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SUBORDINATION AGREEMENT
<br />THIS SUBORDINATION AGREEMENT (this "Agreement") is made and entered into
<br />as of May 1; 2020 by and among (i) CITIBANK, N.A., a national banking association ("Senior
<br />Lender"), (ii) CITY OF REDWOOD CITY, a charter city and municipal corporation in the
<br />State of California (the "Subordinate Lender"), and (iii) HALLMARK 2017 LP, a California
<br />limited partnership ("Borrower").
<br />RECITALS:
<br />A. Borrower applied to the California Statewide Communities Development
<br />Authority, a joint exercise of powers agency, organized and existing under the laws of the State
<br />of California ("Governmental Lender"), for a loan (the "Senior Loan.") for the construction,
<br />rehabilitation, development, equipping and/or operation of a 72 -unit multifamily residential
<br />project located at 531 Woodside Road in the City of Redwood City, San Mateo County,
<br />California, known or to be known as Hallmark House Apartments (the "Property"). The
<br />Property is more particularly described in Exhibit A, attached hereto and incorporated by
<br />reference.
<br />B. The Senior Loan is evidenced by (i) that certain Multifamily Note, dated as of
<br />May 1, 2020, in the maximum principal amount of $22,000,000 made by Borrower payable to
<br />the order of Governmental Lender (the "Senior Note"), and (ii) that certain Borrower Loan
<br />Agreement, dated as of the date hereof, by and between Borrower and Governmental Lender (the
<br />"Borrower Loan Agreement").
<br />C. The Senior Loan is secured by, among other things, that certain Multifamily Deed
<br />of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of May 1, 2020
<br />executed by Borrower for the benefit of Governmental Lender (as the same may from time to
<br />time be extended, consolidated, substituted for, modified, increased, amended and supplemented,
<br />"Senior Security Instrument"), which Senior Security Instrument encumbers the Property.
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<br />D. Borrower requested that Senior Lender enter into that certain Funding Loan
<br />Agreement, dated as of May 1, 2020, by and between Governmental Lender and Senior Lender,
<br />pursuant to which Senior Lender .made a loan to Governmental Lender (the "Funding Loan"),
<br />the proceeds of which were used to make the Senior Loan to Borrower pursuant to the Borrower
<br />Loan Agreement.
<br />E. The Senior Note, the Senior Security Instrument and the Borrower Loan
<br />Agreement were each assigned by Governmental Lender to Senior Lender to secure the Funding
<br />Loan. The Borrower and Senior Lender have entered into that certain Construction Funding
<br />Agreement dated as of May 1, 2020 (the "Construction Funding Agreement") regarding the
<br />manner in which the improvements at the Property will be completed and paid for.
<br />F. Pursuant to the Owner Participation: Agreement (defined below) (i) Subordinate
<br />Lender advanced to KDF Hallmark, L.P., a California limited partnership ("Prior Owner")
<br />$500,000 from a grant of HOME Investment Partnership fiends ("HOME Funds") and (ii) the
<br />Subordination Agreement 1 353 Main Street Apartments
<br />Description: San Mateo,CA Document - rear.DoclD 2020.39722 Page: 3 of 24
<br />order: eeee Comment;
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