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HomeMy WebLinkAbout2013-031 2013-31 1 RESOLUTION NO, 2013-31 2 3 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE SUCCESSOR HOUSING AGENCY TO THE 4 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO APPROVING A SUBORDINATION AGREEMENT AND AN ASSIGNMENT REGARDING THE LUGO 5 SENIOR APARTMENTS PROJECT. 6 7 WHEREAS, the Redevelopment Agency of the City of San Bernardino (the 8 "Redevelopment Agency") previously approved an Acquisition and Development Residual Receipts 9 Loan Agreement (the "Lugo Loan Agreement") with Lugo Senior Apartments, L.L.C. (the 10 "Developer"), dated December 6, 2010, with Resolution No. CDC/2010-64. The Developer is the 11 general partner of Lugo Senior Apartments, L.P. (the "Borrower"); and 12 WHEREAS, the Lugo Loan Agreement provides that the Redevelopment Agency is to 13 subordinate a deed of trust and affordability covenants to liens securing construction and permanent 14 financing; and 15 WHEREAS,the Developer is in the course of arranging for permanent financing; and 16 WHEREAS, in connection with the arrangement of permanent financing as to the project 17 financed under the Lugo Loan Agreement, the Developer, as well as the construction lender and 18 proposed permanent lender, have requested that the Redevelopment Agency's position under the 19 Lugo Loan Agreement be subordinated to the lien in favor of the permanent lender; and 20 WHEREAS, the Redevelopment Agency was dissolved by virtue of ABx1 26, Statutes of 21 2011 (the "2011 Dissolution Measure"). The 2011 Dissolution Act has been further amended by AB 22 1484, as enacted as law in 2012 ("AB 1484" and, together with the 2011 Dissolution Measure, the 23 "Dissolution Act"); and 24 WHEREAS,the City of San Bernardino (the "City"), by its Council Resolution No. 2012-12 25 as adopted on January 9, 2012, designated the City as the successor agency to the Redevelopment 26 Agency and, by its Council Resolution No. 2012-19, confirmed that the City would act as the 27 housing successor agency to the housing assets and obligations of the former Redevelopment Agency 28 pursuant to the Dissolution Act. In its capacity as successor agency to the housing assets and obligations of the former Redevelopment Agency,the City is the "Successor Housing Agency"; and 1 DOC S OC/160475 3 v2/200430-0003 2013-31 1 WHEREAS, staff of the Successor Housing Agency has reviewed the request for 2 subordination as made by construction lender, permanent lender, the Developer and the Borrower 3 and is of the view that subordination of the loan made by the former Redevelopment Agency as well 4 as subordination of affordability covenants is called for under the Lugo Agreements, including 5 without limitation Section 2.2 of the Lugo Loan Agreement; and 6 WHEREAS, the Lugo Loan Agreement contemplates that the Developer will assign its 7 position to a limited partnership entity which is under the control of the same principals as the 8 Developer; and 9 WHEREAS,the principals of the Borrower are substantially the same as the principles of the 10 Developer; and 11 WHEREAS, counsel for the permanent lender has provided a form of assignment attached 12 and incorporated herein as Exhibit "A" (the "Assignment Agreement") evidencing and 13 memorializing an assignment from the Developer to the Borrower; and 14 WHEREAS, the Mayor and Common Council desire to authorize approval of the 15 Assignment Agreement; and 16 WHEREAS, staff has reviewed a form of subordination agreement to effect the 17 subordination described in the foregoing recitals and attached and incorporated herein as Exhibit"B" 18 (the "Subordination Agreement"); and 19 WHEREAS, execution of the Subordination Agreement is in furtherance of the public 20 health, safety and welfare in that such Agreement will further the securing of permanent financing 21 for an affordable housing project previously authorized within the corporate limits of the City, and 22 such subordination is contemplated by the four corners of the Lugo Loan Agreement; 23 NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON 24 COUNCIL ACTING AS THE SUCCESSOR HOUSING AGENCY,AS FOLLOWS: 25 Section 1. The Mayor and Common Council, acting as Successor Housing Agency to 26 the former Redevelopment Agency, finds and determines that each of the foregoing recitals is true 27 and correct; 28 2 DOCSOC/1604753 v2/200430-0003 2013-31 1 Section 2. The Mayor and Common Council, acting as Successor Housing Agency to 2 the former Redevelopment Agency, approves the Subordination Agreement and authorizes and 3 directs the City Manager to execute the Subordination Agreement and to cause such instrument to be 4 recorded against the Property in the Official Records of the County of San Bernardino. 5 Section 3. The Mayor and Common Council, acting as Successor Housing Agency to 6 the former Redevelopment Agency, hereby approves the form of the Assignment Agreement. 7 Section 4. This Resolution shall take effect from and after its date of adoption by the 8 Mayor and Common Council. 9 /// 10 /// 11 /// 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 DOC S OC/160475 3 v2/20043 0-0003 2013-31 1 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO ACTING AS THE SUCCESSOR HOUSING AGENCY TO THE 2 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO APPROVING A SUBORDINATION AGREEMENT AND AN ASSIGNMENT REGARDING THE LUGO 3 SENIOR APARTMENTS PROJECT. 4 5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and joint 6 Common Council of the City of San Bernardino at a regularly scheduled meeting thereof, held on the 7 4th day of Fehri ry , 2013, by the following vote, to wit: 8 9 Council Members: Ayes Nays Abstain Absent 10 MARQUEZ x 11 JENKINS _ 12 VALDIVIA x 13 SHORETT x KELLEY x 14 JOHNSON 15 MC CAMMACK x _ 16 17 C -- 18 Georgea Hanna, i Jerk 19 uT The foregoing Resolution is hereby approved this v day of February , 2013. 20 21 Patrick J. Morris, Ma 22 it of .n Bernardino 23 Approved as to form: 24 James F. Penman City Attorney 25 r By: 26 27 28 4 DOCSOC/1604753v2/200430-0003 2013-31 Exhibit"A" RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Bocarsly Emden Cowan Esmail &Arndt, LLP 633 West Fifth Street, 70th Floor Los Angeles, CA 90071 Attention: Lance Bocarsly, Esq. Space above this line for Recorder's use. ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is entered into as of this LGrh day of February, 2013, by and between Lugo Senior Apartments, LLC, a California limited liability company ("Assignor"), and Lugo Senior Apartments, L.P., a California limited partnership ("Assignee"), with reference to the following facts: WHEREAS, the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency"), made a loan to Assignor in the original principal amount of $6,500,000 for the purpose of financing the acquisition of certain real property located in San Bernardino, California more particularly described on Exhibit "A" attached hereto (the "Property"); WHEREAS, the Loan is evidenced and secured by (i) that certain Acquisition and Development Loan Agreement, dated as of December 6, 2010, by and between the Agency and/ Assignor; (ii) that certain Promissory Note, dated as of January 14, 2011, made by Assignor for the benefit of the Agency; (iii) that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of December 6, 2010, made by Assignor for the benefit of the Agency and recorded against the Property in the Official Records of the County of San Bernardino, California on January 14, 2011 as Document No. 2011-0019692; (iv) that certain Agreement Containing Covenants, Conditions and Restrictions, dated as of December 6, 2010, by and between the Agency and Assignor, recorded against the Property in the Official Records of the County of San Bernardino, California on January 14, 2011 as Document No. 2011- 0019693; and (v) that certain Senior Household Rental Housing Use Covenant, dated as of December 6, 2010, by and between the Agency and Assignor, recorded against the Property in the Official Records of the County of San Bernardino, California on January 14, 2011 as Document No. 2011-0019690 (collectively, the "Loan Documents"); WHEREAS, concurrently herewith, Assignor is transferring the Property to Assignee; WHEREAS, Assignor desires to assign and delegate all of its right, title and related obligations under the Loan Documents to Assignee, and Assignee desires to accept such assignment and assume such obligations under the Loan Documents; and WHEREAS, the parties are entering into this agreement to effectuate the assignment and delegation by Assignor, and the acceptance and assumption by the Assignee, of all of Assignor's rights and obligations under the Loan Documents. 2013-31 NOW, THEREFORE, with reference to the foregoing facts and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties mutually agree as follows: 1. Assignment and Assumption. Assignor hereby assigns and delegates to Assignee, and Assignee hereby accepts and assumes from Assignor, all of Assignor's rights, title, interest and obligations under the Loan Documents. 2. Representations. Assignor hereby represents and warrants that it has not previously assigned, pledged, hypothecated or otherwise transferred any of its rights under the Loan Documents. 