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HomeMy WebLinkAboutDEPOT AT SANTIAGO, LP (4)-2016RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: Davis Wright Tremame LLP 865 S. Figueroa Street Suite 2400 Los Angeles, CA 90017 Attn: Tiffany Switzer, Esq, SUBORDINATION AGREEMENT A- 2016 -033A NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN THE LIEN OF YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT OR INSTRUMENTS. THIS SUBORDINATION AGREEMENT (this "Agreement') is entered into this 1st day of March, 2016 by and among (i) BANK OF AMERICA, N.A., a national banking association ( "Senior Lender'); (ii) the CITY OF SANTA ANA, a charter city and municipal corporation (the "Subordinate Lender "), and (iii) DEPOT AT SANTIAGO, L.P., a California limited partnership (the "Borrower°). Recitals A. Pursuant to that certain Construction and Permanent Loan Agreement dated as of even date herewith (the "Senior Loan Agreement') by and between Senior Lender and Borrower, Senior Lender has agreed to make a loan to Borrower in the maximum principal amount of Twenty -Seven Million Two Hundred Ninety -Five Thousand Two Hundred Seventy and No/100t' Dollars ($27,295,270) (the "Senior Loan'}. B. The obligations of Borrower for repayment of the Senior Loan are evidenced by a promissory note in the face principal amount of $27,295,270 (the "Senior Note ") and are secured by, among other things, a Construction and Permanent Deed of Trust, with Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated as of even date herewith (the "Senior Deed of Trust') executed by Borrower, as trustor, for the benefit of Senior Lender, as beneficiary, and being recorded concurrently herewith in the Official Records of Orange County, California (the "Official Records "). The Senior Deed of Trust encumbers the property ( "Land ") more particularly described in Exhibit A attached hereto and the other real and personal property described therein (collectively, the 'Property "). The Senior Loan Agreement, the Senior Note, the Senior Deed of Trust and all other documents evidencing or otherwise relating to the Senior Loan are collectively referred to herein as "Senior Loan Documents ". C, Subordinate Lender has entered into a Loan Agreement with Borrower dated as of July 11, 2013 ( "Original Subordinate Loan Agreement'), which recorded on August 9, 2013 as Document No. 2013000476765 in the Official Records, pursuant to which Subordinate Lender made a loan to Borrower in the amount of $3,000,000 ( "Subordinate Loan "). The Subordinate Loan is secured by the Property. The Original Subordinate Loan Agreement was amended pursuant to (i) that certain Amendment to Loan Agreements dated as of July 18, 2014, by and between the Subordinate Lender and Borrower ( "Subordinate Loan Agreement Amendment "), which was recorded in the Official Records on June 27, 2014 as Instrument No. 201400025562, and (ii) that certain City Loan Modification Agreement dated as of March 1, 2016, by and between Borrower and Subordinate Lender to be recorded in the Official Records substantially concurrently herewith ( "City Modification Agreement "). The Original 6e DWT 28855138v5 4900000 - 001785 RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: Davis Wright Tremaine LLP 865 S. Figueroa Street Suite 2400 Los Angeles, CA 90017 Attn: Tiffany Switzer, Esq. SUBORDINATION AGREEMENT A- 2016 -033-A NOTICE; THIS SUBORDINATION AGREEMENT RESULTS IN THE LIEN OF YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT OR INSTRUMENTS. THIS SUBORDINATION AGREEMENT (this "Agreement ") is entered into this let day of March, 2016 by and among (1) BANK OF AMERICA, N.A., a national banking association ( "Senior Lender "); (ii) the CITY OF SANTA ANA, a charter city and municipal corporation (the "Subordinate Lender "), and (iii) DEPOT AT SANTIAGO, L.P., a California limited partnership (the "Borrower"). Recitals A. Pursuant to that certain Construction and Permanent Loan Agreement dated as of even date herewith (the "Senior Loan Agreement ") by and between Senior Lender and Borrower, Senior Lender has agreed to make a loan to Borrower in the maximum principal amount of Twenty -Seven Million Two Hundred Ninety -Five Thousand Two Hundred Seventy and Noll 00 "' Dollars ($27,295,270) (the "Senior Loan'). B. The obligations of Borrower for repayment of the Senior Loan are evidenced by a promissory note in the face principal amount of $27,295,270 (the "Senior Note ") and are secured by, among other things, a Construction and Permanent Deed of Trust, with Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated as of even date herewith (the "Senior Deed of Trust ") executed by Borrower, as trustor, for the benefit of Senior Lender, as beneficiary, and being recorded concurrently herewith in the Official Records of Orange County, California (the "Official Records "). The Senior Deed of Trust encumbers the property ( "Land ") more particularly described in Exhibit A attached hereto and the other real and personal property described therein (collectively, the "Property "). The Senior Loan Agreement, the Senior Note, the Senior Deed of Trust and all other documents evidencing or otherwise relating to the Senior Loan are collectively referred to herein as "Senior Loan Documents ". C. Subordinate Lender has entered into a Loan Agreement with Borrower dated as of July 11, 2013 ( "Original Subordinate Loan Agreement"), which recorded on August 9, 2013 as Document No. 2013000476765 in the Official Records, pursuant to which Subordinate Lender made a loan to Borrower in the amount of $3,000,000 ( "Subordinate Loan "). The Subordinate Loan is secured by the Property. The Original Subordinate Loan Agreement was amended pursuant to (i) that certain Amendment to Loan Agreements dated as of July 18, 2014, by and between the Subordinate Lender and Borrower ("Subordinate Loan Agreement