerbate such existing conditions.

3.3 Preliminary Title Report. The Title Company has provided the Developer a Preliminary Title Report for the City Parcel and copies of all title exceptions to the Property shown on the Preliminary Title Report. Developer has approved the Preliminary Title Report.

3.4 Financing Plan. Developer has submitted, and City has approved, a financing plan for the Project (“Financing Plan”), attached hereto as Exhibit I and incorporated herein by this reference. All financing necessary for the construction of the Project, as approved by the City in the Financing Plan (not including permanent financing), shall be closed by the Developer prior to, or simultaneously with, the conveyance of the City Parcel by the City to the Developer and the disbursement of the City Loan to Developer.

ARTICLE IV
ITEM 9.9. ATTACHMENT 2

8 DISPOSITION OF THE CITY PARCEL

4.1 Grant of City Parcel. Upon the Effective Date, City is granting to Developer fee title to the City Parcel, in accordance with and subject to the terms and conditions of this Agreement, free and clear of all liens and encumbrances except: (a) the provisions and effect of this Agreement; (b) liens for nondelinquent taxes, assessments, and/or bonds; and (c) the title exceptions permitted pursuant to Section 3.3 hereof (all of the foregoing collectively referred to as the “Permitted Exceptions”). Following the Effective Date, absent the consent of Developer, City shall not cause or voluntarily agree to allow a lien or other encumbrance to attach to the City Parcel which would remain effective following the conveyance of title.

4.2 Conveyance of Title. City is delivering fee simple title to the City Parcel to Developer at the Closing, subject only to the Permitted Exceptions. Except as expressly set forth herein, the City Parcel is being conveyed by City to Developer in an “as is” condition, with no warranty, express or implied, by City as to the physical condition of the City Parcel including, but not limited to, the soil, its geology, or the presence of known or unknown faults or hazardous materials, Hazardous Substances on, in, under and adjacent to the City Parcel, the air, soil, and groundwater.

4.3 Purchase Price. The purchase price for the conveyance of the City Parcel to Developer shall be Ten Thousand Dollars ($10,000) (“Purchase Price”). The Purchase Price shall be payable as a portion of the City Loan. Developer’s execution of the City Loan Promissory Note is the consideration paid for the City Parcel.

4.4. Escrow. Escrow shall be opened at the office of Old Republic Title Company, 275 Battery St #1500, San Francisco, CA 94111, attn: Michele Pineda (“Title Company” or “Escrow Agent”) in order to consummate the closing of escrow (“Closing”) for the transactions contemplated hereby.
(a) Deliveries by City. City shall deposit into the Escrow a grant deed, substantially in the form of Exhibit “B” attached hereto and incorporated herein (the “Grant Deed”), and an executed copy of the Regulatory Agreement and Memorandum of Agreement.

(b) Deliveries by Developer. On or before the Effective Date, Developer has deposited into Escrow an executed copy of the Regulatory Agreement, Memorandum of Agreement and City Loan Deed of Trust, the Escrow fees and recording fees, and the cost of the Title Policy and endorsements.
(c) Closing. On the Effective Date, Escrow Holder shall: (i) record the Grant Deed, Regulatory Agreement, Memorandum of Agreement and City Loan Deed of Trust; (ii) deliver to City and Developer a conformed copy of the original recorded Grant Deed, Regulatory Agreement, Memorandum of Agreement, and City Loan Deed of Trust; (iii) pay any expenses payable through Escrow; and (iv) distribute to itself the payment of Escrow fees and expenses required hereunder.
(d) Closing Costs. Whether or not Escrow closes, except as provided below, Developer shall pay all closing costs, including but not limited to Escrow fees (including ITEM 9.9. ATTACHMENT 2

9 the costs of preparing documents and instruments), recording fees (if any), title fees, governmental conveyance fees and transfer taxes (if any). Notwithstanding the foregoing, City shall be responsible for payment of all Escrow fees and cancellation costs in the event that Escrow does not close, and this Agreement is terminated, as a result of the default of City. (e) Prorations. There shall be no proration of property taxes and assessments through Escrow, as the City Parcel is exempt from payment of property taxes and assessments as a result of the ownership of the City Parcel by a public agency.

4.5 Closing. The closing (“Closing” or “Close of Escrow”) is occurring concurrently with the Effective Date.

4.6 Costs of Closing and Escrow. At Closing, City is paying that portion of the costs of a title insurance policy equal to the premium for a CLTA title insurance policy in the amount of the Purchase Price, and Developer is paying the incremental cost of obtaining an ALTA policy, the costs of any requested endorsements, and any further title insurance coverage requested by Developer. City is paying for documentary transfer taxes due upon the conveyance of the City Parcel to Developer. Developer and City are each paying one-half of all other Closing and Escrow costs.

4.7 Escrow Instructions; Recordation of Documents. City and Developer shall furnish Escrow Agent a copy of this Agreement, which, together with such supplemental instructions as City or Developer may agree upon in writing, shall serve as Escrow instructions for the conveyance of the City Parcel.

4.8 City’s Conditions to Closing. City’s obligation to proceed with the Closing is subject to satisfaction or waiver by the City of all of the following conditions:
a. Execution of Documents. Developer shall have executed and acknowledged the Memorandum of Agreement, the Regulatory Agreement, the City Loan Promissory Note and the City Loan Deed of Trust, and all other documents required hereunder, and shall have delivered all such documents to City or into Escrow. c. Insurance. Developer shall have submitted to City and City shall have approved Developer’s evidence of the liability insurance required pursuant to Article XII hereof.
d. Land Use Entitlements. The City shall have approved the land use entitlements for the Project and Developer shall have approved or be deemed to have approved the same, including without limitation all terms and conditions applicable thereto. e. Evidence of Development Financing. The City shall have received and reasonably approved the following (to the extent such financing is contained in the Financing Plan): (i) construction loan documents evidencing the obligation of the lender to make the construction loan to Developer, in an amount consistent with the Financing Plan, (ii) a commitment of funds from the syndication of the Tax Credits to construction of the Project, subject only to reasonable and customary conditions, (iii) a commitment from a lender ITEM 9.9. ATTACHMENT 2

10 reasonably acceptable to City (who may also be the construction lender) to make a permanent loan to Developer, with a term of not less than fifteen (15) years, in sum sufficient, when added to any Tax Credit Funds to be disbursed for such purpose, to take out any existing construction financing, subject only to reasonable and customary conditions, and consistent with the Financing Plan, and (iv) commitments and documents from other funding sources described in the Financing Plan.
f. General Contractor. The general contractor for the Project (the “General Contractor”) shall have been approved by the City, which approval shall not be unreasonably withheld or delayed.
g. Construction Contract. City shall have received a true and complete copy of a contract by and between Developer and the General Contractor pursuant to which the General Contractor has agreed to construct the Project at a cost consistent with the costs set forth therefor in the Project budget set forth in the Financing Plan (the “Construction Contract”).
h. Grading Permits. The Grading Permit for the Project shall have been issued or shall be ready to issue subject only to the payment of applicable fees, the posting of required security, or both.
i. Construction to Commence. The City shall be reasonably satisfied that construction of the Project will commence within the time set forth in the Schedule of Performance and thereafter will be pursued to completion in a diligent and continuous manner. j. Management Plan. Developer shall have submitted a
comprehensive management plan for the Project to the City in accordance with the Regulatory Agreement and the City shall have approved the same.
k. Management Agreement. The City shall have received and reasonably approved an executed agreement by and between Developer and the Property Manager (the “Management Agreement”), which Management Agreement shall be consistent with this Agreement and the requirements of the Regulatory Agreement. l. Request for Notice of Default. City shall have submitted into the escrow a request for notice of default pursuant to Civil Code Section 2924(b), requesting that any beneficiaries of liens securing the Project financing notify City of any default under the instrument creating the lien (the “Request for Notice”). m. Title Policy. Title Company is prepared to issue an ALTA lender’s policy of title insurance naming City as the insured, in a policy amount not less than the principal amount of City Loan, showing Developer as holding title to the Property and insuring the City Deed of Trust to be a valid lien on the Property subject only to exceptions approved by City (the “City Title Policy”).

ITEM 9.9. ATTACHMENT 2

11 n. Total Development Cost. The City shall have determined that the Project can be completed at a cost consistent with the Project budget set forth in the Financing Plan, and Developer shall have provided evidence, reasonably satisfactory to City, of the availability of funding sources other than City to complete the Project. o. Representations and Warranties. The representations of Developer contained in this Agreement shall be correct in all material respects as of the Effective Date.

4.9 Developer’s Conditions to Closing. Developer’s obligation to proceed with the Closing is subject to satisfaction or waiver by Developer of the following conditions:
a. Execution of Documents. City shall have executed and acknowledged the Developer shall have executed and acknowledged the Grant Deed, the Memorandum of Agreement, and the Regulatory Agreement, and all other documents required hereunder, and shall have delivered all such documents to City or into Escrow and all other documents required hereunder, and shall have delivered such documents into Escrow. b. Developer’s Title Policy. The Title Company shall be ready to issue an ALTA title policy for the benefit of Developer, showing title to the City Parcel vested in Developer, subject only to the Permitted Exceptions and including such endorsements as Developer may reasonably request.
c. Land Use Entitlements. The City shall have approved the land use entitlements for the Project and Developer shall have approved the same, including without limitation all terms and conditions applicable thereto.

ARTICLE V

DEVELOPMENT OF THE PROJECT

5.1 Scope of Development. Developer shall develop the Project in accordance with the “Scope of Development” attached hereto as Exhibit G, the terms and conditions of this Agreement and in compliance with the terms and conditions of all approvals, entitlements and permits that the City or any other governmental body or entity with jurisdiction over the Project or the Property has granted or issued as of the date hereof or may hereafter grant or issue in connection with development of the Project, including without limitation, all mitigation measures imposed in connection with environmental review of the Project and all conditions of approval imposed in connection with any entitlements, approvals or permits (all of the foregoing approvals, entitlements, permits, mitigation measures and conditions of approval are hereafter collectively referred to as the “Conditions of Approval”).

The Project will consist of eighty-two (82) apartment units, together with all associated landscaping, parking and associated improvements, including a clubhouse, fitness center, leasing office, swimming pool, full kitchen, and employment and educational training classrooms. Twelve (12) of the apartment units will be studio units, fifty (50) of the apartment units will be one bedroom units, and twenty (20) of the apartment units will be two bedroom ITEM 9.9. ATTACHMENT 2

12 units. Project design will be subject to the City’s Design Review process. All of the foregoing is collectively hereinafter referred to as the “Improvements.” Notwithstanding anything to the contrary contained herein, the construction of the Project is expressly conditioned upon compliance with the California Environmental Quality Act, California Public Resources Code Section 21000 et seq., CEQA guidelines, and implementing regulations, all as amended from time to time (“CEQA”). No physical activity, not otherwise exempt from CEQA, shall commence on the Property without such compliance.

5.2 Timing of Construction. The Developer shall obtain a grading permit and building permit and commence construction of the Improvements within the time set forth in the Schedule of Performance. The Developer shall diligently prosecute to completion the construction of the Improvements within the time set forth in the Schedule of Performance.

5.3 Project Approvals. Developer acknowledges and agrees that execution of this Agreement by City does not constitute approval for the purpose of the issuance of building permits for the construction of the Project, does not limit in any manner the discretion of City in such approval process, and does not relieve Developer from the obligation to apply for and obtain all necessary entitlements, approvals, and permits for the construction of the Project, including without limitation, the approval of architectural plans, the issuance of any certificates regarding historic resources required in connection with the Project (if any), and the completion of any required environmental review.

Developer covenants that it shall: (i) obtain all necessary permits and approvals which may be required by City, or any other governmental agency having jurisdiction over the construction of the Project or the development of the Property, (ii) comply with all Conditions of Approval and other design and use considerations as detailed in the City’s Design Review approval, (iii) comply with all mitigation measures imposed in connection with any environmental review of the Project, and (iv) not commence construction work on the Project prior to issuance of building permits required for such work.

City staff shall work cooperatively with Developer to assist in coordinating the expeditious processing and consideration of all permits, entitlements and approvals necessary for development of the Project.

5.4 Fees. Developer shall be solely responsible for, and shall promptly pay when due, all customary and usual fees and charges of City in connection with obtaining building permits and other approvals for the Project, including without limitation, those related to the processing and consideration of amendments, if any, to the current entitlements, any related approvals and permits, environmental review, design review, architectural review, and any subsequent approvals for the Project or the development of the Property.

5.5 Cost of Construction. Developer shall be solely responsible for all direct and indirect costs and expenses incurred in connection with the design, development and construction of the Project and compliance with the Conditions of Approval, including without limitation the installation and construction of all off-site or on-site improvements required by City in connection therewith.

ITEM 9.9. ATTACHMENT 2

13 5.6 Rights of Access. For the purpose of ensuring that the Project is developed in compliance with this Agreement, Developer shall permit representatives of the City to enter upon the Property to inspect the Project following forty-eight (48) hours written notice, including without limitation inspection for labor standards compliance monitoring as described in Section 5.14 (except in the case of emergency in which case such notice as may be practical under the circumstances shall be provided). Developer shall have the right to accompany any City representative performing an inspection of the Project.

5.7 City Disclaimer. Developer acknowledges that City shall have the right to monitor, review, or inspect the progress of construction or the operation of the Project.

Notwithstanding such right, Developer and all third parties shall rely on its or their own supervision and inspection in determining the quality and suitability of the materials and work, the performance of architects, subcontractors, and material suppliers, and all other matters relating to the construction and operation of the Project. Except as completed as part of the City’s plan review and permitting process through the Building or Public Works Departments, any review or inspection undertaken by the City is solely for the purpose of determining whether Developer is properly discharging its obligations under this Agreement, and shall not be relied upon by Developer or any third party as a warranty or representation by the City as to the quality of the design or construction of the Improvements or otherwise.

5.8 Construction Plans. Prior to commencement of Project construction, Developer shall submit to City’s Building Department detailed construction plans for the development of the Project (the “Construction Plans”). As used herein “Construction Plans” means all construction documents upon which Developer and Developer’s contractors shall rely in constructing the Project (including the landscaping, parking, and common areas) and shall include, without limitation, the site development plan, final architectural drawings, landscaping, exterior lighting and signage plans and specifications, materials specifications, final elevations, and building plans and specifications. The Construction Plans shall be based upon the scope of development set forth herein and as detailed in the approved design review documents in the Scope of Development and upon the approvals issued by the City for the Project, and shall not materially deviate therefrom without the express written consent of City. Provided that the Construction Plans are consistent with the requirements of this Agreement, approval of the Construction Plans by City staff shall be deemed approval thereof by City.

5.9 Construction Pursuant to Plans. Developer shall develop the Project in accordance with the approved Construction Plans, the Conditions of Approval, and all other permits and approvals granted by the City pertaining to construction of the Project. Developer shall comply with all directions, rules and regulations of any fire marshal, health officer, building inspector or other officer of every governmental entity having jurisdiction over the Property or the Project. Each element of the work shall proceed only after procurement of each permit, license or other authorization that may be required for such element by any governmental entity having jurisdiction. All design and construction work on the Project shall be performed by licensed contractors, engineers or architects, as applicable.

