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The Loan Modification Agreement, recorded concurrently herewith, CHFA Deed of Trust and CHFA Regulatory Agreement shall hereinafter collectively be referred to as the "CHFA Documents "; and C. WHEREAS, Eden and Borrower previously agreed to encumber the Project with that certain Option to Purchase Agreement and recorded a Memorandum to Agreement on March 14, 1990 as Instrument No. 90- 070679, in the Official Records ( "Official Records ") of the County of Alameda (collectively "Option "). D. WHEREAS, it is a legal requirement pursuant to California Health and Safety Code Section 51335(e) and a condition precedent to CHFA making the CHFA Loan that the CHFA Documents have priority over the Option; and E. WHEREAS, it is beneficial to all the parties to this Agreement that CHFA modify the CHFA Loan, and the parties are willing to subordinate the Option in order that the CHFA Loan be modified. NOW THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, it is hereby declared, understood and agreed as follows: 1. The Option is hereby subordinated to the CHFA Documents including all extensions, modifications or additional advances made hereunder. Hereafter, the CHFA Documents shall unconditionally be, and remain at all times, liens and encumbrances on the Project prior and superior to the liens and encumbrances of the Option, and to all rights and privileges of the parties thereunder, and the liens and encumbrances of the Option 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. In any event of conflict between the Option obligations and the CHFA obligations, the CHFA obligations shall prevail. A judicial or nonjudicial foreclosure of the CHFA Deed of Trust shall result in the Option on the Project being be extinguished. 2 This agreement is for the benefit of the parties hereto and is enforceable by any party against any successors in interest or assigns of any party hereto. 3. If any party shall take any legal action to enforce the terms and conditions of this Agreement, the prevailing party or parties shall be entitled to recover legal costs and reasonable attorney's fees from the other party or parties. 4. Amendments to this Agreement must be in writing and signed by all parties hereto. 5. This Agreement shall be construed in accordance with and be governed by the laws of California. 6. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. 7. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, it will not invalidate or render unenforceable any other part of this Agreement. 8. Eden, Borrower, and CHFA hereby agree to be bound by all the terms, conditions and covenants of this Agreement. CHFA 71.RIDGEVIEW SUBA 9/29/99.RKO.SAON34Z V.emp -2-