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Transmittal - 10/15/2021ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director SALT LAKE CITY CORPORATION 451 SOUTH STATE STREET, ROOM 404 WWW.SLC.GOV P.O. BOX 145486, SALT LAKE CITY, UTAH 84114-5486 TEL 801.535.6230 FAX 801.535.6005 CITY COUNCIL TRANSMITTAL __________________________________ Date Received: _________________ Lisa Shaffer, Chief Administrative Officer Date sent to Council: _________________ ______________________________________________________________________________ TO: Salt Lake City Council DATE: Amy Fowler, Chair FROM: Blake Thomas, Director, Department of Community & Neighborhoods __________________________ SUBJECT: Garden Lofts Income Averaging Request & Subordination Request STAFF CONTACT: Amanda Best, Housing Development Program Specialist HAND 801-535-7698, Amanda.Best@slcgov.com DOCUMENT TYPE: Resolution RECOMMENDATION: Request #1: Income Averaging Housing Trust Fund Advisory Board (HTFAB) recommends approving the income averaging amendment to the Garden Lofts Loan. Request #2: Amend Loan to Subordinate to New Loan (Citibank) Housing Trust Fund Advisory Board (HTFAB) recommends approving the additional loan with Citibank and subordinating to Citibank, putting the City’s Housing Trust Fund loan in third position. BUDGET IMPACT: No budget impacts, this request for an adjustment in income restrictions for the rental units and movement in priority of loan. BACKGROUND/DISCUSSION: Wasatch Residential Group, the managing group of Garden Lofts, currently has an $1,000,000 loan from the Housing Trust Fund (HTF) to develop an all affordable multifamily construction project on 3.18 acres of property in downtown Salt Lake City. This development consists of 272 April 15, 2021 Lisa Shaffer (Apr 20, 2021 15:27 MDT) 04/20/2021 04/20/2021 units, all at or below 60% of Area Median Income (AMI). The loan was recorded on December 14, 2017. The loan was provided using HTF. The development is currently in payback period and is in good standing. The current principal balance is $1,000,000 and accrued interest is $12,500. According to the Promissory Note the term is 38 years, with the first three years borrower paying interest only, and the first payment of $75,000 due on April 1, 2021. Garden Lofts Apartment information can be found at https://www.gardenloftsisyourhome.com. The address is 154 West 600 South, Salt Lake City, UT 84101, located in District 4 under Councilmember Ana Valdemoros. Request #1: Income Averaging According to the City HTF loan documents all units must serve residents at or below 60% AMI based on tenant income verification. Wasatch Residential Group is requesting a change in the loan documents to move from all units at or below 60% AMI to an income averaging of all units. The result would be that the average income level of the entire development will be 60% AMI. Income averaging would allow the housing complex to offset costs within the adjusted range of rents rather than utilizing more subsidy, creating units that have a higher AMI and units that have a lower AMI. As seen in Table 1 and Table 2 below, the units were originally required to serve tenants at or below 60% AMI. With income averaging, the units would be adjusted to allow households ranging from 40% AMI to 80% AMI. However, when contemplating the entire development, the average renter household income will still be 60% AMI. The higher rents collected from households with greater income will offset the deeply affordable rents within the housing complex without the need of more subsidy. The income averaging approach does not create a change in the overall project budget nor in underwriting. This process has recently been approved by Utah Housing Corporation (UHC) and the Low-Income Housing Tax Credit (LIHTC). The Wasatch Residential Group’s LIHTC and Land Use Restriction Agreement (LURA) has already been adjusted to include income averaging for Garden Lofts Apartments. Because this change has taken place in the LIHTC LURA, Wasatch Residential Group is currently out of compliance with the City loan agreement, and thus requesting to make this change. The Federal Consolidated Appropriations Act of 2018 was signed into law on March 23, 2018 and established Income Averaging (IA) as a third minimum set-aside election for Housing Credit (HC) developments. This new election allows developments to designate units as low as 20%, and up to 80% of AMI as long as the average AMI level of the HC units in the project, as defined in line 8b on IRS Form 8609, is 60% or less of AMI. Income averaging is becoming popular with affordable housing funding and is allowable under the County, State, and LIHTC rules and ordinances. This shift would allow for more variety within rents and could allow for a deeper affordability throughout the development, while still receiving needed income from the higher affordability limit. Request #2: Amend Loan to Subordinate to New Loan (Citibank) The original subordination agreement has Salt Lake City Housing Trust Fund Loan in the second position behind Citibank and in front of Olene Walker Housing Loan Fund. The development is currently leased up. The current HTF loan states that the borrower cannot add additional funding after the original loan is in place. Wasatch Residential Group is requesting permission to assume an additional loan, and is asking the City to subordinate its second lien position, placing the new Citibank loan in second lien position, the City in third lien position, and Olene Walker Housing Loan Fund in fourth position. This request was heard by the Olene Walker Housing Loan Fund board on January 28, 2021 in which the board approved the request to subordinate to the Citibank loan. Wasatch Residential Group intends to use the new loan to offset unexpected costs resulting from higher than expected construction costs of the development. The additional loan will allow Wasatch Residential Group to decrease the amount of deferred developer fee for the Garden Lofts Development. Borrower Information: Wasatch Residential Group has an extensive portfolio including both affordable and market rate multi-family housing throughout the Western United States. Wasatch owns/manages over 24 apartment communities in Utah. This group is responsible for developing over 7,600 units and $1 billion in multifamily construction. Here in Salt Lake, they are responsible for constructing and managing Providence Place, Enclave, and 600 Lofts, all affordable housing developments. Wasatch has current Housing Trust Fund financing on both Providence Place and 600 Lofts. In addition, their management affiliate, Wasatch Property Management, currently manages 70 apartment communities around the Western United States. Proposed Loan Amendment: Request #1: Income Averaging When the Federal Consolidated Appropriations Act of 2018 passed allowing income averaging to be an approach to providing affordable housing, Wasatch worked with Utah Housing Coalition to have the Land Use Restricted Agreement (LURA) allow for income averaging. The change would allow for certain rents to increase to 80% AMI and others lower to 40% AMI to allow for the average income of all tenants to be 60% AMI. The unit mix adjustment is in the updated LURA and is represented in the table below. TABLE A: Housing Unit/AMI Mix Current: Type # of Units Income Limits 1 Bed 1 Bath 3 at or below 60% AMI 2 Bed 2 Bath 2 at or below 60% AMI 1 Bed 1 Bath 36 at or below 60% AMI 2 Bed 2 Bath 16 at or below 60% AMI Studio 20 at or below 60% AMI 1 Bed 1 Bath 81 at or below 60% AMI 2 Bed 1 Bath 49 at or below 60% AMI 3 Bed 2 Bath 13 at or below 60% AMI 1 Bed 1 Bath 28 at or below 60% AMI 2 Bed 2 Bath 14 at or below 60% AMI 1 Bed 1 Bath 7 at or below 60% AMI 2 Bed 2 Bath 3 at or below 60% AMI TABLE B: Housing Unit/AMI Mix Proposed: Type # of Units Income Limits 1 Bed 1 Bath 3 80% AMI 2 Bed 2 Bath 2 80% AMI 1 Bed 1 Bath 36 70% AMI 2 Bed 2 Bath 16 70% AMI Studio 20 60% AMI 1 Bed 1 Bath 81 60% AMI 2 Bed 1 Bath 49 60% AMI 3 Bed 2 Bath 13 60% AMI 1 Bed 1 Bath 28 50% AMI 2 Bed 2 Bath 14 50% AMI 1 Bed 1 Bath 7 40% AMI 2 Bed 2 Bath 3 40% AMI This shift would increase the income limits on 57 units to 70% AMI and 80% AMI. This change would not affect the original terms or underwriting of the loan according to Housing Trust Fund Policies and Procedures. HTFAB met on February 3, 2021 to review this request with the developer. Request #2: Amend Loan to Subordinate to New Loan (Citibank) Wasatch Residential Group is also in the process of receiving an additional loan from their primary lender, Citibank. This loan is to offset developer fee costs and other costs that have increased this last year. The additional loan would take second position behind the first Citibank loan, moving the Salt Lake City Housing Trust Fund loan to third position. The current loan states that, “The borrower shall neither create nor suffer to exist any mortgage, pledge, lien, charge or encumbrance… except as of record of disclosed to the City in writing prior to the making of the loan hereunder.” The amendment to add a loan would contradict that section, thus the loan will have to be amended for that section as well. The additional loan has not yet closed and is scheduled to close after all approvals have been received. As of January 28, 2021 the Olene Walker Loan Fund has approved this additional loan. The additional Citibank loan would be for $1,200,000, is not tax exempt and requires hard payments. Wasatch Residential Group is requesting that Salt Lake City amend the subordination agreement to include the additional loan and move to third lien position. A new Deed of Trust and an amendment to the Loan would also be needed. Board Approval: Request #1: The HTFAB recommended approval of amending the Garden Lofts HTF Loan to allow for income averaging across the development to 60% AMI on November 4, 2020. Request #2: The HTFAB recommended approval of amending the Garden Lofts HTF Loan to accept the additional Citibank Loan on February 3, 2021. This would move Salt Lake City to third in line for repayment. PUBLIC PROCESS: HTFAB held a public meeting and reviewed the Income Averaging request on November 4, 2020 and the Subordination Amendment on February 3, 2021. The board unanimously recommended approval of both amendments. No other public process is required. EXHIBITS: 1. Resolution 2. Updated LURA 3. Draft Subordination Agreement 4. Recorded Subordination Agreement 5. Recorded HTF Loan 6. Recorded Deed of Trust Exhibit 1 Resolution RESOLUTION NO. _____ OF 2021 Authorizing a loan amendment from Salt Lake City’s Housing Trust Fund To Garden Lofts Holdings, LP WHEREAS, Salt Lake City Corporation (the “City”) has a Housing Trust Fund to encourage affordable and special needs housing development within the City; and WHEREAS, Garden Lofts Holdings, LP (the “Borrower”), has an existing loan (the “Loan”) for the construction and long-term financing of an affordable multifamily housing development with 272 units (the “Project”) located at 154 West 600 South, Salt Lake City, Utah (the “Property”); and WHEREAS, the Project construction is complete; and WHEREAS, the Borrower has requested that the terms of the Loan be amended as described on the attached term sheet (the “Term Sheet”); and WHEREAS, on November 4, 2020 and February 3, 2021, the Housing Trust Fund Advisory Board (the “Board”) recommended approval of the loan amendment as set forth on the Term Sheet; and WHEREAS, the City recommends the loan amendment described on the attached Term Sheet based on its underwriting of the Project. NOW THEREFORE, BE IT RESOLVED by the City Council of Salt Lake City, Utah: 1. That the City Council hereby approves amending the existing loan documents as set forth on the Term Sheet, subject to revisions that do not materially adversely affect the rights and obligations of the City hereunder. 2. That Erin Mendenhall, Mayor of Salt Lake City, Utah, on behalf of Salt Lake City Corporation is hereby authorized to negotiate and execute the requisite loan documents and any other relevant documents consistent with the Term Sheet, and incorporating such other terms and agreements as recommended by the City Attorney’s Office, and to act in accordance with their terms. Passed by the City Council of Salt Lake City, Utah, this __________ day of ____________, 2021. SALT LAKE CITY COUNCIL By CHAIR ATTEST: CITY RECORDER Approved As To Form Salt Lake City Attorney’s Office By: ____________________________ Kimberly K. Chytraus Date: __________________________ March 24, 2021 Loan Amendment Term Sheet Project: Garden Lofts Borrower: Garden Lofts Holdings, LP Address: 54 West 600 South Loan Amount: $1,000,000 Loan Maturity: 38-year term Interest Rate: 2.5% simple interest per annum Interest Accrual: Current interest accrual is $12,500 (payments are current) Repayment Terms: Payment is interest only for the first 3 years. First payment is due April 1, 2021 in the amount of $75,000. Then surplus cash payments. Collateral and Priority: Current – Second priority Deed of Trust behind Citibank Amendment – Third priority Deed of Trust behind Citibank (Original Citibank loan and new Citibank loan) (Olene Walker Housing Loan Fund has a loan that is junior to the City) Conditions: Standard loan conditions approved by City Attorney’s Office Unit Affordability Requirements: Current – All units are 60% Area Median Income (AMI) or below Amendment – All units income average to 60% AMI or below (range from 20% AMI – 80% AMI) Exhibit 2 Updated LURA 2.Set-Aside Election. The Project Owner agrees that all 272 units of the Project shallbe restricted as provided for herein and in paragraph 13. The Project Owner agrees that for each taxable year in the extended use period, as defined in IRC § 42, 40% or more of the residential units in the Project are both rent restricted, as defined in IRC §42, and occupied by individuals (hereinafter "low-income tenants") whose income does not exceed the imputed income limitation designated by the Project Owner with respect to the respective unit. The average of the imputed income limitation designated by the Project Owner shall not exceed 60% of the area median gross income, as more specifically provided in paragraph 13, with respect to the county in which the Project is located, as annually determined and published by H.U.D. 13.Rent and Incom e Limits. The Project Owner agrees that 272 units of the Project will be leased, throughout the extended use period as set forth in paragraph 9 above, (i) for a maximum monthly rental fee which is affordable to the tenants residing therein ( as calculated below), and (ii) to individuals whose annual income (as defined under Section 8 of the United States Housing Act of 193 7), aggregated for all individuals residing in a given unit, does not exceed the percentages set forth below of area median income for the county in which the unit is located: Units T\rpe Income Limits 3 1 bedroom 1 bath units 80% of area median income 2 2 bedroom 2 bath units 80% of area median income 36 1 bedroom 1 bath units 70% of area median income 16 2 bedroom 2 bath units 70% of area median income 20 Studio units 60% of area median income 81 1 bedroom 1 bath units 60% of area median income 49 2 bedroom 2 bath units 60% of area median income 13 3 bedroom 2 bath units 60% of area median income 28 1 bedroom 1 bath units 5 0% of area median income 14 2 bedroom 2 bath units 50% of area median income 7 1 bedroom 1 bath units 40% of area median income 3 2 bedroom 2 bath units 40% of area median income For purposes of determining the affordability of monthly rental payments, the maximum monthly rental fee is calculated as follows: a.First, multiply the monthly rent limit applicable to the unit as calculated by Utah Housing for the applicable year, based on bedroom size, based on 50% of area median income for the county in which the unit is located, by 2 (to arrive at a rental amount based on 100% of area median income); 2 1485082.2 Exhibit 3 Draft Subordination Agreement 21616387-v2 WHEN RECORDED MAIL TO: Citibank, N.A. Transaction and Asset Management Group 388 Greenwich Street, Trading 6th Floor New York, New York 10013 Attention: Tanya Jimenez Re: Garden Lofts Apartments Citi Deal ID No. 24974 FIRST AMENDMENT