3. Governing Law. The Agreement shall be interpreted under and be governed by the laws of the State of California, except for those provisions relating to choice of law or those provisions preempted by federal law. 4. Entire Agreement. This Agreement is the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral, between the parties with respect to the matters contained in this Agreement. Any waiver, modification, consent or acquiescence with respect to any provision of this Agreement shall be set forth in writing and duly executed by or on behalf of the party to be bound thereby. No waiver by any party of any breach hereunder shall be deemed a waiver of any other or subsequent breach. 5. Counterparts. This Agreement may be executed in counterparts by the parties hereto, each of which shall be deemed to be an original, and all such counterparts shall constitute but one and the same instrument. 6. Further Assurances. Each of the parties agrees to execute further and supplemental instruments as may be requested by another party to effectuate the purposes and intent of the Agreement. (document continues on following page) 50060163.1 2013-31 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ASSIGNOR: LUGO SENIOR APARTMENTS, LLC, a California limited liability company By: John M. Huskey, Manager ASSIGNEE: LUGO SENIOR APARTMENTS, L.P., a California limited partnership By: Lugo Senior Apartments, LLC, a California limited liability company, its administrative general partner By: John M. Huskey, Manager By: WCH Affordable II, LLC, a California limited liability company, its managing general partner By: Western Community Housing, Inc., a California nonprofit corporation, its sole member By: Graham P. Espley-Jones, President 50060163.1 2013-31 STATE OF CALIFORNIA ) ) COUNTY OF LOS ANGELES ) On , 2013, 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. Signature (Seal) STATE OF CALIFORNIA ) ) COUNTY OF LOS ANGELES ) On , 2013, 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. Signature (Seal) 50060163.1 2013-31 Exhibit"A" EXHIBIT A LEGAL DESCRIPTION OF PROPERTY The real property in the City of San Bernardino, County of San Bernardino, State of California, described as follows: PARCEL "A" THAT PORTION OF LOT 2, BLOCK 3, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTHERLY LINE OF SAID LOT 2, FROM WHICH THE NORTHWEST CORNER THEREOF BEARS SOUTH 89° 52' WEST, 192 FEET, SAID POINT BEING THE NORTHEAST CORNER OF THE LAND CONVEYED TO ROLAND H. MOSELEY, ET UX, BY DEED RECORDED OCTOBER 16, 1958, IN BOOK 4630, PAGE 378, OFFICIAL RECORDS; THENCE CONTINUING ON SAID NORTHERLY LINE OF SAID LOT 2, NORTH 89° 52' EAST, 66.15 FEET TO THE NORTHWEST CORNER OF THE LAND CONVEYED TO LLOYD E. GREVE, ET UX, BY DEED RECORDED MARCH 28, 1957, IN BOOK 4191, PAGE 253, OFFICIAL RECORDS; THENCE SOUTH 00° 10' 40" EAST ALONG THE WEST LINE OF SAID GREVE LAND, 130 FEET TO THE SOUTHWEST CORNER THEREOF; THENCE NORTH 89°52'00" EAST, 92.15 FEET TO THE EAST LINE OF SAID LOT 2; THENCE SOUTHEASTERLY ALONG SAID EAST LINE SOUTH 00°10'40" EAST, 509.30 FEET TO THE SOUTHEAST CORNER OF SAID LOT 2; THENCE WESTERLY ALONG THE SOUTH LINE OF SAID LOT 2 SOUTH 89°44'39"WEST, 299.40 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 50.00 FEET EASTERLY OF THE WEST LINE OF SAID LOT 2; THENCE NORTHERLY ALONG SAID PARALLEL LINE NORTH 00°15'31"WEST, 409.94 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 230.00 FEET SOUTHERLY OF THE NORTH LINE OF SAID LOT 2; THENCE EASTERLY ALONG SAID PARALLEL LINE NORTH 89°52'00" EAST, 136.00 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 186.00 FEET EASTERLY OF THE WEST LINE OF SAID LOT 2; THENCE NORTHERLY ALONG SAID PARALLEL LINE NORTH 00°15'31"WEST, 100.00 FEET TO A POINT ON THE SOUTH LINE OF SAID LAND TO MOSELEY; THENCE EASTERLY ALONG SAID SOUTH LINE NORTH 89°52'00" EAST, 6.00 FEET TO THE SOUTHEAST CORNER OF SAID LAND TO MOSELEY; THENCE NORTHERLY ALONG THE EAST LINE OF SAID LAND TO MOSELEY NORTH 00°15'31"WEST, 130.00 FEET TO THE POINT OF BEGINNING. AND SHOWN IN CERTIFICATE OF COMPLIANCE (LOT MERGER NO. LM2012-001) RECORDER APRIL 25, 2012 AS INSTRUMENT NO. 12-0161510. APN: 0140-231-43-0-000 and 0140-231-44-0-000 50060163.1 O,‘ ��� 2013-31 f�r o Recorded In Official Records,County of San Bernardino 2/05/2013 ti DENNIS DRAEGER 1:00 PM BN —N O0 ASSESSOR — RECORDER — CLERK RECORDING REQUESTED BY If AND WHEN RECORDED MAIL TO: 608 North American Title Company Doc#: 2013—0052391 Titles: 2 Pages: 7 Bocarsly Emden Cowan Esmail &Arndt, LLP Fees 4e.66 633 West Fifth Street, 70th Floor Taxes 8.99 Los Angeles, CA 90071 Other 0.00 Attention: Lance Bocarsly, Esq. PAID $48.00 Space above this line for Recorder's use. ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is entered into as of this I Y. day of February, 2013, by and between Lugo Senior Apartments, LLC, a California limited liability company ("Assignor"), and Lugo Senior Apartments, L.P., a California limited partnership ("Assignee"), with reference to the following facts: WHEREAS, the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency"), made a loan to Assignor in the original principal amount of $6,500,000 for the purpose of financing the acquisition of certain real property located in San Bernardino, California more particularly described on Exhibit "A" attached hereto (the "Property"); WHEREAS, the Loan is evidenced and secured by (i) that certain Acquisition and Development Loan Agreement, dated as of December 6, 2010, by and between the Agency and Assignor; (ii)that certain Promissory Note, dated as of January 14, 2011, made by Assignor for the benefit of the Agency; (iii) that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of December 6, 2010, made by Assignor for the benefit of the Agency and recorded against the Property in the Official Records of the County of San Bernardino, California on January 14, 2011 as Document No. 2011-0019692; (iv) that certain Agreement Containing Covenants, Conditions and Restrictions, dated as of December 6, 2010, by and between the Agency and Assignor, recorded against the Property in the Official Records of the County of San Bernardino, California on January 14, 2011 as Document No. 2011- 0019693; and (v) that certain Senior Household Rental Housing Use Covenant, dated as of December 6, 2010, by and between the Agency and Assignor, recorded against the Property in the Official Records of the County of San Bernardino, California on January 14, 2011 as Document No. 2011-0019690 (collectively, the "Loan Documents"); WHEREAS, concurrently herewith, Assignor is transferring the Property to Assignee; WHEREAS, Assignor desires to assign and delegate all of its right, title and related obligations under the Loan Documents to Assignee, and Assignee desires to accept such assignment and assume such obligations under the Loan Documents; and WHEREAS, the parties are entering into this agreement to effectuate the assignment and delegation by Assignor, and the acceptance and assumption by the Assignee, of all of Assignor's rights and obligations under the Loan Documents. 50060163.1 2013-31 NOW, THEREFORE, with reference to the foregoing facts and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties mutually agree as follows: 1. Assignment and Assumption. Assignor hereby assigns and delegates to Assignee, and Assignee hereby accepts and assumes from Assignor, all of Assignor's rights, title, interest and obligations under the Loan Documents. 2. Representations. Assignor hereby represents and warrants that it has not previously assigned, pledged, hypothecated or otherwise transferred any of its rights under the Loan Documents. 3. Governing Law. The Agreement shall be interpreted under and be governed by the laws of the State of California, except for those provisions relating to choice of law or those provisions preempted by federal law. 4. Entire Agreement. This Agreement is the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral, between the parties with respect to the matters contained in this Agreement. Any waiver, modification, consent or acquiescence with respect to any provision of this Agreement shall be set forth in writing and duly executed by or on behalf of the party to be bound thereby. No waiver by any party of any breach hereunder shall be deemed a waiver of any other or subsequent breach. 5. Counterparts. This Agreement may be executed in counterparts by the parties hereto, each of which shall be deemed to be an original, and all such counterparts shall constitute but one and the same instrument. 