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10-068 Subordination Agreement, Pacific Autism Center for Education RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Wells Fargo Bank, National Association 60 South Market Street, Ste. 900 San Jose, CA 95113 Attention: Gregg Nurnberg, VP (Space above for Recorder's Use) SUBORDINATION AGREEMENT APN No. 359 -22 -025 NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT This SUBORDINATION AGREEMENT ( "Agreement "), dated as of June 1, 2010, executed by PACIFIC AUTISM CENTER FOR EDUCATION, a California non - profit public benefit corporation ( "Owner ") and the CITY OF CUPERTINO, a municipal corporation organized under the laws of the State of California, the present owner and holder of the deed of trust and note described in Recital B below ( "City ") in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION ( "Bank "), is entered into with reference to the following facts: A. Owner has entered into a Loan Agreement dated as of June 1, 2010 (the "Loan Agreement ") which provides for a loan (the Authority Loan") to Owner from the California Enterprise Development Authority (the "Authority ") in the principal amount of $4,798,000, which shall be made by the Authority with the proceeds of a loan from Bank in the principal amount of $4,798,000 (the "Bank Loan"). The Authority Loan is secured by, among other things, a Deed of Trust, Assignment of Rents and Fixture Filing dated as of June 1, 2010 (the "Authority Deed of Trust ") in favor of the Authority, which will be recorded in the Official Records of Santa Clara County, California (the "Official Records ") on or before the date this Subordination Agreement is recorded encumbering the real property more fully described in Exhibit "A" attached hereto and made a part hereof (the "Property'). 'i'Sf l? e Authority Deed of Trust has been assigned to the Bank as security for the Bank Loan, by an %§gi'gijNherh of Deed "6f Trust dated as of June 1, 2010, which will be recorded in the Official Records on or before the date this Subordination Agreement is recorded. B. Owner has executed a note dated June 23, 1995 payable to the City in the principal amount of $100,000 (the "City Note ") which is secured by a deed of trust dated June 23, 1995 (the "City Deed of Trust ") recorded on June 27, 1995 in the Official Records as Instrument No. 12928912, in Book N897, Page 1179 that also encumbers the Property. C. It is a condition precedent to the Bank making the Bank Loan and the Authority making the Authority Loan that the Authority Deed of Trust shall unconditionally be and remain at -1- all times a lien and charge on the Property prior and superior to the lien of the City Deed of Trust up to the amount set forth in paragraph 1 below; and City is willing that the City Deed of Trust shall constitute a lien and charge on the Property which is subordinate to the Authority Deed of Trust. IN CONSIDERATION OF ;THE: FOREGOING, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Owner and City hereby agree as follows: 1. Subordination The Authority Deed of Trust, and any renewals, replacements, modifications or extensions thereof, shall unconditionally be and remain at all times a lien or charge on the Property prior and superior to the lien of the City Deed of Trust in an amount up to $80,000. City intentionally and unconditionally waives, relinquishes and subordinates the lien or charge of the City Deed of Trust in favor of the lien or charge on the Property of the Authority Deed of Trust and understands that in reliance upon, and in consideration of, this waiver, relinquishment and 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 on this waiver, relinquishment and subordination. 2. Disbursements Owner and City acknowledge and agree that in making any disbursements related to the Loan, neither the Bank nor the Authority has any obligation or duty to, nor has the Bank or the Authority represented that it will oversee or monitor the application or use of such proceeds by the persons or entities tc whom such disbursements are made, and any application or use of suc^h:pr©ceeds shall not defeat the subordination made in this Agreement, in who Ie''or m- +pmt 3. Loan Documents City consents to and approved (a) all provision of the Loan Agreement and the Authority Deed of Trust and (b) all other documents executed in connection with the Loan. 4. Notice and Right to Cure Upon the occurrence of an event of default under the Authority Deed of Trust, and prior to exercising any remedies under the Authority Deed of Trust, the Bank shall give written notice of such event of default to the City. The City may, but shall not be obligated to, cure such event of default within 10 business days after its receipt of such notice. If the City does not cure the event of default in a timely manner, the Bank may exercise any rights or remedies available under the Authority Deed of Trust or at law. 5. Further Assurances Owner and City shall execute, acknowledge and deliver to each other and the Bank all documents, and shall take all actions reasonably required by such other party from time to time to confirm or effect the matters set forth herein, or otherwise to carry out the purposes of this Agreement. 6. Attorneys' Fees In the evl t t thta` litigation, reference or arbitration shall be commenced concerning this Agreemei6t.,1 h I & - party prevailing in such proceeding shall be entitled to recover, in addition to such other relief as may be granted, its reasonable costs and expenses, including, without limitation, reasonable attorneys' fees and costs (including the allocated -2- costs for in -house counsel), whether or not taxable, as awarded by a court of competent jurisdiction, referee or arbitrator. 6. Miscellaneous This Agreement shall bind, and shall inure to the benefit of, the successors and assigns of the parties. This document may be executed in counterparts with the same force and effect as if the parties had executed one instrument, and each such counterpart shall constitute an original hereof. This Agreement shall be governed by the laws of the State of California. This Agreement integrates all of the terms and conditions of the parties' agreement regarding the matters contained herein. This Agreement supercedes and cancels all oral negotiations and prior and other wril:ings with respect to the matters contained herein. This Agreement may not be modified or amended except in a written agreement signed by the Bank, City and Own. Fpr , espee, ✓e successors in interest. %i �, � iii ��� '�_.: '.::, . -3- IN WITNESS WHEREOF, Owner and Cite have caused this Agreement to be duly executed as of the date first written above. "Owner" PACIFIC AUTISM CENTER FOR EDUCATION, a California non - profit public benefit corporation B j Name. Its: e XL t urn y ze Tn,< "Ciro" CITY OF CUPERTINO By:_ Mime: Its: APPROVED AS TO FORM: By: ' \kkLx , iiti tu� ,City Attorney -4- STATE OF CALIFORNIA ) )ss. COUNTY OF SANTA CLARA ) On this 2ej day of June, 2010, before me,( !►, f;Sw..N a *"'- < < Nt w�kbl personally appeared r� L• 00,k5 , (who proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signatures on the instrument the person, or the entities upon behalf of which the�person acted, executed the instrument. I certify under PENALTY OF PERJURY u-nder the laws of the State of California that the foregoing paragraph is true and correct. Witness my hand and official seal. otary Publi My Com i71 Expires: 1 o z (SEAL) C i w. ►u� Commission I 18 20573 MANN LID Ndwy PUMIC - Crtiit Na 3MM Clan Cou ty M ft&M Oct 2L 1 Few STATE OF CALIFORNIA ) )ss. COUNTY OF SANTA CLARA ) On this I ` day of -J*o:c' , 2010, before me,. C �GbtlYy , personal appeared 4, r ic (who proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signatures on the instrument the person, or the entities upon behalf of which the person 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. (:7 Notary Public My Commission Expires: (SEAL) GRACE SCHMIDT Commission # 1720127 Liam Notary Public - California Santa Clara County Comm. Expires Feb 21, 2011