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HomeMy Public PortalAboutHOUSING AUTHORITYWHEN RECORDED MAIL TO: Davis Wrlight Tremaie LLP C 865 South Figueroa Street Suite 2400 Los A-ngeles, California 90017 Attention: Mark L. Nelson, Esq. (SPACE ABOVE FOR REC-ORDER'S USE) SUBORDINATION AGREEMENT (Housing, Authority) NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN THE ESTATES IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. THIS SUBORDINATION AGREEMENT ("Agreement") is made as of December 12, 2012 by and among CARSON FAMILY HOUSING, L.P., a California limited partnership ("Owner"), CARSON HOUSING AUTHORITY, acting as the successor housing agency of the Carson Redevelopment Agency, a public body ("Authority" or "Junior Z�l Lienholder"), and U.S. BANK NATIONAL ASSOCIATION, a national banking association ("Senior Lienholder"). RECT ALL, IT S A. Owner owns (1) certain real estate more particularly described on Exhihit A, and all improvements now or hereafter located thereon (collectively, the "Real Property"), and (1i) that certain personal property more particularly described in the Senior Loan Documents (the "Personal Property"; together with the Real Property, the "Property"). B. Each of the documents listed on Exhibit B together with all other C, documents and materials entered into with Junior Lienholder with respect to the Property shall be referred to collectively as the "Junior Obligation Documents". C . As used herein, the term "Junior Obligations" means any and all indebtedness, claims, debts, liabilities or other obligations from Owner to Junior Lienholder under the Junior Obligation Documents, together with all costs and expenses, including 7 attorneys' fees, of collection thereof, whether the same accrues or is incurred before or after the commencement of any bankruptcy case by or against Owner. D. Owner and Junior Lienholder desire that Senior Lienholder and Owner enter into that certain Construction and Convertible Term Loan Agreement (the "Senior Loan Agreement"), dated as of the date hereof, pursuant to which Senior Lienholder has agreed to make a loan to Owner in the aggregate principal amount of $6,300,000 in accordance with the terms and conditions set forth therein, which loan will be evidenced by those certain promissory notes dated as of the date hereof (collectively, "Senior Note") made by Owner in favor of Senior Lienholder. Owner's obligations to Senior Lienholder under the Senior Note are secured by, DWT20558599v5 0017787-000296 among other things, (i) that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing ("Senior Deed of Trust"), dated as of the date hereof, made by Owner for the benefit of Senior Lienholder and (ii) the Loan Documents described in the Senior Note. The Senior Deed of Trust is being recorded substantially concurrently herewith in the Official Records of the County of Los Angeles, State of California ("Official Records"). The Senior Loan Agreement, the Senior Deed of Trust, the Senior Note and the other Loan Documents (as defined in the Senior Loan Agreement) are hereinafter collectively referred to as the "Senior Loan Documents". E. As used herein, the term "Senior Lienholder Indebtedness" means any and all indebtedness, claims, debts, liabilities or other obligations from Owner to Senior Lienholder under the Senior Loan Documents, together with all interest accruing thereon and all costs and expenses, including attorneys' fees, of collection thereof, whether the same accrues or is incurred before or after the commencement of any bankruptcy case by or against Owner. F. Pursuant to the Senior Deed of Trust and the other Senior Loan Documents, Owner is not entitled to further encumber the Property without the prior written consent of Senior Lienholder, which consent may be withheld in Senior Lienholder's sole discretion. G. it is a condition precedent to Senior Lienholder to entering into the Senior Loan Documents and permitting the recordation of any of the Junior Obligation Documents that the Senior Deed of Trust and the other Senior Loan Documents be and remain at all times a lien or charge upon the Property, prior and superior to the liens or charges of the Junior Obligation Documents. H. Senior Lienholder is willing to permit the recordation of the recordable Junior Obligation Documents, provided that (1) the Senior Deed of Trust and the other Senior Loan Documents are a lien or charge upon the Property prior and superior to the liens or charges of the Junior Obligation Documents, and (2) Junior Lienholder will specifically subordinate the liens or charges of the Junior Obligation Documents to the lien or charge of the Senior Deed of Trust and the other Senior Loan Documents. 