6. Further Assurances. Each of the parties agrees to execute further and supplemental instruments as may be requested by another party to effectuate the purposes and intent of the Agreement. (document continues on following page) 50060163.1 2013-31 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ASSIGNOR: LUGO SENIOR APARTMENTS, LLC, a California limited liability company Aid r/, By: ✓ John M. H 7 Manager ASSIGNEE: LUGO SENIOR APARTMENTS, L.P., a California limited partnership By: Lugo Senior Apartments, LLC, a California limited liability company, its administrative general partner By: AA, _. y Joh 'P nager irk-y, By: WCH Afford-9e II, LLC, a California limited liability company, its managing general partner By: Western Community Housing, Inc., a California nonprofit corporation, its sole member By: Graham P. Espley-Jones, President SIGNED IN COUNTERPARTS 50060163.1 2013-31 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ASSIGNOR: LUGO SENIOR APARTMENTS, LLC, a California limited liability company By: John M. Huskey, Manager ASSIGNEE: LUGO SENIOR APARTMENTS, L.P., a California limited partnership By: Lugo Senior Apartments, LLC, a California limited liability company, its administrative general partner By: John M. Huskey, Manager By: WCH Affordable II, LLC, a California limited liability company, its managing general partner By: Western Community Housing, Inc., a California nonprofit corporation, its sole member By: rah m P.•Esp Jones, Pre 'dent SIGNED IN COUNTERPARTS 50060163.1 21013-31 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE§ 1189 (e State of California >> County of 1.0 5g, l✓s On Javl 3\ t)t 3 before me, 1�G v-t ti--14,i ✓)� ^' tc b, C Date Here Insert Name and Title of Ore Officer i personally appeared W''■ OA. u s Name )of Signer(s) )J l j who proved to me on the basis of satisfactory ; evidence to be the person ) whose name(?) is/�t'e y� subscribed to the within inst ment and ackndwledged >> to me that he/sl)6/0ey executed the same in his/hEir/thOr authorized capacity(), and that by >>• his/her/th it signature(�'j on the instrument the >> person( , or the entitt)jj upon behalf of which the A persony acted, executed the instrument. >> -+,. MARIAN RAIN ..` 4 Commission# 1976801 I certify under PENALTY OF PERJURY under the i`- �: s Notary Public-California i laws of the State of California that the foregoing rLas Angeles County paragraph is true and correct. >> My Comm.Expires May 27.2016 ?i ), WITNESS y hand and official seal. Signature: R'�"' Place Notary Seal Above Signature of Notary Fuhlic Ji OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document V and could prevent fraudulent removal and reattachment of this form to another document. >> Description of Attached Document > Title or Type of Document: >> Number of Pages: >> Document Date: V Signer(s) Other Than Named Above: >> Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: >> ❑ Corporate Officer — Title(s): ❑Corporate Officer — Title(s): RIGHT THUMBPRINT ❑Individual RIGHT THUMBPRINT ❑ Individual OF SIGNER OF SIGNER CI Partner — ❑Limited ❑General Top of thumb here >> ❑ Partner—❑Limited El General Top of thumb here >> O Attorney in Fact ❑Attorney in Fact >> ❑ Trustee ❑Trustee >> El Guardian or Conservator ❑Guardian or Conservator „. ❑ Other: El Other: >> V C Signer Is Representing: Signer Is Representing: V ry g Item#5907 0 2010 National Notary Association•NationalNOta or 1-800-US NOTARY(1-800-876-6827) 2013-31 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) On , 2013, 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. Signature (Seal) STATE OF CALIFORNIA ) COUNTY OF ORANGE ) On lincctry 31 , 201 , before me kw v?e �ao fer, , notary public, personally appeared r'rCl?/n P �6/ -JGT)e3 , who proved to me on the basis of satisfactory evidence to be the person()whose name() isMare subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/f ei- 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(o) 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. LEANNE TRUOFREH W Commission # 1887730 G Notary Public-California 1 z Vstr, Orange County Signature ` My Comm.Expires Ma 12,2014 /�A�� /i-ta (Seal) 50060163.1 2013-31 EXHIBIT A LEGAL DESCRIPTION OF PROPERTY The real property in the City of San Bernardino, County of San Bernardino, State of California, described as follows: PARCEL "A" THAT PORTION OF LOT 2, BLOCK 3, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTHERLY LINE OF SAID LOT 2, FROM WHICH THE NORTHWEST CORNER THEREOF BEARS SOUTH 89° 52'WEST, 192 FEET, SAID POINT BEING THE NORTHEAST CORNER OF THE LAND CONVEYED TO ROLAND H. MOSELEY, ET UX, BY DEED RECORDED OCTOBER 16, 1958, IN BOOK 4630, PAGE 378, OFFICIAL RECORDS; THENCE CONTINUING ON SAID NORTHERLY LINE OF SAID LOT 2, NORTH 89° 52' EAST, 66.15 FEET TO THE NORTHWEST CORNER OF THE LAND CONVEYED TO LLOYD E. GREVE, ET UX, BY DEED RECORDED MARCH 28, 1957, IN BOOK 4191, PAGE 253, OFFICIAL RECORDS; THENCE SOUTH 00° 10' 40" EAST ALONG THE WEST LINE OF SAID GREVE LAND, 130 FEET TO THE SOUTHWEST CORNER THEREOF; THENCE NORTH 89°52'00" EAST, 92.15 FEET TO THE EAST LINE OF SAID LOT 2; THENCE SOUTHEASTERLY ALONG SAID EAST LINE SOUTH 00°10'40" EAST, 509.30 FEET TO THE SOUTHEAST CORNER OF SAID LOT 2; THENCE WESTERLY ALONG THE SOUTH LINE OF SAID LOT 2 SOUTH 89°44'39"WEST, 299.40 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 50.00 FEET EASTERLY OF THE WEST LINE OF SAID LOT 2; THENCE NORTHERLY ALONG SAID PARALLEL LINE NORTH 00°15'31"WEST, 409.94 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 230.00 FEET SOUTHERLY OF THE NORTH LINE OF SAID LOT 2; THENCE EASTERLY ALONG SAID PARALLEL LINE NORTH 89°52'00" EAST, 136.00 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 186.00 FEET EASTERLY OF THE WEST LINE OF SAID LOT 2; THENCE NORTHERLY ALONG SAID PARALLEL LINE NORTH 00°15'31"WEST, 100.00 FEET TO A POINT ON THE SOUTH LINE OF SAID LAND TO MOSELEY; THENCE EASTERLY ALONG SAID SOUTH LINE NORTH 89°52'00" EAST, 6.00 FEET TO THE SOUTHEAST CORNER OF SAID LAND TO MOSELEY; THENCE NORTHERLY ALONG THE EAST LINE OF SAID LAND TO MOSELEY NORTH 00°15'31"WEST, 130.00 FEET TO THE POINT OF BEGINNING. AND SHOWN IN CERTIFICATE OF COMPLIANCE (LOT MERGER NO. LM2012-001) RECORDER APRIL 25, 2012 AS INSTRUMENT NO. 12-0161510. APN: 0140-231-43-0-000 and 0140-231-44-0-000 50060163.1 2013-31 EXHIBIT "B" • RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: Paul Hastings LLP 515 South Flower Street Twenty-Fifth Floor Los Angeles,CA 90071 Attn: Kenneth Krug,Esq. (SPACE ABOVE THIS LINE FOR RECORDER'S USE) SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT (this "Agreement") is entered into as of February 1, 2013 by and among (i) BANK OF AMERICA, N.A. (the "Senior Lender"), (ii)the CITY OF SAN BERNARDINO (the "Subordinate Lender"), as successor housing agency to the Redevelopment Agency of the City of San Bernardino (the "Agency"), and (iii) LUGO SENIOR APARTMENTS, L.P., a California limited partnership(the "Borrower"). Recitals A. The Senior Lender has made or is making a loan (the "First Mortgage Loan")to the Borrower in the original principal amount of$8,868,000. The First Mortgage Loan is or will be secured by a first mortgage lien (the "First Mortgage") on a multifamily housing project located in San Bernardino, California (the "Property"). The Property is more fully described in Exhibit A attached hereto. The Borrower's obligation to repay the First Mortgage Loan is evidenced by a Note dated January 31, 2013 (the"First Mortgage Note"). B. The Subordinate Lender made a subordinate loan to Borrower in the amount of $6,500,000 (the "Subordinate Loan") and secured the Subordinate Loan by, among other things, placing a mortgage lien against the Property. C. The Subordinate Lender has agreed to specifically and unconditionally subordinate the Subordinate Loan and the Subordinate Loan Documents to the liens and charges of the First Mortgage Loan and First Mortgage Loan Documents and shall at all times and in all respects be wholly subordinate and inferior in claim and right to the First Mortgage Loan and First Mortgage Loan Documents. D. 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 a portion of the Loan, and the First Mortgage Loan will convert to a term loan("Conversion"). (Page-1) LEGAL_US W#73888929.7 75506.00052 2013-31 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. Defmitions. 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). "Agency Senior Household Rental Housing Use Covenant" means covenants in favor of the former Redevelopment Agency of the City of San Bernardino recorded as Instrument No. 2011-0019690 on January 14, 2011 in the Official Records of San Bernardino County. The Agency Senior Household Rental Housing Covenant requires that dwelling units developed on the Property shall be occupied by households including at least one person 62 years or older. "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 First Mortgage Loan Default has occurred under the First Mortgage 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 the Subordinate Loan. Each Default Notice shall specify the default upon which such Default Notice is based. (Page-2) LEGAL_US W#73888929.7 75506.00052 2013-31 "First Mortgage Loan" means the senior loan described in Recital A hereof, and following Conversion,the Permanent Loan. "First Mortgage Loan Default" means the occurrence of an "Event of Default" as that term is defined in the First Mortgage Loan Documents. "First Mortgage Loan Documents" means (i) the First Mortgage Note and all other documents evidencing, securing or otherwise executed and delivered in connection with the First Mortgage Loan; and(ii)following Conversion,the Permanent Loan Documents. "Permanent Loan"means the First Mortgage Loan after Conversion. "Permanent Loan Documents" means the Permanent Note, the First Mortgage and all other documents evidencing, securing, purchased for, or otherwise executed and