Amendment"), which was recorded in the Official Records on June 27, 2014 as Instrument No. 201400025562, and (ii) that certain City Loan Modification Agreement dated as of March 1, 2016, by and between Borrower and Subordinate Lender to be recorded in the Official Records substantially concurrently herewith ( "City Modification Agreement "). The Original N DWT 28855138v54900000- 001789 Subordinate Loan Agreement, as amended by the Subordinate Loan Agreement Amendment and the City Modification Agreement, is referred to herein as the "Subordinate Loan Agreement ". D. Senior Lender and Subordinate Lender shall be referred to collectively in this Agreement as "Lenders ", and each is referred to individually as a "Lender'. The Senior Loan and the Subordinate Loan shall be referred to collectively in this Agreement as the "Loans ", and each individually as a "Loan ". The Loans are being made to Borrower to finance the acquisition, construction and /or rehabilitation of seventy (70) units of a multifamily residential project (collectively for purposes of this Agreement, the "Improvements ") on the Property. Each of the documents set forth on Exhibit B hereto, together with all other documents and materials entered into by Borrower with Subordinate Lender (other than the "Senior Affordability Restrictions" defined below, except for those sections of the Senior Affordability Restrictions listed on Exhibit B) shall be referred to herein as the "Subordinate Loan Documents ". E. The Lenders agree that it is to their mutual benefit that each Lender make its respective Loan to Borrower. Subordinate Lender is willing to specifically and unconditionally subordinate the Subordinate Loan Documents to the liens and charges of the Senior Deed of Trust and other Senior Loan Documents and shall at all times and in all respects be wholly subordinate and inferior in claim and right to the Senior Loan and Senior Loan Documents. F. If Borrower satisfies the "Conversion Conditions" contained in that certain Loan Purchase Agreement of even date herewith by and among Borrower, Senior Lender and California Community Reinvestment Corporation, a California nonprofit public benefit corporation ( "CCRC "), CCRC will purchase up to $5,426,500 of the Senior Loan, and the Senior Loan will convert to a term loan on the Conversion Date (as defined in the Loan Purchase Agreement). NOW, THEREFORE, in order to induce the Senior Lender to permit the Subordinate Lender to make the Subordinate Loan to the Borrower and to place a subordinate mortgage lien against the Property, and in consideration thereof, the Senior Lender, the Subordinate Lender and the Borrower agree as follows: 1. Definitions In addition to the terms defined in the Recitals to this Agreement, for purposes of this Agreement the following terms have the respective meanings set forth below: "Affiliate" means, when used with respect to a Person, any corporation, partnership, joint venture, limited liability company, limited liability partnership, trust or individual controlled by, under common control with, or which controls such Person (the term "control' for these purposes shall mean the ability, whether by the ownership of shares or other equity interests, by contract or otherwise, to elect a majority of the directors of a corporation, to make management decisions on behalf of, or independently to select the managing partner of, a partnership, or otherwise to have the power independently to remove and then select a majority of those individuals exercising managerial authority over an entity, and control shall be conclusively presumed in the case of the ownership of 50% or more of the equity interests). "Borrower" means the Person named as such in the first paragraph of this Agreement and any other Person (other than the Senior Lender) who acquires title to the Property after the date of this Agreement. "Business Day" means any day other than Saturday, Sunday or a day on which the Senior Lender is not open for business. "Default Notice" means: (a) a copy of the written notice from the Senior Lender to the Borrower stating that a Senior Loan Default has occurred under the Loan; or (b) a copy of the written notice from the Subordinate Lender to the Borrower stating that a Subordinate Loan Default has occurred under any Subordinate Loan. Each Default Notice shall specify the default upon which such Default Notice is based. -2- DWT 28855 L38v5 4900000 - 001785 "Person" means an individual, estate, trust, partnership, corporation, limited liability company, limited liability partnership, governmental department or agency or any other entity which has the legal capacity to own property. "Senior Affordability Restrictions" means that certain Affordability Restrictions on Transfer of Property dated as of July 11, 2013, executed by and among Subordinate Lender and Borrower, which was recorded in the Official Records on August 9, 2013 as Document No. 2013000476766 (except the section thereof listed on Exhibit B as being subordinate), as amended by (i) that certain Amendment to Affordability Restrictions on Transfer of Property dated as of June 18, 2014, which was recorded in the Official Records on June 27, 2014 as Document No. 2014000255563 and (ii) the City Modification Agreement. "Senior Lender" means the Person named as such in the first paragraph on page 1 of this Agreement. When any other Person becomes the legal holder of the Bonds, the Senior Note or the Senior Loan Documents, such other Person shall automatically become the Senior Lender. "Senior Loan Default" means the occurrence of an "Event of Default" as that term is defined in the Senior Loan Documents. "Senior Loan Documents" means the Senior Note and all other documents evidencing, securing or otherwise executed and delivered in connection with the Senior Loan. "Subordinate Deed of Trust" means the mortgage or deed of trust