5.10 Changes in Construction Plans. If Developer desires to make any material change in the approved Construction Plans that requires any permit be issued or modified by the City, Developer shall submit the proposed permit or permit modification request to City in ITEM 9.9. ATTACHMENT 2

14 accordance with its standard review process. Nothing in this Section is intended to or shall be deemed to modify the City’s permit review procedures.

5.11 Defects in Plans. City shall not be responsible to Developer or to any third party for any defect in the Construction Plans or for any structural or other defect in any work done pursuant to the Construction Plans. Subject to the last sentence of this Section 5.11.

Developer shall indemnify, defend (with counsel approved by City) and hold harmless the Indemnitees from and against all Claims arising out of, or relating to, or alleged to arise from or relate to defects in the Construction Plans or defects in any work done pursuant to the Construction Plans whether or not any insurance policies shall have been determined to be applicable to any such Claims. Developer’s indemnification obligations set forth in this Section shall survive the expiration or earlier termination of this Agreement and the recordation of a Certificate of Completion and shall be assumed by any successor to Developer’s interest in this Agreement. It is further agreed that City shall not waive any rights against Developer which it may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or Developer’s deposit with City of any of the insurance policies described in this Agreement. Developer’s indemnification obligations pursuant to this Section shall not extend to Claims to the extent arising due to the gross negligence or willful misconduct of the Indemnitees.

Developer’s indemnification obligations set forth in this Section shall not apply to any Construction Plans that are not used by or on behalf of Developer or any entity affiliated with Developer, including without limitation, an entity controlled by or under common control with Developer. In addition, if City uses any of the Construction Plans (or permits a third party to use such Construction Plans), City agrees to release Developer from liability for Claims arising in connection with such use except to the extent any such Claim arises from the gross negligence or willful misconduct of Developer or Developer’s employees, agents or representatives.

5.12 Certificate of Completion for Project. Promptly after completion of construction of the Project, issuance of a final Certificate of Occupancy by the City and the written request of Developer, the City will provide an instrument (“Certificate of Completion”) so certifying, provided that at the time such certificate is requested all applicable components of the Project have been completed. The Certificate of Completion shall be conclusive evidence that Developer has satisfied its obligations regarding the development of the Project on the Property.

The Certificate of Completion shall be issued substantially in the form attached hereto as Exhibit J and incorporated herein by reference, and, at Developer’s option, shall be recorded in the Official Records. The Certificate of Completion shall not constitute evidence of compliance with or satisfaction of any obligation of Developer to any holder of a deed of trust or mortgage securing money loaned to finance the Project or any part thereof and shall not be deemed a notice of completion under the California Civil Code, nor shall such Certificate provide evidence that Developer has satisfied any obligation that survives the expiration of this Agreement, including without limitation, Developer’s obligations pursuant to the Regulatory Agreement; provided that such Certificate of Completion shall be evidence that Developer has satisfied its construction obligations under this Agreement.

5.13 Equal Opportunity. During the construction of the Project, there shall be no discrimination on the basis of race, religious creed, color, national origin, ancestry, physical ITEM 9.9. ATTACHMENT 2

15 disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or veteran or military status in the hiring, firing, promoting or demoting of any person engaged in construction of the Project, and Developer shall direct its contractors and subcontractors to refrain from discrimination on such basis. Developer shall satisfy all Federal, State and City requirements in regard to Equal Opportunity including but not limited to noticing, program development and reporting.

Developer will notify City in a timely manner of any Equal Opportunity issues arising during the development and operation of the Project.

5.14 Prevailing Wage Requirements. If and to the full extent required by all applicable State and Federal laws, rules and regulations, Developer and its contractors and agents shall comply with California Labor Code Section 1720, et seq., the Davis-Bacon Act, and the regulations adopted pursuant to each of them, as the same may be applicable to the Project (“Prevailing Wage Laws”), and shall be responsible for carrying out the requirements of such provisions. Developer, at its own expense, shall prepare and obtain approval from the City of a plan for monitoring, enforcing and reporting on the payment of prevailing wages. This plan shall describe penalties, approved by the City, for the Contractor if it fails to implement said plan and to satisfy on a timely basis the reporting requirements included in said plan.

Developer shall indemnify, defend (with counsel approved by City) and hold the City, and its respective elected and appointed officers, officials, employees, agents, consultants, and contractors (collectively, the “Indemnitees”) harmless from and against all liability, loss, cost, expense (including without limitation reasonable attorneys’ fees and costs of litigation), claim, demand, action, suit, judicial or administrative proceeding, penalty, deficiency, fine, order, and damage (all of the foregoing collectively “Claims”) which directly or indirectly, in whole or in part, are caused by, arise in connection with, result from, relate to, or are alleged to be caused by, arise in connection with, or relate to, the payment or requirement of payment of prevailing wages (including without limitation, all claims that may be made by contractors, subcontractors or other third party claimants pursuant to Labor Code Sections 1726 and 1781), the failure to comply with any state or federal labor laws, regulations or standards in connection with this Agreement, including but not limited to the Prevailing Wage Laws, or any act or omission of Developer related to this Agreement with respect to the payment or requirement of payment of prevailing wages, whether or not any insurance policies shall have been determined to be applicable to any such Claims. It is further agreed that City does not and shall not waive any rights against Developer which they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or Developer’s deposit with City of any of the insurance policies described in this Agreement. The provisions of this Section 5.14 shall survive the expiration or earlier termination of this Agreement and the issuance of a Certificate of Completion for the Project and shall be assumed by any successor to Developer’s interest in this Agreement. Developer’s indemnification obligations set forth in this Section shall not apply to Claims to the extent arising from the gross negligence or willful misconduct of one or more of the Indemnitees.

5.15 Compliance with Laws. In connection with development and construction of the Project, Developer shall comply, and shall cause its contractors to comply with all applicable federal, state and local laws, rules, ordinances and regulations, including without limitation, all applicable federal and state labor laws and standards, contract compliance and ITEM 9.9. ATTACHMENT 2

16 reporting requirements, applicable provisions of the California Public Contracts Code (if any), the City zoning and development standards, building, plumbing, mechanical and electrical codes, all other provisions of the City's Municipal Code, and all applicable disabled and handicapped access requirements, including without limitation, applicable provisions of the Americans with Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq.. Developer shall indemnify, defend (with counsel approved by City) and hold harmless the Indemnitees from and against any and all Claims arising in connection with the breach of Developer’s obligations set forth in this Section whether or not any insurance policies shall have been determined to be applicable to any such Claims. It is further agreed that City shall not waive any rights against Developer which it may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or Developer’s deposit with City of any of the insurance policies described in this Agreement. Developer’s indemnification obligations set forth in this Section shall not apply to Claims to the extent arising from the gross negligence or willful misconduct of the Indemnitees. Developer’s defense and indemnification obligations set forth in this Section 5.15 shall survive the expiration or earlier termination of this Agreement and the issuance of a Certificate of Completion for the Project.

5.16 Liens and Stop Notices. Until the expiration of the term of the Regulatory Agreement, if a claim of a lien or stop notice is given or recorded affecting the Project or the Property, Developer shall within thirty (30) days of such recording or service: (a) pay and discharge (or cause to be paid and discharged) the same; or (b) effect the release thereof by recording and delivering (or causing to be recorded and delivered) to the party entitled thereto a surety bond in sufficient form and amount; or (c) provide other assurance satisfactory to City that the claim of lien or stop notice will be paid or discharged. The provisions of this Section 5.16 shall apply from and after Developer’s acquisition of the Property.

5.17 Right of City to Satisfy Liens on the Property. If Developer fails to satisfy or discharge any lien or stop notice on the Property pursuant to and within the time period set forth in Section 5.16 above, the City shall have the right, but not the obligation, to satisfy any such liens or stop notices at Developer’s expense with prior written notice to Developer. In such event Developer shall be liable for and shall immediately reimburse City for such paid lien or stop notice. Alternatively, the City may require Developer to immediately deposit with City the amount necessary to satisfy such lien or claim pending resolution thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined against Developer.

Developer shall file a valid notice of cessation or notice of completion upon cessation of construction of the Improvements for a continuous period of thirty (30) days or more, and shall take all other reasonable steps to forestall the assertion of claims or liens against the Property or the Improvements. The City may (but has no obligation to), with prior written notice to Developer, record any notices of completion or cessation of labor, or any other notice that the City deems necessary or desirable to protect its interest in the Property and the Improvements.

5.18 Performance Guaranty. On the Effective Date, Developer shall cause St.

Anton Communities, LLC, to deliver to the City an executed performance guaranty in the form of Exhibit K hereto.

ITEM 9.9. ATTACHMENT 2

17 5.19 Insurance Requirements. Developer shall maintain and shall cause its contractors to maintain all applicable insurance coverage specified in Article XII.

ARTICLE VI

CITY FINANCIAL ASSISTANCE

6.1 City Loan. City agrees to provide a loan to Developer to be used as construction and permanent financing in the total principal amount of Two Million Six Hundred Thirty-Four Thousand Dollars ($2,634,000) (“City Loan”). The City Loan shall bear simple interest at the rate of three percent (3%) per annum. The City Loan shall be made upon the terms and conditions and for the purposes set forth in this Agreement. The City Loan shall be evidenced by a Promissory Note (“City Loan Promissory Note”) executed by Developer. The Permanent Note shall be secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the “City Loan Deed of Trust”) executed by Developer as Trustor for the benefit of City and recorded against the Property. Provided that Developer has complied with all conditions precedent to disbursement of the City Loan, the proceeds of the City Loan (“City Loan Proceeds”) shall be disbursed pursuant to this Agreement. Annual payments shall be due and payable in accordance with the terms of the City Loan Promissory Note. The entire outstanding balance of the City Loan shall be payable in full on fifty fifth (55th) anniversary of the date of issuance of the final certificate of occupancy for the Project.

6.2 Use and Disbursement of City Loan. The City Loan Proceeds shall be used solely to fund specific development activities associated with the Project (in an amount and for only such development activities as are approved for funding by the City and granting agencies) and to fund construction of the Project, consistent with the Financing Plan.

ARTICLE VII

USE OF THE PROPERTY

7.1 Use for Affordable Housing. Developer covenants and agrees for itself and its successors and assigns that the Property shall be used for the development and operation of a multifamily affordable housing project in accordance with the terms and conditions of this Agreement and the Regulatory Agreement.

7.2 Regulatory Agreement. The City and the Developer shall execute the “Regulatory Agreement,” which shall be substantially in the form attached hereto as Exhibit F, and cause it to be recorded against the Property concurrently with the Closing. The Regulatory Agreement shall provide, among other matters, for the lease of eighty-one (81) income-restricted units in the Property, at an affordable rent, as defined in the Regulatory Agreement, for a period of fifty-five (55) years. Developer may request changes to the mix of affordable units if necessary to obtain competitive sources of financing for the Project. Any such changes shall be subject to the approval of the City Manager, which approval shall not be unreasonably withheld or delayed.

ITEM 9.9. ATTACHMENT 2

18 7.3 Maintenance. Developer, at its own expense, shall maintain the Property, the Improvements and related landscaping and common areas in good physical condition, in good repair, (reasonable wear and tear excepted), and in decent, safe, sanitary, habitable and tenantable living conditions in conformity with all applicable state, federal, and local laws, ordinances, codes, and regulations. Without limiting the foregoing, Developer agrees to maintain the Project and the Property (including without limitation, the residential units, common areas, landscaping, driveways, parking areas, and walkways) in a condition free of all waste, nuisance, debris, unmaintained landscaping, graffiti, disrepair, abandoned vehicles/appliances, and illegal activity, and shall take all reasonable steps to prevent the same from occurring on the Property or at the Project. Developer shall prevent and/or rectify any physical deterioration of the Property and the Project and shall make all repairs, renewals and replacements necessary to keep the Property and the improvements located thereon in good condition and repair (reasonable wear and tear excepted). Developer shall provide adequate security for occupants of the Project. The provisions of this Section 7.3 shall apply from and after Developer’s acquisition of the Property.

7.4 Taxes and Assessments. Developer shall pay all real and personal property taxes, assessments and charges and all franchise, income, payroll, withholding, sales, and other taxes assessed against the Property or the Improvements and payable by Developer, at such times and in such manner as to prevent any penalty from accruing, or any lien or charge from attaching to the Property or the Improvements; provided, however, that Developer shall have the right to contest in good faith, any such taxes, assessments, or charges. In the event the Developer exercises its right to contest any tax, assessment, or charge, the Developer, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered against it, together with all costs, charges and interest.

7.5 Obligation to Refrain from Discrimination. From and after Developer’s acquisition of the Property, Developer shall not restrict the rental, sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or the Improvements, or any portion thereof, on the basis of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, veteran or military status, or genetic information of any person. Developer covenants for itself and all persons claiming under or through it, and this Agreement is made and accepted upon and subject to the condition that there shall be no discrimination against or segregation of any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property or part thereof, nor shall Developer or any person claiming under or through Developer establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in, of, or for the Property or the Improvements or part thereof. Developer shall include such provision in all deeds, leases, contracts and other instruments executed by Developer, and shall enforce the same diligently and in good faith.

Additionally, City reserves the right to require other mandatory contract language necessary to satisfy existing Federal, State and Local requirements.

ITEM 9.9. ATTACHMENT 2

19 ARTICLE VIII

LIMITATIONS ON CHANGE IN OWNERSHIP, MANAGEMENT

AND CONTROL OF DEVELOPER

8.1 Change Pursuant to this Agreement. Developer and its principals have represented that they possess the necessary expertise, skill and ability to carry out the development of the Project on the Property pursuant to this Agreement. The qualifications, experience, financial capacity and expertise of Developer and its principals are of particular concern to the City. It is because of these qualifications, experience, financial capacity and expertise that the City has entered into this Agreement with Developer. No voluntary or involuntary successor, assignee or transferee of Developer shall acquire any rights or powers under this Agreement, except as expressly provided herein.

8.2 Prohibition on Transfer. Prior to the expiration of the term of the Regulatory Agreement, Developer shall not, except as expressly permitted by this Agreement, directly or indirectly, voluntarily, involuntarily or by operation of law make or attempt any total or partial sale, transfer, conveyance, assignment or lease (collectively, “Transfer”) of the whole or any part of Developer’s interest in the Property, the Project, the Improvements, or this Agreement, without the prior written approval of City, which approval shall not be unreasonably withheld. Any such attempt to assign this Agreement without the City’s consent shall be null and void and shall confer no rights or privileges upon the purported assignee. In addition to the foregoing, prior to the expiration of the term of the Regulatory Agreement, except as expressly permitted by this Agreement, Developer shall not undergo any significant change of ownership without the prior written approval of City. For purposes of this Agreement, a “significant change of ownership” shall mean a transfer of the beneficial interest of more than twenty-five percent (25%) in aggregate of the present ownership and /or control of Developer, taking all transfers into account on a cumulative basis; provided however, neither the admission of an investor limited partner, nor the transfer by the investor limited partner to subsequent limited partners shall be restricted by this provision.