delivered in connection with,the Permanent Loan. "Permanent Note" means the First Mortgage Note, as it may be modified in connection with Conversion. "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 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 First Mortgage Note or of the Permanent Loan Documents, such other Person shall automatically become the Senior Lender. Upon purchase of the First Mortgage at Conversion and Borrower's satisfaction of the Conversion Conditions, CCRC shall become Senior Lender hereunder. "Subordinate Lender" means the Person named as such in the first paragraph on page 1 of this Agreement and any other Person who becomes the legal holder of the Subordinate Note after the date of this Agreement. "Subordinate Loan 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 Loan Documents" means the Subordinate Note, the Subordinate Mortgage, the Subordinate Regulatory Agreement, and all other documents evidencing, securing or otherwise executed and delivered in connection with the Subordinate Loan. The Agency Senior Household Rental Housing Covenant is not one of the Subordinate Loan Documents. (Page-3) LEGAL_US W#73888929.7 75506.00052 2013-31 "Subordinate Mortgage" means that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing executed by Lugo Senior Apartments, L.L.C., a California limited liability company, as Borrower's predecessor-in-interest,for the benefit of the Agency, encumbering the Property and recorded in the Official Records of San Bernardino County on January 14,2011 as Document No. 2011-0019692. "Subordinate Note" means the Promissory note dated as of January 14, 2011 issued by Lugo Senior Apartments, L.L.C., a California limited liability company, as Borrower's predecessor-in-interest,or order,to evidence the Subordinate Loan. "Subordinate Regulatory Agreement" means that certain Agreement Containing Covenants, Conditions and Restrictions between the Agency and Lugo Senior Apartments, L.L.C., a California limited liability company, as Borrower's predecessor-in-interest, encumbering the Property and recorded in the Official Records of San Bernardino County on January 14, 2011 as Document No. 2011-0019693. 2. Permission to Place Mortgage Lien Against Property. The Senior Lender agrees, notwithstanding the prohibition against inferior liens on the Property contained in the First Mortgage Loan Documents or the Permanent Loan Documents, and subject to the provisions of this Agreement, to permit the Subordinate Lender to record or retain the Subordinate Mortgage and other recordable Subordinate Loan Documents against the Property (which shall be subordinate in all respects to the lien of the First Mortgage)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. If any of the representations and warranties made by the Borrower and the Subordinate Lender in Section 3 is not true and correct on the date of this Agreement, the provisions of the First Mortgage Loan Documents and/or the Permanent Loan Documents applicable to unpermitted liens on the Property shall apply. 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 (except that subsection (d) consists of representations and warranties made solely by Borrower): (a) 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. (Page-4) LEGAL_US W#73888929.7 75506.00052 2013-31 (b) Term. The term of the Subordinate Note does not end before the term of the First Mortgage Note or the Permanent Note. (c) Subordinate Loan Documents. The executed Subordinate Loan Documents have been submitted to, and , to the actual knowledge of Subordinate Lender, approved by, Senior Lender prior to the date of this Agreement. (d) First Mortgage Loan Documents. The executed First Mortgage Loan Documents will be substantially in the same forms as those reviewed by Subordinate Lender prior to the date of this Agreement. Upon execution and delivery of the First Mortgage Loan Documents, Borrower shall deliver to Subordinate Lender an executed copy of each of the First Mortgage 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 First Mortgage Loan Documents, and (ii) the Subordinate Mortgage 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 First Mortgage and the other First Mortgage Loan Documents and to all advances heretofore made or which may hereafter be made pursuant to the First Mortgage and the other First Mortgage Loan Documents (including but not limited to, all sums advanced for the purposes of(1) protecting or further securing the lien of the First Mortgage, curing defaults by the Borrower under the First Mortgage Loan Documents or for any other purpose expressly permitted by the First Mortgage, or (2) constructing, renovating, repairing, furnishing, fixturing or equipping the Property). The Agency Senior Household Rental Housing Use Covenant is not subordinated to the First Mortgage Loan Documents. (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 First Mortgage,then, in that event, such lien shall be subject and subordinate to the lien of the First Mortgage. (c) Payments Before First Mortgage Loan Default. Until the Subordinate Lender receives a Default Notice of a First Mortgage 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. (Page-5) LEGAL_US W#73888929.7 75506.00052 2013-31 (d) Payments After First Mortgage Loan Default. The Borrower agrees that, after it receives notice (or otherwise acquires knowledge) of a First Mortgage 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 Mortgage) 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 Mortgage) without the Senior Lender's prior written consent. If the Subordinate Lender receives written notice from the Senior Lender that the First Mortgage 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 First Mortgage Loan Documents in accordance with the provisions of the First Mortgage 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, as debtor, without the Senior Lender's prior written consent. (Page-6) LEGAL_US W#73888929.7 75506.00052 2013-31 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. Failure of the Subordinate Lender to send a Default Notice to the Senior Lender shall not prevent the exercise of the Subordinate Lender's rights and remedies under the Subordinate Loan Documents, subject to the provisions of this Agreement. 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 to the extent permitted under Section 5(b). All amounts paid by the Senior Lender in accordance with the First Mortgage 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 First Mortgage. (b) Subordinate Lender's Agreement to Standstill. If a Subordinate Loan Default occurs and is continuing, the Subordinate Lender agrees that it will not accelerate the Subordinate Loan, commence foreclosure proceedings with respect to the Property, collect rents, appoint(or seek the appointment of) a receiver or institute any other collection or enforcement action without first giving at least ninety(90) days' notice of a default under the Subordinate Loan and Subordinate Lender's intent to exercise one of the preceding actions. (c) Cross Default. The Borrower and the Subordinate Lender agree that a Subordinate Loan Default declared by Subordinate Lender shall constitute a First Mortgage Loan Default under the First Mortgage Loan Documents and the Senior Lender shall have the right to exercise all rights or remedies under the First Mortgage Loan Documents in the same manner as in the case of any other First Mortgage 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 First Mortgage Loan Documents, any First Mortgage Loan Default under the First Mortgage Loan Documents arising solely from such Subordinate Loan Default shall be deemed cured, and the First Mortgage 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 First Mortgage Loan Default. 6. Default Under First Mortgage Loan Documents. (Page-7) LEGAL_US W#73888929.7 75506.00052 2013-31 (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 First Mortgage Loan Documents, subject to the provisions of this Agreement. The Subordinate Lender shall have the right, but not the obligation, to cure any such First Mortgage Loan Default as provided below. Subordinate Lender may have up to 30 days from the date of the delivery of the Default Notice to Subordinate Lender to cure any monetary default under the First Mortgage Loan Documents; provided, however, that the Senior Lender shall be entitled during such 30-day period to continue to pursue its remedies with respect to the Property. Subordinate Lender may have up to 60 days from the date of delivery of the Default Notice to cure a non- monetary default if during such 60-day period Subordinate Lender keeps current all payments required by the First Mortgage Loan Documents. 