encumbering the Property as security for the Subordinate Loan, which the Subordinate Lender will cause to be recorded among the applicable land records immediately before this Agreement, including, but not limited to those deeds of trust listed on Exhibit B attached hereto. "Subordinate Default" means a default by the Borrower in performing or observing any of the terms, covenants or conditions in the Subordinate Loan Documents to be performed or observed by it, which continues beyond any applicable period provided in the Subordinate Loan Documents for curing the default. "Subordinate Lender" means the City of Santa Ana and any other Person who becomes the legal holder of any of the Subordinate Note after the date of this Agreement. "Subordinate Loan Documents" means, collectively, the Subordinate Loan Agreement, Subordinate Note, the Subordinate Deed of Trust, all documents set forth on Exhibit B attached hereto, any related financing statements, and all other documents evidencing, securing or otherwise executed and delivered in connection with any Subordinate Loan. "Subordinate Note" means the Subordinate Note as defined on Exhibit B. 2. Permission to Place Mortgage Lien Against Property. The Senior Lender agrees, notwithstanding the prohibition against inferior liens on the Property contained in the Senior Loan Documents and subject to the provisions of this Agreement, to permit the Subordinate Lender to record the Subordinate Deed of Trust and other recordable Subordinate Loan Documents against the Property (which are subordinate in all respects to the lien of the Senior Deed of Trust) to secure the Borrower's obligation to repay the Subordinate Note and all other obligations, indebtedness and liabilities of the Borrower to the Subordinate Lender under and in connection with the Subordinate Loan. Such permission is subject to the condition that each of the representations and warranties made by the Borrower and the Subordinate Lender in Section 3 is true and correct on the date of this Agreement and on the date on which the proceeds of the Subordinate Loan are disbursed to the Borrower. If any of the representations and warranties made by the Borrower and the Subordinate Lender in Section 3 is not true and correct on both of those dates, the provisions of the Senior Loan Documents applicable to unpermitted liens on the Property shall apply. -3- DWT 28855I3W 4900000-001785 3. Borrower's and Subordinate Lender's Representations and Warranties. The Borrower and the Subordinate Lender each makes the following representations and warranties to the Senior Lender: (a) [Intentionally Omitted.] (b) Relationship of Borrower to Subordinate Lender and Senior Lender. The Subordinate Lender is not an Affiliate of the Borrower and is not in possession of any facts which would lead it to believe that the Senior Lender is an Affiliate of the Borrower. (c) Term. The term any of the Subordinate Note does not end before the term of the Senior Note. (d) Subordinate Loan Documents. The executed Subordinate Loan Documents are substantially in the same forms as those submitted to, and approved by, Senior Lender prior to the date of this Agreement. Upon execution and delivery of the Subordinate Loan Documents, Borrower shall deliver to Senior Lender an executed copy of each of the Subordinate Loan Documents, certified to be true, correct and complete. (e) Senior Loan Documents. Borrower (but not Subordinate Lender) represents and warrants to Senior Lender that the executed Senior Loan Documents are substantially in the same forms as, when applicable, those submitted to, and approved by, Senior Lender prior to the date of this Agreement. Upon execution and delivery of the Senior Loan Documents, Borrower shall deliver to Subordinate Lender an executed copy of each of the Senior Loan Documents, certified to be true, correct and complete. 4. Terms of Subordination. (a) Agreement to Subordinate. The Senior Lender and the Subordinate Lender agree that: (i) the indebtedness evidenced by the Subordinate Loan Documents is and shall be subordinated in right of payment, to the extent and in the manner provided in this Agreement to the prior payment in full of the indebtedness evidenced by the Senior Loan Documents, and (ii) the Subordinate Deed of Trust and the other Subordinate Loan Documents are and shall be subject and subordinate in all respects to the liens, terms, covenants and conditions of the Senior Deed of Trust and the other Senior Loan Documents and to all advances heretofore made or which may hereafter be made pursuant to the Senior Deed of Trust and the other Senior Loan Documents (including but not limited to, all sums advanced for the purposes of (1) protecting or further securing the lien of the Senior Deed of Trust, curing defaults by the Borrower under the Senior Loan Documents or for any other purpose expressly permitted by the Senior Deed of Trust, or (2) constructing, renovating, repairing, furnishing, fxturing or equipping the Property). (b) Subordination of Subrogation Rights. The Subordinate Lender agrees that if, by reason of its payment of real estate taxes or other monetary obligations of the Borrower, or by reason of its exercise of any other right or remedy under the Subordinate Loan Documents, it acquires by right of subrogation or otherwise a lien on the Property which (but for this subsection) would be senior to the lien of the Senior Deed of Trust, then, in that event, such lien shall be subject and subordinate to the lien of the Senior Deed of Trust. (c) Payments Before Senior Loan Default. Until the Subordinate Lender receives a Default Notice of a Senior Loan Default from the Senior Lender, the Subordinate Lender shall be entitled to retain for its own account all payments made under or pursuant to the Subordinate Loan Documents. -4- DWT 288551380 4900000 - 001785 (d) Payments After Senior Loan