8.3 Permitted Transfers. Notwithstanding any contrary provision hereof, the prohibitions set forth in this Article shall not be deemed to prevent: (i) the granting of easements, licenses or permits to facilitate development of the Property; (ii) the dedication of any property required pursuant to this Agreement; (iii) the lease of individual residences to tenants for occupancy as their principal residence in accordance with the Regulatory Agreement; (iv) assignments creating security interests for the purpose of financing, construction or permanent financing of the Project or the Property in accordance with the Financing Plan as it may be updated with City approval, and subject to the requirements of Article VII, or Transfers directly resulting from the foreclosure of, or granting of a deed in lieu of foreclosure of, such a security interest; (v) a Transfer to a single purpose limited partnership in which at least one of the general partners is an affiliate controlled by St. Anton Communities, LLC, a California limited liability company (“Controlled Affiliate”), and the limited partners are tax credit investor limited partners, subject to approval pursuant to Section 8.4 hereof; and (vi) Transfers of direct or indirect interests in the general partners of the Developer provided that either or both of Peter Geremia and Ardie Zahedani retain decision-making control of St. Anton Sunrise Crossing Affordable LLC as the co-general partner of Developer.

ITEM 9.9. ATTACHMENT 2

20 8.4 Requirements for Proposed Transfers. The City shall, in the exercise of its sole but reasonable discretion, consent to a proposed Transfer of this Agreement, the Improvements, the Property or portion thereof if all of the following requirements are met (provided however, the requirements of this Section 8.4 shall not apply to Transfers described in clauses (i) through (iv) of Section 8.3):
(i) The proposed transferee demonstrates to the City’s satisfaction that it has the qualifications, experience and financial resources necessary and adequate as may be reasonably determined by the City to competently complete construction of the Project and to otherwise fulfill the obligations undertaken by the Developer under this Agreement. (ii) The Developer and the proposed transferee shall submit for City review and approval all instruments and other legal documents proposed to effect any Transfer of this Agreement, the Improvements, the Property or interest therein together with such documentation of the proposed transferee’s qualifications and development capacity as the City may reasonably request.
(iii) The proposed transferee shall expressly assume all of the rights and obligations of the Developer under this Agreement and the City Documents arising after the effective date of the Transfer and all obligations of Developer arising prior to the effective date of the Transfer (unless Developer expressly remains responsible for such obligations) and shall agree to be subject to and assume all of Developer’s obligations pursuant to the Conditions of Approval and all other conditions, and restrictions set forth in this Agreement and the Regulatory Agreement.
(iv) The Transfer shall be effectuated pursuant to a written instrument satisfactory to the City in form recordable in the Official Records.

Consent to any proposed Transfer may be given by the City Manager unless the City Manager, in his or her reasonable discretion, refers the matter of approval to the City Council. If a proposed Transfer has not been approved by City in writing within thirty (30) days following City’s receipt of written request by Developer, it shall be deemed rejected.

8.5 Effect of Transfer without City Consent.

8.5.1 In the absence of specific written agreement by the City, no Transfer by Developer shall be deemed to relieve the Developer or any other party from any obligation under this Agreement.

8.5.2 Without limiting any other remedy City may have under this Agreement, or under law or equity, it shall be an Event of Developer Default hereunder entitling City to terminate this Agreement if without the prior written approval of the City, Developer assigns or Transfers this Agreement, the Improvements, or the Property prior to the City’s issuance of a Certificate of Completion. This Section 8.5.2 shall not apply to Transfers described in clauses (i) through (iv) of Section 8.3.

8.6 Recovery of City Costs. In connection with any request for the City’s approval of a Transfer that requires the City’s approval hereunder, Developer shall reimburse the ITEM 9.9. ATTACHMENT 2

21 City up to Ten Thousand Dollars ($10,000) within thirty (30) days following City’s delivery to Developer of an invoice detailing the reasonable out-of-pocket costs of the City in connection therewith provided that any such invoices may be delivered only after the construction loan closing is consummated. Costs incurred by the City may include, but are not limited to, activity delivery and reasonable legal costs. Recovery is required, if and only if a Closing is consummated.

ARTICLE IX

SECURITY FINANCING AND RIGHTS OF MORTGAGEES

9.1 Mortgages and Deeds of Trust for Project. Mortgages and deeds of trust, or any other reasonable security instrument are permitted to be placed upon the Property or the Improvements only for the purpose of securing loans for the purpose of the design and construction of the Improvements, and other expenditures reasonably necessary for development of the Property pursuant to this Agreement. Developer shall not enter into any conveyance for such financing that is not contemplated in the Financing Plan as it may be updated with City approval, without the prior written approval of the City’s Chief Executive officer or his or her designee. As used herein, the terms “mortgage” and “deed of trust” shall mean any security instrument used in financing real estate acquisition, construction and land development.

9.1.1 Subordination of Deed of Trust, Memorandum and Regulatory Agreement. The City agrees that it will not withhold consent to reasonable requests for subordination of the Deed of Trust, Memorandum of Agreement and Regulatory Agreement to deeds of trust and related instruments provided for the benefit of (i) lenders identified in the Financing Plan as it may be updated with City approval, and (ii) lenders of loans that refinance the loans identified in the Financing Plan, provided that the instruments effecting such subordination include reasonable protections to the City in the event of default.

9.2 Holder Not Obligated to Construct. The holder of any mortgage or deed of trust authorized by this Agreement shall not be obligated to complete construction of the Improvements or to guarantee such completion. Nothing in this Agreement shall be deemed to permit or authorize any such holder to devote the Property or any portion thereof to any uses, or to construct any improvements thereon, other than those uses or improvements provided for or authorized by this Agreement.

9.3 Notice of Default and Right to Cure. Whenever City delivers any notice of default hereunder, City shall concurrently deliver a copy of such notice to each holder of record of any mortgage or deed of trust secured by the Property or the Improvements, or other property of Developer, provided that City has been provided with the address for delivery of such notice. City shall have no liability to any such holder for any failure by the City to provide such notice to such holder. Each such holder shall have the right, but not the obligation, at its option, to cure or remedy any such default or breach within the cure period provided to Developer extended by and additional sixty (60) days. In the event that possession of the Property or the Improvements (or any portion thereof), or other property of Developer, is required to effectuate such cure or remedy, the holder shall be deemed to have timely cured or ITEM 9.9. ATTACHMENT 2

22 remedied the default if it commences the proceedings necessary to obtain possession of the Property or Improvements, or other property of Developer, as applicable, within sixty (60) days after receipt of the City’s notice, diligently pursues such proceedings to completion, and after obtaining possession, diligently completes such cure or remedy. A holder who chooses to exercise its right to cure or remedy a default or breach shall first notify City of its intent to exercise such right prior to commencing to cure or remedy such default or breach. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction of the Project (beyond the extent necessary to conserve or protect the same) without first having expressly assumed in writing Developer’s obligations to City under this Agreement. The holder in that event must agree to complete, in the manner provided in this Agreement, the Project and the Improvements and submit evidence reasonably satisfactory to City that it has the development capability on staff or retainer and the financial capacity necessary to perform such obligations. Any such holder properly completing the Project pursuant to this Section shall assume all rights and obligations of Developer under this Agreement and shall be entitled to a Certificate of Completion upon compliance with the requirements of this Agreement.

9.4 City Right to Cure Defaults. In the event of a breach or default by Developer under a mortgage or deed of trust secured by the Property or the Improvements, City may cure the default, without acceleration of the subject loan, following prior notice thereof to the holder of such instrument and Developer. In such event, Developer shall be liable for, and City shall be entitled to reimbursement from Developer for all costs and expenses incurred by City associated with and attributable to the curing of the default or breach and such sum.

9.5 Holder to be Notified. Developer agrees to use best efforts to ensure that each term contained herein dealing with security financing and rights of holders shall be either inserted into the relevant deed of trust or mortgage or acknowledged by the holder prior to its creating any security right or interest in the Property or the Improvements, or other property of Developer, as applicable.

9.6 Modifications to Agreement. City shall not unreasonably withhold its consent to modifications of this Agreement requested by Project lenders or investors provided such modifications do not alter City’s substantive rights and obligations under this Agreement.

9.7 Estoppel Certificates. Either Party shall, at any time, and from time to time, within fifteen (15) days after receipt of written request from the other Party, execute and deliver to such Party a written statement certifying that, to the knowledge of the certifying Party:
(i) this Agreement is in full force and effect and a binding obligation of the Parties (if such be the case), (ii) this Agreement has not been amended or modified, or if so amended, identifying the amendments, and (iii) the requesting Party is not in default in the performance of its obligations under this Agreement, or if in default, describing the nature of any such defaults.

ARTICLE X

ENVIRONMENTAL MATTERS
ITEM 9.9. ATTACHMENT 2

23 10.1 No City Liability; Developer’s Covenants. City shall be not responsible for the cost of any soil, groundwater or other environmental remediation or other response activities for any Hazardous Materials existing or occurring in, on, under or about the Improvements, the Property or any portion thereof. Upon receipt of any notice regarding the presence, release or discharge of Hazardous Materials in, on or under the Improvements, the Property, or any portion thereof, Developer agrees to timely initiate and diligently pursue and complete all appropriate response, remediation and removal actions for the presence, release or discharge of such Hazardous Materials within such deadlines as specified by applicable Environmental Laws. Developer hereby covenants and agrees that commencing upon Developer’s acquisition of its interests in the Property:
(i) Developer shall not knowingly permit the Project or the Property or any portion of either to be a site for the use, generation, treatment, manufacture, storage, disposal or transportation of Hazardous Materials or otherwise knowingly permit the presence or release of Hazardous Materials in, on, under, about or from the Project or the Property with the exception of cleaning supplies and other materials customarily used in construction, operation or maintenance of residential property and any commercial uses developed as part of the Project, and used, stored and disposed of in compliance with Hazardous Materials Laws, and (ii) Developer shall keep and maintain the Project and the Property and each portion thereof in compliance with, and shall not cause or permit the Project or the Property or any portion of either to be in violation of, any Hazardous Materials Laws.

10.2 Environmental Indemnification. Subject to the last sentence of this Section 10.2, commencing upon Developer’s acquisition of the Property, Developer shall indemnify, defend (with counsel approved by City) and hold the Indemnitees harmless from and against any and all Claims including without limitation any expenses associated with the investigation, assessment, monitoring, response, removal, treatment, abatement or remediation of Hazardous Materials and administrative, enforcement or judicial proceedings resulting, arising, or based directly or indirectly in whole or in part, upon (i) the presence, release, use, generation, discharge, storage or disposal or the alleged presence, release, discharge, storage or disposal of any Hazardous Materials on, under, in or about, or the transportation of any such Hazardous Materials to or from, the Property, or (ii) the failure of Developer, Developer’s employees, agents, contractors, subcontractors, or any person acting on behalf of any of the foregoing to comply with Hazardous Materials Laws or the covenants set forth in Section 10.1. The foregoing indemnity shall further apply to any residual contamination in, on, under or about the Property or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the generation, use, handling, treatment, storage, transport or disposal of any such Hazardous Materials, and irrespective of whether any of such activities were or will be undertaken in accordance with Hazardous Materials Laws. The provisions of this Section 10.2 shall survive the issuance of a Certificate of Completion for the Project and the expiration or earlier termination of this Agreement. Except for any Claims caused by sole negligence of the Developer or its agents, Developer’s indemnification obligations set forth in this Section shall not apply to Claims regarding the Property arising out of or occurring prior to Developer’s acquisition of the Property, Claims arising from the gross negligence or willful misconduct of the City or its agents or Claims arising after Developer’s dispossession from the Property pursuant to foreclosure proceedings or a deed in lieu thereof.

ITEM 9.9. ATTACHMENT 2

24 10.2.1 No Limitation. Developer hereby acknowledges and agrees that Developer’s duties, obligations and liabilities under this Agreement, including, without limitation, under Section 8.2 above, are in no way limited or otherwise affected by any information the City may have concerning the Property and/or the presence in, on, under or about the Property of any Hazardous Materials, whether the City obtained such information from the Developer or from its own investigations. It is further agreed that City does not and shall not waive any rights against Developer that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies described in this Agreement.

10.3 Hazardous Materials. As used herein, the term “Hazardous Materials” means any substance, material or waste which is or becomes regulated by any federal, state or local governmental authority, and includes without limitation (i) petroleum or oil or gas or any direct or indirect product or by-product thereof; (ii) asbestos and any material containing asbestos; (iii) any substance, material or waste regulated by or listed (directly or by reference) as a “hazardous substance”, “hazardous material”, “hazardous waste”, “toxic waste”, “toxic pollutant”, “toxic substance”, “solid waste” or “pollutant or contaminant” in or pursuant to, or similarly identified as hazardous to human health or the environment in or pursuant to, the Toxic Substances Control Act [15 U.S.C. Section 2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C. Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C. Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. Section 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the PorterCologne Water Quality Control Act [California Water Code Section 13000, et seq.], as they now exist or are hereafter amended, together with any regulations promulgated thereunder; (iv) any substance, material or waste which is defined as such or regulated by any “Superfund” or “Superlien” law, or any Environmental Law; or (v) any other substance, material, chemical, waste or pollutant identified as hazardous or toxic and regulated under any other federal, state or local environmental law, including without limitation, asbestos, polychlorinated biphenyls, petroleum, natural gas and synthetic fuel products and by-products. Hazardous Materials shall not include any materials routinely used in the construction or operations of multifamily housing in accordance with all applicable laws and regulations.

10.4 Environmental Laws. As used herein, the term “Environmental Laws” means all federal, state or local statutes, ordinances, rules, regulations, orders, decrees, judgments or common law doctrines, and provisions and conditions of permits, licenses and other operating authorizations regulating, or relating to, or imposing liability or standards of conduct concerning (i) pollution or protection of the environment, including natural resources; (ii) exposure of persons, including employees and agents, to Hazardous Materials (as defined above) or other products, raw materials, chemicals or other substances; (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities; (iv) the manufacture, ITEM 9.9. ATTACHMENT 2

25 use or introduction into commerce of chemical substances, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal; or (iv) the use, release or disposal of toxic or hazardous substances or Hazardous Materials or the remediation of air, surface waters, groundwater or soil, as now or may at any later time be in effect, including but not limited to the Toxic Substances Control Act [15 U.S.C. Section 2601, et seq.]; the Comprehensive Environmental Response, Compensation and Liability Act [42 U.S.C.

Section 9601, et seq.], the Hazardous Materials Transportation Authorization Act [49 U.S.C.

Section 5101, et seq.], the Resource Conservation and Recovery Act [42 U.S.C. Section 6901, et seq.], the Federal Water Pollution Control Act [33 U.S.C. Section 1251], the Clean Air Act [42 U.S.C. Section 7401, et seq.], the California Underground Storage of Hazardous Substances Act [California Health and Safety Code Section 25280, et seq.], the California Hazardous Substances Account Act [California Health and Safety Code Section 25300, et seq.], the California Hazardous Waste Act [California Health and Safety Code Section 25100, et seq.], the California Safe Drinking Water and Toxic Enforcement Act [California Health and Safety Code Section 25249.5, et seq.], and the Porter-Cologne Water Quality Control Act [California Water Code Section 13000, et seq.], as each of the foregoing now exist or are hereafter amended, together with any regulations promulgated thereunder.