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 First Mortgage 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 Mortgage. (b) Cross Default. The Borrower and the Subordinate Lender agree that a First Mortgage Loan Default recognized by Senior Lender shall constitute a Subordinate Loan Default under the Subordinate Loan Documents and the Subordinate Lender shall have the right to exercise all rights or remedies under the Subordinate Loan Documents in the same manner as in the case of any other Subordinate Loan Default. If the Senior Lender notifies the Subordinate Lender in writing that any First Mortgage Loan Default of which the Subordinate Lender has received a Default Notice has been cured or waived, as determined by the Senior Lender in its sole discretion, then provided that Subordinate Lender has not conducted a sale of the Property pursuant to its rights under the Subordinate Loan Documents, any Subordinate Mortgage Loan Default under the Subordinate Loan Documents arising solely from such First Mortgage Loan Default shall be deemed cured, and the Subordinate Mortgage shall be reinstated, provided, however, that the Subordinate 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 Subordinate Lender during such Subordinate Loan Default. 7. 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 First Mortgage Loan Documents, the Subordinate Loan Documents and the terms of this Agreement, the terms of this Agreement shall (Page-8) LEGAL_US W#73888929.7 75506.00052 2013-31 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 First Mortgage and the Subordinate Mortgage, 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 First Mortgage Loan Default or Subordinate Loan Default, as the case may be; give the Borrower the right to notice of any First Mortgage Loan Default or Subordinate Loan Default, as the case may be other than that, if any, provided, respectively under the First Mortgage 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 First Mortgage 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 First Mortgage Loan Defaults pursuant to Section 6(a) above and advance funds pursuant to the Subordinate Mortgage 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. The foregoing portion of this subsection (a) shall not be construed to preclude activities by the Subordinate Lender to enforce 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 First Mortgage 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 First Mortgage Loan Documents with respect thereto, and the Subordinate Lender shall (Page-9) LEGAL US W#73888929.7 75506.00052 2013-31 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 First Mortgage 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 First Mortgage Loan, any proceeds remaining after the satisfaction in full of the principal of, interest on and other amounts payable under the First Mortgage 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 First Mortgage 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 First Mortgage Loan Documents. Any unauthorized amendment of the Subordinate Loan Documents 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 without the prior written consent of the Senior Lender. Except with regard to the voluntary transfer or assignment of the Subordinate Loan or the Subordinate Loan Documents by the Subordinate Lender without the written consent of the Senior Lender, the foregoing portion of this subsection (c) shall not be construed to preclude activities by the Subordinate Lender to enforce the Subordinate Loan Documents. 9. Conversion,Modification or Refinancing of First Mortgage 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 First Mortgage Loan (Page-10) LEGAL US W#73888929.7 75506.00052 2013-31 Documents, including any provision requiring the payment of money. Subordinate Lender further agrees that its agreement to subordinate hereunder shall extend to the Permanent Loan Documents, as well as to any new mortgage debt which is for the purpose of refinancing all or any part of the First Mortgage Loan (including reasonable and necessary costs associated with the closing and/or the refinancing) and, in the event of new mortgage debt, Subordinate Lender shall execute and deliver to Senior Lender a new subordination agreement on the same terms and conditions as this Subordination Agreement. Following Conversion, all the terms and covenants of this Agreement shall inure to the benefit of any holder of the Permanent Loan; and all references to the First Mortgage Loan, the First Mortgage Note and the First Mortgage Loan Documents shall mean, respectively,the Permanent Loan,the Permanent Note and the Permanent Loan Documents. 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: SENIOR LENDER(Prior to Conversion): Bank of America, N.A. Community Development Banking Mail Code#CA0-103-04-04 450 B Street, Suite 450 San Diego, CA 92101 Attention: Loan Administration Manager • SENIOR LENDER(After Conversion): (Page-11) LEGAL_US W#73888929.7 75506.00052 2013-31 California Community Reinvestment Corp. 225 West Broadway, Suite 120 Glendale, California 91204 Attention: President BORROWER: Lugo Senior Apartments,L.P. do Meta Housing Corporation 1640 S. Sepulveda Blvd., Suite 425 Los Angeles, CA 90011 Attention: John Huskey Facsimile: (310) 575-3563 with a copy to: WCH Affordable II, LLC 151 Kalmus Drive, Suite J-5 Costa Mesa, CA 92626 Attention: Graham Espley-Jones Facsimile: (714) 549-4600 SUBORDINATE LENDER: City of San Bernardino As successor agency of the Redevelopment Agency of the City of San Bernardino 300"D"Street San Bernardino, CA 92418 With a copy to: Office of City Attorney City of San Bernardino 300 N. "D" Street San Bernardino, California 92418 A 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. (Page-12) LEGAL US W#73888929.7 75506.00052 2013-31 13. 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. This Agreement supersedes and previous subordination instruments among Borrower, 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 Mortgage is subordinate to the lien, covenants and conditions of the First Mortgage, 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. (fj 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 First Mortgage Loan Documents; (ii)the payment of all of the principal of, interest on and other amounts payable under the Subordinate Loan Documents, other than by reason of payments which the (Page-13) LEGAL_US W#73888929.7 75506.00052 2013-31 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 First Mortgage; 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 Mortgage, 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. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] (Page-14) LEGAL..US W#73888929.7 75506.00052 2013-31 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. By: Name: Title: (Signature Page-1) LEGAL_US_W#73888929 75506.00052 2013-31 SUBORDINATE LENDER: CITY OF SAN BERNARDINO, as successor housing agency to the Redevelopment Agency of the City of San Bernardino r y' Name: Andrea Mae Miller Title: Interim City Manager (Signature Page-2) LEGAL US W#73888929 75506.00052 2013-31 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE§ 1189 c State of California County o4---- á-t49h ' / § On.0� t'2'/ efore me, 'WO'/ / #616.ii .1 4l /✓•c , to HereIIInnss Name a Title of the Officer personally appeared / is '4- /Aft- ///,��/' Name(s)of Signer(s) who proved to me on the basis of satisfactory evidence to be the person{ whose name(e)1s/ar-e- subscribed to the within instrument and acknowledged to me that hsfshe/tr►ey executed the same in }ia/her/tIetr authorized capacity(iger' and that by 13is/her/tb it" signaturef on the instrument the personS,s'J, or the entity upon behalf of which the person'acted, executed the instrument. certify under PENALTY OF PERJURY under the VALERIE R.MONTOYA Y _ Commission 1985357 laws of the State of California that the foregoing 0,11;-7::1,)' c Notary paragraph is true and correct. I Notar Public-California I San Bernardino County ""'" Comm.E fires Au 2,2016 WITNESS my han and official se Signature: a-Z-- r Place Notary Seal Above Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Signer's Name: ❑ Corporate Officer — Title(s): ❑Corporate Officer — Title(s): ❑ Individual RIGHT THUMBPRINT ❑ Individual RIGHT THUMBPRINT OF SIGNER OF SIGNER ❑ Partner — ❑Limited ❑General Top of thumb here ❑ Partner — ❑ Limited ❑General Top of thumb here i ❑ Attorney in Fact ❑Attorney in Fact ❑ Trustee ❑Trustee ❑ Guardian or Conservator ❑Guardian or Conservator ❑ Other: ❑Other: Signer Is Representing: Signer Is Representing: ©2010 National Notary Association•NationalNotary.org•1-800-US NOTARY(1-800-876-6827) Item#5907 2013-31 BORROWER: LUGO SENIOR APARTMENTS, L.P., a California limited partnership By: WCH Affordable II, LLC, a California limited liability company, its Managing General Partner By: Western Community Housing, Inc., a California nonprofit public benefit corporation, its sole member and manager By: Graham P. Espley-Jones President By: Lugo Senior Apartments, LLC, a California limited liability company, its Administrative General Partner By: John Huskey Sole Member (Signature Page-3) LEGAL_US W#73888929 75506.00052 2013-31 EXHIBIT A Legal Description The real property in the City of San Bernardino, County of San Bernardino, State of California, described as follows: PARCEL"A" THAT PORTION OF LOT 2, BLOCK 3, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTHERLY LINE OF SAID LOT 2, FROM WHICH THE NORTHWEST CORNER THEREOF BEARS SOUTH 89° 52'WEST, 192 FEET, SAID POINT BEING THE NORTHEAST CORNER OF THE LAND CONVEYED TO ROLAND H. MOSELEY, ET UX, BY DEED RECORDED OCTOBER 16, 1958, IN BOOK 4630, PAGE 378, OFFICIAL RECORDS; THENCE CONTINUING ON