Default. The Borrower agrees that, after it receives notice (or otherwise acquires knowledge) of a Senior Loan Default, it will not make any payments under or pursuant to the Subordinate Loan Documents (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorney's fees, or any other sums secured by the Subordinate Deed of Trust) without the Senior Lender's prior written consent. The Subordinate Lender agrees that, after it receives a Default Notice from the Senior Lender with written instructions directing the Subordinate Lender not to accept payments from the Borrower on account of the Subordinate Loan, it will not accept any payments under or pursuant to the Subordinate Loan Documents (including but not limited to principal, interest, additional interest, late payment charges, default interest, attorney's fees, or any other sums secured by the Subordinate Deed of Trust) without the Senior Lender's prior written consent. If the Subordinate Lender receives written notice from the Senior Lender that the Senior Loan Default which gave rise to the Subordinate Lender's obligation not to accept payments has been cured, waived, or otherwise suspended by the Senior Lender, the restrictions on payment to the Subordinate Lender in this Section 4 shall terminate, and the Senior Lender shall have no right to any subsequent payments made to the Subordinate Lender by the Borrower prior to the Subordinate Lender's receipt of a new Default Notice from the Senior Lender in accordance with the provisions of this Section 4(d). (e) Remitting Subordinate Loan Payments to Senior Lender. If, after the Subordinate Lender receives a Default Notice from the Senior Lender in accordance with subsection (d) above, the Subordinate Lender receives any payments under the Subordinate Loan Documents, the Subordinate Lender agrees that such payment or other distribution will be received and held in trust for the Senior Lender and unless the Senior Lender otherwise notifies the Subordinate Lender in writing, will be promptly remitted, in kind to the Senior Lender, properly endorsed to the Senior Lender, to be applied to the principal of, interest on and other amounts due under the Senior Loan Documents in accordance with the provisions of the Senior Loan Documents. By executing this Agreement, the Borrower specifically authorizes the Subordinate Lender to endorse and remit any such payments to the Senior Lender, and specifically waives any and all rights to have such payments returned to the Borrower or credited against the Subordinate Loan. Borrower and Senior Lender acknowledge and agree that payments received by the Subordinate Lender, and remitted to the Senior Lender under this Section 4, shall not be applied or otherwise credited against the Subordinate Loan, nor shall the tender of such payment to the Senior Lender waive any Subordinate Loan Default which may arise from the inability of the Subordinate Lender to retain such payment or apply such payment to the Subordinate Loan. (f) Agreement Not to Commence Bankruptcy Proceeding, The Subordinate Lender agrees that during the term of this Agreement it will not commence, or join with any other creditor in commencing any bankruptcy reorganization, arrangement, insolvency or liquidation proceedings with respect to the Borrower, without the Senior Lender's prior written consent. 5. Default Under Subordinate Loan Documents. (a) Notice of Default and Cure Rights. The Subordinate Lender shall deliver to the Senior Lender a Default Notice within five Business Days in each case where the Subordinate Lender has given a Default Notice to the Borrower. The Senior Lender shall have the right, but not the obligation, to cure any Subordinate Loan Default within 60 days following the date of such notice; provided, however that the Subordinate Lender shall be entitled, during such 60 -day period, to continue to pursue its rights and remedies under the Subordinate Loan Documents. All amounts paid by the Senior Lender in accordance with the Senior Loan Documents to cure a Subordinate Loan Default shall be deemed to have been advanced by the Senior Lender pursuant to, and shall be secured by the lien of, the Senior Deed of Trust. (b) [INTENTIONALLY OMITTED] -5- D WT 28855138x5 4900000 - 001785 M Cross Default. The Borrower and the Subordinate Lender agree that a Subordinate Loan Default shall constitute a Senior Loan Default under the Senior Loan Documents and the Senior Lender shall have the right to exercise all rights or remedies under the Senior Loan Documents in the same manner as in the case of any other Senior Loan Default. If the Subordinate Lender notifies the Senior Lender in writing that any Subordinate Loan Default of which the Senior Lender has received a Default Notice has been cured or waived, as determined by the Subordinate Lender in its sole discretion, then provided that Senior Lender has not conducted a sale of the Property pursuant to its rights under the Senior Loan Documents, any Senior Loan Default under the Senior Loan Documents arising solely from such Subordinate Loan Default shall be deemed cured, and the Senior Loan shall be reinstated, provided, however, that the Senior Lender shall not be required to return or otherwise credit for the benefit of the Borrower any default rate interest or other default related charges or payments received by the Senior Lender during such Senior Loan Default. 