ARTICLE XI

DEFAULTS, REMEDIES AND TERMINATION

11.1 Event of Developer Default. The following events shall constitute an event of default on the part of Developer (“Event of Developer Default”):
(a) Subject to Force Majeure, the availability of financing and City’s issuance of permits and approvals, Developer fails to commence or complete construction of the Project within the times set forth in Section 5.8, or subject to Force Majeure, abandons or suspends construction of the Project prior to completion for a period of sixty (60) days or more; (b) A Transfer occurs, either voluntarily or involuntarily, in violation of Article VIII;
(c) Developer fails to maintain insurance as required pursuant to this Agreement, and Developer fails to cure such default within ten (10) days; (d) Subject to Developer’s right to contest the following charges pursuant to Section 7.3, if Developer fails to pay prior to delinquency taxes or assessments due on the Property or the Project or fails to pay when due any other charge that may result in a lien on the Property or the Project, and Developer fails to cure such default within thirty (30) days of date of delinquency, but in all events upon the imposition of any such tax or other lien; (e) Following Developer’s acquisition of the Property, a default arises under any loan secured by a mortgage, deed of trust or other security instrument recorded against the Property, the Improvements, or Developer’s interest therein, and remains uncured beyond any applicable cure period such that the holder of such security instrument has the right to accelerate repayment of such loan unless and until the same default is waived or cured; ITEM 9.9. ATTACHMENT 2

26 (f) Any representation or warranty contained in this Agreement or in any application, financial statement, certificate or report submitted to the City in connection with this Agreement or Developer’s request for City Funds proves to have been incorrect in any material and adverse respect when made and continues to be materially adverse to the City and Developer fails to cure such default within sixty (60) days after the date upon which City shall have given written notice of the default to Developer; provided however, if the default is of a nature that it cannot be cured within sixty (60) days, an Event of Developer Default shall not arise hereunder if Developer commences to cure the default within sixty (60) days and thereafter prosecutes the curing of such default with due diligence and in good faith to completion and in no event later than one hundred twenty (120) days after receipt of notice of the default; (g) If, pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (“Bankruptcy Law”), Developer (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against Developer or any general partner thereof in an involuntary case; (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official for Developer or any general partner thereof; (iv) makes an assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due; (h) A court of competent jurisdiction shall have made or entered any decree or order (1) adjudging the Developer to be bankrupt or insolvent, (2) approving as properly filed a petition seeking reorganization of the Developer or seeking any arrangement for Developer under bankruptcy law or any other applicable debtor's relief law or statute of the United States or any state or other jurisdiction, (3) appointing a receiver, trustee, liquidator, or assignee of the Developer in bankruptcy or insolvency or for any of its properties, or (4) directing the winding up or liquidation of the Developer; (i) Developer shall have assigned its assets for the benefit of its creditors (other than pursuant to a mortgage loan) or suffered a sequestration or attachment of or execution on any substantial part of its property, unless the property so assigned, sequestered, attached or executed upon shall have been returned or released within sixty (60) days after such event (unless a lesser time period is permitted for cure under any other mortgage on the Property or the Improvements, in which event such lesser time period shall apply under this subsection as well) or prior to any sooner sale pursuant to such sequestration, attachment, or execution; (j) The Developer shall have voluntarily suspended its business or Developer shall have been dissolved or terminated;
(k) An event of default arises under any City Document and remains uncured beyond any applicable cure period; or
(l) Developer defaults in the performance of any term, provision, covenant or agreement contained in this Agreement other than an obligation enumerated in this Section 11.1 and unless a shorter cure period is specified for such default, the default continues for ten (10) days in the event of a monetary default or ninety (90) days in the event of a nonmonetary default after the date upon which City shall have given written notice of the default to Developer; provided however, if the default is of a nature that it cannot be cured within sixty ITEM 9.9. ATTACHMENT 2

27 (60) days, an Event of Developer Default shall not arise hereunder if Developer commences to cure the default within sixty (60) days and thereafter prosecutes the curing of such default with due diligence and in good faith to completion and in no event later than one hundred twenty (120) days after receipt of notice of the default.

11.2 City Default. An event of default on the part of City (“Event of City Default”) shall arise hereunder if City fails to keep, observe, or perform any of its covenants, duties, or obligations under this Agreement, and the default continues for a period of thirty (30) days after written notice thereof from Developer to City, or in the case of a default which cannot with due diligence be cured within thirty (30) days, City fails to commence to cure the default within thirty (30) days of such notice and thereafter fails to prosecute the curing of such default with due diligence and in good faith to completion.

11.3 City’s Right to Terminate Agreement. If an Event of Developer Default shall occur and be continuing beyond any applicable cure period, then City shall, in addition to other rights available to it under law or this Agreement, have the right to terminate this Agreement. If City makes such election, City shall give written notice to Developer and to any mortgagee entitled to such notice specifying the nature of the default and stating that this Agreement shall expire and terminate on the date specified in such notice, and upon the date specified in the notice, this Agreement and all rights of Developer under this Agreement, shall expire and terminate.

11.4 City’s Remedies and Rights Upon an Event of Developer Default. During the continuance of an Event of Developer Default and the expiration of any applicable cure period, City shall have all remedies available to it under this Agreement or under law or equity, including, but not limited to the following, and City may, at its election, without notice to or demand upon Developer, except for notices or demands required by law or expressly required pursuant to the City Documents, exercise one or more of the following remedies:
(a) Accelerate and declare the balance of the City Loan Note, and any interest accrued thereon, immediately due and payable;
(b) Seek specific performance to enforce the terms of the City Documents;
(c) Foreclose on the Property pursuant to the City Loan Deed of Trust; and
(d) Pursue any and all other remedies available under this Agreement or under law or equity to enforce the terms of the City Documents and City’s rights thereunder.

11.5 Developer’s Remedies Upon an Event of City Default. Upon the occurrence of an Event of City Default, in addition to pursuing any other remedy allowed at law or in equity or otherwise provided in this Agreement, Developer may bring an action for equitable relief seeking the specific performance of the terms and conditions of this Agreement, and/or enjoining, abating, or preventing any violation of such terms and conditions, and/or seeking to obtain any other remedy consistent with the purpose of this Agreement.

ITEM 9.9. ATTACHMENT 2

28 11.6 Remedies Cumulative; No Consequential Damages. Except as otherwise expressly stated in this Agreement, the rights and remedies of the Parties are cumulative, and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different time, of any other rights or remedies for the same or any other default by the other Party. Notwithstanding anything to the contrary set forth herein, a Party’s right to recover damages in the event of a default shall be limited to actual damages and shall exclude consequential damages.

11.7 Inaction Not a Waiver of Default. No failure or delay by either Party in asserting any of its rights and remedies as to any default shall operate as a waiver of such default or of any such rights or remedies, nor deprive either Party of its rights to institute and maintain any action or proceeding which it may deem necessary to protect, assert or enforce any such rights or remedies in the same or any subsequent default.

ARTICLE XII

INDEMNITY AND INSURANCE

12.1 Indemnity. Developer shall indemnify, defend (with counsel approved by City) and hold Indemnitees, except third party contractors and consultants, harmless from and against any and all Claims arising directly or indirectly, in whole or in part, as a result of or in connection with Developer’s or Developer’s contractors, subcontractors, agents or employees development, construction, improvement, operation, ownership or maintenance of the Project or the Property, or any part thereof or otherwise arising out of or in connection with Developer’s performance under this Agreement. Developer’s indemnification obligations under this Section

12.1 shall not extend to Claims resulting solely from the gross negligence or willful misconduct of, or to any breach of a warranty or representation of this Agreement by, one or more Indemnitees. The provisions of this Section 12.1 shall survive the issuance of a Certificate of Completion for the Project and the expiration or earlier termination of this Agreement. It is further agreed that City will not and shall not waive any rights against Developer that they may have by reason of this indemnity and hold harmless agreement because of the acceptance by City, or the deposit with City by Developer, of any of the insurance policies described in this Agreement.

12.2 Liability and Workers’ Compensation Insurance.
(a) Prior to initiating work on the Project and continuing through the issuance of the Certificate of Completion, Developer and all contractors working on behalf of Developer on the Project shall maintain a commercial general liability policy in the amount of One Million Dollars ($1,000,000) each occurrence, Two Million Dollars ($2,000,000) annual aggregate, together with Three Million Dollars ($3,000,000) excess liability coverage, or such other policy limits as City may require in its reasonable discretion including coverage for bodily injury, property damage, products, completed operations and contractual liability coverage.

Such policy or policies shall be written on an occurrence basis and shall name the Indemnitees as additional insureds.

ITEM 9.9. ATTACHMENT 2

29 (b) Until issuance of the Certificate of Completion, Developer and all contractors working on behalf of Developer shall maintain a comprehensive automobile liability coverage in the amount of One Million Dollars ($1,000,000), combined single limit including coverage for owned and non-owned vehicles and shall furnish or cause to be furnished to City evidence satisfactory to City that Developer and any contractor with whom Developer has contracted for the performance of work on the Property or otherwise pursuant to this Agreement carries workers’ compensation insurance in an amount not less than One Million Dollars ($1,000,000), including a Waiver of Subrogation. Automobile liability policies shall name the Indemnitees as additional insureds.
(c) Upon commencement of construction work and continuing until issuance of a Certificate of Completion, Developer and all contractors working on behalf of Developer shall maintain a policy of builder's all-risk insurance in an amount not less than the full insurable cost of the Project on a replacement cost basis naming City as loss payee. Such insurance shall include coverage for risks of direct physical loss or damage, excluding the perils of earthquake, flood, and earth movement.
(d) Upon completion of construction, Developer shall maintain property insurance covering all risks of loss (other than earthquake and flood) for one hundred percent (100%) of the replacement value of the Project with deductible no greater than Ten Thousand Dollars ($10,000), naming City as loss payee.
(e) Companies writing the insurance required hereunder shall be licensed to do business in the State of California. Insurance shall be placed with insurers with a current A.M. Best's rating of no less than A: VII. The Commercial General Liability and comprehensive automobile policies required hereunder shall name the Indemnitees as additional insureds. Builder’s Risk and property insurance shall name City as loss payees as their interests may appear.
(f) Prior to commencement of construction work, Developer shall furnish City with certificates of insurance in form acceptable to City evidencing the required insurance coverage and duly executed endorsements evidencing such additional insured status.

The certificates shall contain a statement of obligation on the part of the carrier to notify City of any material adverse change, cancellation, termination or non-renewal of the coverage at least thirty (30) days in advance of the effective date of any such material adverse change, cancellation, termination or non-renewal.
(g) If any insurance policy or coverage required hereunder is canceled or reduced, Developer shall, within twenty-one (21) days after receipt of notice of such cancellation or reduction in coverage, but in no event later than the effective date of cancellation or reduction, file with City a certificate showing that the required insurance has been reinstated or provided through another insurance company or companies. Upon failure to so file such certificate, City may, without further notice and at its option, procure such insurance coverage at Developer’s expense, and Developer shall promptly reimburse City for such expense upon receipt of billing from City.

ITEM 9.9. ATTACHMENT 2

30 (h) Coverage provided by Developer shall be primary insurance and shall not be contributing with any insurance, or self-insurance maintained by City, and the policies shall so provide. Any Workers’ Compensation insurance policies shall contain a waiver of subrogation for the benefit of the City. Developer shall furnish the required certificates and endorsements to City prior to the commencement of construction of the Project, and shall provide City with certified copies of the required insurance policies upon request of City.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

13.1 No Brokers. Each Party warrants and represents to the other that no person or entity can properly claim a right to a real estate commission, brokerage fee, finder’s fee, or other compensation with respect to the transactions contemplated by this Agreement, except as identified in the Financing Plan. Each Party agrees to defend, indemnify and hold harmless the other Party from any claims, expenses, costs or liabilities arising in connection with a breach of this warranty and representation. The terms of this Section shall survive the expiration or earlier termination of this Agreement.

13.2 Enforced Delay; Extension of Times of Performance. Subject to the limitations set forth below, performance by either Party shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended where delays are due to the following (each a “Force Majeure”): war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, governmental restrictions or priority, litigation, including court delays, unusually severe weather, acts or omissions of the other Party, acts or failures to act of the City or any other public or governmental agency or entity (other than the acts or failures to act of City which shall not excuse performance by City), or any other cause beyond the affected Party’s reasonable control. An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the Party claiming such extension is sent to the other Party within thirty (30) days of the later of commencement of the cause or such Party’s acquiring knowledge that such cause will necessitate such extension. Neither Party shall unreasonably withhold consent to an extension of time pursuant to this Section.

Times of performance under this Agreement may also be extended in writing by the mutual agreement of Developer and City (acting in the discretion of its City Manager unless he or she determines in his or her discretion to refer such matter to the City Council). City and Developer acknowledge that adverse changes in economic conditions, either of the affected Party specifically or the economy generally, changes in market conditions or demand, and/or inability to obtain financing to complete the work of Improvements (all except in the event of Force Majeure) shall not constitute grounds of enforced delay pursuant to this Section. Each Party expressly assumes the risk of such adverse economic or market changes and/or financial inability, whether or not foreseeable as of the Effective Date.

13.3 Notices. Except as otherwise specified in this Agreement, all notices to be sent pursuant to this Agreement shall be made in writing, and sent to the Parties at their ITEM 9.9. ATTACHMENT 2

31 respective addresses specified below or to such other address as a Party may designate by written notice delivered to the other Parties in accordance with this Section. All such notices shall be sent by:
(i) personal delivery, in which case notice is effective upon delivery; (ii) certified or registered mail, return receipt requested, in which case notice shall be deemed delivered on receipt if delivery is confirmed by a return receipt; (iii) nationally recognized overnight courier, with charges prepaid or charged to the sender’s account, in which case notice is effective on delivery if delivery is confirmed by the delivery service;
(iv) facsimile transmission, in which case notice shall be deemed delivered upon transmittal, provided that (a) a duplicate copy of the notice is promptly delivered by first-class or certified mail or by overnight delivery, or (b) a transmission report is generated reflecting the accurate transmission thereof. Any notice given by facsimile shall be considered to have been received on the next business day if it is received after 5:00 p.m. recipient’s time or on a non-business day.

City: City of Rancho Cordova
2729 Prospect Park Drive
Rancho Cordova, CA 95670
Attention: City Manager [or designee]
Developer: Sunrise Crossing Affordable, LP
c/o St. Anton Communities
1801 I Street, Suite 200
Sacramento, CA 95811
Attn: President
With copies to:

PacH Anton South Holdings, LLC
c/o Pacific Housing, Inc.
2115 J Street, Suite 201
Sacramento, CA 95816
Attn: Mark A. Wiese
and: Cox, Castle & Nicholson LLP
50 California St., Ste 3200
San Francisco, CA 94111
Attn: Ofer Elitzur, Esq.

13.4 Attorneys’ Fees. If either Party fails to perform any of its obligations under this Agreement, or if any dispute arises between the Parties concerning the meaning or interpretation of any provision hereof, then the prevailing Party in any proceeding in connection ITEM 9.9. ATTACHMENT 2

32 with such dispute shall be entitled to the costs and expenses it incurs on account thereof and in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys’ fees and disbursements.

13.5 Waivers; Modification. No waiver of any breach of any covenant or provision of this Agreement shall be deemed a waiver of any other covenant or provision hereof, and no waiver shall be valid unless in writing and executed by the waiving Party. An extension of time for performance of any obligation or act shall not be deemed an extension of the time for performance of any other obligation or act, and no extension shall be valid unless in writing and executed by the Party granting the extension. This Agreement may be amended or modified only by a written instrument executed by the Parties.