TO SUBORDINATION AND INTERCREDITOR AGREEMENT (SLC Corporation) THIS FIRST AMENDMENT TO SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Amendment”) dated as of the ____ day of January, 2021, is made by and between SALT LAKE CITY CORPORATION, a municipal corporation of the State of Utah (“Junior Lender”), and CITIBANK, N.A., a national banking association (“Senior Lender”) and acknowledged by GARDEN LOFTS HOLDINGS, LP, a Utah limited partnership (“Borrower”). R E C I T A L S A. Junior Lender, Senior Lender and Borrower entered into that certain Subordination and Intercreditor Agreement dated as of December 19, 2017, recorded with the Salt Lake County Recorder’s Office (the “Recorder’s Office”) as Entry No. 12684036, in Book 10631, Page 9114, relating to (1) a tax exempt loan made to Borrower in the aggregate maximum principal amount of $27,300,000, and (2) a certain junior loan made to Borrower by Junior Lender in the original principal amount of $1,000,000 (the “Junior Loan”) (as the same may be further amended from time to time, the “Original Agreement”); B. Junior Lender, Senior Lender and Borrower have agreed to amend the Original Agreement with respect to certain definitions pertaining to the Senior Loan thereunder to include a new taxable loan from Senior Lender to Borrower in the original principal amount of [$1,200,000], evidenced by the following: a certain Multifamily Permanent Note dated the date hereof in the amount of the Taxable Senior Loan made by Borrower to the order of Senior Lender, secured by a certain Subordinate Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of January 1, 2021, granted by Borrower for the benefit of Senior Lender and to be recorded with the Recorder’s Office, and a certain Loan Covenant Agreement dated as of January 1, 2021, by and between Borrower and Senior Lender, and such other documents, agreements and instruments executed in connection therewith; and C. Capitalized terms used but not defined in this Amendment shall have the meanings given them in the Original Agreement, NOW THEREFORE, for TEN DOLLARS ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Junior Lender, Senior Lender, and Borrower (collectively, the “Parties”) hereby agree as follows: First Amendment to Subordination and Intercreditor Agreement (SLC Corp) – Garden Lofts Apartments Page 2 1. The following new definitions are added to Section 1 of the Original Agreement: ““Senior Loan” means the Senior Loan, as defined in Recital A, together with that certain taxable loan from Senior Lender to Borrower in the original principal amount of [$1,200,000]. ““Senior Loan Agreement” means, collectively, the Borrower Loan Agreement, as defined in Recital B; the Construction Funding Agreement as defined in Recital D; and that certain Loan Covenant Agreement dated as of January 1, 2021, by and between Borrower and Senior Lender. ““Senior Note” means the Note, as defined in Recital B, together with that certain taxable Multifamily Permanent Note dated January [___], 2021, in the original principal amount of [$1,200,000] made by Borrower to the order of Senior Lender. ““Senior Security Instrument” means the Senior Security Instrument, as defined in Recital C, together with that certain Subordinate Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of January 1, 2021, granted by Borrower for the benefit of Senior Lender and to be recorded with the Salt Lake County Recorder’s Office.” 2. In all other respects, the terms, provisions, and conditions of the Original Agreement, as hereby amended or modified, are hereby ratified and confirmed and shall remain in full force and effect. 3. This Amendment may be executed in any one or more counterparts and all so executed shall constitute one and the same instrument, binding on all parties, even though all parties are not signatory to the same document. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] First Amendment to Subordination and Intercreditor Agreement (SLC Corp) – Garden Lofts Apartments Page S-1 IN WITNESS WHEREOF, the undersigned have caused this Amendment to be signed and delivered under seal by their respective duly authorized representatives as of the date set forth above. The undersigned intend that this Amendment shall be deemed signed and delivered as a sealed instrument. JUNIOR LENDER: SALT LAKE CITY CORPORATION, a Utah municipal corporation By: _________________________________________ Name: Erin Mendenhall Title: Mayor Approved as to Form Salt Lake City Attorney’s Office By: ________________________________ Name: _______________________________ Title: Senior City Attorney ATTEST: ______________________________________ ________________, Salt Lake City Recorder STATE OF UTAH COUNTY OF SALT LAKE On January __, 2021, before me, _______________________, personally appeared Erin Mendenhall who, personally known to me or 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/she/they executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature _______________________________ of Notary Public First Amendment to Subordination and Intercreditor Agreement (SLC Corp) – Garden Lofts Apartments Page S-2 SENIOR LENDER: CITIBANK, N.A., a national banking association By: _____________________________ Name: Kathy Millhouse Title: Vice President Citi Deal ID No. 24974 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On __________________ before me, _______________________ (here insert name and title of the officer), personally appeared Kathy Millhouse who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) 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. Signature _______________________________ (Seal) First Amendment to Subordination and Intercreditor Agreement (SLC Corp) – Garden Lofts Apartments Page S-3 ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE: BORROWER: GARDEN LOFTS HOLDINGS, LP, a Utah limited partnership By: Garden Lofts GP, LLC, a Utah limited liability company By: ______________________________ Name: Jeffrey S. Nielson Title: Manager STATE OF UTAH COUNTY OF SALT LAKE On January __, 2021, before me, _______________________, personally appeared Jeffrey S. Nielson who, personally known to me or 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/she/they executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature _______________________________ of Notary Public Exhibit 4 Recorded Subordination Agreement WHEN RECORDED MAIL TO: Citibank, N.A. Transaction Management Group/Post Closing 390 Greenwich Street, 2nd Floor New York, New York 10013 Attention: Tanya Jimenez Re: Garden Lofts Apartments Deal No. 24974 RECORDED DEC 1 4 2017 CITY RECORDER SUBORDINATION AND INTERCREDITOR AGREEMENT l 7267 l l 4-v4 (SLC Corporation) PRO PrRTY OF SALT LAl<E CITY Rl:CC) <DE R'S OFFICE P.O . BOX l '.lS5 l 5 SALT LAl<E C ITY, UTAH 84 114 -55 1 5 SUBORDINATION AND INTERCREDITOR AGREEMENT (SLC Corporation) THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "Agreement") dated as of December_, 2017, is made by and between SALT LAKE CITY CORPORATION, a municipal corporation of the State of Utah ("Junior Lender") and CITIBANK, N.A., a national banking association ("Senior Lender"), and acknowledged by GARDEN LOFTS HOLDINGS, LP, a Utah limited partnership ("Borrower"). The date of this Agreement as set forth above is for reference purposes only, and this Agreement will not be effective and binding until the Closing Date (as defined in the Borrower Loan Agreement). RECITALS: A. Borrower has applied to the Utah Housing Corporation, an independent body politic and corporate constituting a public corporation, organized and existing under the laws of the State of Utah ("Governmental Lender"), for a loan (the "S enior Loan") for the acquisition, construction, development, equipping and/or operation of a 272-unit multifamily residential project located in the City and County of Salt Lake, Utah, known or to be known as Garden Lofts Apartments (the "Mortgaged Property"). B. The Senior Loan is evidenced by (i) that certain Multifamily Note, dated as of the Closing Date, in the maximum principal amount of [$26,330,000] made by Borrower payable to the order of Governmental Lender (the "Note"), and (iii) that certain Borrower Loan Agreement, dated as of December 1, 2017, by and between Borrower and Governmental Lender (the "Borrower Loan Agreement"). C. The Senior Loan is secured by, among other things, that certain Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of December 1, 2017, executed by Borrower for the benefit of Governmental Lender ( as the same may from time to time be extended, consolidated, substituted for, modified, increased, amended and supplemented, the "Senior Security Instrument"), recorded in the office of the Salt Lake County Recorder as Entry No. __ in Book __ , at Pages ___ , which Senior Security Instrument encumbers the Mortgaged Property. D. Borrower has requested that Senior Lender enter into that certain Funding Loan Agreement (the "Funding Loan Agreement"), dated as of December I , 2017, by and among Governmental Lender, U.S. Bank National Association, a national banking association organized and existing under the laws of the United States of America, as fi scal agent, and Senior Lender, pursuant to which Funding Lender will make a loan to Governmental Lender (the "Funding Loan"), the proceeds of which will be used to make the Senior Loan to Borrower pursuant to the Borrower Loan Agreement. The Senior Loan will be advanced to Borrower pursuant to that certain Construction Funding Agreement, dated as of December 1, 2017, by and between Borrower and Senior Lender (the "Construction Funding Agreement"). E. The Note, the Senior Security Instrument, the Borrower Loan Agreement, the Funding Loan Documents (as defined in the Funding Loan Agreement) and all other Senior Loan Subo rd ination and lntercredito r Agreement (SLC Corporation) PROPERTY OF SALT LAl<E CITY RECORDER 'S OFF ICE P.O . BOX 145515 SALT LAKE CITY, UTAH 84 114-5515 Lofts Apartments Documents (as hereinafter defined) have each been assigned by Governmental Lender to Senior Lender to secure the Funding Loan. F. Junior Lender is making a loan (the "Junior Loan") to Borrower in the original principal amount of $1,000,000 under its Housing Trust Fund Program, which Junior Loan is evidenced by a certain Promissory Note, dated as of the date hereof, made by Borrower to Junior Lender (the "Junior Note") and secured by, the Junior Security Instrument (as hereinafter defined) encumbering the Property, and will be advanced to Borrower pursuant to that certain Loan Agreement (the "Junior Loan Agreement") dated as of the date hereof between Borrower and Junior Lender. G. As a condition to the making of the Senior Loan, Senior Lender requires that Junior Lender execute and deliver this Agreement prior to the making of the Junior Loan and the granting of the Junior Security Instrument by Borrower. NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the making of the Senior Loan and to induce Senior Lender to consent to the Junior Loan and the Junior Security Instrument, Junior Lender hereby agrees as follows: 1. Definitions. Capitalized terms used but not defined in this Agreement shall have the meanings ascribed thereto in the Senior Security Instrument. As used in this Agreement, the terms set forth below shall have the respective meanings indicated: "Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency, composition, restructuring, dissolution, liquidation, receivership , assignment for the benefit of creditors, or custodianship action or proceeding under any federal or state law with respect to Borrower, any guarantor of any of the Senior Indebtedness, any of their respective properties, or any of their respective partners, members, officers, directors, or shareholders. "Casualty" means the occurrence of damage to or loss of any of the Property by fire or other casualty. "Condemnation" means any proposed or actual condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Property, whether direct or indirect. "Enforcement Action" means any exercise of any of Junior Lender's remedies under the Junior Security Instrument or any of the other Junior Loan Documents, including, without limitation, any of the following: (i) the acceleration of all or any part of the Junior Indebtedness, (ii) the commencement of any judicial or non-judicial action of proceeding to enforce any obligation of Borrower under any of the Junior Loan Documents, collect any monies payable to Borrower or have a receiver appointed to collect any monies payable to Borrower, or foreclose the lien(s) created by the Junior Security Instrument, (iii) the filing or joining in the filing of any involuntary Bankruptcy Proceeding against Borrower or any person or entity which owns a direct or indirect interest in Borrower, (iv) the advertising of or commencement of any foreclosure or trustee's sale proceedings, (v) the exercise of any power of sale, (vi) the acceptance of a deed or assignment in lieu of foreclosure or sale, (vii) the collecting of Rents , (viii) the obtaining of or seeking of the appointment of a receiver, (ix) the seeking of default PROPERTY OF SALT LAKE CITY RECORDER'S OFFICE Subordination and lntercredi tor Agreement (S LC Corporation ) 2 P.O . BOX 145515 Garden Lofts Apartments SALT LAKE CITY, UTAH 84114-5515 interest, (x) the taking of possession or control of any of the Property, (xi) the commencement of any suit or other legal, administrative, or arbitration proceeding base d upon the Juni or Note or any other of the Junior Loan Documents, (xii) the exercising of any banker's lien or rights of set- off or recoupme nt, or (xiii) the taking of any other enforcement action against Borrower, any other party liable for any of the Junior Indebtedness or obligated under any of the Junior Loan Documents, or the Property. "Enforcement Action Notice" means a written notice from Junior Lender to Senior Lender, given following a Junior Loan Default and the expiration of any notice or cure periods provided for such Junior Loan Default in the Junior Loan Documents, setting forth in reasonable detail the Enforcement Action proposed to be taken by Junior Lender. "Junior In debtedness" means all indebtedness of any kind at any time evidenced or secured by, or arising under, the Junior Loan Documents, whether incurred, arising or accruing before or after the filing of any Bankruptcy Proceeding. "Junior Loan Defaulf' means any act, failure to act, event, condition, or occurrence which constitutes, or which with the giving of notice or the passage of time, or b oth, would constitute, an "Event of Default" as defined in the Junior Security Instrument. "Junior Loan Documents" means, collectively, the Junior Note, the Junior Security Instrument, the Junior Loan Agreement and all other documents evidencing, securing or delivered in connection with the Junior Loan, all of which are listed on Exhibit B attached hereto , together with such modifications, amendments and supplements thereto as are approved in writing by Senior Lender prior to their execution. "Junior Security Instrum ent" means that certain Trust Deed with Assignment of Rents, dated as of the date hereof, made by Borrower for the benefit of Junior Lender, as the same may from time to time be extended, consolidated, substituted for, modified, amended or supplemented upon receipt of the consent of Senior Lender. "Loss Proceeds" means all monies received or to be received under any insurance p olicy, from any condemning authority, or from any other source, as a result of any Condemnation or Casualty. "Property" means (i) the land and improvements known or to be known as Garden Lofts Apartments and located in the City and County of Salt Lake, State of Utah, which Property is more particularly described on Exhibit A attached hereto, and (ii) all furniture, fixtures and equipment located at such apartments and other property, accounts, depo sit s and rights and interests of Borrower encumbered by the Senior Security Instrument and/or the other Senior Loan Documents. "Sen ior Indebtedness" means all indebtedness of any kind at any time evidenced or secured by, or arising under, the Senior Loan Documents, whether incurred, arising or accruing before or after the filing of any Bankruptcy Proceeding. "Senior Loan Do cuments" means, collectively, the Senior Security Instrument, the Senior Note, the Senior Loan Agreement and all of the oth~r:. documents , instruments and agreements now or hereafter evidencing, securing or otherwise 11JJ8{eg:ih 9crJt~HibB,~th the Senior Loan, 11 l fhCORDER'S OFF ICE P.O. BOX 1 45515 Subordination and lntercreditor Agree ment (S LC Corporatio n) 3 SALT LAKE CITY, UTAH 841 bli\-a~5.Jt§ Apartments as the same may from time to time be extended, consolidated, substituted for , modified, increased, amended and supplemented in accordance with the provisions of this Agreement. "Senior Loan Default" means any act, failure to act, event , condition, or occurrence which constitutes an "Event of Default" as defined in the Senior Security Instrument. 