6. Default Under Senior Loan Documents. (a) Notice of Default and Cure Rights. The Senior Lender shall deliver to the Subordinate Lender a Default Notice within five Business Days in each case where the Senior Lender has given a Default Notice to the Borrower. Failure of the Senior Lender to send a Default Notice to the Subordinate Lender shall not prevent the exercise of the Senior Lender's rights and remedies under the Senior Loan Documents, subject to the provisions of this Agreement. The Subordinate Lender shall have the right, but not the obligation, to cure any such Senior Loan Default as provided below. Subordinate Lender may have up to sixty (60) days from the date of the Default Notice to cure any monetary default under the Senior Loan Documents; provided, however, that the Senior Lender shall be entitled during such 60 -day period to continue to pursue its remedies with respect to the Property. Subordinate Lender may also have up to sixty (60) days from the date of the Default Notice to cure a non - monetary default. In the event that such a non - monetary default creates an unacceptable level of risk relative to the Property, or Senior Lender's secured position relative to the Property, as determined by Senior Lender in its sole discretion, then Senior Lender may exercise during such 60 -day period all available rights and remedies to protect and preserve the Property and the rents, revenues and other proceeds from the Property. All amounts paid by the Subordinate Lender to the Senior Lender to cure a Senior Loan Default shall be deemed to have been advanced by the Subordinate Lender pursuant to, and shall be secured by the lien of, the Subordinate Deed of Trust. (b) Cross Default. The Subordinate Lender agrees that, notwithstanding any contrary provision contained in the Subordinate Loan Documents, a Senior Loan Default shall not constitute a default under the Subordinate Loan Documents if no other default occurred under the Subordinate Loan Documents until either (1) the Senior Lender has accelerated the maturity of the Loan, or (ii) the Senior Lender has taken affirmative action to exercise its rights under the Senior Deed of Trust to collect rent, to appoint (or seek the appointment of) a receiver or to foreclose on (or to exercise a power of sale contained in) the Senior Deed of Trust. At any time after a Senior Loan Default is determined to constitute a default under the Subordinate Loan Documents, the Subordinate Lender shall be permitted to pursue its remedies for such default under the Subordinate Loan Documents, subject to the restrictions and limitations of this Agreement. If at any time the Borrower cures any Senior Loan Default to the satisfaction of the Senior Lender, as evidenced by written notice from the Senior lender to the Subordinate Lender, any default under the Subordinate Loan Documents arising from such Senior Loan Default shall be deemed cured and the Subordinate Loan shall be retroactively reinstated as if such Senior Loan Default had never occurred. Except as expressly provided above, nothing contained in this Agreement shall prohibit Subordinate Lender from exercising any right or remedy which may be available to it under the Subordinate Loan Documents upon the occurrence of any breach by Borrower thereunder. 0 D WT 288551380 4900000- 001785 Conflict. The Borrower, the Senior Lender and the Subordinate Lender each agrees that, in the event of any conflict or inconsistency between the terms of the Senior Loan Documents, the Subordinate Loan Documents and the terms of this Agreement, the terms of this Agreement shall govern and control solely as to the following: (a) the relative priority of the security interests of the Senior Lender and the Subordinate Lender in the Property; (b) the timing of the exercise of remedies by the Senior Lender and the Subordinate Lender under the Senior Deed of Trust and the Subordinate Deed of Trust, respectively; and (c) solely as between the Senior Lender and the Subordinate Lender, the notice requirements, cure rights, and the other rights and obligations which the Senior Lender and the Subordinate Lender have agreed to as expressly provided in this Agreement. Borrower acknowledges that the terms and provisions of this Agreement shall not, and shall not be deemed to: extend Borrower's time to cure any Senior Loan Default or Subordinate Loan Default, as the case may be; give the Borrower the right to notice of any Senior Loan Default or Subordinate Loan Default, as the case may be other than that, if any, provided, respectively under the Senior Loan Documents or the Subordinate Loan Documents; or create any other right or benefit for Borrower as against Senior Lender or Subordinate Lender. 8. Rights and Obligations of the Subordinate Lender Under the Subordinate Loan Documents and of the Senior Lender under the Senior Loan Documents. Subject to each of the other terms of this Agreement, all of the following provisions shall supersede any provisions of the Subordinate Loan Documents covering the same subject matter: (a) Protection of Security Interest. The Subordinate Lender shall not, without the prior written consent of the Senior Lender in each instance, take any action which has the effect of increasing the indebtedness outstanding under, or secured by, the Subordinate Loan Documents, except that the Subordinate Lender shall have the right to advance funds to cure Senior Loan Defaults pursuant to Section 6(a) above and advance funds pursuant to the Subordinate Deed of Trust for the purpose of paying real estate taxes and insurance premiums, making necessary repairs to the Property and curing other defaults by the Borrower under the Subordinate Loan Documents. (b) Condemnation or Casualty. In the event of: a taking or threatened taking by condemnation or other exercise of eminent domain of all or a portion of the Property (collectively, a 'Taking'); or the occurrence of a fire or other casualty resulting in damage to all or a portion of the Property (collectively, a "Casualty "), at any time or times when the Senior Deed of Trust remains a lien on the Property the following provisions shall apply: (1) The Subordinate Lender hereby agrees that its rights (under the Subordinate Loan Documents or otherwise) to participate in any proceeding or action relating to a Taking and /or a Casualty, or to participate or join