13.6 Binding on Successors. Subject to the restrictions on Transfers set forth in Article VIII, this Agreement shall bind and inure to the benefit of the Parties and their respective permitted successors and assigns. Any reference in this Agreement to a specifically named Party shall be deemed to apply to any permitted successor and assign of such Party who has acquired an interest in compliance with this Agreement or under law.

13.7 Survival. All representations made by Developer hereunder and Developer’s obligations pursuant to Sections 5.14, 5.17, 5.18, 10.2, 12.1, 13.1 and 13.18 shall survive the expiration or termination of this Agreement and the issuance and recordation of a Certificate of Completion.

13.8 Construction. The section headings and captions used herein are solely for convenience and shall not be used to interpret this Agreement. The Parties acknowledge that this Agreement is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since both Parties have participated in the negotiation and drafting of this Agreement, this Agreement shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.

13.9 Action or Approval. Whenever action and/or approval by City is required under this Agreement, the City Manager or his or her designee may act on and/or approve such matter unless specifically provided otherwise, or unless the City Manager determines in his or her discretion that such action or approval requires referral to the City Council for consideration.

13.10 Entire Agreement. This Agreement, including Exhibits A through J attached hereto and incorporated herein by this reference, together with other City Documents contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior written or oral agreements, understandings, representations or statements between the Parties with respect to the subject matter hereof.

13.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto having additional signature pages executed by the other ITEM 9.9. ATTACHMENT 2

33 Party. Any executed counterpart of this Agreement may be delivered to the other Party by facsimile and shall be deemed as binding as if an originally signed counterpart was delivered.

13.12 Severability. If any term, provision, or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect unless an essential purpose of this Agreement is defeated by such invalidity or unenforceability.

13.13 No Third Party Beneficiaries. Nothing contained in this Agreement is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder.

13.14 Parties Not Co-Venturers. Nothing in this Agreement is intended to or shall establish the Parties as partners, co-venturers, or principal and agent with one another.

13.15 Non-Liability of Officials, Employees and Agents. No officer, official, employee or agent of City shall be personally liable to Developer or its successors in interest in the event of any default or breach by City for any amount which may become due to Developer or its successors in interest pursuant to this Agreement.

13.16 Time of the Essence; Calculation of Time Periods. Time is of the essence for each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is not a business day, in which event the period shall run until the next business day. The final day of any such period shall be deemed to end at 5:00 p.m., local time at the Property. For purposes of this Agreement, a “business day” means a day that is not a Saturday, Sunday, a federal holiday or a state holiday under the laws of California.

13.17 Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. Any action to enforce or interpret this Agreement shall be filed in the Superior Court of Sacramento County, California.

13.18 General Indemnification. Developer shall indemnify, defend (with counsel approved by City) and hold harmless Indemnitees from all Claims (including without limitation, reasonable attorneys’ fees) arising in connection with any claim, action or proceeding to attack, set aside, void, or annul any approval by the City or any of its agencies, departments, commissions, agents, officers, employees or legislative body concerning the Project or this Agreement. The City will promptly notify Developer of any such claim, action or proceeding, and will cooperate fully in the defense. The City may participate in the defense of any such claim, action or proceeding, and if the City chooses to do so, Developer shall reimburse City for reasonable attorneys’ fees and expenses incurred. Developer’s indemnification obligation hereunder shall not apply to gross negligence or willful misconduct of an Indemnitee.

ITEM 9.9. ATTACHMENT 2

34 IN WITNESS WHEREOF, the Parties have entered into this Agreement effective as of the date first written above.

CITY

THE CITY OF RANCHO CORDOVA,
a California municipal corporation
By: __________________________________

Name: ________________________________
Title: _________________________________
ATTEST:

By: _________________________________
Stacy Leitner, City Clerk
APPROVED AS TO FORM:

By: _________________________________
Adam Lindgren, City Attorney
ITEM 9.9. ATTACHMENT 2

35 DEVELOPER

SUNRISE CROSSING AFFORDABLE, LP,
a California limited partnership
By: St. Anton Sunrise Crossing Affordable LLC,
a California limited liability company,
its Co-General Partner

By: Blue Bronco, LLC,
a California limited liability company,
its Manager
By: _______________________________
Peter H. Geremia, Manager
By: PacH Anton South Holdings, LLC,
a California limited liability company,
its Managing General Partner

By: Pacific Housing, Inc.,
a California nonprofit public benefit corporation,
its Manager
By: _________________________________
Mark A. Wiese, President
ITEM 9.9. ATTACHMENT 2

36 Exhibit A

LEGAL DESCRIPTION
(Attach)
Exhibit B

GRANT DEED
(Attach)
Exhibit C

MEMORANDUM OF AGREEMENT
(Attach)
Exhibit D

CITY LOAN PROMISSORY NOTE
(Attach)
Exhibit E

CITY LOAN DEED OF TRUST
(Attach)
Exhibit F

AFFORDABLE HOUSING REGULATORY AGREEMENT AND DECLARATION OF

RESTRICTIVE COVENANTS
(Attach)
Exhibit G

SCOPE OF DEVELOPMENT
(Attach)
Exhibit H

SCHEDULE OF PERFORMANCE
(Attach)
Exhibit I

FINANCING PLAN
(Attach)
Exhibit J

CERTIFICATE OF COMPLETION
(Attach)
Exhibit K

PERFORMANCE GUARANTY
(Attach)
ITEM 9.9. ATTACHMENT 2

37 5042499.5
ITEM 9.9. ATTACHMENT 2

1 Recording Requested by
and When Recorded, Return to:

City of Rancho Cordova
2729 Prospect Park Drive
Rancho Cordova, CA 95670
Attention: City Clerk

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§6103, 27383
(SPACE ABOVE THIS LINE RESERVED
FOR RECORDER’S USE)

MEMORANDUM OF

DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT
This MEMORANDUM OF DISPOSITION, DEVELOPMENT AND LOAN
AGREEMENT ( “Memorandum”) is entered into as of _______________________, 2022, by and between the CITY OF RANCHO CORDOVA, a California municipal corporation (the “City”), and SUNRISE CROSSING AFFORDABLE, LP, a California limited partnership (“Developer”).

This Memorandum is made with reference to the following:

1. The City and Developer have entered into that certain Disposition, Development And Loan Agreement dated as of __________________, 2022 (the “DDLA”). The DDLA provides for the development of a rental multifamily housing development which is affordable to lower income and very low income households on certain real property located in the City of Rancho Cordova, California and more particularly described in Exhibit “A” attached hereto, and referred to in the DDLA as the “Property”. Any capitalized term used, but not defined, in this Memorandum shall have the meaning provided in the DDLA.

2. The DDLA provides for City and Developer to enter this Memorandum and to record the same in the Official Records of Sacramento County, California, to provide notice to all persons of the existence of the DDLA, which DDLA is binding on Developer and Developer’s successors-in-interest as to the Property.

3. This Memorandum is not intended as a full description of the terms and conditions of the DDLA. This Memorandum shall not replace, alter, or modify any term or condition set forth in the DDLA, nor shall it be used to interpret the terms and conditions of the DDLA.

ITEM 9.9. ATTACHMENT 2

2 4. This Memorandum may be executed in several counterparts, and all so executed shall constitute one agreement binding on both parties hereto, notwithstanding that both parties are not signatories to the original or same counterpart.

IN WITNESS WHEREOF, City and Developer have entered into this Memorandum as of the date first set forth above.

CITY

THE CITY OF RANCHO CORDOVA,
a California municipal corporation
By: __________________________________

Name: ________________________________
Title: _________________________________
ATTEST:

By: _________________________________
Stacy Leitner, City Clerk
APPROVED AS TO FORM:

By: _________________________________
Adam Lindgren, City Attorney
ITEM 9.9. ATTACHMENT 2

3 DEVELOPER

SUNRISE CROSSING AFFORDABLE, LP,
a California limited partnership
By: St. Anton Sunrise Crossing Affordable LLC,
a California limited liability company,
its Co-General Partner

By: Blue Bronco, LLC,
a California limited liability company,
its Manager
By: _______________________________
Peter H. Geremia, Manager
By: PacH Anton South Holdings, LLC,
a California limited liability company,
its Managing General Partner

By: Pacific Housing, Inc.,
a California nonprofit public benefit corporation,
its Manager
By: _________________________________
Mark A. Wiese, President
ITEM 9.9. ATTACHMENT 2

4 EXHIBIT A

LEGAL DESCRIPTION
ITEM 9.9. ATTACHMENT 2

5 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
County of ______________________)
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)
ITEM 9.9. ATTACHMENT 2

6 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California )
County of ______________________)
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature (Seal)
5050802.2
ITEM 9.9. ATTACHMENT 2

1 PROMISSORY NOTE
(Sunrise Crossing)
$2,634,000 Rancho Cordova, California
______________, 2022
FOR VALUE RECEIVED, the undersigned SUNRISE CROSSING AFFORDABLE, LP, a California limited partnership ("Borrower"), hereby promises to pay to the order of the City of Rancho Cordova, a California municipal corporation ("Holder"), 2729 Prospect Park Drive, Rancho Cordova, California, 95670, the principal amount of Two Million Six Hundred ThirtyFour Thousand Dollars ($2,634,000), plus interest thereon pursuant to Section 2 below (the “City Loan”).

1. Borrower's Obligation. This promissory note (the "Note") evidences Borrower's obligation to pay Holder the principal amount of up to Two Million Six Hundred Thirty-Four Thousand Dollars ($2,634,000) with interest for the funds loaned to Borrower by Holder pursuant to the Disposition, Development and Loan Agreement between Borrower and Holder dated _______________, 2022 (the "DDLA"). All capitalized terms not otherwise defined in this Note shall have the meanings set forth in the DDLA.

2. Interest. The City Loan bears simple interest from the date of this Note at three percent (3%) interest on the outstanding balance, until full repayment of the outstanding balance of the City Loan.

3. Term and Repayment Requirements. Principal and interest under this Note is due and payable as follows:
a. Annual Payments. No payments shall be required with respect to the period ending on the end of the calendar year in which there occurs the fifteenth (15th) anniversary of the date on which the Project receives its final permanent certificate of occupancy. Thereafter the Borrower shall make payments of principal and interest to the Holder in the following amounts: Twenty-Five Percent (25%) of Residual Receipts for each of the following fifteen (15) years; Thirty-Five Percent (35%) of Residual Receipts for each of the following ten (10) years; Forty-Five Percent (45%) of Residual Receipts for each of the following ten (10) years; and Fifty Percent (50%) of Residual Receipts for each of the following five (5) years. Such annual payments shall be due and payable in arrears no later than April 1 of each year with respect to the previous calendar year. The Borrower shall provide the Holder with any documentation reasonably requested by the Holder to substantiate the Borrower's determination of Residual Receipts. Repayments shall be credited first to interest, then to principal.
b. Definitions.
(i) “Residual Receipts" means the excess of annual Operating Revenues over annual Operating Expenses for the Project.

ITEM 9.9. ATTACHMENT 2

2 (ii) "Operating Revenues" means all income derived from the Project, and includes, without limitation: (i) rents; (ii) rent subsidy payments received on behalf of tenants; and (iii) receipts from laundry, parking, vending, or other services in which a fee is charged.
(iii) "Operating Expenses" means all direct costs and expenses necessary to operate the Project including: (1) debt service on any loans secured by the Property as described in the Final Financing Plan or otherwise approved by Holder, provided that such loans have been used to develop or improve the Project (or to refinance loans used for development or improvement of the Project); (2) resident service program and property management fees and costs; (3) property taxes and assessments (if any); (4) insurance premiums; (5) maintenance and repair; (6) reasonable payments to reserves for operating contingencies, replacement of capital items, and other reserve uses in such amounts as are required by the loans described in paragraph (1) and/or by Borrower’s tax credit investor limited partner; (7) deferred developer fee to the Borrower or its affiliate for development services for the Project in such amount as set forth in the Financing Plan as such amount may be updated by the final cost certification upon completion of construction; (8) credit adjuster payments, limited partner loans, and developer loans all as set forth in the Partnership Agreement; (9) advertising, legal, accounting, security and other general office administration expenses; (10) payroll, benefits and payroll taxes, (11) utility costs; and (12) payments for partnership management fee, asset management fees, and other fees payable to a partner of the Partnership pursuant to the Partnership Agreement in such amounts as are set forth in the Financing Plan, including any annual inflationary increases included in the Financing Plan. c. Payment in Full. Borrower shall pay all outstanding principal and accrued interest on the City Loan, in full, on the earliest to occur of (i) an Event of Developer Default for which the Holder exercises its right to cause the City Loan indebtedness to become immediately due and payable, and (ii) the date that is the fifty-fifth (55th) anniversary of the date that a final certificate of occupancy is issued by the City of Rancho Cordova to certify that the construction of the Project is complete and the Project may be legally occupied (the "Completion Date"); provided, however, if a record of the Completion Date cannot be located or established, the City Loan is due and payable on the fifty-seventh (57th) anniversary of the date of this Note.

4. Disbursements. All proceeds of the City Loan shall be disbursed to or on behalf of the Borrower in accordance with the terms of the DDLA.

5. Prepayment. Borrower may prepay the City Loan in full or in part at any time without penalty or fee.

6. Assumption. This Note shall not be assumable by the successors and assigns of Borrower without the prior written consent of Holder unless the assignment complies with Article VIII of the DDLA. Holder may assign its interest in the Note to a public agency or nonprofit entity in Holder’s sole discretion.

ITEM 9.9. ATTACHMENT 2

3 7. Security. This Note shall be secured by the City Loan Deed of Trust on the Property, wherein Borrower is the trustor and Holder is the beneficiary. The terms of the City Loan Deed of Trust are hereby incorporated into this Note and made a part hereof.

8. Terms of Payment.
(a) All payments due under this Note shall be paid in currency of the United States of America, which at the time of payment is lawful for the payment of public and private debts.
(b) All payments on this Note shall be paid to Holder at the address set forth in the first paragraph of this Note, or to such other place as Holder of this Note may from time to time designate.
(c) All payments on this Note shall be without expense to Holder, and Borrower agrees to pay all costs and expenses, including re-conveyance fees and reasonable attorney's fees of Holder, incurred in connection with the payment of this Note and the release of any security hereof.
(d) Notwithstanding any other provision of this Note, or any instrument securing the obligations of Borrower under this Note, if, for any reason whatsoever, the payment of any sums by Borrower pursuant to the terms of this Note would result in the payment of interest which would exceed the amount that Holder may legally charge under the laws of the State of California, then the amount by which payments exceed the lawful interest rate shall automatically be deducted from the principal balance owing on this Note, so that in no event shall Borrower be obligated under the terms of this Note to pay any interest which would exceed the lawful rate.

9. Default.
(a) Any of the following shall constitute an event of default under this Note:
(i) Any failure to pay, in full, any payment required under this Note when due following written notice by the Holder of such failure and ten (10) days opportunity to cure;
(ii) Any failure in the performance by Borrower of any term, condition, provision or covenant set forth in this Note and Borrower’s failure to cure such default within thirty (30) days of receiving written notice thereof from the Holder; and (iii) The occurrence of any Borrower event of default under the DDLA, the City Loan Deed of Trust, the Regulatory Agreement, or other instrument securing the obligations of Borrower under this Note or under any other promissory notes hereafter issued by Borrower to Holder pursuant to the DDLA or the Deed of Trust (the "City Loan Documents"), subject to notice and cure periods, if any, set forth therein.