2. Junior Loan and Junior Loan Documents are Subordinate; Acts by Senior Lender do not Affect Subordination. (a) Junior Lender hereby covenants and agrees on behalf of itself and its successors and permitted assigns that the Junior Indebtedness is and shall at all times continue to be, subordinate, subject and inferior (in payment and priority) to the prior payment in full of the Senior Indebtedness, and that the liens, rights, payment interests, priority interests and security interests granted to Junior Lender in connection with the Junior Loan and under the Junior Loan Documents are, and are hereby expressly acknowledged to be in all respects and at all times , subject, subordinate and inferior in all respects to the liens, rights, payment , priority and security interests granted to Senior Lender under the Senior Loan and the Senior Loan Documents and the terms, covenants, conditions, operations and effects thereof. (b) Except as expressly set forth herein, repayment of the Junior Indebtedness, is and shall be postponed and subordinated to repayment in full of the Senior Loan. Prior to a Senior Loan Default (regardless of whether such Senior Loan Default occurs prior to or during the pendency of a Bankruptcy Proceeding), Junior Lender shall be entitled to receive and retain payments made pursuant to and in accordance with the terms of the Junior Loan Documents; provided, however, that no such payment is made more than ten (10) days in advance of the due date thereof. Junior Lender agrees that from and after such time as it has received from either Senior Lender or Borrower written notice that a Senior Loan Default then exists (which has not been expressly waived in writing by Senior Lender), Junior Lender shall not receive or accept any payments under the Junior Loan. If (i) Junior Lender receives any payment, property, or asset of any kind or in any form on account of the Junior Indebtedness (including, without limitation, any proceeds from any Enforcement Action) after a Senior Loan Default of which Junior Lender has been given notice of, or (ii) Junior Lender receives, voluntarily or in voluntarily, by operation of law or otherwise, any payment, property, or asset in or in connection with any Bankruptcy Proceeding, such payment, property, or asset will be received and held in trust for Senior Lender. Junior Lender will promptly remit, in kind and properly endorsed as necessary, all such payments, properties, and assets to Senior Lender. Senior Lender shall apply any payment, asset, or property so received from Junior Lender to the Senior Indebtedness in such order, amount (with respect to any asset or property other than immediately available funds), and manner as Senior Lender shall determine in its sole and absolute discretion. (c) Without limiting the complete subordination of the Junior Indebtedness to the payment in full of the Senior Indebtedness, in any Bankruptcy Proceeding, upon any payment or distribution (whether in cash, property, securities, or otherwise) to creditors (i) the Senior Indebtedness shall first be paid in full in cash before Junior Lender shall be S ubordination a nd lntercredi tor Agreement (SLC Corporati on) PROPERTY OF SALT LAl<E 4 C ITY RECORDER'S OFFICE Ga rden Lo ft s Apartments P.O BOX 145515 SALT LAKE C ITY, UTAH 84114~55 15 entitled to receive any payment or other distribution on account of or in respect of the Junior Indebtedness, and (ii) until all of the Senior Indebtedness is paid in full in cas h , any payment or distribution to which Junior Lender would be entitled but for this Agreement (whether in cash, property, or other assets) shall be made to Senior Lender. (d) The subordination of the Junior Indebtedness shall continue in the event that any payment under the Senior Loan Documents (whether by or on behalf of Borrower, as proceeds of security or enforcement of any right of set-off or otherwise) is for any reason repaid or returned to Borrower or its insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law. In such event, the Senior Indebtedness or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding to the extent of any repayment, return, or other action, as if such payment on account of the Senior Indebtedness had not been made. (e) The subordination of the Junior Loan Documents and of the Junior Indebtedness shall apply and continue notwithstanding (i) the actual date and time of execution, delivery, recording, filing or perfection of the Senior Security Instrument and other Senior Loan Documents and of the Junior Security Instrument and other Junior Loan Documents, and (ii) the availability of any collateral to Senior Lender, including the availability of any collateral other than the Property. (f) By reason of, and without in any way limiting, the full subordination of the Junior Indebtedness and the Junior Loan Documents provided for in this Agreement, all rights and claims of Junior Lender under the Junior Security Instrument or under the Junior Loan Documents in or to the Property or any portion thereof, the proceeds thereof, the Leases thereof, the Rents, issues and profits therefrom, and the Loss Proceeds payable with respect thereto, are expressly subject and subordinate in all respects to the rights and claims of Senior Lender under the Senior Loan Documents in and to the Property or any portion thereof, the proceeds thereof, the Leases thereof, the Rents , issues and profits therefrom, and the Loss Proceeds payable with respect thereto. (g) If Junior Lender, by indemnification, subrogation or otherwise, shall acquire any lien, estate, right or other interest in any of the Property (unless such interest is otherwise excluded from this Agreement as agreed to in writing by Senior Lender), that lien, estate, right or other interest shall be fully subject and subordinate to the receipt by Senior Lender of payment in full of the Senior Indebtedness, and to the Senior Loan Documents, to the same extent as the Junior Indebtedness and the Junior Loan Documents are subordinate pursuant to this Agreement. Junior Lender hereby acknowledges and agrees that Senior Lender may, without the consent or approval of Junior Lender, agree with Borrower to extend, consolidate, modify, increase or amend any or all the Senior Loan D ocuments and otherwise act or fail to act with respect to any matter set forth in any Senior Loan Document (including, without limitation, the exercise of any rights or remedies, waiver, forbearance or delay in enforcing any rights or remedies, the declaration of acceleration, the declaration of defaults or events of default, the release, in whole or in part, of any collateral or other Subordin ation and lnterc redi to r Agreement (SLC Corporation) 5 PROPERTY OF SALT LAl~E CITY RECORDER'S OFF ICE X 145515 Garden Lofts Apartments ~~L/L~l(E C ITY, UTAH 841 14-5515 property, and any consent, approval or waiver), and all such extensions, consolidations, modifications, amendments acts and omissions shall not release, impair or otherwise affect Junior Lender's obligations and agreements hereunder. Notwithstanding the foregoing or any contrary provision of this Agreement, except as otherwise currently set forth in the Senior Loan Documents, Senior Lender agrees that it will not, without Junior Lender's prior written consent in each instance: (i) change the term of the Senior Loan and/or the maturity date of the Senior Indebtedness, (ii) increase the principal amount of the Senior Note or the Senior Indebtedness other than increases pursuant to protective advances made by Senior Lender, or (iii) increase the interest rate payable under the Senior Note or the Senior Loan Documents. 3. Junior Lender Agreements. (a) Without the prior written consent of Senior Lender in each instance, Junior Lender shall not (i) amend, modify, waive, extend, renew or replace any provision of any of the Junior Loan Documents in any material manner, or (ii) pledge, assign, transfer, convey, or sell any interest in the Junior Indebtedness or any of the Junior Loan Documents; or (iii) accept any payment on account of the Junior Indebtedness other than a regularly scheduled payment of interest or principal and interest made not earlier than ten (10) days prior to the due date thereof; or (iv) take any action which has the effect of increasing the Junior Indebtedness; or (v) appear in, defend or bring any action in connection with the Property; or (vi) take any action concerning environmental matters affecting the Property. Regardless of any contrary provision in the Junior Loan Documents, Junior Lender shall not collect payments for the purpose of escrowing for any cost or expense related to the Property or for any portion of the Junior Indebtedness. (b) Junior Lender hereby agrees that Senior Lender may, at its option (but without any obligation to do so), at any time (including during the pendency of a Bankruptcy Proceeding), purchase the Junior Loan at par (and without liability for any prepayment premiums or liquidated damages set forth in the Junior Loan Documents). Such transfer and assignment of the Junior Loan shall be without representation or recourse, except that Junior Le nder shall represent that it is the sole holder of the Junior Loan, that it has authority to assign and convey the Junior Loan Documents, that, to the best of its knowledge, there are no defaults or breaches under the Junior Loan Documents, and as to the total amount then outstanding under the Junior Loan .. Junior Lender shall give Senior Lender a concurrent copy of each notice of a Junior Loan Default, Enforcement Action Notice or other material notice given by Junior Lender under the Junior Loan Documents. Notwithstanding any contrary provision in the Junior Loan Documents, Senior Lender shall have the right, but shall not have any obligation, to cure any Junior Loan Default until ninety (90) days following Senior Lender's receipt of an Enforcement Action Notice gi ven by Junior Lender as a consequence of the Junior Loan Default. Senior Lender shall not be subrogated to the rights of Junior Lender under the Junior Loan Documents by reason of Senior Lender hav ing cured any Junior Loan Default. However, Junior Lender acknowledges that all amounts advanced or expended by Senior Lender to cure a Junior Loan Default shall be added to and become a part of the Senior Indebtedness pursuant to the terms of the Senior Security Ins trument. Subordina tion and In tercreditor Agreement (SLC Corp ora tion) 6 PPOPERTY OF SALT LAl<E CITY RECORDER 'S OFF ICE P.O. BOX 145515 Garden Lofts A_partments SALT LAKE CITY, UTAH 84 1 14-55 I 5 (c) In the event and to the extent that each of Senior Lender and Junior Lender have under their respective loan documents certain approval or consent rights over the same subject matters (regardless of whether the obligations or rights are identical or substantially identical), Junior Lender shall have no right to object to any such action or approval taken by Senior Lender and shall consent thereto and be bound thereby. Without limiting the generality of the foregoing, Senior Lender shall have all approval, consent and oversight rights in connection with any insurance claims relating to the Property, any decisions regarding the use of insurance proceeds after a casualty loss or condemnation awards, the hiring or firing of property managers, or otherwise related in any way to the Property, and Junior Lender shall have no right to object to any such action or approval taken by Senior Lender and shall consent thereto and be bound thereby. ( d) Junior Lender agrees that in any action commenced to enforce the obligation of Borrower to pay any portion of the Junior Indebtedness, the judgment shall not be enforceable personally against Borrower or Borrower's assets, and the recourse of Junior Lender for the collection of the Junior Indebtedness shall be limited to actions against the Property and the rents, profits , issues, products, and income from the Property. (e) Junior Lender shall not commence or JOm with any other creditor in commencing any Bankruptcy Proceeding involving Borrower, and Junior Lender shall not initiate and shall not be a party to any action, motion or request, in a Bankruptcy Proceeding involving any other person or entity, which seeks the consolidation of some or all of the assets of Borrower into such Bankruptcy Proceeding. In the event of any Bankruptcy Proceeding relating to Borrower or the Property or, in the event of any Bankruptcy Proceeding relating to any other person or entity into which (notwithstanding the covenant in the first sentence of this clause) the assets or interests of Borrower are consolidated, then in either event, the Senior Loan shall first be paid in full before Junior Lender shall be entitled to receive and retain any payment or distribution in respect to the Junior Loan. Junior Lender agrees that (i) Senior Lender shall receive all payments and distributions of every kind or character in respect of the Junior Loan to which Junior Lender would otherwise be entitled, but for the subordination provisions of this Agreement (including without limitation , any payments or distributions during the pendency of a Bankruptcy Proceeding involving Borrower or the Property), and (ii) the subordination of the Junior Loan and the Junior Loan Documents shall not be affected in any way by Senior Lender electing, under Section 111 l(b) of the federal bankruptcy code, to have its claim treated as being a fully secured claim. In addition , Junior Lender hereby covenants and agrees that, in connection with a Bankruptcy Proceeding inv olving Borrower, neither Junior Lender nor any of its affiliates shall (i) make or participate in a loan facility to or for the benefit of Borrower on a basis that is senior to or pari passu with the liens and interests held by Senior Lender pursuant to the Senior Loan Documents, (ii) not vote affirmatively in favor of any plan of reorganization or liquidation unless Senior Lender has also voted affirmatively in favor of such plan, and (iii) not contest the continued accrual of interest on the Senior Indebtedness, in accordance with and at the rates specified in the Senior Loan Documents, both for periods before and for periods after the commencement of such Bankruptcy Proceedings. Junior Lender shall execute and deliver to Senior Lender powers of attorney, assignments or other instruments as may PROPERTY OF SALT LAl<E CITY RECORDER'S OFFICE Subordination and In tercreditor Ag reement (S LC Corporation) 7 P.O. BOX 1 45515 Garden Lofts ,}Partments SALT LAl<E CITY, UTAH 841 14-5015 be requested by Senior Lender in order to enable it to exercise the above-described authority or powers with respect to any or all of the Junior Loan Documents, and to collect and receive any and all payments or distributions which may be payable or deliverable at any time upon or with respect to any of the Junior Loan Documents to Junior Lender. (f) Junior Lender covenants and agrees that the effectiveness of this Agreement and the rights of Senior Lender hereunder shall be in no way impaired, affected, diminished or released by any renewal or extension of the time of payment of the Senior Loan, by any delay, forbearance, failure, neglect or refusal of Senior Lender in enforcing payment thereof or in enforcing the lien of or attempting to realize upon the Senior Loan Documents or any other security which may have been given or may hereafter be given for the Senior Loan, by any waiver or failure to exercise