in any settlement of, or to adjust, any claims resulting from a Taking or a Casualty shall be and remain subordinate in all respects to the Senior Lender's rights under the Senior Loan Documents with respect thereto, and the Subordinate Lender shall be bound by any settlement or adjustment of a claim resulting from a Taking or a Casualty made by the Senior Lender; provided, however, this subsection and /or anything contained in this Agreement shall not limit the rights of the Subordinate Lender to file any pleadings, documents, claims or notices with the appropriate court with jurisdiction over the proposed Taking and /or Casualty; and (2) all proceeds received or to be received on account of a Taking or a Casualty, or both, shall be applied (either to payment of the costs and expenses of repair and restoration or to payment of the Loan) in the manner determined by the Senior Lender in its sole discretion; provided, however, that if the Senior Lender elects to apply such proceeds to payment of the principal of, interest on and other amounts payable under the Loan, any proceeds remaining after the satisfaction in full of the principal of, interest on and -7- D W T 28855138v5 4900000 - 001785 other amounts payable under the Senior Loan shall be paid to, and may be applied by, the Subordinate Lender in accordance with the applicable provisions of the Subordinate Loan Documents, provided however, the Senior Lender agrees to consult with the Subordinate Lender in determining the application of Casualty proceeds, provided further however that in the event of any disagreement between the Senior Lender and the Subordinate Lender over the application of Casualty proceeds, the decision of the Senior Lender, in its sole discretion, shall prevail. (c) No Modification of Subordinate Loan Documents. The Borrower and the Subordinate Lender each agrees that, until the principal of, interest on and all other amounts payable under the Senior Loan Documents have been paid in full, it will not, without the prior written consent of the Senior Lender in each instance, increase the amount of the Subordinate Loan, increase the required payments due under the Subordinate Loan, decrease the term of the Subordinate Loan, increase the interest rate on the Subordinate Loan, or otherwise amend the Subordinate Loan terms in a manner that creates an adverse effect upon the Senior Lender under the Senior Loan Documents. Additionally, the Borrower and Subordinate Lender each agrees that, until the principal of, interest on and all other amounts payable under the Senior Loan Documents have been paid in full, it will not, without the prior written consent of Senior Lender in each instance, amend, modify or supplement the Senior Affordability Restrictions. Any unauthorized amendment of the Subordinate Loan Documents or Senior Affordability Restrictions or assignment of the Subordinate Lender's interest in the Subordinate Loan without the Senior Lender's consent shall be void ab initio and of no effect whatsoever and Subordinate Lender agrees that it shall not transfer or assign the Subordinate Loan or the Subordinate Loan Documents (except to the City of Santa Ana's housing authority), without the prior written consent of the Senior Lender. 9. Conversion, Modification or Refinancing of Loan. The Subordinate Lender consents to any agreement or arrangement in which the Senior Lender waives, postpones, extends, reduces or modifies any provisions of the Senior Loan Documents, including any provision requiring the payment of money, except for any modifications which increase the interest rate under the Senior Loan Documents, shorten the term of the Loan, increase the amortization payments due under the Senior Loan or any other changes which would have a materially adverse affect on the Subordinate Lender. 10. Default by the Subordinate Lender or Senior Lender. If the Subordinate Lender or Senior Lender defaults in performing or observing any of the terms, covenants or conditions to be performed or observed by it under this Agreement, the other, non - defaulting lender shall have the right to all available legal and equitable relief. 11. Notices. Each notice, request, demand, consent, approval or other communication (hereinafter in this Section referred to collectively as "notices' and referred to singly as a "notice ") which the Senior Lender or the Subordinate Lender is required or permitted to give to the other party pursuant to this Agreement shall be in writing and shall be deemed to have been duly and sufficiently given if: (a) personally delivered with proof of delivery thereof (any notice so delivered shall be deemed to have been received at the time so delivered); or (b) sent by Federal Express (or other similar national overnight courier) designating early morning delivery (any notice so delivered shall be deemed to have been received on the next Business Day following receipt by the courier); or (c) sent by United States registered or certified mail, return receipt requested, postage prepaid, at a post office regularly maintained by the United States Postal Service (any notice so sent shall be deemed to have been received two days after mailing in the United States), addressed to the respective parties as follows: EE D WT 288551380 4900000 -001785 SENIOR LENDER: Bank of America, N.A. 2001 Clayton Road 2nd Floor Concord, California 94520 -2405 Attention: Loan Administration Manager SUBORDINATE LENDER: City of Santa Ana 20 Civic Center Plaza (M -37) P.O. Box 1988 Santa Ana, California 92702 Attention: Housing Manager Either party may, by notice given pursuant to this Section, change the person or persons and /or address or addresses, or designate an additional person or persons or an additional address or addresses for its notices, but notice of a change of address shall only be effective upon receipt. 