ITEM 9.9. ATTACHMENT 2

4 (b) Upon the occurrence of one or more of the foregoing events of default, the entire unpaid principal balance, together with all interest thereon, and together with all other sums then payable under this Note and the Deed of Trust shall at the option of Holder become immediately due and payable upon written notice by Holder to Borrower without further demand.
(c) Holder's failure to exercise the remedy set forth in Subsection 9(b) above or any other remedy provided by law upon the occurrence of one or more of the foregoing events of default shall not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other default. The acceptance by Holder hereof of any payment which is less than the total of all amounts due and payable at the time of such payment shall not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of Holder, except as and to the extent otherwise provided by law.
(d) Notwithstanding anything herein to the contrary, Holder hereby agrees that any cure of any default made or tendered by one or more of Borrower's limited partners shall be deemed a cure by Borrower and shall be accepted or rejected on the same basis as if made or tendered by Borrower. Copies of all notices which are sent hereunder to Borrower shall be sent to Borrower's limited partners at the following address:

10. Non-Recourse. The Borrower shall not have any direct or indirect personal liability for payment of the principal of, or interest on, the City Loan or the performance of the covenants of the Borrower under the City Loan Deed of Trust and Regulatory Agreement.

The sole recourse of the Holder with respect to the principal of, or interest on, this Note and defaults by the Borrower in the performance of its covenants under the City Deed of Trust and City Regulatory Agreement shall be to the property described in the City Deed of Trust.

Notwithstanding the foregoing, however, the foregoing shall not in any way affect any rights Holder may have (as a secured party or otherwise) hereunder or under this Note and City Loan Deed of Trust to recover directly from Borrower any amounts, or any funds, damages or costs (including without limitation reasonable attorneys’ fees and costs) incurred by Holder as a result of fraud, intentional misrepresentation or bad faith, waste, and any costs and expenses incurred by Holder in connection therewith (including without limitation reasonable attorneys’ fees and costs).

11. Waivers.
(a) Borrower hereby waives diligence, presentment, protest and demand, and notice of protest, notice of demand, notice of dishonor and notice of non-payment ITEM 9.9. ATTACHMENT 2

5 of this Note. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Holder may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower. (b) Any extension of time for payment of this Note or any installment hereof made by agreement of Holder with any person now or hereafter liable for payment of this Note shall not operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.
(c) The obligations of Borrower under this Note shall be absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever.

12. Miscellaneous Provisions.
(a) All notices to Holder or Borrower shall be given in the manner and at the addresses set forth in the DDLA, or to such addresses as Holder and Borrower may therein designate.
(b) Borrower promises to pay all costs and expenses, including reasonable attorney's fees, incurred by Holder in the enforcement of the provisions of this Note, regardless of whether suit is filed to seek enforcement. (c) This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
(d) This Note shall be governed by and construed in accordance with the laws of the State of California.
(e) The times for the performance of any obligations hereunder shall be strictly construed, time being of the essence.
(f) This document, together with the City Loan Documents, contains the entire agreement between the parties as to the City Loan. It may not be modified except upon written consent of the parties.

ITEM 9.9. ATTACHMENT 2

6 IN WITNESS WHEREOF, Borrower is executing this Promissory Note as of the day and year first above written.

SUNRISE CROSSING AFFORDABLE, LP,
a California limited partnership
By: St. Anton Sunrise Crossing Affordable LLC,
a California limited liability company,
its Co-General Partner

By: Blue Bronco, LLC,
a California limited liability company,
its Manager
By: _______________________________
Peter H. Geremia, Manager
By: PacH Anton South Holdings, LLC,
a California limited liability company,
its Managing General Partner

By: Pacific Housing, Inc.,
a California nonprofit public benefit corporation,
its Manager
By: _________________________________
Mark A. Wiese, President

3333166.12
ITEM 9.9. ATTACHMENT 2

1 RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Rancho Cordova
2729 Prospect Park Drive
Rancho Cordova, CA 95670
Attn: City Manager
No fee for recording pursuant to
Government Code Section 27383 and 27388.1
A.P.N. ________________

DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY AGREEMENT, AND

FIXTURE FILING
(Sunrise Crossing)

THIS DEED OF TRUST WITH ASSIGNMENT OF RENTS, SECURITY
AGREEMENT AND FIXTURE FILING ("Deed of Trust") is made as of ______________ by and among Sunrise Crossing Affordable, LP, a California limited partnership ("Trustor"), Old Republic Title Company, a California corporation ("Trustee"), and the City of Rancho Cordova, a California municipal corporation ("Beneficiary").

FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions hereinafter set forth, the property located in the County of Sacramento, State of California, that is described in the attached Exhibit A, incorporated herein by this reference (the "Property").

TOGETHER WITH all interest, estates or other claims, both in law and in equity which Trustor now has or may hereafter acquire in the Property and the rents; TOGETHER WITH all easements, rights-of-way and rights used in connection therewith or as a means of access thereto, including (without limiting the generality of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto; TOGETHER WITH any and all buildings and improvements of every kind and description now or hereafter erected thereon, and all property of the Trustor now or hereafter affixed to or placed upon the Property;
TOGETHER WITH all building materials and equipment now or hereafter delivered to said property and intended to be installed therein;
TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter acquired, in and to any land lying within the right-of-way of any street, open or proposed, ITEM 9.9. ATTACHMENT 2

2 adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to or used in connection with the Property;
TOGETHER WITH all estate, interest, right, title, other claim or demand, of every nature, in and to such property, including the Property, both in law and in equity, including, but not limited to, all deposits made with or other security given by Trustor to utility companies, the proceeds from any or all of such property, including the Property, claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may hereafter acquire, any and all awards made for the taking by eminent domain or by any proceeding or purchase in lieu thereof of the whole or any part of such property, including without limitation, any awards resulting from a change of grade of streets and awards for severance damages to the extent Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein;
TOGETHER WITH all of Trustor's interest in all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any manner; and
TOGETHER WITH all of Trustor's interest in all building materials, fixtures, equipment, work in process and other personal property to be incorporated into the Property; all goods, materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other personal property now or hereafter appropriated for use on the Property, whether stored on the Property or elsewhere, and used or to be used in connection with the Property; all rents, issues and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles, chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance and condemnation awards and proceeds, trade names, trademarks and service marks arising from or related to the Property and any business conducted thereon by Trustor; all replacements, additions, accessions and proceeds; and all books, records and files relating to any of the foregoing.

All of the foregoing, together with the Property, is herein referred to as the "Security." To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever.

FOR THE PURPOSE OF SECURING THE FOLLOWING OBLIGATIONS (the "Secured Obligations"):
(a) Payment to Beneficiary of all sums at any time owing under or in connection with the Note (defined in Section 1.3 below) until paid or cancelled and any other amounts owing under the Loan Documents (defined in Section 1.2 below). Said principal and other payments shall be due and payable as provided in the Note or other Loan Documents, as applicable. The ITEM 9.9. ATTACHMENT 2

3 Note and all its terms are incorporated herein by reference, and this conveyance shall secure any and all extensions thereof, however evidenced;
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to the terms and provisions of this Deed of Trust following a breach of Trustor's obligation to advance said sums and the expiration of any applicable cure period, with interest thereon as provided herein;
(c) Performance of every obligation, covenant or agreement of Trustor contained herein and in the Loan Documents; and
(d) All modifications, extensions and renewals of any of the Secured Obligations (including without limitation, (i) modifications, extensions or renewals at a different rate of interest, or (ii) deferrals or accelerations of the required principal payment dates or interest payment dates or both, in whole or in part), however evidenced, whether or not any such modification, extension or renewal is evidenced by a new or additional promissory note or notes.

AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR COVENANTS AND AGREES:

ARTICLE 1

DEFINITIONS
In addition to the terms defined elsewhere in this Deed of Trust, the following terms shall have the following meanings in this Deed of Trust:

Section 1.1 The term "Loan Agreement" means that certain Disposition, Development and Loan Agreement between Trustor and Beneficiary, dated _______, 2022, providing for the Beneficiary to loan to Trustor Two Million Six Hundred Thirty-Four Thousand Dollars ($2,634,000).

Section 1.2 The term "Loan Documents" means this Deed of Trust, the Note, the Loan Agreement, the Regulatory Agreement, and any other debt, loan or security instruments between Trustor and the Beneficiary relating to the Property.

Section 1.3 The term "Note" means the Promissory Note in the principal amount of Two Million Six Hundred Thirty-Four Thousand Dollars ($2,634,000), of even date herewith, executed by Trustor in favor of the Beneficiary, as it may be amended or restated, the payment of which is secured by this Deed of Trust. (A copy of the Note is on file with the Beneficiary and terms and provisions of the Note are incorporated herein by reference.) Section 1.4 The term "Principal" means the amount required to be paid under the Note.

ITEM 9.9. ATTACHMENT 2

4 Section 1.5 The term "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants of even date herewith by and between the Beneficiary and the Trustor.

ARTICLE 2

MAINTENANCE AND MODIFICATION OF THE PROPERTY

AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.

The Trustor agrees that at all times prior to full payment and performance of the Secured Obligations, the Trustor will, at the Trustor's own expense, maintain, preserve and keep the Security or cause the Security to be maintained and preserved in good condition, reasonable wear and tear excepted. The Trustor will from time to time make or cause to be made all repairs, replacements and renewals deemed proper and necessary by it. The Beneficiary shall have no responsibility in any of these matters or for the making of improvements or additions to the Security.

Trustor agrees to pay fully and discharge (or cause to be paid fully and discharged) all claims for labor done and for material and services furnished in connection with the Security, diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation of labor on the work or construction on the Security for a continuous period of thirty (30) days or more, and to take all other reasonable steps to forestall the assertion of claims of lien against the Security of any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary as its agent (said agency being coupled with an interest) with the authority, but without any obligation, to file for record any notices of completion or cessation of labor or any other notice that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the Loan Documents; provided, however, that Beneficiary shall exercise its rights as agent of Trustor only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those actions as hereinbefore provided.

During the continuance of an Event of Default under this Deed of Trust, upon demand by Beneficiary, Trustor shall make or cause to be made such demands or claims as Beneficiary shall specify upon laborers, materialmen, subcontractors or other persons who have furnished or claim to have furnished labor, services or materials in connection with the Security. Nothing herein contained shall require Trustor to pay any claims for labor, materials or services which Trustor in good faith disputes and is diligently contesting provided that Trustor shall, within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder of Sacramento County, a surety bond in an amount 1 and 1/2 times the amount of such claim item to protect against a claim of lien.

Section 2.2 Granting of Easements.

Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in the nature of easements with respect to any property or rights included in the Security except those required or desirable for installation and maintenance of public utilities including, without ITEM 9.9. ATTACHMENT 2

5 limitation, water, gas, electricity, sewer, telephone and telegraph, or those otherwise required by law, and as approved, in writing, by Beneficiary.

Section 2.3 Assignment of Rents.

As part of the consideration for the indebtedness evidenced by the Note, Trustor hereby absolutely and unconditionally assigns and transfers to Beneficiary all the rents and revenues of the Property including those now due, past due, or to become due by virtue of any lease or other agreement for the occupancy or use of all or any part of the Property, regardless of to whom the rents and revenues of the Property are payable. Trustor hereby authorizes Beneficiary or Beneficiary's agents to collect the aforesaid rents and revenues and hereby directs each tenant of the Property to pay such rents to Beneficiary or Beneficiary's agents; provided, however, that prior to written notice given by Beneficiary to Trustor of an Event of Default by Trustor, Trustor shall collect and receive all rents and revenues of the Property as trustee for the benefit of Beneficiary and Trustor to apply the rents and revenues so collected to the Secured Obligations with the balance, so long as no Event of Default is continuing, to the account of Trustor, it being intended by Trustor and Beneficiary that this assignment of rents constitutes an absolute assignment and not an assignment for additional security only. Upon delivery of written notice by Beneficiary to Trustor of an Event of Default by Trustor, and without the necessity of Beneficiary entering upon and taking and maintaining full control of the Property in person, by agent or by a court-appointed receiver, Beneficiary shall immediately be entitled to possession of all rents and revenues of the Property as specified in this Section 2.3 as the same becomes due and payable, including but not limited to rents then due and unpaid, and all such rents shall immediately upon delivery of such notice be held by Trustor as trustee for the benefit of Beneficiary only; provided, however, that the written notice by Beneficiary to Trustor of the Event of Default by Trustor shall contain a statement that Beneficiary exercises its rights to such rents. Trustor agrees that commencing upon delivery of such written notice of Trustor's Event of Default by Beneficiary to Trustor, each tenant of the Property shall make such rents payable to and pay such rents to Beneficiary or Beneficiary's agents on Beneficiary's written demand to each tenant therefor, delivered to each tenant personally, by mail or by delivering such demand to each rental unit, without any liability on the part of said tenant to inquire further as to the existence of an Event of Default by Trustor.

Trustor hereby covenants that Trustor has not executed any prior assignment of said rents (except in connection with the Loans described in the Financing Plan (“Approved Financing”)), that Trustor has not performed, and will not perform, any acts or has not executed and will not execute, any instrument which would prevent Beneficiary from exercising its rights under this Section 2.3, and that at the time of execution of this Deed of Trust, there has been no anticipation or prepayment of any of the rents of the Property for more than two (2) months prior to the due dates of such rents. Trustor covenants that Trustor will not hereafter collect or accept payment of any rents of the Property more than two (2) months prior to the due dates of such rents.

Trustor further covenant that Trustor will execute and deliver to Beneficiary such further assignments of rents and revenues of the Property as Beneficiary may from time to time request.

Upon Trustor's breach of any covenant or agreement of Trustor in the Loan Documents beyond any applicable notice and cure periods, Beneficiary may in person, by agent or by a court-appointed receiver, regardless of the adequacy of Beneficiary's security, enter upon and ITEM 9.9. ATTACHMENT 2

6 take and maintain full control of the Property in order to perform all acts necessary and appropriate for the operation and maintenance thereof including, but not limited to, the execution, cancellation or modification of leases, the collection of all rents and revenues of the Property, the making of repairs to the Property and the execution or termination of contracts providing for the management or maintenance of the Property, all on such terms as are deemed best to protect the security of this Deed of Trust. In the event Beneficiary elects to seek the appointment of a receiver for the Property upon Trustor's breach of any covenant or agreement of Trustor in this Deed of Trust, Trustor hereby expressly consents to the appointment of such receiver. Beneficiary or the receiver shall be entitled to receive a reasonable fee for so managing the Property.

All rents and revenues collected subsequent to delivery of written notice by Beneficiary to Trustor of the breach by Trustor of any covenant or agreement of Trustor in the Loan Documents shall be applied first to the costs, if any, of taking control of and managing the Property and collecting the rents, including, but not limited to, attorney's fees, receiver's fees, premiums on receiver's bonds, costs of repairs to the Property, premiums on insurance policies, taxes, assessments and other charges on the Property, and the costs of discharging any obligation or liability of Trustor as lessor or landlord of the Property and then to the sums secured by this deed of Trust. Beneficiary or the receiver shall have access to the books and records used in the operation and maintenance of the Property and shall be liable to account only for those rents actually received. Beneficiary shall not be liable to Trustor, anyone claiming under or through Trustor or anyone having an interest in the Property by reason of anything done or left undone by Beneficiary under this Section 2.3 except resulting from the gross negligence or willful misconduct of Beneficiary or its agents.