any right or remedy under the Senior Loan Documents, or by any other act or failure to act by Senior Lender. Junior Lender acknowledges that Senior Lender, at its sole option, may release all or any portion of the Property from the lien of the Senior Security Instrument, and may release or waive any guaranty, surety or indemnity providing additional collateral to Senior Lender, and Junior Lender hereby waives any legal or equitable right in respect of marshaling it might have, in connection with any release of all or any portion of the Property by Senior Lender, to require the separate sales of any portion of the Property or to require Senior Lender to exhaust its remedies against any portion of the Property or any other collateral before proceeding against any other portion of the Property or other collateral (including guarantees) for the Senior Loan. Senior Lender may pursue all rights and remedies available to it under the Senior Loan Documents, at law, or in equity, regardless of any Enforcement Action Notice or Enforcement Action by Junior Lender. Except as otherwise provided herein, at any time or from time to time and any number of times, without notice to Junior Lender and without affecting the liability of Junior Lender, (a) the time for payment of the Senior Indebtedness may be extended or the Senior Indebtedness may be renewed in whole or in part; (b) the time for Borrower's performance of or compliance with any covenant or agreement contained in the Senior Loan Documents, whether presently existing or hereinafter entered into , may be extended or such performance or compliance may be waived; (c) the maturity of the Senior Indebtedness may be accelerated as provided in the Senior Loan Documents; (d) any Senior Loan Document may be extended, consolidated, modified or amended b y Senior Lender and Borrower in any respect, including, but not limited to, an increase in the principal amount; and (e) any security for the Senior Indebtedness may be modified, exchanged, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Senior Indebtedness. If, after the occurrence of a Senior Loan Default, Senior Lender acquires title to any of the Property pursuant to a mortgage foreclosure conducted in accordance with applicable law, the lien, operation, and effect of the Junior Security Instrument and other Junior Loan Documents automatically shall terminate with respect to such Property upon Senior Lender's acquisition of title. (g) Junior Lender acknowledges that it entered into the transactions contemplated by the Junior Loan Documents and made the Junior Loan to Borrower without reliance upon any information or advice from Senior Le nder. Junior Lender made its own underwriting analysis in connecp ~, ~t~,l~FJBµJ;g fl ~@,<l,11, its own credit C ITY RECORDEl~'S OFF ICE P.O. BOX 1455 15 S ub ordinatio n and lntercreditor Agreement (SLC Corporation) 8 SALT LAl<E C ITY, UTAH 8 da1ct"h4 bfft5 Ap~rtments review of Borrower, and investigated all matters pertinent, in Junior Lender's judgment, to its determination to make the Junior Loan to Borrower. Junior Lender acknowledges that it is a sophisticated, experienced commercial lender, and was represented by competent counsel in connection with this Agreement. (h) Junior Lender hereby represents and warrants that, as of the date hereof, the entire proceeds of the Junior Loan have been disbursed to Borrower. Junior Lender hereby further represents and warrants that: (i) Junior Lender is now the owner and holder of the Junior Loan Documents; (ii) the Juni.or Loan Documents are now in full force and effect; (iii) the Junior Loan Documents have not been modified or amended; (iv) no default or event which, with the passing of time or giving of notice would constitute a default, under the Junior Loan Documents has occurred; (v) the current outstanding principal balance of the Junior Indebtedness is $1,000,000; (vi) no scheduled monthly payments under the Junior Loan Documents have been or will be prepaid except with the prior written consent of Senior Lender; (vii) none of the rights of Junior Lender under any of the Junior Loan Documents are subject to the rights of any third parties, by way of subrogation, indemnification or otherwise; and (viii) there are no other Junior Loan Documents other than those listed on Exhibit B hereto. Borrower further represents and warrants that it has provided to Senior Lender a true, complete, and correct copy of all the Junior Loan Documents. 4. Standstill Agreement; Right to Cure Senior Loan Default. (a) Until such time as any of the Senior Indebtedness has been repaid in full and the Senior Security Instrument has been released and discharged, Junior Lender shall not without the prior written consent of Senior Lender, which may be withheld in Senior Lender's sole and absolute discretion, take any Enforcement Action, including, without limitation, (i) accelerate the Junior Loan, (ii) exercise any of Junior Lender's remedies under the Junior Security Instrument or any of the other Junior Loan Documents (including, without limitation, the commencement of any judicial or non-judicial action of proceeding (a) to enforce any obligation of Borrower under any of the Junior Loan Documents, (b) to collect any monies payable to Borrower, (c) to have a receiver appointed to collect any monies payable to Borrower; or (d) to foreclose the lien(s) created by the Junior Security Instrument) or (iii) file or join in the filing of any involuntary Bankruptcy Proceeding against Borrower or any person or entity which owns a direct or indirect interest in Borrower; provided, however, that such limitation on the remedies of Junior Lender shall not derogate or otherwise limit Junior Lender's rights, following an event of default under the Junior Loan Documents to (a) compute interest on all amounts due and payable under the Junior Loan at the default rate described in the Junior Loan Documents, (b) compute prepayment premiums and late charges, and (c) enforce against any person , other than Borrower and any guarantors or indemnitors under the Senior Loan Documents, any guaranty of the obligations of Borrower under the Junior Loan. (b) Senior Lender shall, simultaneously with the sending of any notice of a Senior Loan Default to Borrower, send to Junior Lender a copy of said notice under the Senior Loan Documents; prov ided, however, failure to do so s hall not affect the validity PROPERTY OF SALT LAl<c CITY RECORDER'S OFflCE Subordination a nd lntercreditor Ag reeme nt (S LC Corp oration) 9 P.O . BOX 145515 Garde n Lofts Af a rtments SALT LAKE CITY, UTAH 84114 -55 5 of such notice or any obligation of Borrower to Senior Lender and shall not affect the relative priorities between the Senior Loan and the Junior Loan as set forth herein. Borrower covenants and agrees to forward to Junior Lender, within three (3) business days of Borrower's receipt thereof, a copy of any notice of a Senior Loan Default Borrower receives from Senior Lender. (c) Junior Lender shall have the right, but shall have no obligation, to cure any Senior Loan Default; provided, if Junior Lender shall elect to cure any such Default, it shall so notify Senior Lender and shall commence and complete such curing within any applicable notice or grace period, if any, as Borrower is permitted by the terms of the Senior Loan Documents to cure such Senior Loan Default. Junior Lender shall not be subrogated to the rights of Senior Lender under the Senior Loan Documents by reason of Junior Lender having cured any Senior Loan Default. However, Senior Lender acknowledges that, to the extent so provided in the Junior Loan Documents, amounts advanced or expended by Junior Lender to cure a Senior Loan Default may be added to and become a part of the Junior Indebtedness. (d) Junior Lender agrees that, notwithstanding any contrary prov1s10n contained in the Junior Loan Documents, a Senior Loan Default shall not constitute a default under the Junior Loan Documents if no other default occurred under the Junior Loan Documents. (e) Junior Lender acknowledges that any conveyance or other transfer of title to the Property pursuant to a foreclosure of the Junior Security Instrument (including a conveyance or other transfer of title pursuant to the exercise of a power of sale contained in the Junior Security Instrument), or any deed or assignment in lieu of foreclosure or similar arrangement, shall be subject to the transfer provisions of the Senior Loan Documents; and the person (including Junior Lender) who acquires title to the Property pursuant to the foreclosure proceeding ( or pursuant to the exercise of a power of sale contained in the Junior Security Instrument) shall not be deemed to be automatically approved by Senior Lender. 5. Insurance. Junior Lender agrees that all original policies of insurance required pursuant to the Senior Security Instrument shall be held by Senior Lender. The preceding sentence shall not preclude Junior Lender from requiring that it be named as a loss payee, as its interest may appear, under all policies of property damage insurance maintained by Borrower with respect to the Property or that it be named as an additional insured under all policies of liability insurance maintained by Borrower with respect to the Property. Nothing in this paragraph shall affect the priority of payment of the proceeds of property damage insurance under the Senior Security Instrument. 6. Default. Junior Lender and Borrower acknowledge and agree that a default by either such party under this Agreement shall, at the sole option of Senior Lender, constitute a default under the Senior Loan Documents. Each party hereto acknowledges that in the event any party fails to comply with its obligations hereunder, the other parties shall have all rights available at law and in equity, including the right to obtain specific performance of the obligations of such defaulting party and injunctive relief. No failure or delay on the part of any Sub ordination and lnte rc reditor Agreement (S LC Corporation) 10 PROPERTY OF SALT LAl<E CITY RECORDER'S OFFICE P.O. BOX 1 45515 Garde n Lofts Apartments SALT LAl<E CITY, UTAH 84114-5515 party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. 7. Enforcement Costs. Borrower agrees to reimburse Senior Lender for any and all costs and expenses (including reasonable attorneys' fees) incurred by Senior Lender in connection with enforcing its rights against Junior Lender under this Agreement. 8. Notices. Any notice which any party hereto may be required or may desire to give hereunder shall be deemed to have been given and shall be effective only if it is in writing and (i) delivered personally, (ii) mailed, postage prepaid, by United State registered or certified mail , return receipts requested, (iii) delivered by overnight express courier or (iv) sent by telecopier, in each instance addressed as follows: To Junior Lender: If to Senior Lender: With a copy to: Prior to the Conversion Date, with a copy to: City of Salt Lake PO Box 145488 451 South State Street, Room 406 Salt Lake City, Utah 84114 Attention: Housing & Neighborhood Development Facsimile: (801) 535-6131 Citibank, N .A . 388 Greenwich Street, 8th Floor New York, New York 10013 Attention: Transaction Management Group Re: Garden Lofts Apartments Deal No. 24974 Facsimile: (212) 723-8209 Citibank, N.A. 325 East Hillcrest Drive, Suite 160 Thousand Oaks , California 91360 Attention: Operations Manager/ Asset Manager Re: Garden Lofts Apartments Deal No. 24974 Facsimile: (805) 557-0924 Citibank, N.A. 388 Greenwich Street, 8th Floor New York, New York 10013 Attention: Account Specialist Re: Garden Lofts Apartments Deal No. 24974 Facsimile: (212) 723-8209 Following the Conversion Citibank N .A. Date, with a copy to: c/o Berkadia Commercial Servicing Department 323 Norristown Road, Suite 300 Ambler, Pennsylvania 19002 PROPERTY OF SALT LA!<E CITY RECORDER'S OFFICE Subordination and lnterc redito r Ag reement (S LC Corporati on) 11 P.O . BOX l 455 l 5 Gar d v.n Lofts J).pa rtmen ts SALT LAl<E CITY, UTAH tl4 1 14 -o..> 1 -i Attention: Client Relations Manager Re: Garden Lofts Apartments Deal No . 24974 Facsimile: (215) 328 -0305 And a copy of any notices Citibank, N.A. of default sent to: 388 Greenwich Street New York, New York 10013 Attention: General Counsel 's Office Re: Garden Lofts Apartments Deal No . 24974 Facsimile: (646) 291-5754 or at such other addresses or to the attention of such other persons as may from time to time be designated by the party to be addressed by written notice to the other in the manner herein provided. Notices, demands and requests given in the manner aforesaid shall be deemed sufficiently served or given for all purposes hereunder when received or when delivery is refused or when the same are returned to sender for failure to be called for. 9. WAIVER OF TRIAL BY JURY. TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF THE PARTIES HERETO (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS W AIYER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VO LUNT ARIL Y WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL. 10. Term. The term of this Agreement shall commence on the date hereof and shall continue until the earliest to occur of the following events: (i) the payment of all of the principal of, interest on and other amounts payable under the Senior Loan Documents; (ii) the payment of all of the principal of, interest on and other amounts payable under the Junior Loan Documents, other than by reason of payments which Junior Lender is obligated to remit to Senior Lender pursuant to the terms hereof; (iii) the acquisition by Senior Lender of title to the Property pursuant to a foreclosure, or a deed in lieu of foreclosure , of ( or the exercise of a power of sale contained in) the Senior Security Instrument; or (iv) the acquisition by Junior Lender of title to the Property pursuant to a foreclosure, or a deed in lieu of foreclosure , of ( or the exercise of a power of sale contained in) the Junior Security Instrument, but only if such acquisition of title does not violate any of the terms of this Agreement. Subordina tion and In terc redito r Ag reement (S LC Corporation) 12 PROPERTY OF StLT LAl<E CITY RECOF?DER'S OFFICE P.O. BOX l 45515 SALT LAKE C ITY, UTAH 84114-5515 Garden lofts Apa rtments 11. Miscellaneous. (a) Junior Lender shall, within ten (10) business days following a request from Senior Lender, provide Senior Lender with a written statement setting forth the then current outstanding principal balance of the Junior Loan, the aggregate accrued and unpaid interest under the Junior Loan, and stating whether, to the knowledge of Junior Lender, any default or event of default exists under the Junior Loan, and containing such other information with respect to the Junior Indebtedness as Senior Lender may require. Upon notice from Senior Lender from time to time, Junior Lender shall execute and deliver such additional instruments and documents, and shall take such actions, as are required by Senior Lender in order to further evidence or effectuate the provisions and intent of this Agreement. (b) This Agreement shall bind and inure to the benefit of all successors and assigns of Junior Lender and Senior Lender. Senior Lender may assign its interest in the Senior Loan Documents without notice to or consent of Junior Lender. Junior Lender may only assign its rights and interests hereunder following the prior written consent of Senior Lender, which consent may be withheld or conditioned in its sole and absolute discretion. (c) Senior Lender hereby consents to the Junior Loan and the Junior Loan Documents; provided, however, that this Agreement does not constitute an approval by Senior Lender of the terms of the Junior Loan Documents. Junior Lender hereby consents to the Senior Loan and the Senior Loan Documents; provided, however, that this Agreement does not constitute an approval b y Junior Lender of the terms of the Senior Loan Documents. (d) This Agreement may be executed in multiple counterparts, each of which shall constitute an original document and all of which together shall constitute one agreement. (e) IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, MA TIERS OF CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER, THIS