12. General (a) Assignment/Successors. This Agreement shall be binding upon the Borrower, the Senior Lender and the Subordinate Lender and shall inure to the benefit of the respective legal successors and assigns of the Senior Lender and the Subordinate Lender. (b) No Partnership or Joint Venture. The Senior Lender's permission for the placement of the Subordinate Loan Documents does not constitute the Senior Lender as a joint venturer or partner of the Subordinate Lender. Neither party hereto shall hold itself out as a partner, agent or Affiliate of the other party hereto. (c) Senior Lender's and Subordinate Lender's Consent. Wherever the Senior Lender's consent or approval is required by any provision of this Agreement, such consent or approval may be granted or denied by the Senior Lender in its sole and absolute discretion, unless otherwise expressly provided in this Agreement. Wherever the Subordinate Lender's consent or approval is required by any provision of this Agreement, such consent or approval may be granted or denied by the Subordinate Lender in its sole and absolute discretion, unless otherwise expressly provided in this Agreement. (d) Further Assurances. The Subordinate Lender, the Senior Lender and the Borrower each agree, at the Borrower's expense, to execute and deliver all additional instruments and /or documents reasonably required by any other party to this Agreement in order to evidence that the Subordinate Deed of Trust is subordinate to the lien, covenants and conditions of the Senior Deed of Trust, or to further evidence the intent of this Agreement. (e) Amendment. This Agreement shall not be amended except by written instrument signed by all parties hereto. (f) Governing Law. This Agreement shall be governed by the laws of the State in which the Property is located. (g) Severable Provisions. If any provision of this Agreement shall be invalid or unenforceable to any extent, then the other provisions of this Agreement, shall not be affected thereby and shall be enforced to the greatest extent permitted by law. (h) Term. The term of this Agreement shall commence on the date hereof and shall continue until the earliest to occur of the following events: (i) the payment of all of the principal of, interest on and other amounts payable under the Senior Loan Documents; (ii) the payment of all of 0 DWT 288551380 4900000- 001785 the principal of, interest on and other amounts payable under the Subordinate Loan Documents, other than by reason of payments which the Subordinate Lender is obligated to remit to the Senior Lender pursuant to Section 4 hereof; (iii) the acquisition by the Senior Lender of title to the Property pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the Senior Deed of Trust; or (iv) the acquisition by the Subordinate Lender of title to the Property pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the Subordinate Deed of Trust, but only if such acquisition of title does not violate any of the terms of this Agreement. (i) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be considered an original for all purposes; provided, however, that all such counterparts shall together constitute one and the same instrument. (Signature pages follow] -10- DWT 28855138x5 4900000-001785 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above. SENIOR LENDER: BANK OF AMERICA, N.A., a national banking association By: Michael K. Petty Vice President [Signature Page to Subordination Agreement (City)) D WT 28855138v5 4900000- 001785 ,ylrrn CITY OF SANTA ANA, a charter ' y end na nicipal core lion ay: David avazos City Manager ATTEST: Maria D. Huizar, Clerk of the Cou cil APPROVED AS TO FORM SON IA fjlgAgVALqO, City Attorney M [Signature Page to Subordination Agreement (City)] DWT 28855138v5 4900000 - 001785 ACKNOWLEDGMENT 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 Orange ) On March 8, 2016 before me, Claudia M. Fernandez -Shaw, Notary Public (insert name and title of the officer) personally appeared David Cavazos who proved to me on the basis of satisfactory evidence to be the persoi whose name Ki' are - subscribed to the within instrument and acknowledged to me that kjiLshe�tl-ey executed the same in her/their authorized capacity(ie<,, and that by Qlher'ftlre r- signature(p) on the instrument the person( s9, or the entity upon behalf of which the person(,) 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. Cia. CLAUpIA M. HRNANIU -SHAW Commission * 2858995 Notary Public - California i Orange County My Comm. Expires Jan 25, 2018' BORROWER: DEPOT AT SANTIAGO, L.P., a California limited partnership By: OHDC Depot, LLC, a California limited liability company, its managing general partner By: Orange Housing Development Corporation, a California nonprofit public benefit corporation, its sole member 0 Eunice Bobert Chief Executive Officer By: C &C Depot, LLC, a California limited liability company, its administrative general partner By: C &C Development Co., LLC, a California limited liability company, its sole member 0 M Todd R. Cottle, its member Barry A. Cottle, Trustee of The Cottle Family Trust Dated 3/8/1987, its member [Signature Page to Subordination Agreement (City)] U WT 28855 t38v5 4900000- 001785 EXHIBIT A LEGAL DESCRIPTION THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: PARCEL 1 AS SHOWN ON EXHIBIT "B" OF THAT CERTAIN VOLUNTARY LOT MERGER NO. 2016- 02, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, RECORDED FEBRUARY 29, 2016 AS INSTRUMENT NO. 2016000083651 OF OFFICIAL RECORDS OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS: A PORTION OF BLOCK 52 OF THE TOWN OF SANTA ANA EAST, AS SHOWN ON THE OFFICIAL MAP OF SAID TOWN, RECORDED IN BOOK 10, PAGE 43, OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE RECORDER OF THE COUNTY OF LOS ANGELES TOGETHER WITH THAT PORTION OF LOT 8 IN BLOCK D OF HAWKIN'S ADDITION TO SANTA ANA, AS SHOWN ON A MAP RECORDED IN BOOK 