If the rents of the Property are not sufficient to meet the costs, if any, of taking control of and managing the Property and collecting the rents, any funds expended by Beneficiary for such purposes shall become part of the Secured Obligations pursuant to Section 3.3 hereof. Unless Beneficiary and Trustor agree in writing to other terms of payment, such amounts shall be payable upon notice from Beneficiary to Trustor requesting payment thereof and shall bear interest from the date of disbursement at the rate stated in Section 3.3.

Any entering upon and taking and maintaining of control of the Property by Beneficiary or the receiver and any application of rents as provided herein shall not cure or waive any default hereunder or invalidate any other right or remedy of Beneficiary under applicable law or provided herein. This assignment of rents of the Property shall terminate at such time as this Deed of Trust ceases to secure the Secured Obligations.

ARTICLE 3
TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.

Trustor shall pay, or cause to be paid, prior to the date of delinquency, all taxes, assessments, charges and levies imposed by any public authority or utility company which are or may become a lien affecting the Security or any part thereof; provided, however, that Trustor ITEM 9.9. ATTACHMENT 2

7 shall not be required to pay and discharge any such tax, assessment, charge or levy so long as (a) the legality thereof shall be promptly and actively contested in good faith and by appropriate proceedings, and (b) Trustor maintains reserves adequate to pay any liabilities contested pursuant to this Section 3.1. With respect to taxes, special assessments or other similar governmental charges, Trustor shall pay such amount in full prior to the attachment of any lien therefor on any part of the Security; provided, however, if such taxes, assessments or charges may be paid in installments, Trustor may pay in such installments. Except as provided in clause (b) of the first sentence of this paragraph, the provisions of this Section 3.1 shall not be construed to require that Trustor maintain a reserve account, escrow account, impound account or other similar account for the payment of future taxes, assessments, charges and levies.

In the event that Trustor shall fail to pay any of the foregoing items required by this Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the same, after the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to fully pay such items within seven (7) business days after receipt of such notice. Any amount so advanced therefor by Beneficiary, together with interest thereon from the date of such advance at the maximum rate permitted by law, shall become part of the Secured Obligations secured hereby, and Trustor agrees to pay all such amounts.

Section 3.2 Provisions Respecting Insurance.

Trustor agrees to provide insurance conforming in all respects to that required under the Loan Documents during the course of construction and following completion, and at all times until all amounts secured by this Deed of Trust have been paid and all Secured Obligations secured hereunder fulfilled, and this Deed of Trust reconveyed.

All such insurance policies and coverages shall be maintained at Trustor's sole cost and expense. Certificates of insurance for all of the above insurance policies, showing the same to be in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time prior to Trustor's satisfaction of the Secured Obligations.

Section 3.3 Advances.

In the event the Trustor shall fail to maintain the full insurance coverage required by this Deed of Trust or shall fail to keep the Security in accordance with the Loan Documents, the Beneficiary, after at least seven (7) days prior notice to Trustor, may (but shall be under no obligation to) take out the required policies of insurance and pay the premiums on the same or may make such repairs or replacements as are necessary and provide for payment thereof; and all amounts so advanced therefor by the Beneficiary shall become part of the Secured Obligations (together with interest as set forth below) and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the Beneficiary, and if not so paid, shall bear interest from the date of the advance at the lesser of ten percent (10%) per annum or the maximum rate permitted by law.

ITEM 9.9. ATTACHMENT 2

8 ARTICLE 4

DAMAGE, DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages.

All judgments, awards of damages, settlements and compensation made in connection with or in lieu of (1) taking of all or any part of or any interest in the Property by or under assertion of the power of eminent domain, (2) any damage to or destruction of the Property or in any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the Property (collectively, the "Funds") shall be used to repair or restore the Property, but if the property cannot be repaired or restored such Funds are hereby assigned to and shall be paid to the Beneficiary by a check made payable to the Beneficiary. The Beneficiary is authorized and empowered (but not required) to collect and receive any Funds and is authorized to apply them in whole or in part upon any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary shall determine at its sole option. The Beneficiary shall be entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all expenses incurred by it in connection with any such settlement or adjustment. All or any part of the amounts so collected and recovered by the Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for its disposition. Application of all or any part of the Funds collected and received by the Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust. The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior mortgage lender. The Beneficiary shall release the Funds to Trustor to be used to reconstruct the improvements on the Property provided that Beneficiary reasonably determines that Trustor (taking into account the Funds) has sufficient funds to rebuild the improvements in substantially the form they existed prior to the casualty or condemnation.

ARTICLE 5
AGREEMENTS AFFECTING THE PROPERTY; FURTHER
ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements Affecting Property.

The Trustor shall duly and punctually perform all terms, covenants, conditions and agreements binding upon it under the Loan Documents and any other agreement of any nature whatsoever now or hereafter involving or affecting the Security or any part thereof.

Section 5.2 Agreement to Pay Attorneys' Fees and Expenses.

In the event of any Event of Default (as defined in Section 7.1) hereunder, and if the Beneficiary should employ attorneys or incur other expenses for the collection of amounts due or the enforcement of performance or observance of an obligation or agreement on the part of the Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the Secured ITEM 9.9. ATTACHMENT 2

9 Obligations, and shall bear interest from the date such expenses are incurred at the lesser of ten percent (10%) per annum or the maximum rate permitted by law.

Section 5.3 Payment of the Principal.

The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth in the Note in the amounts and by the times set out therein.

Section 5.4 Personal Property.

To the maximum extent permitted by law, the personal property subject to this Deed of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall constitute a fixtures filing under the California Commercial Code. As to any personal property not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement under the California Commercial Code.

Section 5.5 Financing Statement.

The Trustor shall execute and deliver to the Beneficiary such financing statements pursuant to the appropriate statutes, and any other documents or instruments as are required to convey to the Beneficiary a valid perfected security interest in the Security. The Trustor agrees to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary to maintain such valid perfected security interest in the Security in order to secure the payment of the Note in accordance with its terms. The Beneficiary is authorized to file a copy of any such financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order to protect the security interest established pursuant to this instrument.

Section 5.6 Operation of the Security.

The Trustor shall operate the Security (and, in case of a transfer of a portion of the Security subject to this Deed of Trust, the transferee shall operate such portion of the Security) in full compliance with the Loan Documents.

Section 5.7 Inspection of the Security.

At any and all reasonable times upon seventy-two (72) hours' notice, the Beneficiary and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right, without payment of charges or fees, to inspect the Security.

Section 5.8 Nondiscrimination.

The Trustor herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or veteran or military status in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the Trustor itself or any person claiming under or ITEM 9.9. ATTACHMENT 2

10 through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The foregoing covenants shall run with the land.

ARTICLE 6

HAZARDOUS WASTE
Trustor shall keep and maintain the Property in compliance with, and shall not cause or permit the Property to be in violation of any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the environmental conditions ("Environmental Laws") on, under or about the Property including, but not limited to, soil and ground water conditions.

Trustor shall not use, generate, manufacture, store or dispose of on, under, or about the Property or transport to or from the Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or related materials, including without limitation, any substances defined as or included in the definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic substances" under any applicable federal or state laws or regulations (collectively referred to hereinafter as "Hazardous Materials") except (x) as permitted under Environmental Laws; (y) such of the foregoing as may be customarily used in construction or operation of a multi-family residential development; or (z) such of the foregoing as was present on the Property prior to Trustor’s acquisition of the Property.

Trustor shall immediately advise Beneficiary in writing if at any time it receives written notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against Trustor or the Property pursuant to any applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous Materials, ("Hazardous Materials Law"); and (ii) all claims made or threatened by any third party against Trustor or the Property relating to damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as "Hazardous Materials Claims").

Beneficiary shall have the right to join and participate in, as a party if it so elects, any legal proceedings or actions initiated in connection with any Hazardous Materials Claims.

Beneficiary shall have its reasonable out-of-pocket attorneys' fees in connection therewith paid by Trustor, only if Trustor has failed, based on reasonable evidence produced by Beneficiary, to adequately defend such Hazardous Materials Claims. Trustor shall indemnify, defend, and hold harmless Beneficiary and its councilmembers, supervisors, directors, officers, employees, agents, successors and assigns from and against any loss, damage, cost, expense or liability directly or indirectly arising out of or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on, under, or about the Property arising or occurring upon or after the Trustor’s acquisition of the Property, including without limitation:
(a) all actual, non-consequential damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the Property and the preparation and implementation of any closure, remedial or other required plans; and (c) all reasonable costs and expenses incurred by Beneficiary in connection with clauses (a) and (b), including but not limited to reasonable attorneys' fees and consultant's fees. This indemnification applies whether or not any government agency has issued a cleanup order. Losses, claims, costs, suits, liability, and expenses covered by this indemnification provision include, but are not limited to: (1) losses ITEM 9.9. ATTACHMENT 2

11 attributable to diminution in the value of the Property; (2) loss or restriction of use of rentable space on the Property; (3) adverse effect on the marketing of any rental space on the Property; and (4) penalties and fines levied by, and remedial or enforcement actions of any kind issued by any regulatory agency (including but not limited to the costs of any required testing, remediation, repair, removal, cleanup or detoxification of the Property and surrounding properties).

Notwithstanding the foregoing, Trustor’s indemnity obligations under this paragraph shall not apply with respect to any loss, damage, cost, expense, liability or suit to the extent the same either (i) results from the gross negligence or willful misconduct of the Beneficiary or its agents, or (ii) occurs after the dispossession of the Trustor from the Property pursuant to foreclosure proceedings or a deed in lieu thereof.

Without Beneficiary's prior written consent, which shall not be unreasonably delayed or withheld, Trustor shall not take any Environmental Measure or other remedial action in response to the presence of any Hazardous Materials on, under or about the Property, nor enter into any settlement agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action, settlement, consent decree or compromise might, in Beneficiary's reasonable judgement, impair the value of the Beneficiary's security hereunder; provided, however, that Beneficiary's prior consent shall not be necessary in the event that the presence of Hazardous Materials on, under, or about the Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not reasonably possible to obtain Beneficiary's consent before taking such action, provided that in such event Trustor shall notify Beneficiary as soon as practicable of any action so taken. Beneficiary agrees not to withhold its consent, where such consent is required hereunder, if (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) Trustor will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required action; (iii) Trustor establishes to the reasonable satisfaction of Beneficiary that there is no reasonable alternative to such remedial action which would result in less impairment of Beneficiary's security hereunder; or (iv) the action has been agreed to by Beneficiary.

The Trustor hereby acknowledges and agrees that (i) this Article is intended as the Beneficiary's written request for information (and the Trustor's response) concerning the environmental condition of the Property as required by California Code of Civil Procedure Section 726.5, and (ii) each representation and warranty in this Deed of Trust or any of the other Loan Documents (together with any indemnity applicable to a breach of any such representation and warranty) with respect to the environmental condition of the property is intended by the Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code of Civil Procedure Section 736.

In the event that any portion of the Property is determined to be "environmentally impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(1)), then, without otherwise limiting or in any way affecting the Beneficiary's or the Trustee's rights and remedies under this Deed of Trust, the Beneficiary may elect to exercise its rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and remedies of an unsecured creditor, including reduction of its claim against the Trustor to ITEM 9.9. ATTACHMENT 2

12 judgment, and (b) any other rights and remedies permitted by law. For purposes of determining the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil Procedure Section 726.5(a), the Trustor shall be deemed to have willfully permitted or acquiesced in a release or threatened release of hazardous materials, within the meaning of California Code of Civil Procedure Section 726.5(d)(1), if the release or threatened release of hazardous materials was knowingly or negligently caused or contributed to by any lessee, occupant, or user of any portion of the Property and the Trustor knew or should have known of the activity by such lessee, occupant, or user which caused or contributed to the release or threatened release. All costs and expenses, including (but not limited to) attorneys' fees, incurred by the Beneficiary in connection with any action commenced under this paragraph, including any action required by California Code of Civil Procedure Section 726.5(b) to determine the degree to which the Property is environmentally impaired, plus interest thereon at the default rate specified in the Loan Agreement until paid, shall be added to the indebtedness secured by this Deed of Trust and shall be due and payable to the Beneficiary upon its demand made at any time following the conclusion of such action.

ARTICLE 7 EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.

The following shall constitute events of default ("Events of Default") following the expiration of any applicable notice and cure periods: (1) failure to make any payment to be paid by Trustor under the Loan Documents; (2) failure to observe or perform any of Trustor's other covenants, agreements or obligations under the Loan Documents, including, without limitation, the provisions concerning discrimination; (3) failure to make any payment or observe or perform any of Trustor's other covenants, agreements, or obligations under any other debt instrument or regulatory agreement secured by the Property, which default shall not be cured within the times and in the manner provided therein; or (4) a default is declared under the Approved Financing by the lender of such Approved Financing. Notwithstanding anything to the contrary contained herein, Beneficiary hereby agrees that any cure of any default made or tendered by one or more of Trustor's limited partners shall be deemed a cure by the Trustor and shall be accepted or rejected on the same basis as if made or tendered by Trustor. Copies of all notices which are sent to Trustor hereunder shall be sent to Investor Limited Partner at the address set forth in the Loan Agreement.

Section 7.2 Acceleration of Maturity.

If an Event of Default shall have occurred and be continuing, then at the option of the Beneficiary, the amount of any payment related to the Event of Default and all unpaid Secured Obligations shall immediately become due and payable, upon written notice by the Beneficiary to the Trustor (or automatically where so specified in the Loan Documents), and no omission on the part of the Beneficiary to exercise such option when entitled to do so shall be construed as a waiver of such right.

Section 7.3 The Beneficiary's Right to Enter and Take Possession.

If an Event of Default shall have occurred and be continuing, the Beneficiary may:

ITEM 9.9. ATTACHMENT 2

13 (a) Either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Security and take possession thereof (or any part thereof) and of any of the Security, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any Event of Default or Notice of Sale (as defined below) hereunder or invalidate any act done in response to such Event of Default or pursuant to such Notice of Sale, and, notwithstanding the continuance in possession of the Security, Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any Event of Default, including the right to exercise the power of sale;
(b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (c) Deliver to Trustee a written declaration of default and demand for sale, and a written notice of default and election to cause Trustor's interest in the Security to be sold ("Notice of Sale"), which notice Trustee or Beneficiary shall cause to be duly filed for record in the Official Records of Alameda County; or
(d) Exercise all other rights and remedies provided herein, in the instruments by which the Trustor acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing the Secured Obligations.

Section 7.4 Foreclosure By Power of Sale.

