80A - HOUSING AND SUBORDINATION LOANS

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EXHIBIT 3 The provisions of this Section 7.7 shall not apply in the event of a foreclosure of the Property or transfer in lieu of foreclosure. In the event of a foreclosure, or acceptance of a deed in lieu of foreclosure, Senior Lender will use commercially reasonable efforts to accept bids for the Property from a qualified CHDO; provided, however, that in no event shall Senior Lender be obligated to select a qualified CHDO to be the purchaser of the Property unless, among other criteria used in Senior Lender's reasonable discretion, such qualified CHDO has offered the highest purchase price among the bidders. 8. RESERVED. 9. GENERAL PROVISIONS AND WARRANTIES As a material inducement to City to enter into this Agreement, Developer represents and warrants as follows: 9.1 Formation, Oualification and Compliance. JHC-Comerstone II, LLC, the managing general partner of Developer (a) is a limited liability company, validly existing and in good standing under the laws of the State of California, (b) has all requisite authority to conduct its business and own and lease its properties, and (c) is qualified and in good standing in every jurisdiction in which the nature of its business makes qualification necessary or where failure to qualify could have a material adverse effect on its financial condition or the performance of its obligations under the Loan Documents. Developer is in compliance with all laws applicable to its business and has obtained all approvals, licenses, exemptions and other authorizations from, and has accomplished all filings, registrations and qualifications with, any Governmental Authority that are necessary for the transaction of its business. 9.2 Execution and Performance of Loan Documents. 9.2.1 Developer has all requisite authority to execute and perform its obligations under the Loan Documents. 9.2.2 The execution and delivery of Developer of, and the performance by Developer of its obligations under, each Loan Document has been authorized by all necessary action and does not and will not: (a) require any consent or approval not heretofore obtained of any person having any interest in Developer; (b) violate any provision of, or require any consent or approval not heretofore obtained under, any articles of incorporation, by-laws or other governing document applicable to Developer; (c) result in or require the creation of any lien, claim, charge or other right of others of any kind (other than under the City Loan Documents) on or with respect to any property now or hereafter owned or leased by Developer; (d) violate any provision of any law presently in effect; 13 80A-49