SAID NORTHERLY LINE OF SAID LOT 2, NORTH 89° 52' EAST, 66.15 FEET TO THE NORTHWEST CORNER OF THE LAND CONVEYED TO LLOYD E. GREVE, ET UX, BY DEED RECORDED MARCH 28, 1957, IN BOOK 4191, PAGE 253, OFFICIAL RECORDS; THENCE SOUTH 00° 10'40" EAST ALONG THE WEST LINE OF SAID GREVE LAND, 130 FEET TO THE SOUTHWEST CORNER THEREOF; THENCE NORTH 89°52'00" EAST, 92.15 FEET TO THE EAST LINE OF SAID LOT 2; THENCE SOUTHEASTERLY ALONG SAID EAST LINE SOUTH 00°10'40" EAST, 509.30 FEET TO THE SOUTHEAST CORNER OF SAID LOT 2; THENCE WESTERLY ALONG THE SOUTH LINE OF SAID LOT 2 SOUTH 89°44'39"WEST, 299.40 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 50.00 FEET EASTERLY OF THE WEST LINE OF SAID LOT 2; THENCE NORTHERLY ALONG SAID PARALLEL LINE NORTH 00°15'31"WEST, 409.94 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 230.00 FEET SOUTHERLY OF THE NORTH LINE OF SAID LOT 2; THENCE EASTERLY ALONG SAID PARALLEL LINE NORTH 89°52'00" EAST, 136.00 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 186.00 FEET EASTERLY OF THE WEST LINE OF SAID LOT 2; THENCE NORTHERLY ALONG SAID PARALLEL LINE NORTH 00°15'31"WEST, 100.00 FEET TO A POINT ON THE SOUTH LINE OF SAID LAND TO MOSELEY; THENCE EASTERLY ALONG SAID SOUTH LINE NORTH 89°52'00" EAST, 6.00 FEET TO THE SOUTHEAST CORNER OF SAID LAND TO MOSELEY; THENCE NORTHERLY ALONG THE EAST LINE OF SAID LAND TO MOSELEY NORTH 00°15'31"WEST, 130.00 FEET TO THE POINT OF BEGINNING. AND SHOWN IN CERTIFICATE OF COMPLIANCE (LOT MERGER NO. LM2012-001) RECORDER APRIL 25, 2012 AS INSTRUMENT NO. 12-0161510. APN: 0140-231-43-0-000 and 0140-231-44-0-000 (Exhibit A) LEGAL_US W#73888929.7 75506.00052 2013-31 (°6 t Recorded in Official Records, County of San Bernardino 2/05/2013 DENNIS DRAEGER BN 0 PM w` ;„,.R , ASSESSOR — RECORDER — CLERK An ..� RECORDING REQUESTED BY ,14,e 608 North American Title Company AND WHEN RECORDED RETURN TO: Titles: 1 Pages: 21 Mot 2013—0052392 Paul Hastings LLP ::: f =_ Fees 78.00 8 515 South Flower Street ! l n i' .ifs 1I • Faxes 0.00 Twenty-Fifth Floor 1' j' I 0.00 �_ �� .i ` @ Other ii Los Angeles,CA 90071 L !€' ' "" g lgl `i: .:a !?; ...:a.`{��, :�:. PAID $78.00 Attn: Kenneth Krug,Esq. (SPACE ABOVE TIIlS LINE FOR RECORDER'S USE) SUBORDINATION AGREEMENT THIS SUBORDINATION AGREEMENT (this "Agreement") is entered into as of February 1, 2013 by and among (i) BANK OF AMERICA, N.A. (the "Senior Lender"), (ii)the CITY OF SAN BERNARDINO (the "Subordinate Lender"), as successor housing agency to the Redevelopment Agency of the City of San Bernardino (the "Agency"), and (iii) LUGO SENIOR APARTMENTS, L.P., a California limited partnership(the"Borrower"). Recitals A. The Senior Lender has made or is making a loan (the "First Mortgage Loan")to the Borrower in the original principal amount of$8,868,000. The First Mortgage Loan is or will be secured by a first mortgage lien (the "First Mortgage") on a multifamily housing project located in San Bernardino, California (the "Property"). The Property is more fully described in Exhibit A attached hereto. The Borrower's obligation to repay the First Mortgage Loan is evidenced by a Note dated February 1,2013 (the"First Mortgage Note"). B. The Subordinate Lender made a subordinate loan to Borrower in the amount of $6,500,000 (the "Subordinate Loan") and secured the Subordinate Loan by, among other things, placing a mortgage lien against the Property. C. The Subordinate Lender has agreed to specifically and unconditionally subordinate the Subordinate Loan and the Subordinate Loan Documents to the liens and charges of the First Mortgage Loan and First Mortgage Loan Documents and shall at all times and in all respects be wholly subordinate and inferior in claim and right to the First Mortgage Loan and First Mortgage Loan Documents. D. 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 a portion of the Loan, and the First Mortgage Loan will convert to a term loan("Conversion"). (Page-1) LEGAL US W#73888929.7 75506.00052 2013-31 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). "Agency Senior Household Rental Housing Use Covenant" means covenants in favor of the former Redevelopment Agency of the City of San Bernardino recorded as Instrument No. 2011-0019690 on January 14, 2011 in the Official Records of San Bernardino County. The Agency Senior Household Rental Housing Covenant requires that dwelling units developed on the Property shall be occupied by households including at least one person 62 years or older. "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 First Mortgage Loan Default has occurred under the First Mortgage 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 the Subordinate Loan. Each Default Notice shall specify the default upon which such Default Notice is based. (Page-2) LEGAL US W#73888929.7 75506.00052 2013-31 "First Mortgage Loan" means the senior loan described in Recital A hereof, and following Conversion,the Permanent Loan. "First Mortgage Loan Default" means the occurrence of an "Event of Default" as that term is defined in the First Mortgage Loan Documents. "First Mortgage Loan Documents" means (i) the First Mortgage Note and all other documents evidencing, securing or otherwise executed and delivered in connection with the First Mortgage Loan; and(ii) following Conversion,the Permanent Loan Documents. "Permanent Loan"means the First Mortgage Loan after Conversion. "Permanent Loan Documents" means the Permanent Note, the First Mortgage and all other documents evidencing, securing, purchased for, or otherwise executed and delivered in connection with,the Permanent Loan. "Permanent Note" means the First Mortgage Note, as it may be modified in connection with Conversion. "Person" means an individual, estate, trust, partnership, corporation, limited liability company, limited liability partnership, governmental departiiient or agency or any other entity which has the legal capacity to own property. "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 First Mortgage Note or of the Permanent Loan Documents, such other Person shall automatically become the Senior Lender. Upon purchase of the First Mortgage at Conversion and Borrower's satisfaction of the Conversion Conditions, CCRC shall become Senior Lender hereunder. "Subordinate Lender" means the Person named as such in the first paragraph on page 1 of this Agreement and any other Person who becomes the legal holder of the Subordinate Note after the date of this Agreement. "Subordinate Loan 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 Loan Documents" means the Subordinate Note, the Subordinate Mortgage, the Subordinate Regulatory Agreement, and all other documents evidencing, securing or otherwise executed and delivered in connection with the Subordinate Loan. The Agency Senior Household Rental Housing Covenant is not one of the Subordinate Loan Documents. (Page-3) LEGAL U5 W#73888929.7 75506.00052 2013-31 "Subordinate Mortgage" means that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing executed by Lugo Senior Apartments, L.L.C., a California limited liability company,as Borrower's predecessor-in-interest, for the benefit of the Agency, encumbering the Property and recorded in the Official Records of San Bernardino County on January 14,2011 as Document No. 2011-0019692. "Subordinate Note" means the Promissory note dated as of January 14, 2011 issued by Lugo Senior Apartments, L.L.C., a California limited liability company, as Borrower's predecessor-in-interest,or order,to evidence the Subordinate Loan. "Subordinate Regulatory Agreement" means that certain Agreement Containing Covenants, Conditions and Restrictions between the Agency and Lugo Senior Apartments, L.L.C., a California limited liability company, as Borrower's predecessor-in-interest, encumbering the Property and recorded in the Official Records of San Bernardino County on January 14, 2011 as Document No. 2011-0019693. 2. Permission to Place Mortgage Lien Against Property. The Senior Lender agrees, notwithstanding the prohibition against inferior liens on the Property contained in the First Mortgage Loan Documents or the Permanent Loan Documents, and subject to the provisions of this Agreement,to permit the Subordinate Lender to record or retain the Subordinate Mortgage and other recordable Subordinate Loan Documents against the Property (which shall be subordinate in all respects to the lien of the First Mortgage)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. If any of the representations and warranties made by the Borrower and the Subordinate Lender in Section 3 is not true and correct on the date of this Agreement, the provisions of the First Mortgage Loan Documents and/or the Permanent Loan Documents applicable to unpermitted liens on the Property shall apply. 