1. Junior Lienholder is willing that the Senior Deed of Trust shall constitute a lien or charge upon the Property which is prior and superior to the liens or charges of the Junior Obligation Documents. The parties hereto enter into this Agreement for the purposes set forth in these Recitals. J. Capitalized terms used herein and not otherwise defined shall have the meanings set forth for them in the Senior Note. AGREEMENT NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, and in order to induce Senior Lienholder to make the "Loan" described in the Senior Note, it is hereby declared, understood, and agreed as follows: -2- DWT20558599v5 0017787-000296 I . Subordination. The Senior Deed of Trust in favor of Senior Lienholder, and all amendments, modifications, extensions and renewals thereof shall unconditionally be and remain at all times a lien or charge on the Property prior and superior to the lien or charge of the Junior Obligation Documents. Junior Lienholder intentionally and unconditionally subordinates the lien or charge of the Junior Obligation Documents *in favor of the lien or charge upon said land of the Senior Deed of Trust in favor of Senior Lienholder, and understands that in reliance upon and in consideration of this subordination, specific loans and advances are being and will be made and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this subordination. 2. Only Agreement Regarding Subordination. Senior Lienholder would not permit the recordation of any Junior Obligation Documents without this Agreement. This Agreement shall be the whole and only agreement with regard to the subordination of the lien or charge of the Junior Obligation Documents to the lien or charge of the Senior Deed of Trust and shall supersede and cancel, but only insofar as would affect the priority between said deeds of trust and said covenants, conditions and restrictions, any prior agreements as to such subordination, including, but not limited to, those provisions, if any, contained in the Junior Obligation Documents which provide for the subordination of the lien or charge thereof to another deed or deeds of trust or to another mortgage or mortgages. 3. Loan Disbursements. In making disbursements pursuant to any of the Senior Loan Documents, Senior Lienholder is under no obligation or duty to, nor has Senior Lienholder represented that it will, see to the application of such proceeds by the person or persons to whom Senior Lienholder disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in such Senior Loan Document(s) shall not defeat the subordination herein made in whole or in part. 4. Final Disbursement of Agency Note Proceeds. Junior Lienholder hereby agrees to disburse to Owner the final $420,000 of the Agency Note (as defined on Exhibit B hereto) (the "Final Disbursemenf ') upon (a) completion of the improvements, (b) evidence that Owner has paid all Project Costs (as defined in the Senior Loan Agreement) (other thant those which are to be paid for with the Final Disbursement), and (c) the expiration of any applicable mechanic lien periods. 5. Cons t and Approval. Junior Lienholder has received and consents to and approves the Senior Loan Documents, including but not limited to any extension, modification and/or amendment of said agreements, between Owner and Senior Lienholder. No decision by Junior Lienholder to review or not review the Senior Loan Documents, including but not limited to the disbursement provisions contained therein, shall impair or otherwise I the enforceability of this Agreement. 6. Other Agreements. Junior Lienholder and Owner declare, agree, and acknowledge that: 6.1 Subordination of Indebtedness. Any and all Junior Obligations are hereby subordinated and subject to any and all Senior Lienholder fndebtedness, as set forth herein. -3- DWT20558599v5 0017787-000296 6.2 Permitted Payments. Owner may make payments under the Junior Obligation Documents, if required, as long as all payments under the Senior Deed of Trust and the other Senior Loan Documents are current and not delinquent or in arrears, and only so long as at the time of such payment: (i) no default under the Senior Lienholder Indebtedness exists and no event exists which, with the lapse of time or the giving of notice or both, would be an Event of Default under the Senior Lienholder Indebtedness of which Junior Lienholder has received notice; and (11) such payment would not result in a violation of any of Owner's financial covenants set forth in any of the documents evidencing the Senior Lienholder Indebtedness ("Permitted Payments"). 