AGREEMENT HAS BEEN ENTERED INTO AND DELIVERED IN, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAW. (f) Time is of the essence m the performance of every covenant and agreement contained in this Agreement. (g) If any provision or remedy set forth in this Agreement for any reason shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or remedy of this Agreement and this Agreement shall be construed as if such invalid, ill egal or unenforceable prov ision or Subordination and lntercreditor Agreement (SLC Collloration) 13 PROPERTY OF Sfa.LT l.Al<E CITY RECORDEr,?'S OFFICE P.O . BOX 145 515 SALT LAl<E CITY, UTAH @Wie1 lf-ts p1a!J11ents remedy had never been set forth herein, but only to the extent of such invalidity, illegality or unenforceability. (h) Each party hereto hereby represents and warrants that this Agreement has been duly authorized, executed and delivered by it and constitutes a legal, valid and binding agreement enforceable in all material respects in accordance with its terms. (i) Borrower hereby acknowledges and consents to the execution of this Agreement, and agrees to be bound by the provisions hereof that are applicable to Borrower. Solely as between Senior Lender and Junior Lender, all of the signatories below hereby agree that to the extent of any conflict between the terms and provisions of this Agreement and the terms and provisions of the Senior Loan Documents and/or the Junior Loan Documents respectively, the terms and provisions of this Agreement shall govern and control. By executing this Agreement in the place provided below, Borrower hereby (i) acknowledges the provisions hereof, (ii) agrees not to take any action inconsistent with Senior Lender's rights or Junior Lender's rights under this Agreement, (iii) waives and relinquishes to the maximum extent permitted by law any and all rights, defenses and claims now existing or hereinafter accruing relating to Junior Lender's forbearance from exercising any rights and remedies pursuant to Section 4 of this Agreement, including, without limitation, any defenses based on the statute of limitations or any equitable defenses, such as laches, and (iv) acknowledges and agrees that (A) this Agreement is entered into for the sole protection and benefit of Senior Lender and Junior Lender (and their respective successors, assigns and participants), and no other person (including Borrower) shall have any benefits, rights or remedies under or by reason of this Agreement, (B) nothing in thi s Agreement is intended, or shall be construed to , relieve or discharge the obligations or liabilities of any third party (including Borrower under the Senior Loan Documents and the Junior Loan Documents), (c) neither of them nor any of their affiliates shall be, or be deemed to be, beneficiaries of any of the provisions hereof or have any rights hereunder whatsoever, and (D) no provision of this Agreement is intended to , or shall be construed to , give any such third party (including Borrower) any right subrogating to the rights of, or action against, Senior Lender or Junior Lender. (j) No amendment, supplement, modification, waiver or termination of this Agreement shall be effective against any party unless such amendment, supplement, modification, waiver or termination is contained in a writing signed by such party. (k) No party other than Senior Lender and Junior Lender shall have any rights under, or be deemed a beneficiary of any of the provisions of, this Agreement. (1) Nothing herein or in any of the Senior Loan Documents or Junior Loan Documents shall be deemed to constitute Senior Lender as a joint venturer or partner of Junior Lender. 12. REPRESENTATION REGARDING ETHICAL STANDARDS FOR CITY OFFICERS AND EMPLOYEES AND FORMER CITY OFFICERS AND EMPLOYEES. Senior Lender and Borrower each represents , solely with respect to itself and its agents and Subordination a nd lnte rcredito r Agreem ent (SLC Corporation) 14 PROPERTY OF SALT LA!<E CITY RECORDER'S OfflCF P.O. BOX 145515 Garden Lofts Apartments SALT LAl<E CIW, UTAH 84114-5515 employees, that it has not: ( 1) provided an illegal gift or payoff to a City officer or employee or former City officer or employee, or his or her relative or business entity; (2) retained any person to solicit or secure this contract upon an agreement or understanding for a commission, percentage, or brokerage or contingent fee , other than bona fide employees or bona fide commercial selling agencies for the purpose of securing business; (3) knowingly breached any of the ethical standards set forth in City's conflict of interest ordinance, Chapter 2.44, Salt Lake City Code; or (4) knowingly influenced, and hereby promises that it will not knowingly influence, a City officer or employee or former City officer or employee to breach any of the ethical standards set forth in City's conflict of interest ordinance, Chapter 2.44, Salt Lake City Code 13. Attached Exhibits. The following Exhibits are attached to this Agreement and are incorporated by reference herein as if more fully set forth in the text hereof: Exhibit A -Legal Description Exhibit B -Junior Loan Documents Exhibit C-Modifications to Subordination and Intercreditor Agreement The terms of thi s Agreement are modified and supplemented as set forth in said Exhibits. To the extent of any conflict or inconsistency between the terms of said Exhibits and the text of this Agreement, the terms of said Exhibits shall be controlling in all respects. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Subordination and lntercreditor Agreement (SLC Corporation) 15 Pl~OPERTY OF SALT LA:<:: CITY f<ECORDE:R'S CF-ICE P.O . BOX 145515 SALT LAl<E Clfr, UTl"\HGag'zt f,~t P~'titt s IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Subordination and Intercreditor Agreement or caused this Subordination and Intercreditor Agreement to be duly executed and delivered by their respective authorized representatives as of the date first set forth above. ATTEST: r STATE OF UTAH COUNTY OF SALT LAKE JUNIOR LENDER: SALT LAKE CITY CORPORATION, a Utah municipal corporation By: ~fl'),(?~ acquelineM.Biskupski,Mayor Approved as to Form Salt Lake City Attorney's Office By:m:KefuK nnberly K. Chytraus t9oil:'.:'. Attorney Date: \ 2D I] On December l3 2017 before me, ~ \ 1\"\0V\.t... rb\rl:\t)( , personally appeared Jacqueline M. Biskupski who, personally known to me or 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/she/they executed the same in his/her authorized capacity, and that by his/her s ignature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature ~ Subordination and lnte rcreditor Agree ment (S LC Co)l'.loration) of Notary Public NOTARY PUBLIC SIMONE BUTLER 697404 COMM ISSION EXPIRES OCTOBER 25, 2021 STATE OF UTAH S-1 P,,OPEr.Ty _)~ ! I I'\ Cl'IY l~ECORDER" OF, I ~'-" P.O BCX l 45515 SALT LA1<1: CffY, U iAH a 4°ttf1s~s{rrt ments SENIOR LENDER: CITIBANK, N .A. By:------------ Name: Bryan Barker Title: Authorized Signatory GENERAL ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. ST A TE OF CALIFORNIA COUNTY OF ----- ) ) ) On December_, 2017, before me, _______________ , N otary Public, personally appeared Bryan Barker, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) 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. Signature of Notary Public Subordina tion and lntercred itor Agreement (S LC Corpora tio n) S-2 (Seal) PROPERTY OF SALT LAl<E C ITY RECORDER'S OFFICE P.O . BOX l 45515 SALT LAl<E C ITY, UTAH 84114-5515 Garden Lofts Apartme nts ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE: STATE OF UTAH ) ) COUNTY OF SALT LAKE ) BORROWER: GARDEN LOFTS HOLDINGS, LP, a Utah limited partnership By: Garden Lofts GP, LLC, a Utah limited liability company Its: General Partner By: --------- Name: Jeffrey S. Nielson Title: Manager On December , 2017 before me, , Notary Public, personally appeared Jeffrey S. Nielson, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name(s) is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Sub ordinati o n and lntercredito r Agreeme nt (SLC Corp oration) Signature of Notary Public S-3 PROPERTY OF SALT LAl<E CITY RECORDER 'S OFFICE P.O. BOX l 45515 SALT LAKE CITY, UTAH 84114-5515 Gard e n Lofts Apartments EXHIBIT A LEGAL DESCRIPTION All of Lot 1, SALT CITY PLAZA MINOR SUBDIVISION, located in the Southeast Quarter of Section 1, Township 1 South, Range 1 West, Salt Lake Base and Meridian, more particularly described as follows: Beginning at a point on the West line of Lot 5, Block 32, Plat "A", Salt Lake City Survey, said point also being in the East right-of-way line of 200 West Street, said point lies South 00°01 '45" West from the Northwest comer of said Lot 5, along the West line of Lot 5, 239.40 feet, said point also lies South 00°00'48" East along the monument line of 200 West Street 306.39 feet and North 89°59'12" East 70.81 feet from the Salt Lake City Survey Monument in the intersection of200 West Street and 500 South Street and running thence North 89°54'10" East 165. 04 feet to the East line of said Lot 5; thence North 00°01 '44" East along said East line 129 .87 feet; thence East 36.58 feet; thence South 6.65 feet; thence East 19.13 feet; thence South 7.33 feet; thence East 65.14 feet; thence South 45 °00'00" East 15.84 feet ; thence East 44.16 feet ; thence South 45 °00'00" East 11.73 feet; thence East 103 .58 feet; thence South 45°00'00" East 27.06 feet; thence East 22.84 feet to the East line of Lot 7 of said Block 32; thence South 00°01 '41" West along said East line and the extension thereof 171 .50 feet; thence South 89°54'05" West 95.03 feet; thence South 00°01'42" West 198 .60 feet; thence South 89°53'54" West 32.88 feet; thence South 00°01 '42" West 127.56 feet to the South line of Lot 2 of said Block 32, said point also being on the North right-of-way line of 600 South Street; thence South 89°53'46" West along said right-of-way 202.18 feet to the Southwest comer of Lot 3 of said Block 32 ; thence North 00°01'44" East along the West line of said Lot 3 and the extension thereof 354.95 feet; thence South 89 °54'06" West 165.04 feet to the West right-of- way line of said 200 West Street; thence North 00°01 '45" East along said West line 66.04 feet to the point of beginning. Tax Parcel No.: 15-01-476-021 Subordination and lntercreditor Agreeme nt (S LC Corporation) A-1 PROPERTY OF SALT LAl<E CITY RECORDER'S Off ICE P.O. BOX 145515 SALT LAKE CITY, UTAH 84114-5515 Gardea Lofts Apartments EXHIBITB JUNIOR LOAN DOCUMENTS 1. Promissory Note, dated as of the date hereof, made by Garden Lofts Holdings, LP, a Utah limited partnership ("Borrower") to Salt Lake City Corporation, a municipal corporation of the State of Utah ("Junior Lender"). 2 . Loan Agreement, dated as of the date hereof, by and between Borrower and Junior Lender. 3. Trust Deed with Assignment of Rents, dated as of the date hereof, made b y Borrower for the benefit of Junior Lender. Subordination and lntercreditor Agreement (S LC Coll)oralion) B-1 PROPERTY OF SALT LAl<E CITY RECORDER'S OFFICE P.O BOX 145515 SALT LAl<E CITY, UTAH 84114-5515 Garden Lofts Apartments EXHIBIT C MODIFICATIONS TO SUBORDINATION AND INTERCREDITOR AGREEMENT The following modifications are made to the text of the Agreement that precedes this Exhibit: None. Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Agreement. Subord ination and Intercreditor Agreement (SLC Corporation) C-1 Garden Lofts Apartments Exhibit 5 Recorded HTF Loan LOAN AGREEMENT Garden Lofts Holdings, LP (Garden Lofts Project) RECORDED DEC 1 4 2017 _________________ C_ITY____:_;Ro=-ECORDER THIS AGREEMENT is by and between SALT LAKE CITY CORPORATION, a munici pal corporation of the state of Utah, hereinafter called the "City," and Garden Lofts Holdings, LP, hereinafter called the "Borrower," and is dated the date that the City Recorder attests the applicable City signature (which date shall be the recordation date). WHEREAS, the Borrower has applied to the City for a loan from the City's Housing Trust Fund for the Garden Lofts project located at 154 West 600 South in Salt Lake City, Utah (the "Project"); and WHEREAS, the City is willing to make said loan to the Borrower on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE 1 THE LOAN SECTION 1.01-THE LOAN, NOTE AND RATE Subject to the terms and conditions of this Agreement, the City hereby agrees to loan to Borrower, and the Borrower hereby agrees to borrow from the City and repay to the City or its assigns, a sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000) (the "Loan"). The obligation of the Borrower to repay the Loan shall be evidenced by a Promissory Note (the "Note") of the Borrower in a form satisfactory to the City, dated on the date on which the Loan is made (the "Closing Date "), payable over thirty-five (35) years with payments commencing and continuing as more fully set forth in the Note, and pa yable to the order of the City for the amount of the Loan with interest on the unpaid principa l at the rate of two and one-half perce nt (2 .5%) per annum. The City's loan shall be secured by a trust deed (the "Trust Deed ") on the Proje ct. The documents evidencing and securing the Loan are herein collectively referred to as the "Loan Documents." SECTION 1.02-THE TERM AND REPAYMENT (a). The term of the Loan shall be for thirty-eight (38) years beginning upon date of funding. The first three (3) years Borrower shall pay interest only. The first payment shall be due at the end of the three (3) year interest only period on April 1 , 2021 in the amount of $75,000 (the "First Payment"). Subsequent payments shall thereafter be made annually ("Annual Payments") comme nc ing on April 1, 2022 and on each April 1 thereafter, until all monies owed to the City have been paid in full. The maximum amount of th e Annual Payment shall be $42,899.43; provided, howeve r, the amount of each Annual Payment shall be limited to the amount of the available Surplus Cash, it being understood that the Borrower shall not be in default if it pays the Surplus Cash, or if there is no Surplus Cash, if no Annual Payment is made for the period when no Surplus Cash is available. Borrower will provide a copy of Borrower's full annual audit each year within thirty (30) days of the completion of the annual audit and such annual audit shall be the conclusive evidence of the availability of Surplus Cash for repayment of the Loan. The City acknowledges that available Surplus Cash will be split evenly between payment on the City's Loan and the Olene Walker Housing Trust Fund Loan. (b). For purposes of this Agreement, "Surplus Cash" shall mean with respect to any period, 75% any revenues of the Borrower remaining after paying, or setting aside funds for paying, all of the following: (i) All sums due or currently required to be paid (including but not limited to any deposits to a principal reserve fund) under that project loan agreement (the "Senior Loan Agreement"), defined in that certain Subordination Agreement (the "Subordination Agreement") dated as of December __ , 2017, by and between Citibank, N.A. ("Senior Mortgagee"), City and Borrower; (ii) All deposits to any replacement reserve, completion/repair reserve or other reserve or escrow required by the Borrower's Senior Mortgagee and investor limited partner; (iii) All fees due or currently payable by the Borrower in connection with any loan senior to the City's loan as such requirements are described in Senior Loan Agreement and Subordination Agreement; and (iv) All reasonable operating expenses of the mortgaged property defined in the Senior Loan Documents (the "Mortgaged Property"), including but not limited to real estate taxes, insurance premiums, utilities, building maintenance, painting and repairs, management fees, payroll , administrative expenses, legal expenses and audit expenses (including any fees, deposits or escrows payable under the Borrower's organizational documents, but excluding any developer fees payable with respect to the Mortgaged Property). (c). Interest shall commence accruing on the date of this Agreement. Each Annual Payment shall be applied first to accrued interest, then to currently due interest, and then to the repayment of principal. If Surplus Cash is not sufficient to make a full First or Annual Payment required under this loan then the unpaid principal portion of such payment shall be deferred and the interest shall accrue and be added to the next Annual Payment. If the Loan has not been fully repaid by the end of the loan term, or if the Loan has not otherwise been paid in full, the City, at its discretion, may call the entire outstanding loan amount due or at the City's sole discretion renegotiate the Loan with the Borrower. Borrower acknowledges that the Loan shall become immediately due and payable to the City if the use of the Project changes from what is described in Section 1.04, without the prior written of consent of the City which consent shall not be unreasonably withheld, conditioned , or delayed. Borrower acknowledges that the City will require an annual report from the Borrower. The annual report will include information on the two hundred seventy two (272) units funded by the City. Borrower will provide documentation on tenant income verifying units are occupied by persons at 60% of area median income or below. These reports will be reviewed and verified by the Housing and Neighborhood Development Staff. 