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DRAFT — DO NOT EXECUTE <br />1. Subordination of Locality Documents. <br />(a) The Locality and Borrower hereby unconditionally subordinate the Locality <br />Documents to the SNHP Loan Documents, including all extensions, modifications, incremental <br />disbursements of the original amount of the SNHP Loan if made during construction, or additional <br />advances made thereunder, but specifically excluding the Locality Regulatory Agreement, which is <br />intended hereby to be senior to the SNHP Loan Documents. Hereafter, the SNHP Loan Documents <br />shall unconditionally be, and remain at all times, liens and encumbrances on the Project prior and <br />superior to the encumbrances of the Locality Documents and to all rights and privileges of the parties <br />thereunder, and the liens and encumbrances of the Locality Documents together with all rights and <br />privileges of the parties thereunder shall hereby be subject to and made subordinate to the liens and <br />encumbrances of the SNHP Loan Documents. In the event of a judicial or non judicial foreclosure of <br />the SNHP Loan Documents, the lien of the Locality Documents shall be extinguished. <br />(b) The Agency agrees that it shall use its best efforts to provide Locality with a <br />copy of all initial notices of default provided to Borrower under the SNHP Loan Documents, <br />provided, the Agency shall have no liability to Locality and/or Borrower for its failure to do so, nor <br />shall failure to do so constitute grounds for any restraining order, injunction, or other prohibition <br />against or delay in the Agency's exercise of its remedies under the SNHP Loan Documents. The <br />Agency shall not record a Notice of Default related to such initial notice during the period ninety (90) <br />days after the date of such initial notice if such notice relates to a nonmonetary default or defaults <br />under the SNHP Loan Documents. During the term of such period Locality shall have the right, but <br />not the obligation, to cure any nonmonetary default under such initial notice. Notwithstanding the <br />foregoing, if at any time following the date of the initial notice, there shall occur or be continuing a <br />default in the payment of any amount due to the Agency under the SNHP Loan Documents, the <br />Agency shall have the right to, and in its sole discretion may, record a Notice of Default and proceed <br />to foreclosure based upon any such nonpayment regardless of any extended cure period with respect <br />to nonmonetary defaults. <br />(c) Locality has read, understands and approves the SNHP Loan Documents and <br />agrees to be bound thereby in the event of its foreclosure or acquisition of the Project. <br />2. Representations. Locality hereby represents and warrants to the Agency that at the <br />time of execution of this agreement, the Borrower is in substantial compliance with its obligations to <br />the Locality under the terms of the Locality Documents, and Locality has read and understands the <br />SNHP Loan Documents and agrees that in the event the Agency determines there is a conflict of <br />terms between the SNHP Loan Documents and Locality Documents, the terms of the SNHP Loan <br />Documents shall prevail. <br />3. Attorneys Fees & Costs. If any party shall take any action to enforce or otherwise <br />relating to this Agreement, the prevailing party or parties shall be entitled to recover reasonable <br />attorney's fees and costs from the other party or parties. <br />-3- <br />SNU Subordination Agreetnent (City of Santa Ana) <br />Santa Ana Veteran Village; Caff[ ANo. 17-047-M <br />1 U09/2018.1 CS/jad-# <br />25B-7 <br />