6.3 Payment Subordination. Except for any Permitted Payments, (a) all of the Senior Lienholder Indebtedness now or hereafter existing shall be first paid in full by Owner before any payment shall be made by Owner on the Junior Obligations, and (b) this priority of payment shall apply at all times until all of the Senior Lienholder Indebtedness has been repaid in full. In the event of any assignment by Owner for the benefit of Owner's creditors, or any bankruptcy proceedings instituted by or against Owner, or the appointment of any receiver for Owner or Owner's business or assets, or of any dissolution or other winding up of the affairs of Owner or of Owner's business, and in all such cases respectively, Owner's officers and any assignee, trustee in bankruptcy, receiver and other person or persons in charge are hereby directed to pay to Senior Lienholder the full amount of the Senior Lienholder Indebtedness before making any payments to Junior Lienholder due under the Junior Obligations. 6.4 Return of Prohibited Payments. Except as otherwise expressly agreed to herein, if Junior Lienholder shall receive any payments or other rights in any property of Owner in connection with the Junior Obligations in violation of this Agreement, such payment or property shall immediately be delivered and transferred to Senior Lienholder after notice to Junior Lienholder. 6.5 RepgMent of Senior Lienholder Indebtedness. This Agreement shall remain in full force and effect until all Senior Lienholder Indebtedness is fully repaid in accordance with its terms and all of the terms of this Agreement have been complied with. 6.6 Standstill. Junior Lienholder agrees that, without the Senior Lienholder's prior written consent, it will not accelerate the Junior Obligations, 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. 6.7 Amendments and Modifications. Junior Lienholder and Owner hereby agree that there shall be no amendments or modifications to the Junior Obligations or the Junior Obligation Documents without Senior Lienholder's prior written consent. 7. Junior Lienholder Cure Rights. Senior Lienholder agrees that it shall not complete a foreclosure sale of the Property or record a deed -in -lieu of foreclosure with respect to the Property (each, a "Foreclosure Remedy") unless Junior Lienholder has first been given sixty (60) days written notice of the Event(s) of Default giving Senior Lienholder the right to complete such Foreclosure Remedy, and unless Junior Lienholder has failed, within such sixty (60) day period, to cure such Event(s) of Default; provide , however, that Senior Lienholder shall be -4- DWT 205585990 0017787-000296 entitled during such sixty (60) day period to continue to pursue all of its rights and remedies under the Senior Loan Documents, includmig, but not limited to, acceleration of the Senior Loan (subject to any de -acceleration provisions specifically set forth in the Senior Loan Documents), commencement and pursuit of a judicial or non -judicial foreclosure (but not completion of the foreclosure sale), appointment of a receiver, enforcement of any guaranty (subject to any notice and cure provisions contained therein), and/or enforcement of any other Senior Loan Document. In the event Senior Lienholder has accelerated the Senior Loan and Junior Lienholder cures all Events of Default giving rise to such acceleration withmi the sixty (60) day cure period described above, such cure shall have the effect of de -accelerating the Senior Loan; provide , however, that such de -acceleration shall not waive or limit any of Senior Lienholder's rights to accelerate the Senior Loan or exercise any other remedies under the Senior Loan Documents as to any future or continuing Events of Default. It is the express intent of the parties hereunder that Senior Lienholder shall have the right to pursue all rights and remedies excep completion of a Foreclosure Remedy without liability to Junior Lienholder for failure to provide timely notice to Junior Lienholder required hereunder, and that Senior Lienholder's liability hereunder shall be expressly limited to actual and consequential damages to Junior Lienholder directly caused by Senior Lienholder's completion of a Foreclosure Remedy without Junior Lienholder receiving the notice and opportunity to cure described above. Senior Lienholder shall give Junior Lienholder notice at the address set forth below or such other address as Junior Lienholder may instruct Senior Lienholder in writing from time to time: Carson Housing Authority 701 East Carson Street Carson, California 90745 Attention: Executive Director 8. Bankruptcy Provisions. To the extent any payment under any Senior Loan Document (whether by or on behalf of Owner, as proceeds of security or enforcement of any right of set-off, or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to a trustee, receiver or other similar party under the Bankruptcy Code or any federal or state bankruptcy, Insolvency, receivership or similar law, then if such payment is recovered by, or paid over to, such trustee, receiver or other similar party, the Senior Indebtedness or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. 