2 All payments shall be applied first to late fees, if any, then to interest, and then to principal. All payments shall be made when due to the City at its address as City may designate in writing. SECTION 1.03-PERSONAL GUARANTEE Not applicable . SECTION 1.04-PURPOSE OF LOAN The purpose of this Loan is for the construction of the Project consisting of 272 income restricted rental units for households earning at or below 60% of the area median income. The Borrower agrees that it shall apply funds received by it under this Agreement in accordance with the purpose stated above . The Borrower further agrees that no application of any funds received from the City hereunder shall be made in violation of federal or state law or Salt Lake City ordinances. SECTION1 .05-DUL Y ORGANIZED The Borrower certifies that it is a Utah limited partnership in good standing , having been organized on October 16, 2017. SECTION 1.06-TERMS, COVENANTS AND CONDITIONS Borrower agrees to abide by and be bound by the attached Terms , Covenants and Conditions marked as Exhibit "A," and the Use of Proceeds marked as Exhibit "B," and incorporated herein by this reference . Borrower acknowledges that it has received a copy of such Terms, Covenants and Conditions, and the Use of Proceeds, has read the same, and accepts them as legal binding parts of this Loan Agreement. SECTION 1.07-FEES Not applicable. IN WITNESS WHEREOF, the parties hereto are signing this Agreement as of the date stated in the introductory clause. RECORDED DEC t 4 2017 CITY RECORDER ATTEST: ~ City RBCOrder 3 CITY: Salt Lake City Corporation, a Utah municipal corporation By Q::r&f/1:/:~ STATE OF UTAH :ss COUNTY OF SALT LAKE ) GARDEN LOFTS HOLDINGS, LP, a Utah limited partnership By: Garden Lofts GP , LLC, a Utah limited liability company its General Partner The foregoing instrument was duly acknowledged before me this ] 4~ day of December, 2017, by Jeffrey S. Nielson, Manager of Garden Lofts GP, LLC , a Utah limited liability company that is the General Partner for Garden Lofts Holdings LP, a Utah limited partnership . • ARNAE BALLANTYNE ttJWff PIAIJC•STAlE OFIIJ'AH COMMISSION# 680146 COMM, EXP. 01·18-2019 Salt Lak e County, Utah 4 ACKNOWLEDGEMENT OF RECEIPT OF COPY OF TERMS, COVENANTS AND CONDITIONS TO LOAN AGREEMENT COMES NOW the Undersigned, hereinafter referred to as the "Borrower ," and acknowledges receipt of a copy of Ex hibit A, "Terms , Covenants and Conditions," and Exh ibit B, "Use of Proceeds" to Loan Agreement and acknowledges that he has read the same, and acknowledges his agreement t o accept them as legal and binding parts of the Loan Agreement. DATED this / 4ft day of December, 2017. GARDEN LOFTS HOLDINGS, LP, a Utah li m ited partnership By: Garden Lofts GP, LLC, a Utah lim ited liability company its General Partner Jeffrey S Nielson 5 SALT LAKE CITY CORPORATION EXHIBIT "A" TO LOAN AGREEMENT TERMS, COVENANTS AND CONDITIONS It is expressly agreed by the parties that this Exhibit is incorporated in and a part of that certain Loan Agreement by and between Salt Lake City Corporation (the "City") and Garden Lofts Holdings, LP, a Utah limited partnership, (the "Borrower"), and that all of the terms, conditions and provisions set forth below are to apply to that Agreement and are made a part of that Agreement as though they were expressly rewritten , incorporated and included therein. ARTICLE II REPRESENTATIONS AND WARRANTIES The Borrower Represents and Covenants the Following: SECTION 2.01: DULY AUTHORIZED The making and performance by the Borrower of this Agreement, and the execution and delivery of the Note, and any security agreements and Instruments have been duly authorized by all necessary action, including but not limited to company, partnership or individual action, and will not violate any law, rule, regulation, order, writ, judgment, decree, determination or award presently in effect having applicability to the Borrower or any provision of the Borrower's Partnership Agreement, dated ___________ (the "Partnership Agreement"), or result in a breach of or constitute a default under any indenture or bank loan or credit agreement or any other agreement or instrument to which the Borrower is a party or by which it or its property may be bound or affected. SECTION 2.02: LEGALLY BINDING INSTRUMENTS When this Agreement is executed by the Borrower and the City, and when the Note is executed and delivered by the Borrower for value , each such instrument shall constitute the legal, valid, and binding obligation of the Borrower in accordance with its terms. Any security agreements and instruments, financing statements, mortgages, trust deeds, and other liens on collateral or real estate with respect to the Loan shall constitute legal, valid and binding liens. The City acknowledges it is subordinating its Loan and the collateral for such Loan as set forth in the Subordination Agreement to certain senior financing previously disclosed to the City and will share second priority with the lien in favor of the Olene Walker Housing Loan Fund (the "Olene Walker Loan") SECTION 2.03: NO LEGAL SUITS There are no legal actions, suits , or proceedings pending or, to the knowledge of the Borrower, threatened against the Borrower before any court or administrative agency, whi c h, if determined adversely to the Borrower, would have a material adverse effect on the financial condition or business of the Borrower. 6 SECTION 2.04: NO LEGAL AUTHORIZATION NEEDED No authorization, consent or approval, or any formal exemption of any Governmental body, regulatory authorities (Federal, State or Local) or mortgagee, creditor or third party is or was necessary to the valid execution and delivery by the Borrower of this Agreement, the Note, any security agreement, financing statement or the Trust Deed. SECTION 2.05: NOT IN DEFAULT The Borrower is not in default of any obligation , covenant, or condition contained in any bond, debenture, note or other evidence of indebtedness or any mortgage or collateral instrument securing the same. SECTION 2.06. TAXES ARE PAID The Borrower ha s filed all tax returns which are required and has paid or made provision for the payment of all taxes which have or may become due pursuant to said returns or pursuant to any assessments levied against the Borrower or its personal or real property by any ta xing agency, federal, state or local. No tax liability has been asserted by the Internal Revenue Service or other taxing agency, federal, state or local for taxes materially in excess of those already provided for the Borrower knows of no basis for any such deficiency assessment. SECTION 2.07: NO ADVERSE CHANGE The Borrower certifies th at there has been no adverse change since the date of loan application in the financial condition , organization, operation, business prospects, fi xed properties, or personnel of the Borrower. ARTICLE Ill CONDITIONS OF LENDING The obligation of the City to make the Loan shall be subject to the fulfillment at the t ime of funding of each of the following conditions: SECTION 3 .01 : EX ECUTION OF AUTHORIZATION The Borrower shall have executed and delivered to the City the loan commitmen t, if applicable. SECTION 3.02: EXECUTION AND DELIVERY OF NOTE AND LOAN AGREEMENT The Borrower shall have executed and delivered to the City this Loan Agreement and the Note in a form satisfactory to the City and its counsel. SECTION 3.03: EX ECUTION AND DELIVERY OF SECURITY AGREEMENT AND MORTGAGE If required by the City, the Borrower shall have executed and delivered to the City a security ag reement and financing statements in a form satisfactory to the City, giving the City 7 security in all of the collateral and personal property acquired with the Loan proceeds, and/or the Borrower shall have executed and delivered to the City, the Trust Deed on the real estate . Said security agreement (the "Security Agreement"), financing statements (the "Financing Statements") and Trust Deed shall be free and clear of all prior liens and encumbrances, except as provided for Section 2.02 herein . The Security Agreement, Financing Statements and Trust Deed are to secure payment of the principal of the Note, the interest thereon, and any other sums payable by the Borrower hereunder. SECTION 3.04: EXECUTION AND CERTIFICATION OF RESOLUTION OF BOARD OF DIRECTORS OR CERTIFICATE OF PARTNERSHIP If required by the City, the Borrower shall have executed and delivered to the City a duly certified copy of a Resolution of the Manager of the General Partner of the Borrower authorizing the execution and delivery by the Borrower of this Agreement, the Note, and Security Agreement and Trust Deed. SECTION 3.05: CORPORATE OR PARTNERSHIP PAPERS The Borrower shall have delivered to the City if requested , copies of the Borrower's Partnership Agreement, Certificate of Limited Partnership, W-9. SECTION 3.06 : TITLE INSURANCE Borrower shall provide to Lender a current title commitment for City's review, At Closing, the Borrower shall have secured lenders title insurance in the form and issued by companies satisfactory to the City, in the amount of the Loan, insuring the City's lien under the Trust Deed , subject only to exceptions approved by the City if no loan commitment is issued. The title policy shall show no delinquent taxes or assessments affecting the real property or any part thereof on the date of closing except as approved by the City. SECTION 3.07 : GOVERNMENTAL APPROVAL The Borrower shall have secured all necessary approvals or consents, if required, of Governmental bodies having jurisdiction with respect to its business .. If this Loan is to be used for construction , Borrower shall have obtained all required building and other applicable permits and approvals . SECTION 3.08 : APPROVAL OF OTHERS The Borrower shall have secured all necessary approvals or consents required with respect to this transaction by any mortgagor, creditor or other party having any financial interest in the Borrower. The Borrower will provide evidence of all funding commitments and executed tax credit investor agreement. ARTICLE IV AFFIRMATIVE COVENANTS OF THE BORROWER The Borrower agrees to comply with the following covenants from the date hereof until the City has bee n fully repaid with interest, unless the City or its a ssigns sh all otherwise consent in writing: 8 SECTION 4.01: PAYMENT OF THE LOAN The Borrower agrees to pay punctually the principal and interest on the Note according to its terms and conditions and to pay punctually any other amounts that may become due and payable to the City under or pursuant to the terms of this Agreement or Note. In the event City or its agent or assignee accepts a late payment after the date on which such payment is due, the Borrower agrees to pay a late payment charge equal to five percent of the late amount or ONE HUNDRED and NO/100THS DOLLARS ($100.00), whichever is greater, as compensation for additional collection efforts. Subject to any provisions to the contrary in the Senior Loan document or Subordination Agreement, the Borrower reserves the right to prepay at any time all or any part of the principal amount of the Note without the payment of penalties or premiums. All payments on this Note shall be applied first to late charges, if any, then to the interest due on the Note, and then to the principal due on the Note. SECTION 4.02: PAYMENT OF OTHER INDEBTEDNESS The Borrower agrees to pay punctually the principal and interest due on any other indebtedness now or hereafter at any time owing by the Borrower to the City or any other entity. SECTION 4 .03: MAINTAIN AND INSURE PROPERTY The Borrower agrees at all times to maintain the property provided as security for this Loan in such condition and repair that the City's security interest therein will be adequately protected. If the security is real property, the Borrower also agrees to maintain during the term of the Loan adequate hazard insurance policies covering fire and extended coverage and such other hazards as may be deemed appropriate in amounts and form sufficient to prevent the Borrower from becoming a co-insurer and issued by companies satisfactory to the City with acceptable loss payee clauses in favor of the City. The Borrower further agrees, if at any time during the life of the Loan the Borrower's property is declared to be within a flood hazard area, to purchase Federal Flood Insurance, if available. Such insurance shall be in an amount equal to the lesser of: i) the amount of the Loan; ii) the insurable value of the property; or iii) the maximum limit of coverage available. Subject to any provisions to the contrary in the Senior Loan document or Subordination Agreement, and notwithstanding anything to the contrary contained in the Loan Documents, City agrees to apply all insurance proceeds resulting from casualty to or damage of the real property, including improvements, securing the loan {the "Project") and all payments or awards resulting from a taking for any public or quasi-public purpose by any lawful power or authority by exercise of the power of condemnation or eminent domain toward the restoration , replacement or rebuilding of the Project, or any part thereof, as nearly as possib,le to its value, condition and operational character immediately prior to any such damage, destruction or taking ("Restoration"), provided sufficient funds are available from all sources to complete such Restoration . 9 The Borrower agrees to obtain and maintain during the entire term of this Loan a comprehensive general liability policy of insurance with minimum coverage amounts as required by City from time to time, but for the present, a minimum of $2,000,000 per occurrence and $3,000,000 aggregate. Said insurance shall provide for a minimum of thirty (30) day's prior written notice of cancellation to the City, but cancellation shall not relieve Borrower of this obligation to provide insurance. On all such coverage, City shall be named as an additional insured. Borrower shall furnish to City appropriate certificates of insurance verifying such present and continued coverage, concurrently with the execution hereof. Borrower also agrees to provide additional certificates as changes occur in policies or coverage during the term of this Loan. All policies of insurance provided shall be issued by insurance companies qualified to do business in the State of Utah and listed on the United States Treasury Department's current Department of Treasury Fiscal Services List 4 70, or having a general policyholder's rating of not less than "A-" in the most current available A.M. Best Co., lnc.'s, Best Insurance Report. Upon request, Borrower shall provide satisfactory evidence of appropriate insurance coverage. SECTION 4.04: PAY ALL TAXES The Borrower agrees to duly pay and discharge all taxes, assessments, and governmental charges upon it or against its properties prior to the date on which the penalties attach thereto, except that the Borrower shall not be required to pay any such tax, assessment, or governmental charge which is being contested by it in good faith and by appropriate proceedings. SECTION 4.05: PROVIDE AFFORDABLE HOUSING The loan funds at issue are being provided on the specific condition that no less than one hundred percent (100%) of the total units to be built in the development will be offered and leased under terms affordable to households at or below 60% of area median income, as defined for purposes of administration of the federal Low Income Housing Tax Credit program for a period of not less than fifty-five (55) years from the date the units are first placed into service. The Borrower agrees that any variance from that condition will constitute a breach the conditions of the loan and all loan amounts and interest owing thereon shall immediately become due and payable. The Borrower will provide documentation to the City at initial lease up and through annual reports demonstrating compliance with the affordability restrictions. SECTION 4.06: MAINTAIN LEGAL EXISTENCE The Borrower agrees to maintain its existence, rights , privilege, and franchises within the State of Utah, and remain qualified to do business in each jurisdiction in which its present or future operations or its ownership of property require such qualification. SECTION 4.07: PROVIDE FINANCIAL AND PROJECT INFORMATION The Borrower agrees to maintain adequate records and books of account, in which complete entries will be made reflecting all of its business and financial transactions, such entries to be made in accordance with generally accepted principles of good accounting practice consistently applied in the case of financial transactions. 