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C. WHEREAS, the City's loans are evidenced by a promissory note (the "First City Note ") in the amount of Four Million and No /100 Dollars ($4,000,000.00) which is secured by a deed of trust ( "First City Deed of Trust "), executed by Borrower as Trustor, to Santa Clara Land Title Company, as Trustee, in favor of the City, as Beneficiary, and recorded on June 29, 1988 as Instrument No. 88- 154983, in the Official Records; and D. WHEREAS, in consideration for CHFA's loan to Borrower for the Project, the City entered into the Loan Subordination Agreement wherein the City agreed, inter alia, to subordinate its City Documents to the Regulatory Agreement, CHFA Note and CHFA Deed of Trust (collectively the "CHFA Documents "); and E. WHEREAS, by its terms, the CHFA Deed of Trust secures payment of the CHFA Note together with ". . . any and all amendments, modification, extensions or renewals thereof (including without limitation, amendments, modifications, extensions or renewals providing for a different rate of interest). "; and F. WHEREAS, Borrower has modified certain terms of the CHFA Note as more particularly set forth in the Loan Modification Agreement by and between Borrower and CHFA, dated September 16, 1999 and recorded concurrently herewith (hereafter "Loan Modification Agreement "); and G. WHEREAS, accordingly, CHFA the Borrower and the City now desire to affirm the Loan Subordination Agreement and modify it to evidence (i) the City's express consent to the Loan Modification Agreement and (ii) the City's express agreement to subordinate its interest (evidenced by the City Note and City Deed of Trust) to the Loan Modification Agreement. NOW THEREFORE, in consideration of the foregoing and other consideration the receipt and sufficiency of which are hereby acknowledged, and in order to induce CHFA to make the CHFA Loan, the parties hereto agree as follows: 1. Subordination. City and Borrower hereby subordinate the City Documents to the CHFA Documents, and Loan Modification Agreement. Hereafter, the CHFA Documents and Loan Modification Agreement shall unconditionally be, and remain at all times, liens and encumbrances on the Project prior and superior to the liens and encumbrances of the City documents, and to all rights and privileges of the parties hereunder, and the liens and encumbrances of the City Documents together with all rights and privileges of the parties thereunder shall hereby be subjected and made subordinate to the liens and encumbrances of the CHFA Documents and Loan Modification Agreement. 2. Attorney Fees and Costs. If any party shall take any legal action to enforce or otherwise relating to this Agreement, the prevailing party or parties shall be entitled to recover legal costs and reasonable attorneys fees from the other party or parties. hereto. 3. Amendments. Amendments to this Agreement shall be in writing and signed by all the parties 4. Governing Law. This Agreement shall be construed in accordance with and be governed by the laws of California. CHFA 71.LN.SUB.AGMT.RIDGEVIEW COMMONS(AFFIRM /MOD)(CITY) 9/29/99.RK0 -2- SAON2T7B.emp