9. Casualty Insurance Proceeds; Condemnation Proceeds. In the event Senior Lienholder shall release, for the purposes of restoration of all or any part of the improvements, its right, title and interest in and to the proceeds under policies of insurance thereon, and/or its right, title and interest in and to any awards, or its right, title and interest in and to other compensation made for any damages, losses or compensation for other rights by reason of a taking in eminent domain, Junior Lienholder shall simultaneously release (and hereby agrees that it shall be irrevocably and unconditionally deemed to have agreed to release) for such purpose all of Junior Lienholder's right, title and interest, if any, in and to all such insurance proceeds, awards or compensation. Junior Lienholder agrees that the balance of such proceeds remaining after such restoration, or all of such proceeds in the event Senior Lienholder elects, in accordance with California law, not to release any such proceeds for any such restoration, shall be applied to the payment of amounts due under the Senior Loan Documents until all such amounts have been DWT 20558599v5 0017787-000296 paid in full, prior to being applied to the payment of any amounts due under the Junior Obligation Documents. If Senior Lienholder holds such proceeds, awards or compensation and/or monitors the disbursement thereof, Junior Lienholder agrees that Senior Lienholder may also elect, in its sole and absolute discretion, to hold and monitor the disbursement of such proceeds, awards and compensation to which Junior Lienholder is or may be entitled. Nothing contained in this Agreement shall be deemed to require Senior Lienholder, in any way whatsoever, to act for or on behalf of Junior Lienholder or to hold or monitor any proceeds, awards or compensation in trust for or on behalf of Junior Lienholder, and all or any of such sums so held or monitored may be commingled with any funds of Senior Lienholder. 10. Effect of Other Agreements. The relationship between Owner and Senior Lienholder under the Senior Loan Documents is, and shall at all times remain, solely that of borrower and lender. Based thereon, Junior Lienholder acknowledges and agrees that Senior Lienholder neither undertakes nor assumes any fiduciary responsibility or other responsibility or duty to Owner or Junior Lienholder to guarantee or assist in Owner's or Junior Lienholder's performance under any of the agreements between those parties and other third parties, including without limitation the Junior Obligation Documents. 11. Miscellaneous. This Agreement may be executed in multiple counterparts and the signature page(s) and acknowledgment(s) assembled into one original document for recordation, and the validity hereof shall not be impaired by reason of such execution in multiple counterparts. This Agreement is to be governed according to the laws of the State of California. In the event of action, suit, proceeding or arbitration to enforce any term of this Agreement, the iling party shall be entitled to recover from the non -prevailing party, as determined by the preval C� court or arbitrator, all of the prevailing party's costs and expenses, including without limitation attorneys' fees and expert witness fees, incurred by the prevailing party in connection therewith. If Junior Lienholder or any affiliate of Junior Lienholder shall acquire, by indemnification, subrogation or otherwise, any lien, estate, night or other interest in the Property, that lien, estate, right or other interest shall be subordinate to the Senior Deed of Trust and the other Senior Loan Documents as provided herein, and Junior Lienholder hereby waives, on behalf of itself and such affiliate, until all amounts owed under the Senior Loan Documents have been indefeasibly paid in full and all Senior Lienholder's obligations to extend credit under the Senior Loan Documents have terminated, the night to exercise any and all such rights it may acquire by indemnification, subro-ation or otherwise. The Agreement shall inure to the benefit of, and the binding upon, the parties hereto and the respective successors and assigns. [Signature pages follovvj -6- DWT20558599v5 0017787-000296 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. JUNIOR LIENHOLDER: CARSON HOUSING AUTHORITY, acting as the successor housing agency of the CARSON REDEVELOPMENT AGENCY, a public body By. Chairman Jim Dear ATTEST: By: Authority Secrrjiry Donesia L. Gause, CMC APPROVED AS TO FORM: ALESHIRE & WYNDER, LLP By: Authority Cou�n S-1 OWNER: CARSON FAMILY HOUSING, L.P., a California limited