10 In addition, the Borrower agrees to deliver to the City financial statements, certified by an authorized officer of the Borrower to be true and accurate copies, upo n request. Borrower shall have completed and deliver to City an annual aud it within 30 days of completion. The Bo rrower further agrees to provide written notice to the City of any public hearing or meeting before any administrative or other public agency that may, in any manner, affect the collateral, personal property or real estate securing the Loan (the "Collate ral"). The Borrower agrees to prov ide the City the following notifications and documentation: 1) quarterly progress reports post-closing through project completion; 2) notification of material changes to project financing sources or costs (defined as a change greater than 5%); 3) notification of project lease up; 4) notification of project completion; 5) project certificate of occupancy; 6) final cost certification; 7) property management agent contact information and management agreement. SECTION 4.08: RIGHT TO INSPECTION The Borrower agrees to grant the City, until the Note has been fully repaid with interest, the right during normal business hours to inspect the Collateral used to secure the Loan; and the Borrower further agrees to provide the City free access to the Borrowe r's premises for the purpose of such inspection to determine the condition of the Collateral provided such entry and inspection shall not unreasonably interfere with the construction or operation of the Collateral. SECTION 4.09: NULL AND VOID COVENANTS The Borrower agrees that in the event any provision of this Loan Agreement or any other instrument executed at closing, or the application thereof to any person or circumstances, shall be declared null and void, invalid, or held for any reason to be unenforceable by a Court of competent jurisdiction, the remainder of such agreement shall ne ve rth e less remain in full force and effect, and to this end, the provisions of all covenants, conditions, and agreements described herein are deemed separate. SECTION 4.10: EXPENSES AND CLOSING COSTS If required by the City, the Borrower agrees to pay all fees and charges incurred with respect to the Loan, or its making, or transfer to the City in any way connected therewith , including, but not limited to, the fees and out-of-pocket expenses of local counsel employed by the City, title insurance and survey costs , recording and filing fees, mortgage taxes, documentary stamp, and any other assessments, fees and expenses payable in connection with this transaction and with the enforcement of this Loan Agreement a nd Note. In the event the processing of the Loan is terminated, for whatever reason, or the Loan is not funded , for whatever reason, Borrower agrees to pay all fees of legal counsel employed by City to assist Borrower at the rate of $100.00 per hour, plus out-of-pocket expenses, and the fees of the representative of City at the rate of $150.00 per hour, plus out-of-pocket expenses, within thirty (30) days after billing . Interest shall accrue on unpaid fees at the rate of eighteen percent (18%) per annum compounded monthly. 11 SECTION 4.11: NOTICE OF DEFAULT The Borrower agrees to give written notice to the City of any event, within ten (10) days of the event, which constitutes an Event of Default under this Loan Agreement as described in Article VI herein, or that would, with notice or lapse of time or both, constitute an Event of Default under this Loan Agreement. SECTION 4.12: INDEMNIFICATION Borrower agrees and covenants to hold the City harmless, indemnify and defend it and its officers and agents of and from any and all claims of loss, damages or injury sustained by any person or damage to property and all expenses, including reasonable attorneys' fees , incurred or thereby arising from Borrower's performance under this agreement, including but not limited to any event of default under Article VI herein by the Borrower's principals, staff, agents, contractors or employees. Nothing herein shall be construed to require the Borrower to indemnify the City against the City's negligence or willful misconduct. If any of the following events of default referred to in the subsections listed below ("Event of Default") shall occur and be continuing at the time of such demand, the entire unpaid principal balance of the Note, and the interest then accrued thereon, shall become and be immediately due and payable upon demand, without presentment or protest, if not cured within the applicable cure period following written notice from the City as set forth in this Article VI. The Loan shall be in default whether it is voluntary or involuntary, with or without limitation, it occurred or was brought about by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rules or regulation of any administrative governmental body, provided, however, that such sum shall not be then payable if Borrower's payments have been waived or the time for making the Borrower's payments has been extended by the City. SECTION 4.13: EXPENSES OF COLLECTION OR ENFORCEMENT The Borrower agrees, if at any time the Borrower defaults on any provision of this Loan Agreement, to pay the City or its assigns, in addition to any other amounts that may be due from the Borrower, an amount equal to the reasonable costs and expenses of collection, enforcement or correction or waiver of the default incurred by the City or its assigns in such collection, enforcement, correction, or waiver of default, including reasonable attorneys' fees actually incurred . SECTION 4.14: OTHER CONDITIONS The Borrower agrees to identify City funding on construction signage and in any public project descriptions. ARTICLE V NEGATIVE COVENANTS OF THE BORROWER The Borrower covenants and agrees that, from the date hereof until payment in full of the Note, unless the City or its assigns shall otherwise consent in writing, it will not enter into any agreement or other commitme nt the performance of which would constitute a breach of any 12 of the covenants contained in this Loan Agreement, including, but not limited to, the following covenants: SECTION 5.01: ENCUMBER THE COLLATERAL The Borrower shall neither create nor suffer to exist any mortgage, pledge, lien, charge or encumbrance, including liens arising from judgments on the Collateral except as of record or disclosed to the City in writing prior to the making of the loan hereunder. SECTION 5.02: SELL THE COLLATERAL The Borrower shall not sell, convey, or suffer to be conveyed, lease, assign, transfer, or otherwise dispose of the Collateral unless approved in writing by the City; provided however, that nothing herein shall preclude the lease of individual residential dwelling units. SECTION 5.03: CHANGE OWNERSHIP Except as otherwise stated in the senior loan documents and the restated limited liability partnership agreement, Borrower shall not permit any material change in the ownership structure, control, or operation of the general partner of the Borrower without the written permission of the City, which permission shall not be unreasonably withheld, conditioned, or delayed. ARTICLE VI EVENTS OF DEFAULT If any of the following events of default referred to in the subsections listed below ("Event of Default") shall occur and be continuing at the time of such demand, the entire unpaid principal balance of the Note, and the interest then accrued thereon, shall become and be immediately due and payable upon demand, without presentment or protest, if not cured within the applicable cure period following written notice from the City as set forth in this Article VI. The Loan shall be in default whether it is voluntary or involuntary, with or without limitation, it occurred or was brought about by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rules or regulation of any administrative governmental body, provided, however, that such sum shall not be then payable if Borrower's payments have been waived or the time for making the Borrower's payments has been extended by the City. SECTION 6.01: NON-PAYMENT OF LOAN If the Borrower shall fail to make payment when due of any installment of principal on the Note, or interest accrued thereon and if the default shall remain unremedied for fifteen (15) days after written notice from the City to Borrower. SECTION 6 .02 : NON-PAYMENT OF OTHER INDEBTEDNESS If default shall be made in the payment when due of any installment of principal or of interest accrued on any of the Borrower's other indebtedness secured by any or all of the collateral securing this Loan, including, but not limited to, the Trust Deed of any other lender on 13 this Project or transaction, and if such default shall remain unremedied for thirty (30) days after written notice from the City to Borrower or within any longer applicable cure period. SECTION 6.03: INCORRECT REPRESENTATION OR WARRANTY Any representation or warranty contained in, or made in connection with the execution and delivery of this Loan Agreement, or in any certificate furnished pursuant hereto, shall prove to have been incorrect when made in any material respect and such misrepresentation or warranty has a material adverse effect on the enforceability of the Loan Documents or the value of the Collateral. SECTION 6 .04: DEFAULT IN COVENANTS The Borrower shall default in the performance of any other term, covenant, or agreement contained in this Loan Agreement, and such default shall continue unremedied for thirty (30) days after written notice thereof shall have been given to the Borrower by the City unless the same cannot reasonably be cured within the 30 days in which case the period for cure will be 90 days. SECTION 6.05: VOLUNTARY INSOLVENCY If the Borrower shall become insolvent or shall cease to pay its debts as they mature or shall voluntarily file a petition seeking reorganization of, or the appointment of a receiver, trustee, or liquidation for it or a substantial portion of its assets or to effect a plan or other arrangement with creditors, or shall be adjudicated bankrupt, or shall make a voluntary assignment for the benefit of creditors. SECTION 6.06: INVOLUNTARY INSOLVENCY If an involuntary petition shall be filed against the Borrower under any bankruptcy, insolvency, or similar law or seeking the re-organization of or the appointment of any receiver, trustee, or liquidator for the Borrower, or of a substantial party of the property of the Borrower, or a writ or warrant of attachment or similar process shall be issued against a substantial part of the property of the Borrower, and such petition shall not be dismissed , or such writ or warrant of attachment or similar process shall not be released or bonded within ninety (90) days after filing or levy. SECTION 6.07: JUDGMENTS If any final judgment for the payment of money that is not fully covered by liability insurance and is in excess of $100,000.00 shall be rendered against the Borrower, and within thirty (30) days, shall not be discharged, or an appeal therefrom taken and execution thereon effectively stayed pending such appeal, and, if such judgment be affirmed on such appeal, the same shall not be discharged within thirty (30) days. 14 ARTICLE VII MISCELLANEOUS SECTION 7.01: WAIVER OF NOTICE No failure or delay on the part of the City in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. No modification or waiver of any provision of this Loan Agreement or of the Note , nor any consent to any department by the Borrower therefrom, shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 7.02: AMENDMENTS; MISCELLANEOUS The Borrower and the City or its assigns, with the concurrence of the City, hereby expressly reserve all rights to amend any provisions of this Agreement, to consent to or waive any departure from the provisions of this Loan Agreement, to amend or consent to or waive departure from the provisions of the Note, and to release or otherwise deal with any collateral security for payment of the Note, provided, however, all such amendments shall be in writing and executed by the City or its assigns and the Borrower. City agrees that the Loan Documents will not be considered to be in default until the expiration of all contracted notice and cure periods provided to the Borrower. The terms of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. City agrees to deliver a copy of this Agreement to any transferee of its interests in the Loan Documents. If any provision of this Agreement is determined to be unenforceable for any reason , it shall be adjusted rather than voided, to the greatest extent possible, to achieve the intent of the parties. All of the other provisions shall be deemed valid and enforceable to the greatest extent possible. SECTION 7.03: NOTICES All notices, consents, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given to a party hereto if mailed by certified mail , prepaid, to the City at its address set forth below, and to the Borrower at the address set forth below or at such other addresses as any party may have designated in writing to an y other party hereto: CITY: Director Housing and Neighborhood Development PO Box 145488 451 South State Street, Room 406 Salt Lake City, Utah 84114-5488 15 BORROWER: Garden Lofts Holdings, LP 620 South State Street Salt Lake City, UT 84111 Attention: Jeffrey Nielson INVESTOR LIMITED PARTNER: SECTION 7.04: PAYMENTS GSB LIHTC Investor LLC Urban Investment Group c/o Goldman Sachs Bank USA 200 West Street New York, New York 10282 Attention: Urban Investment Group Portfolio Manager Email: gs-uig-docs@gs.com gs-uig-portfo li o-ma nager@gs.co m with a copy to: GSB LIHTC Investor LLC Urban Investment Group c/o Goldman Sachs Bank USA 200 West Street New York, NY 10282 Attention: Michael Lohr Email: michael.l ohr@gs.com with a copy to: Jones Day 100 High Street Boston, MA 0211 O Attention: John D. Kelley Telephone No.: (617) 449-6939 Email: jkelley@jonesday.co m The Borrower shall make payments to the City in accordance with the terms, conditions and instructions contained in the Note. SECTION 7.05: SURVIVAL OF REPRESENTATIONS AND WARRANTIES All agreements, representations, and warranties made by the Borrower here in, or any other document or certificate delivered to the City in connection with the transactions contemplated by this Loan Agreement, shall survive the delivery of this Agreement, the Note , 16 Trust Deed and the Security Agreements hereunder, and shall continue in full force and effect so long as the Note is outstanding. SECTION 7.06: SUCCESSORS AND ASSIGNS This Loan Agreement shall be binding upon the Borrower, its successors and assigns, except that the Borrower may not assign or transfer its rights without City's prior written consent. This Agreement shall inure to the benefit of the City, its successors