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 (except that subsection (d) consists of representations and warranties made solely by Borrower): (a) 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. (Page-4) LEGAL US W#73888929.7 75506.00052 2013-31 (b) Term. The term of the Subordinate Note does not end before the term of the First Mortgage Note or the Permanent Note. (c) Subordinate Loan Documents. The executed Subordinate Loan Documents have been submitted to, and , to the actual knowledge of Subordinate Lender, approved by, Senior Lender prior to the date of this Agreement. (d) First Mortgage Loan Documents. The executed First Mortgage Loan Documents will be substantially in the same forms as those reviewed by Subordinate Lender prior to the date of this Agreement. Upon execution and delivery of the First Mortgage Loan Documents,Borrower shall deliver to Subordinate Lender an executed copy of each of the First Mortgage 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 First Mortgage Loan Documents, and (ii) the Subordinate Mortgage 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 First Mortgage and the other First Mortgage Loan Documents and to all advances heretofore made or which may hereafter be made pursuant to the First Mortgage and the other First Mortgage Loan Documents (including but not limited to, all sums advanced for the purposes of(1) protecting or further securing the lien of the First Mortgage, curing defaults by the Borrower under the First Mortgage Loan Documents or for any other purpose expressly permitted by the First Mortgage, or (2) constructing, renovating, repairing, furnishing, fixturing or equipping the Property). The Agency Senior Household Rental Housing Use Covenant is not subordinated to the First Mortgage Loan Documents. (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 First Mortgage,then, in that event,such lien shall be subject and subordinate to the lien of the First Mortgage. (c) Payments Before First Mortgage Loan Default. Until the Subordinate Lender receives a Default Notice of a First Mortgage 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. (Page-5) LEGAL US W#73888929.7 75506.00052 2013-31 (d) Payments After First Mortgage Loan Default. The Borrower agrees that, after it receives notice (or otherwise acquires knowledge) of a First Mortgage 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 Mortgage) 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 Mortgage) without the Senior Lender's prior written consent. If the Subordinate Lender receives written notice from the Senior Lender that the First Mortgage 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 First Mortgage Loan Documents in accordance with the provisions of the First Mortgage 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. (t) 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, as debtor, without the Senior Lender's prior written consent. (Page-6) LEGAL US W#73888929.7 75506.00052 2013-31 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. Failure of the Subordinate Lender to send a Default Notice to the Senior Lender shall not prevent the exercise of the Subordinate Lender's rights and remedies under the Subordinate Loan Documents, subject to the provisions of this Agreement. 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 to the extent permitted under Section 5(b). All amounts paid by the Senior Lender in accordance with the First Mortgage 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 First Mortgage. (b) Subordinate Lender's Agreement to Standstill. If a Subordinate Loan Default occurs and is continuing, the Subordinate Lender agrees that it will not accelerate the Subordinate Loan, commence foreclosure proceedings with respect to the Property, collect rents, appoint(or seek the appointment of) a receiver or institute any other collection or enforcement action without first giving at least ninety(90) days' notice of a default under the Subordinate Loan and Subordinate Lender's intent to exercise one of the preceding actions. (c) Cross Default. The Borrower and the Subordinate Lender agree that a Subordinate Loan Default declared by Subordinate Lender shall constitute a First Mortgage Loan Default under the First Mortgage Loan Documents and the Senior Lender shall have the right to exercise all rights or remedies under the First Mortgage Loan Documents in the same manner as in the case of any other First Mortgage 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 First Mortgage Loan Documents, any First Mortgage Loan Default under the First Mortgage Loan Documents arising solely from such Subordinate Loan Default shall be deemed cured, and the First Mortgage 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 First Mortgage Loan Default. 6. Default Under First Mortgage Loan Documents. (Page-7) LEGAL_US_W#73888929.7 75506.00052 2013-31 (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 First Mortgage Loan Documents, subject to the provisions of this Agreement. The Subordinate Lender shall have the right, but not the obligation, to cure any such First Mortgage Loan Default as provided below. Subordinate Lender may have up to 30 days from the date of the delivery of the Default Notice to Subordinate Lender to cure any monetary default under the First Mortgage Loan Documents; provided,however, that the Senior Lender shall be entitled during such 30-day period to continue to pursue its remedies with respect to the Property. Subordinate Lender may have up to 60 days from the date of delivery of the Default Notice to cure a non- monetary default if during such 60-day period Subordinate Lender keeps current all payments required by the First Mortgage Loan Documents. 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 Lendcr 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 First Mortgage 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 Mortgage. (b) Cross Det'ault. The Borrower and the Subordinate Lender agree that a First Mortgage Loan Default recognized by Senior Lender shall constitute a Subordinate Loan Default under the Subordinate Loan Documents and the Subordinate Lender shall have the right to exercise all rights or remedies under the Subordinate Loan Documents in the same manner as in the case of any other Subordinate Loan Default. If the Senior Lender notifies the Subordinate Lender in writing that any First Mortgage Loan Default of which the Subordinate Lender has received a Default Notice has been cured or waived, as determined by the Senior Lender in its sole discretion, then provided that Subordinate Lender has not conducted a sale of the Property pursuant to its rights under the Subordinate Loan Documents, any Subordinate Mortgage Loan Default under the Subordinate Loan Documents arising solely from such First Mortgage Loan Default shall be deemed cured, and the Subordinate Mortgage shall be reinstated, provided, however, that the Subordinate 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 Subordinate Lender during such Subordinate Loan Default. 7. 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 First Mortgage Loan Documents, the Subordinate Loan Documents and the terms of this Agreement, the terms of this Agreement shall (Page-8) LEGAL US W#73888929.7 75506.00052 2013-31 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 First Mortgage and the Subordinate Mortgage, 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 First Mortgage Loan Default or Subordinate Loan Default, as the case may be; give the Borrower the right to notice of any First Mortgage Loan Default or Subordinate Loan Default, as the case may be other than that, if any, provided, respectively under the First Mortgage 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 First Mortgage 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 First Mortgage Loan Defaults pursuant to Section 6(a) above and advance funds pursuant to the Subordinate Mortgage 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. The foregoing portion of this subsection (a) shall not be construed to preclude activities by the Subordinate Lender to enforce 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 First Mortgage 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 First Mortgage Loan Documents with respect thereto, and the Subordinate Lender shall (Page-9) LEGAL US W#73888929.7 75506.00052 2013-31 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 First Mortgage 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 First Mortgage Loan, any proceeds remaining after the satisfaction in full of the principal of, interest on and other amounts payable under the First Mortgage 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 First Mortgage 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 First Mortgage Loan Documents. Any unauthorized amendment of the Subordinate Loan Documents 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 without the prior written consent of the Senior Lender. Except with regard to the voluntary transfer or assignment of the Subordinate Loan or the Subordinate Loan Documents by the Subordinate Lender without the written consent of the Senior Lender, the foregoing portion of this subsection (c) shall not be construed to preclude activities by the Subordinate Lender to enforce the Subordinate Loan Documents. 