Should the Beneficiary elect to foreclose by exercise of the power of sale herein contained, the Beneficiary shall deliver to the Trustee the Notice of Sale and shall deposit with Trustee this Deed of Trust which is secured hereby (and the deposit of which shall be deemed to constitute evidence that the Secured Obligations are immediately due and payable), and such receipts and evidence of any expenditures made that are additionally secured hereby as Trustee may require.
(a) Upon receipt of the Notice of Sale from the Beneficiary, Trustee shall cause to be recorded, published and delivered to Trustor such Notice of Sale as then required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse of such time as may then be required by law and after recordation of such Notice of Sale having been given as required by law, sell the Security, at the time and place of sale fixed by it in the Notice of Sale, whether as a whole or in separate lots or parcels or items as Trustee shall deem expedient and in such order as it may determine unless specified otherwise by the Trustor according to California Civil Code Section 2924g(b), at public auction to the highest bidder, for cash in lawful money of the United States payable at the time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient deed or deeds conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed or any matters of facts shall be conclusive proof of the truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary, may purchase at such sale.

ITEM 9.9. ATTACHMENT 2

14 (b) After deducting all reasonable costs, fees and expenses of Trustee, including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to payment of: (i) the unpaid Principal amount of the Note; (ii) all other Secured Obligations owed to Beneficiary under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the remainder, if any, to Trustor.
(c) Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter, and without further notice make such sale at the time fixed by the last postponement, or may, in its discretion, give a new Notice of Sale.

Section 7.5 Receiver.

If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of right and without further notice to Trustor or anyone claiming under the Security, and without regard to the then value of the Security or the interest of Trustor therein, shall have the right to apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of entry as provided herein, and shall continue as such and exercise all such powers until the date of confirmation of sale of the Security, unless such receivership is sooner terminated.

Section 7.6 Remedies Cumulative.

No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of Trust is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or now or hereafter existing at law or in equity.

Section 7.7 No Waiver.
(a) No delay or omission of the Beneficiary to exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any such right, power or remedy, or shall be construed to be a waiver of any such Event of Default or acquiescence therein; and every right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised from time to time and as often as may be deemed expeditious by the Beneficiary.

Beneficiary's express or implied consent to breach, or waiver of, any obligation of the Trustor hereunder shall not be deemed or construed to be a consent to any subsequent breach, or further waiver, of such obligation or of any other obligations of the Trustor hereunder. Failure on the part of the Beneficiary to complain of any act or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by the Beneficiary of its right hereunder or impair any rights, power or remedies consequent on any Event of Default by the Trustor.

ITEM 9.9. ATTACHMENT 2

15 (b) If the Beneficiary (i) grants forbearance or an extension of time for the payment or performance of any Secured Obligation, (ii) takes other or additional security or the payment of any sums secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv) releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any of the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the granting of any easement or other right affecting the Security, or (vi) makes or consents to any agreement subordinating the lien hereof, any such act or omission shall not release, discharge, modify, change or affect the original liability under this Deed of Trust, or any other obligation of the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or omission preclude the Beneficiary from exercising any right, power or privilege herein granted or intended to be granted in any Event of Default then made or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by the Beneficiary shall the lien of this Deed of Trust be altered thereby.

Section 7.8 Suits to Protect the Security.

The Beneficiary shall have power to (a) institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Security and the rights of the Beneficiary as may be unlawful or any violation of this Deed of Trust, (b) preserve or protect its interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment, rule or order would impair the Security thereunder or be prejudicial to the interest of the Beneficiary.

Section 7.9 Trustee May File Proofs of Claim.

In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings affecting the Trustor, its creditors or its property, the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have the claims of the Beneficiary allowed in such proceedings and for any additional amount which may become due and payable by the Trustor hereunder after such date.

Section 7.10 Waiver.

The Trustor waives presentment, demand for payment, notice of dishonor, notice of protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in taking any action to collect any Secured Obligations or in proceedings against the Security, in connection with the delivery, acceptance, performance, default, endorsement or guaranty of this Deed of Trust.

ITEM 9.9. ATTACHMENT 2

16 ARTICLE 8

MISCELLANEOUS
Section 8.1 Amendments.

This Deed of Trust cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by Beneficiary and Trustor.

Section 8.2 Reconveyance by Trustee.

Upon written request of Beneficiary stating that all Secured Obligations have been paid or forgiven, and all obligations under the Loan Documents have been performed in full, and upon surrender of this Deed of Trust to Trustee for cancellation and retention, and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to Trustor, or to the person or persons legally entitled thereto.

Section 8.3 Notices.

Formal notices, demands, and communications between the Parties shall be sufficiently given if and shall not be deemed given unless (a) dispatched by registered or certified mail, postage prepaid, return receipt requested, (b) delivered by express delivery service, return receipt requested, (c) delivered personally, or (d) sent by electronic mail, provided that any notice sent by electronic mail must be followed by notice delivered under either (a), (b), or (c) within 2 business days. All such notices shall be delivered to the principal office of the Parties as follows:

Borrower: Sunrise Crossing Affordable, LP
c/o St. Anton Communities
1801 I Street, Suite 200
Sacramento, CA 95811
Attn: President
With copies to:

PacH Anton South Holdings, LLC
c/o Pacific Housing, Inc.
2115 J Street, Suite 201
Sacramento, CA 95816
Attn: Mark A. Wiese
and: Cox, Castle & Nicholson LLP
50 California St., Ste 3200
San Francisco, CA 94111
Attn: Ofer Elitzur, Esq.

ITEM 9.9. ATTACHMENT 2

17 City: City of Rancho Cordova
2729 Prospect Park Drive
Rancho Cordova, CA 95670
Attn: City Manager

Such written notices, demands and communications may be sent in the same manner to such other addresses as the affected Party may from time to time designate by mail as provided in this Section. Receipt shall be deemed to have occurred on the date shown on a written receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable) except that any electronic mail received after 5:00 p.m. shall be deemed to have been received on the next business day.

Section 8.4 Successors and Joint Trustors.

Where an obligation created herein is binding upon Trustor, the obligation shall also apply to and bind any transferee or successors in interest. Where the terms of the Deed of Trust have the effect of creating an obligation of the Trustor and a transferee, such obligation shall be deemed to be a joint and several obligation of the Trustor and such transferee. Where Trustor is more than one entity or person, all obligations of Trustor shall be deemed to be a joint and several obligation of each and every entity and person comprising Trustor.

Section 8.5 Captions.

The captions or headings at the beginning of each Section hereof are for the convenience of the parties and are not a part of this Deed of Trust.

Section 8.6 Invalidity of Certain Provisions.

Every provision of this Deed of Trust is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or partially secured portion of the debt, and all payments made on the debt, whether voluntary or under foreclosure or other enforcement action or procedure, shall be considered to have been first paid or applied to the full payment of that portion of the debt which is not secured or partially secured by the lien of this Deed of Trust.

Section 8.7 Governing Law.

This Deed of Trust shall be governed by and construed in accordance with the laws of the State of California.

ITEM 9.9. ATTACHMENT 2

18 Section 8.8 Gender and Number.

In this Deed of Trust the singular shall include the plural and the masculine shall include the feminine and neuter and vice versa, if the context so requires.

Section 8.9 Deed of Trust, Mortgage.

Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and any reference to a deed of trust shall also refer to a mortgage.

Section 8.10 Actions.

Trustor agrees to appear in and defend any action or proceeding purporting to affect the Security.

Section 8.11 Substitution of Trustee.

Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by Beneficiary, containing reference to this Deed of Trust and its place of record, which, when duly recorded in the proper office of the county or counties in which the Property is situated, shall be conclusive proof of proper appointment of the successor trustee.

Section 8.12 Statute of Limitations.

The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to the full extent permissible by law.

Section 8.13 Acceptance by Trustee.

Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otherwise provided by law the Trustee is not obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.

Section 8.14 Tax Credit Provisions.

Notwithstanding anything to the contrary contained herein or in any documents secured by this Deed of Trust or contained in any subordination agreement, the Beneficiary acknowledges and agrees that in the event of a foreclosure or deed-in-lieu of foreclosure (collectively, "Foreclosure") with respect to the Security encumbered by this Deed of Trust, the following rule contained in Section 42(h)(6)(E)(ii) of the Internal Revenue Code of 1986 (26 USC 42 (h)(6)(E)(ii)), as amended, shall apply:

ITEM 9.9. ATTACHMENT 2

19 For a period of three (3) years from the date of Foreclosure, with respect to any unit that had been regulated by a Regulatory Agreement with the California Tax Credit Allocation Committee, (i) none of the tenants occupying those units at the time of Foreclosure may be evicted or their tenancy terminated (other than for good cause), (ii) nor may any rent be increased except as otherwise permitted under Section 42 of the Code. [SIGNATURES TO FOLLOW ON NEXT PAGE]
ITEM 9.9. ATTACHMENT 2

20 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and year first above written.

TRUSTOR:

SUNRISE CROSSING AFFORDABLE, LP,
a California limited partnership
By: St. Anton Sunrise Crossing Affordable LLC,
a California limited liability company,
its Co-General Partner

By: Blue Bronco, LLC,
a California limited liability company,
its Manager
By: _______________________________
Peter H. Geremia, Manager
By: PacH Anton South Holdings, LLC,
a California limited liability company,
its Managing General Partner

By: Pacific Housing, Inc.,
a California nonprofit public benefit corporation,
its Manager
By: _________________________________
Mark A. Wiese, President
ITEM 9.9. ATTACHMENT 2

STATE OF CALIFORNIA )
)
COUNTY OF __________________ )
On ____________________, before me, ___________________________, Notary Public, personally appeared ______________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.
______________________________________
Name: _______________________________
Notary Public
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

ITEM 9.9. ATTACHMENT 2

A-1

EXHIBIT A

LEGAL DESCRIPTION
3333224.9
ITEM 9.9. ATTACHMENT 2

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Rancho Cordova
2729 Prospect Park Drive
Rancho Cordova, California 95670
Attention: City Clerk
________________________________________________________________________ No fee for recording pursuant to
Government code Section 27383

REGULATORY AGREEMENT AND

DECLARATION OF RESTRICTIVE COVENANTS
(Sunrise Crossing)
This Regulatory Agreement and Declaration of Restrictive Covenants (the "Agreement") is made and entered into as of _______, 2022, by and between the City of Rancho Cordova, a California municipal corporation (the "City"), and Sunrise Crossing Affordable, LP, a California limited partnership (the "Owner").

RECITALS
A. The City and Owner have entered into that certain Disposition, Development and Loan Agreement (the “DDLA”), dated as of ________________, 2022, which is incorporated by this reference as if fully set forth herein.

B. Pursuant to the DDLA, City has conveyed to the Owner an approximately 5,600 square foot parcel of real property (the “City Parcel”), and has made a loan to Owner for the construction of an affordable housing development (the "Project") on a site located at 11295 Folsom Boulevard, Rancho Cordova, California, which is comprised of the City Parcel and an approximately 2.26 acre parcel which Owner has acquired (the “Developer Parcel”) (collectively, the “Property”). The Property is more fully described in Exhibit A attached hereto and incorporated by reference.

C. The Project consists of eighty-two (82) apartment units, together with all associated landscaping, parking and associated improvements, including a clubhouse, fitness center, leasing office, swimming pool, full kitchen, and employment and educational training classrooms. Twelve (12) of the apartment units will be studio units, fifty (50) of the apartment units will be one bedroom units, and twenty (20) of the apartment units will be two bedroom units.

D. All of the apartment units in the Project, except for one manager’s unit (the “Affordable Units”), will be restricted for occupancy by eligible 70% low, low, very low and ITEM 9.9. ATTACHMENT 2

extremely low income households for a period of fifty-five (55) years from issuance of a final certificate of occupancy for the Project.

E. The DDLA requires the Owner to place specified restrictions upon the use and transfer of the Property in order to ensure continued Project affordability.

F. The Parties intend that the covenants set forth in this Agreement shall run with the land and be binding upon Owner and Owner's successors and assigns as further provided herein.

THEREFORE, City and Owner hereby agree as follows.

ARTICLE 1.

DEFINITIONS
Section 1.1 Definitions. When used in this Agreement, the following terms shall have the respective meanings assigned to them in this Article 1. (a) "60% Low Income Household" shall mean a household with a Household Income that does not exceed sixty percent (60%) of Area Median Income applicable to Sacramento County, adjusted for family size, as published and periodically updated by HUD. (b) "60% Low Income Unit" shall mean the Units which pursuant to Section

2.1(c) below, are required to be occupied by 60% Low Income Households. (c) “70% Low Income Household” shall mean a household with a Household Income which does not exceed seventy percent (70%) of the Area Median Income applicable to Sacramento County, adjusted for family size, as published and periodically updated by HUD. (d) “70% Low Income Unit" shall mean each of the Units which pursuant to Section 2.1(d) below, are required to be occupied by 70% Low Income Households. (e) "Agreement" shall mean this Regulatory Agreement and Declaration of Restrictive Covenants.
(f) "Affiliate" means any person or entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Owner which, if Owner is a partnership or limited liability company, shall include each of the constituent members or partners, respectively thereof. The term "control" as used in the immediately preceding sentence, means, with respect to a person that is a corporation, the right to the exercise, directly or indirectly, of more than fifty percent (50%) of the voting rights attributable to the shares of the controlled corporation, and, with respect to a person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled person.

ITEM 9.9. ATTACHMENT 2

(g) "Area Median Income" shall mean the median gross yearly income adjusted for Assumed Household Size as specified herein, in Sacramento County, California, as determined by HUD. In the event that such income determinations are no longer published or are not updated for a period of at least eighteen (18) months, City shall provide the Owner with other income determinations which are reasonably similar with respect to methods of calculation to those previously published by HUD.
(h) "Assumed Household Size" means the household size "adjusted for family size appropriate to the unit" in accordance with the California Tax Credit Allocation Committee rules and regulations.
(i) "City" shall mean the City of Rancho Cordova, a California municipal corporation.
(j) "City Loan" shall mean all funds loaned to Owner pursuant to the DDLA. (k) "Completion Date" means the date a final certificate of occupancy, or equivalent document is issued by the City to certify that the construction of the Project is complete and the Project may be legally occupied.
(l) "DDLA" shall mean the Disposition, Development and Loan Agreement entered into by and among the City and Owner and dated of ________________, 2022. (m)"Deed of Trust" shall mean the Deed of Trust with Assignment of Rents, Security Agreement and Fixture Filing of even date herewith by and among Owner, as Trustor, Old Republic Title Company, as trustee, and the City as beneficiary, that encumbers Owner's leasehold interest in the Property to secure repayment of the City Loan and Owner's performance of the Loan Documents.
(n) “Extremely Low Income Household” shall mean a household with a Household Income which does not exceed thirty percent (30%) of the Area Median Income applicable to Sacramento County, adjusted for family size, as published and periodically updated by HUD.
(o) “Extremely Low Income Unit" shall mean each of the Units which pursuant to Section 2.1(a) below, are required to be occupied by Extremely Low Income Households. (p) "Fifteen Year Compliance Period" means the fifteen (15) year compliance period as described in Section 42(i)(1) of the Internal Revenue Code of 1986, as amended. (q) "Household Income" shall mean the total anticipated annual income of all persons in a household, as calculated in accordance with the California Tax Credit Allocation Committee rules and regulations or pursuant to a successor State housing program that utilizes a reasonably similar method of calculation of adjusted income. In the event that no such program exists, City shall provide the Owner with a reasonably similar method of calculation of gross income as provided in 25 California Code of Regulations Section 6914.

ITEM 9.9. ATTACHMENT 2