partnership By: AEG Carson, LLC a California limited liability company, its General Partner By: Affirmed Housing Group, Inc., a Delaware corporation, its Manager LIM S-2 James Silverwood, President SENIOR LIENHOLDER: U.S. BANK NATIONAL ASSOCIATION, a national banking association Lm Waheed Kan*m, Vice President S-3 ACKNOWLEDGEMENT State of California County of 1) /tKv I C) i On C C" ft4 2012, before me appeared J 0 a Notary Public, personally who proved to me on the basis of satisfactory evidence to be the person(s) whose name(&) is4ar-" subscribed to the within instrument and acknowledged to me that he/shrfthry executed the same in his/hek+rei-r authorized capacity(ios-�, and that by his/herfttreir signature(* 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. JOY SIMARAGO roe Commission# 11 Z Notary Public - California Los Angeles County My Comm. Expires Aug 25, 2014 t Signature (Seal) State of California County of On ACKNOWLEDGEMENT 2012, before me appeared . a Notary Public, personally 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. S ignature (Seal) EXHIBIT A Legal Description THE LAND REFERRED TO HEREINBELOW IS SITUATED IN THE CITY OF CARSON, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS: PARCEL A, AS DEPICTED ON EXHIBIT "B" ATTACHED TO THAT CERTAIN NOTICE OF LOT MERGER, LOT MERGER NO. 260-12 RECORDED DECEMBER 7, 2012 AS INSTRUMENT NO. 20121880330 OF OFFICIAL RECORDS OF LOS ANGELES COUNTY, CALIFORNIA, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: THOSE PORTIONS OF LOTS 3 AND 10, TRACT NO. 3612, IN THE CITY OF CARSON, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 40, PAGES 5 AND 6 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEASTERLY CORNER OF SAID LOT 10, SAID POINT BEING ON THE WESTERLY LINE OF FIGUEROA STREET (FORMERLY HOOVER STREET), 50 FEET WIDE AS SHOWN ON SAID TRACT NO. 3612; THENCE ALONG THE EASTERLY LINE OF SAID LOT 10, SOUTH 00' 08' 57" WEST 186.00 FEET TO A POINT ON THE SOUTHERLY LINE OF THE NORTHERLY 60 FEET OF THE SOUTHERLY 184 FEET OF SAID LOT 10; THENCE ALONG SAID SOUTHERLY LINE, SOUTH 89' 55'47" WEST 265.05 FEET TO THE EASTERLY RIGHT OF WAY LINE OF STATE ROUTE LA- I 10 AS SHOWN ON A MAP FILED IN BOOK 196, PAGES 57 THROUGH 60, INCLUSIVE OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE ALONG SAID EASTERLY RIGHT OF WAY LINE, NORTH 00' 27' 17" WEST 228.51 FEET AND NORTH 04" 43'35" EAST 17.62 FEET TO THE SOUTHERLY LINE OF THE NORTHERLY 140 FEET OF THE SOUTHERLY 200 FEET OF SAID LOT 3; THENCE ALONG SAID SOUTHERLY LINE, NORTH 89' 56'27" EAST 266.05 FEET TO A POINT ON THE EASTERLY LINE OF SAID LOT 3; THENCE ALONG SAID EASTERLY LINE, SOUTH 00" 08' 5 7" WEST 60.02 FEET TO THE POINT OF BEGINNING. Exhibit A DWT 20558599v5 0017787-000296 EXHIBIT B Junior Obligation Documents I . Disposition and Development Agreement dated as of March 1, 2011 by and among the Carson Redevelopment Agency and Affirmed Housing Group, Inc., a Delaware Corporation ("Initial Developer") as amended by that certain First Amendment to Disposition and Development Agreement dated as of December 12, 2012, between Carson Housing Authority, as the successor housing agency of the Carson Redevelopment Agency, and Owner, as successor to the Initial Developer, and affecting the Property. 2. Agency Note ("Agency Note") dated as of December 12, 2012 executed by Owner in favor of the Authority, in the face principal amount of $4,200,000. 3. Agency Deed of Trust and Assignment of Rents dated as of December 12, 2012 executed by Owner in favor of the Authority, securing the Agency Note, encumbering the Property, to be recorded in the Official Records substantially concurrently herewith. 4. Land Note ("Land Note") dated as of December 12, 2012, executed by Owner in favor of the Authority, in the face principal amount of $1,345,000. 5. Land Deed of Trust and Assignment of Rents dated as of December 12, 2012 executed by Owner in favor of the Authority, securing the Land Note, encumbering the Property, to be recorded in the Official Records substantially concurrently herewith. 6. Notice of Affordability Restrictions on Transfer of Property dated as of December 12, 2012 executed by Owner and the Authority, encumbering the Property, to be recorded in the Official Records substantially concurrently herewith. 7. Regulatory Agreement and Declaration of Covenants and Restrictions dated as of December 12, 2012, by and between the Authority and Owner, encumbering the Property, to be recorded in the Official Records substantially concurrently herewith. 8. Sections I and 6 of the Grant Deed dated as of December 12, 2012, made by the Authority in favor of Owner, encumbering the Property, to be recorded in the Official Records substantially concurrently herewith. Exhibit B DWT 20558599v5 0017787-000296