9. Conversion,Modification or Refinancing of First Mortgage 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 First Mortgage Loan (Page-10) LEGAL_US W#73888929.7 75506.00052 2013-31 Documents, including any provision requiring the payment of money. Subordinate Lender further agrees that its agreement to subordinate hereunder shall extend to the Permanent Loan Documents, as well as to any new mortgage debt which is for the purpose of refinancing all or any part of the First Mortgage Loan (including reasonable and necessary costs associated with the closing and/or the refinancing) and, in the event of new mortgage debt, Subordinate Lender shall execute and deliver to Senior Lender a new subordination agreement on the same terms and conditions as this Subordination Agreement. Following Conversion, all the terms and covenants of this Agreement shall inure to the benefit of any holder of the Permanent Loan; and all references to the First Mortgage Loan, the First Mortgage Note and the First Mortgage Loan Documents shall mean, respectively,the Permanent Loan,the Permanent Note and the Permanent Loan Documents. 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: SENIOR LENDER(Prior to Conversion): Bank of America,N.A. Community Development Banking Mail Code#CA0-103-04-04 450 B Street, Suite 450 San Diego, CA 92101 Attention: Loan Administration Manager • SENIOR LENDER(After Conversion): (Page-11) LEGAL_US_W#73888929.7 75506.00052 2013-31 California Community Reinvestment Corp. 225 West Broadway, Suite 120 Glendale, California 91204 Attention: President BORROWER: Lugo Senior Apartments,L.P. c/o Meta Housing Corporation 1640 S. Sepulveda Blvd., Suite 425 Los Angeles, CA 90011 Attention: John Huskey Facsimile: (310) 575-3563 with a copy to: WCH Affordable II,LLC 151 Kalmus Drive,Suite J-5 Costa Mesa,CA 92626 Attention: Graham Espley-Jones Facsimile: (714) 549-4600 SUBORDINATE LENDER: City of San Bernardino As successor agency of the Redevelopment Agency of the City of San Bernardino 300 "D" Street San Bernardino,CA 92418 With a copy to: Office of City Attorney City of San Bernardino 300 N. "D" Street San Bernardino, California 92418 A 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. (Page-12) LEGAL US W#73888929.7 75506.00052 2013-31 13. 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. This Agreement supersedes and previous subordination instruments among Borrower, 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 Mortgage is subordinate to the lien, covenants and conditions of the First Mortgage,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 First Mortgage Loan Documents; (ii)the payment of all of the principal of, interest on and other amounts payable under the Subordinate Loan Documents, other than by reason of payments which the (Page-13) LEGAL US W#73888929.7 75506.00052 2013-31 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 First Mortgage; 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 Mortgage,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. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] (Page-14) LEGAL US W#73888929.7 75506.00052 2013-31 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. By: �C Name: L ct,vt i e Ch.me .r 4S Title: V1e,� (Signature Page-1) LEGAL US W#73888929 75506.00052 2013-31 SUBORDINATE LENDER: CITY OF SAN BERNARDINO, as successor housing agency to the Redevelopment Agency of the City of San Bernardino BY: 110.1.e lti 'f�,� k tJWt Name: Andrea Mae Miller Title: Interim City Manager (Signature Page-2) LEGAL_US W#73688929 75506.00052 2013-31 BORROWER: LUGO SENIOR APARTMENTS, L.P., a California limited partnership By: WCH Affordable II, LLC, a California limited liability company, its Managing General Partner By: Western Community Housing, Inc., a California nonprofit public benefit corporation, its sole member and manager By: raha P. Lpieet President By: Lugo.Senior Apartments, LLC, a California limited liability company, its Administrative General Partner By: (1/ /7/.---' ' John s ey Solember (Signature Page-3) LEGAL. US W#73868929 75506.00052 2013-31 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) On January 28, 2013, before me, Marichelle E. Maloney, a Notary Public, personally appeared Stephanie Oliveras 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. fjjMARICNELLE E. MALONEY Commission# 1891472 Signal / i g Notary Public•California " FM!' T ''q Los Angeles County / My Comm.Expires May 30,2014„1, 2013-31 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CEEL CODE§ 1189 ( ;` (,, State of California (< County of-- 00/2 1f//74 /f OnO�l/� f2øbefore me, /ie /�///7 e , , / �j +jHere Insert N and Title of the Officer personally appeared �/�«- /%34" /'�/1//e'C g. Name(s)of Signer(s) G 9: I who proved to me on the basis of satisfactory �) evidence to be the person(.e)r whose name* is/are- . subscribed to the within instrument and acknowledged to me that 1:+e/she/they' executed the same in his/her/their authorized capacity(i }' and that by • nigher/tiaefr signature(csr on the instrument the person(9j;or the entity upon behalf of which the personO-acted, executed the instrument. .) .r.� I certify under PENALTY OF PERJURY under the 9 ( VALERIE R.MONTOYA ti 444 Commission* 1985357 laws of the State of California that the foregoing 9 a'�+-o': y is true and correct. x .r, � Notary Public-California � paragraph •) San Bernardino County F My Comm. Expires Au 2,2016 WITNESS my ha and official I. Si nature• '' ' Place Notary Seal Above g Signature of Notary Pu �) OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document ,i and could prevent fraudulent removal and reattachment of this form to another document. $ Description of Attached Document Title or Type of Document: P Document Date: Number of Pages: A Signer(s)Other Than Named Above: ,) 6, V Claimed by Signer(s) ) / Signer's Name: Signer's Name: ( ❑ Corporate Officer—Title(s): ❑Corporate Officer — Title(s): Li Individual RIGHTTHUWBPRINT U Individual RIGHT THUMBPRINT �) OF SIGNER OF SIGNER ❑ Partner—❑Limited El General Top of thumb here ❑ Partner — ❑Limited ❑General Top of thumb here ❑ Attorney in Fact ❑Attorney in Fact �9 ❑ Trustee ❑Trustee yl ❑ Guardian or Conservator ❑Guardian or Conservator ," ❑ Other: Li Other: �4 g .) Signer Is Representing: Signer Is Representing: PI vi �`G�F;�%fc_`e%6._`r=%y,�`'F0.`t=�.p.`� � '6dY'�1C�'c�.';... :�, -•�.`�o.'r=�6N1-"a`�Es�r'•r�6�s��`Z=S.n^�=rvl';%sv.. ©2010 National Notary Association•NationalNotary.org•1-800-US NOTARY(1-800-876-6827) Item#5907 2013-31 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) On January 25, 2013, before me, Marichelle E. Maloney, a Notary Public, personally appeared Graham P. Espley-Jones 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. / ,13,1 MARICHELLE E. MALONEY Commission# 1891472 if-r."111311M "%: Notary Public-California z z �. Los Angeles County xx My Comm.Expires Ma 30,2014 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) On January 25, 2013, before me, Marichelle E. Maloney, a Notary Public, personally appeared John Huskey 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 signatures) 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. OP ael rem-. _ MARICHELLE E.MALONEY �' T.ss Commission # 1891472 z . °/..c3 Notary Public-California z z` ''�' Los Angeles County My Comm.Expires May 30,2014 2013-31 EXHIBIT A Legal Description The real property in the City of San Bernardino, County of San Bernardino, State of California, described as follows: PARCEL"A" THAT PORTION OF LOT 2, BLOCK 3, RANCHO SAN BERNARDINO, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,AS PER PLAT RECORDED IN BOOK 7 OF MAPS, PAGE 2, RECORDS OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE NORTHERLY LINE OF SAID LOT 2, FROM WHICH THE NORTHWEST CORNER THEREOF BEARS SOUTH 89° 52'WEST, 192 FEET, SAID POINT BEING THE NORTHEAST CORNER OF THE LAND CONVEYED TO ROLAND H. MOSELEY, ET UX, BY DEED RECORDED OCTOBER 16, 1958, IN BOOK 4630, PAGE 378, OFFICIAL RECORDS; THENCE CONTINUING ON SAID NORTHERLY LINE OF SAID LOT 2, NORTH 89° 52' EAST, 66.15 FEET TO THE NORTHWEST CORNER OF THE LAND CONVEYED TO LLOYD E. GREVE, ET UX, BY DEED RECORDED MARCH 28, 1957, IN BOOK 4191, PAGE 253, OFFICIAL RECORDS; THENCE SOUTH 00° 10'40"EAST ALONG THE WEST LINE OF SAID GREVE LAND, 130 FEET TO THE SOUTHWEST CORNER THEREOF;THENCE NORTH 89°52'00" EAST, 92.15 FEET TO THE EAST LINE OF SAID LOT 2;THENCE SOUTHEASTERLY ALONG SAID EAST LINE SOUTH 00°10'40" EAST, 509.30 FEET TO THE SOUTHEAST CORNER OF SAID LOT 2;THENCE WESTERLY ALONG THE SOUTH LINE OF SAID LOT 2 SOUTH 89°44'39"WEST,299.40 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 50.00 FEET EASTERLY OF THE WEST LINE OF SAID LOT 2; THENCE NORTHERLY ALONG SAID PARALLEL LINE NORTH 00°15'31"WEST, 409.94 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 230.00 FEET SOUTHERLY OF THE NORTH LINE OF SAID LOT 2;THENCE EASTERLY ALONG SAID PARALLEL LINE NORTH 89°52'00" EAST, 136.00 FEET TO A POINT OF INTERSECTION WITH A LINE PARALLEL WITH AND 186.00 FEET EASTERLY OF THE WEST LINE OF SAID LOT 2; THENCE NORTHERLY ALONG SAID PARALLEL LINE NORTH 00°15'31"WEST, 100.00 FEET TO A POINT ON THE SOUTH LINE OF SAID LAND TO MOSELEY; THENCE EASTERLY ALONG SAID SOUTH LINE NORTH 89°52'00" EAST,6.00 FEET TO THE SOUTHEAST CORNER OF SAID LAND TO MOSELEY; THENCE NORTHERLY ALONG THE EAST LINE OF SAID LAND TO MOSELEY NORTH 00°15'31"WEST, 130.00 FEET TO THE POINT OF BEGINNING. AND SHOWN IN CERTIFICATE OF COMPLIANCE (LOT MERGER NO. LM2012-001) RECORDER APRIL 25, 2012 AS INSTRUMENT NO. 12-0161510. APN: 0140-231-43-0-000 and 0140-231-44-0-000 (Exhibit A) LEGAL US W#73888929.7 75506.00052