13, PAGE 26 OF MISCELLANEOUS RECORDS OF LOS ANGELES COUNTY, CALIFORNIA, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHWEST CORNER OF LOT 1 OF SAID BLOCK 52, SAID POINT ALSO BEING ON THE EAST LINE OF SANTIAGO STREET, 40.00 FEET HALF WIDTH; THENCE ALONG SAID EAST LINE OF SANTIAGO STREET SOUTH 260 05'22" EAST 363.53 FEET TO THE BEGINNING OF A CURVE, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 25.00 FEET; THENCE SOUTHERLY AND EASTERLY 39.10 FEET ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 890 36'37" TO A POINT ON THE NORTHERLY LINE OF SANTA ANA BOULEVARD, 52.00 FEET HALF WIDTH; THENCE ALONG SAID NORTH LINE OF SANTA ANA BOULEVARD NORTH 64° 18'01 EAST 214.52 FEET TO THE BEGINNING OF A CURVE, CONCAVE NORTHWESTERLY HAVING A RADIUS OF 25.00 FEET; THENCE EASTERLY AND NORTHERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 650 00'50" TO A POINT ON THE WEST LINE OF LOGAN STREET, 22.50 FEET HALF WIDTH; THENCE ALONG SAID WEST LINE OF LOGAN STREET NORTH 00° 42'49" WEST 9.35 FEET TO THE NORTHEAST CORNER OF SAID LOT 8; THENCE ALONG THE NORTH LINE OF SAID LOT 8 NORTH 89° 45'22 WEST 129.33 FEET TO THE EAST LINE OF SAID BLOCK 52; THENCE ALONG THE EAST LINE OF SAID BLOCK 52 NORTH 26° 05'22" WEST 309.34 FEET TO THE NORTHEAST CORNER OF LOT 1 OF SAID BLOCK 52, SAID POINT ALSO BEING ON THE SOUTH LINE OF CIVIC CENTER DRIVE 40.00 FEET HALF WIDTH; THENCE ALONG THE SOUTH LINE OF CIVIC CENTER DRIVE SOUTH 640 04'52" WEST 150 FEET TO THE POINT OF BEGINNING. EXCEPTING AND RESERVING FROM BLOCK 52 UNTO SOUTHERN PACIFIC RAILROAD COMPANY, A CORPORATION, THEIR SUCCESSORS AND ASSIGNS, ALL PETROLEUM, OIL, NATURAL GAS AND PRODUCTS DERIVED THEREFROM WITHIN OR UNDERLYING SAID LAND, OR THAT MAY BE PRODUCED THEREFROM AND ALL RIGHTS THERETO; PROVIDED, HOWEVER, THAT SAID SOUTHERN PACIFIC RAILROAD COMPANY, A CORPORATION, THEIR SUCCESSORS AND ASSIGNS, SHALL NOT USE THE SURFACE OF SAID LAND IN THE EXERCISE OF ANY OF SAID RIGHTS, BUT SHALL HAVE THE RIGHT TO ENTER INTO AND USE THE SUB - SURFACE OF SAID LAND BY LATERAL OR SLANT DRILLING AND BORING FOR SUCH PURPOSES; PROVIDED, FURTHER, THAT IN SO DOING SAID SOUTHERN PACIFIC RAILROAD COMPANY, A CORPORATION, THEIR SUCCESSORS OR ASSIGNS, SHALL NOT DISTURB THE SURFACE OF SAID LAND, OR ANY IMPROVEMENTS THEREON, OR REMOVE OR IMPAIR THE LATERAL OR SUBJECT SUPPORT OF SAID LAND, OR ANY IMPROVEMENT THEREON, BY DEED RECORDED JULY 14, 1945 IN BOOK 1326 PAGE 24 OF OFFICIAL RECORDS OF ORANGE COUNTY, CALIFORNIA. Exhibit A Page 1 DWT 28855138x5 4900000- 001785 ALSO EXCEPTING THEREFROM THOSE PORTIONS OF LOTS 15 AND 16 OF BLOCK 52 GRANTED TO THE CITY OF SANTA ANA, A MUNICIPAL CORPORATION BY FINAL ORDER OF CONDEMNATION, CASE NO. 160 973, RECORDED NOVEMBER 26, 1969 AS INSTRUMENT NO. 15762, IN BOOK 9148 PAGE 783 OF OFFICIAL RECORDS. APN: 398 - 202 -01, 398. 202 -10 Exhibit A Page 2 D W't 28955138v5 4900000-001785 EXHIBIT B SUBORDINATE LOAN DOCUMENTS 1. Loan Agreement dated as of July 11, 2013, between Borrower and City, which recorded on August 9, 2013 as Document No. 2013000476765 in the Official Records, as amended pursuant to that certain Amendment to Loan Agreements dated as of July 18, 2014, by and between the Subordinate Lender and Borrower, which was recorded in the Official Records on June 27, 2014 as Instrument No. 201400025562 and that certain City Loan Modification Agreement dated as of March 1, 2016, by and between Subordinate Lender and Borrower, to be recorded in the Official Records substantially concurrently herewith ( "City Modification Agreement "). 2. Amended and Restated City Promissory Note dated as of March 1, 2016, executed by Borrower in favor of Subordinate Lender in the face principal amount of $3,000,000 ( "Subordinate Note "). [NOT RECORDED] 3. City Deed of Trust and Assignment of Rents dated as of July 11, 2013, executed by Borrower for the benefit of the Subordinate Lender and securing the Subordinate Note, which recorded in the Official Records on August 9, 2013 as Document No. 2013000476764, as amended by the City Modification Agreement. 4. Section 18 of the Senior Affordability Restrictions 5. Any Notice of Affordability Restrictions on Transfer of Property, executed by and between Subordinate Lender and Borrower, which shall record in the Official Records substantially concurrently herewith (but only to the extent of Item 4, above, are subordinated). 6. Any UCC -1 Financing Statement showing Borrower, as Debtor, and City, as Secured Party, which is filed with the California Secretary of State or recorded in the Official Records, Exhibit B Page 1 Dwr 288551380 4900000- 001785 ACKNOWLEDGMENT 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 ) ) ss County of ) On , 2016 before me, State, personally appeared a Notary Public in and for said 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. Signatu DWT 28855 138v5 4900000 - 001785 ACKNOWLEDGMENT 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 ) ) ss County of ) On , 2016 before me, State, personally appeared a Notary Public in and for said 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 DWT 28855138v5 4900000 - 001785 ACKNOWLEDGMENT 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 ) ) ss County of ) On , 2016 before me, State, personally appeared a Notary Public in and for said 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 DWT 288551380 4900000 - 001785 I'_Cy.IR41ri91114ZML6MY� 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 ) ) ss County of ) On , 2016 before me, State, personally appeared a Notary Public in and for said 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. Sig D W'1' 28855138v5 4900000 - 001785 r_[y 11 ki 101rdI I �ZC7IM MI MI 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 ) ss County of ) On , 2016 before me, State, personally appeared a Notary Public in and for said 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. UW'1'28855138v54900000- 001785