and assigns, and , except as otherwise expressly provided in particular provisions hereof, all subsequent holders of the Note. SECTION 7.07: COUNTERPARTS This Loan Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. SECTION 7.08: GOVERNING LAW This Loan Agreement and the Note and Security Agreements, Financing Statements and/or Trust Deed shall be deemed contracts made in the State of Utah and , for all purposes, shall be construed in accordance with Utah Law. SECTION 7 .09: ARTICLE AND SECTION HEADINGS Article and Section headings used in this Agreement are for convenience only and shall not affect the construction of this Agreement. SECTION 7 .10: BORROWER DEFINED/USE OF PRONOUNS The word "Borrower'' shall be deemed and taken to mean the party identified as such in the Preamble to this Agreement. The use of the neuter singular pronoun to refer to Borrower or City shall be deemed a proper reference even though Borrower or City may be an individual, a partnership, a corporation, or a group of two or more individuals or corporations . The necessary grammatical changes required to make the provisions of this Loan Agreement apply in the plural sense where there is more than one Borrower and the corporations, associations, partnerships, or individuals, males or females , shall in all instances be assumed as though in each fully e x pressed . SECTION 7.11 : NON-RECOURSE TO BORROWER Notwithstanding anything contained herein or in the Trust Deed to the contrary, it is understood and agreed that the liability of the Borrower for the repayment of the indebtedness evidence by this Note and the performance of the obligations secured by the Trust Deed (the "Secured Obligations") shall be limited solely to the Collateral , and that the City waives any right to seek or obta in a deficiency judgment against the Borrower, Borrower's partners, and the officers, directors, members, pa rtners, shareholders, or employees of Borrower's partners , and agrees that it will look solely to the Collateral for, and that no other property or assets of the Borrower shall be subject to, levy, execution or other enforcement procedure for the satisfaction of the remedies of the City, or for any paym ent required to be made under this Note or for the performance of any of the Secure d Obligations; provided that the foreg o ing no n-recourse provisions (i) shall not constitute a release, forgiveness , waiver or remiss ion of the Secured 17 Obligations, but rather evidence City's agreement not to sue Borrower for any deficiency with respect to the Secured Obligations that may remain unpaid after City's realizati on upon the Collateral, and (ii) shall not limit the right of the City to name the Borrower as a party in any action or suit for foreclosure and sale under the Trust Deed or any other document executed in connection herewith to the extent necessary for foreclosure judgments or other realization upon the Collateral. Notwithstanding the foregoing provisions of this Section 7 .11, Borrower shall be personally liable and shall not be exculpated for any deficiency, loss or damage suffered by City, including City's reasonable attorney's fees and costs, resulting from Borrower's (a) fraud, intentional misrepresentation or gross negligence in connection with the transactions contemplated by the Loan Agreement; (b) waste or deterioration of the Collateral prior to an event of default hereunder; (c) misappropriation of any insurance proceeds payable to City under the Trust Deed; or (d) failure to pay any ta xes, assessments or other charges which could create liens on any of the Collateral which are or could become senior to the liens of the City, or any other liens arising from the consensual acts of Borrower directly, but not otherwise, which are or could become senior to the liens of City in such Collateral, excluding any such consensual liens appearing in City's title insurance policy issued in connection herewith. Nothing herein shall be construed to impose any liability on the Investment Member with respect to the Secured Obligations. SECTION 7.12: REPRESENTATION REGARDING ETHICAL STANDARDS FOR CITY OFFICERS AND EMPLOYEES AND FORMER CITY OFFICERS AND EMPLOYEES Borrower represents as to itself that it has not: ( 1) provided an illegal gift or payoff to a City officer or employee or former City officer or employee, or his or her relative or business entity; (2) retained any person to solicit or secure this contract upon an agreement or understanding for a commission, percentage, or brokerage or contingent fee, other than bona fide employees or bona fide commercial selling agencies for the purpose of securing business; (3) knowingly breached any of the ethical standards set forth in City's conflict of interest ordinance, Chapter 2.44, Salt Lake City Code; or (4) knowingly influenced, and hereby promises that it will not knowingly influence, a City officer or employee or former City officer or employee to brea ch any of the ethical standards set forth in City's conflict of interest ordinance, Chapter 2.44, Salt Lake City Code . 18 EXHIBIT "B" TO LOAN AGREEMENT USE OF PROCEEDS Borrower will use the proceeds of the $1,000,000 loan it receives from Salt Lake City Corporation's Housing Trust Fund for the development of the Garden Lofts Apartment Project located at 154 West 600 South in Salt Lake City, Utah as follows: ITEM AMOUNT Development of multi-family apartment units 1,000,000 TOTAL $1,000,000 19 Exhibit 6 Recorded Deed of Trust ERIN MENDENHALL DEPARTMENT of COMMUNITY Mayor and NEIGHBORHOODS Blake Thomas Director SALT LAKE CITY CORPORATION 451 SOUTH STATE STREET, ROOM 404 WWW.SLC.GOV P.O. BOX 145486, SALT LAKE CITY, UTAH 84114-5486 TEL 801.535.6230 FAX 801.535.6005 CITY COUNCIL TRANSMITTAL __________________________________ Date Received: _________________ Lisa Shaffer, Chief Administrative Officer Date sent to Council: _________________ ______________________________________________________________________________ TO: Salt Lake City Council DATE: Amy Fowler, Chair FROM: Blake Thomas, Director, Department of Community & Neighborhoods __________________________ SUBJECT: Garden Lofts Income Averaging Request & Subordination Request STAFF CONTACT: Amanda Best, Housing Development Program Specialist HAND 801-535-7698, Amanda.Best@slcgov.com DOCUMENT TYPE: Resolution RECOMMENDATION: Request #1: Income Averaging Housing Trust Fund Advisory Board (HTFAB) recommends approving the income averaging amendment to the Garden Lofts Loan. Request #2: Amend Loan to Subordinate to New Loan (Citibank) Housing Trust Fund Advisory Board (HTFAB) recommends approving the additional loan with Citibank and subordinating to Citibank, putting the City’s Housing Trust Fund loan in third position. BUDGET IMPACT: No budget impacts, this request for an adjustment in income restrictions for the rental units and movement in priority of loan. BACKGROUND/DISCUSSION: Wasatch Residential Group, the managing group of Garden Lofts, currently has an $1,000,000 loan from the Housing Trust Fund (HTF) to develop an all affordable multifamily construction project on 3.18 acres of property in downtown Salt Lake City. This development consists of 272 May 4, 2021 Lisa Shaffer (May 5, 2021 12:24 MDT) 05/05/2021 05/05/2021 units, all at or below 60% of Area Median Income (AMI). The loan was recorded on December 14, 2017. The loan was provided using HTF. The development is currently in payback period and is in good standing. The current principal balance is $1,000,000 and accrued interest is $12,500. According to the Promissory Note the term is 38 years, with the first three years borrower paying interest only, and the first payment of $75,000 due on April 1, 2021. Garden Lofts Apartment information can be found at https://www.gardenloftsisyourhome.com. The address is 154 West 600 South, Salt Lake City, UT 84101, located in District 4 under Councilmember Ana Valdemoros. Request #1: Income Averaging According to the City HTF loan documents all units must serve residents at or below 60% AMI based on tenant income verification. Wasatch Residential Group is requesting a change in the loan documents to move from all units at or below 60% AMI to an income averaging of all units. The result would be that the average income level of the entire development will be 60% AMI. Income averaging would allow the housing complex to offset costs within the adjusted range of rents rather than utilizing more subsidy, creating units that have a higher AMI and units that have a lower AMI. As seen in Table 1 and Table 2 below, the units were originally required to serve tenants at or below 60% AMI. With income averaging, the units would be adjusted to allow households ranging from 40% AMI to 80% AMI. However, when contemplating the entire development, the average renter household income will still be 60% AMI. The higher rents collected from households with greater income will offset the deeply affordable rents within the housing complex without the need of more subsidy. The income averaging approach does not create a change in the overall project budget nor in underwriting. This process has recently been approved by Utah Housing Corporation (UHC) and the Low-Income Housing Tax Credit (LIHTC). The Wasatch Residential Group’s LIHTC and Land Use Restriction Agreement (LURA) has already been adjusted to include income averaging for Garden Lofts Apartments. Because this change has taken place in the LIHTC LURA, Wasatch Residential Group is currently out of compliance with the City loan agreement, and thus requesting to make this change. The Federal Consolidated Appropriations Act of 2018 was signed into law on March 23, 2018 and established Income Averaging (IA) as a third minimum set-aside election for Housing Credit (HC) developments. This new election allows developments to designate units as low as 20%, and up to 80% of AMI as long as the average AMI level of the HC units in the project, as defined in line 8b on IRS Form 8609, is 60% or less of AMI. Income averaging is becoming popular with affordable housing funding and is allowable under the County, State, and LIHTC rules and ordinances. This shift would allow for more variety within rents and could allow for a deeper affordability throughout the development, while still receiving needed income from the higher affordability limit. Request #2: Amend Loan to Subordinate to New Loan (Citibank) The original subordination agreement has Salt Lake City Housing Trust Fund Loan in the second position behind Citibank and in front of Olene Walker Housing Loan Fund. The development is currently leased up. The current HTF loan states that the borrower cannot add additional funding after the original loan is in place. Wasatch Residential Group is requesting permission to assume an additional loan, and is asking the City to subordinate its second lien position, placing the new Citibank loan in second lien position, the City in third lien position, and Olene Walker Housing Loan Fund in fourth position. This request was heard by the Olene Walker Housing Loan Fund board on January 28, 2021 in which the board approved the request to subordinate to the Citibank loan. Wasatch Residential Group intends to use the new loan to offset unexpected costs resulting from higher than expected construction costs of the development. The additional loan will allow Wasatch Residential Group to decrease the amount of deferred developer fee for the Garden Lofts Development. Borrower Information: Wasatch Residential Group has an extensive portfolio including both affordable and market rate multi-family housing throughout the Western United States. Wasatch owns/manages over 24 apartment communities in Utah. This group is responsible for developing over 7,600 units and $1 billion in multifamily construction. Here in Salt Lake, they are responsible for constructing and managing Providence Place, Enclave, and 600 Lofts, all affordable housing developments. Wasatch has current Housing Trust Fund financing on both Providence Place and 600 Lofts. In addition, their management affiliate, Wasatch Property Management, currently manages 70 apartment communities around the Western United States. Proposed Loan Amendment: Request #1: Income Averaging When the Federal Consolidated Appropriations Act of 2018 passed allowing income averaging to be an approach to providing affordable housing, Wasatch worked with Utah Housing Coalition to have the Land Use Restricted Agreement (LURA) allow for income averaging. The change would allow for certain rents to increase to 80% AMI and others lower to 40% AMI to allow for the average income of all tenants to be 60% AMI. The unit mix adjustment is in the updated LURA and is represented in the table below. TABLE A: Housing Unit/AMI Mix Current: Type # of Units Income Limits 1 Bed 1 Bath 3 at or below 60% AMI 2 Bed 2 Bath 2 at or below 60% AMI 1 Bed 1 Bath 36 at or below 60% AMI 2 Bed 2 Bath 16 at or below 60% AMI Studio 20 at or below 60% AMI 1 Bed 1 Bath 81 at or below 60% AMI 2 Bed 1 Bath 49 at or below 60% AMI 3 Bed 2 Bath 13 at or below 60% AMI 1 Bed 1 Bath 28 at or below 60% AMI 2 Bed 2 Bath 14 at or below 60% AMI 1 Bed 1 Bath 7 at or below 60% AMI 2 Bed 2 Bath 3 at or below 60% AMI TABLE B: Housing Unit/AMI Mix Proposed: Type # of Units Income Limits 1 Bed 1 Bath 3 80% AMI 2 Bed 2 Bath 2 80% AMI 1 Bed 1 Bath 36 70% AMI 2 Bed 2 Bath 16 70% AMI Studio 20 60% AMI 1 Bed 1 Bath 81 60% AMI 2 Bed 1 Bath 49 60% AMI 3 Bed 2 Bath 13 60% AMI 1 Bed 1 Bath 28 50% AMI 2 Bed 2 Bath 14 50% AMI 1 Bed 1 Bath 7 40% AMI 2 Bed 2 Bath 3 40% AMI This shift would increase the income limits on 57 units to 70% AMI and 80% AMI. This change would not affect the original terms or underwriting of the loan according to Housing Trust Fund Policies and Procedures. HTFAB met on February 3, 2021 to review this request with the developer. Request #2: Amend Loan to Subordinate to New Loan (Citibank) Wasatch Residential Group is also in the process of receiving an additional loan from their primary lender, Citibank. This loan is to offset developer fee costs and other costs that have increased this last year. The additional loan would take second position behind the first Citibank loan, moving the Salt Lake City Housing Trust Fund loan to third position. The current loan states that, “The borrower shall neither create nor suffer to exist any mortgage, pledge, lien, charge or encumbrance… except as of record of disclosed to the City in writing prior to the making of the loan hereunder.” The amendment to add a loan would contradict that section, thus the loan will have to be amended for that section as well. The additional loan has not yet closed and is scheduled to close after all approvals have been received. As of January 28, 2021 the Olene Walker Loan Fund has approved this additional loan. The additional Citibank loan would be for $1,200,000, is not tax exempt and requires hard payments. Wasatch Residential Group is requesting that Salt Lake City amend the subordination agreement to include the additional loan and move to third lien position. A new Deed of Trust and an amendment to the Loan would also be needed. Board Approval: Request #1: The HTFAB recommended approval of amending the Garden Lofts HTF Loan to allow for income averaging across the development to 60% AMI on November 4, 2020. Request #2: The HTFAB recommended approval of amending the Garden Lofts HTF Loan to accept the additional Citibank Loan on February 3, 2021. This would move Salt Lake City to third in line for repayment. PUBLIC PROCESS: HTFAB held a public meeting and reviewed the Income Averaging request on November 4, 2020 and the Subordination Amendment on February 3, 2021. The board unanimously recommended approval of both amendments. No other public process is required. EXHIBITS: 1. Resolution 2. Updated LURA 3. Draft Subordination Agreement 4. Recorded Subordination Agreement 5. Recorded HTF Loan 6. Recorded Deed of Trust Exhibit 1 Resolution RESOLUTION NO. _____ OF 2021 Authorizing a loan amendment from Salt Lake City’s Housing Trust Fund To Garden Lofts Holdings, LP WHEREAS, Salt Lake City Corporation (the “City”) has a Housing Trust Fund to encourage affordable and special needs housing development within the City; and WHEREAS, Garden Lofts Holdings, LP (the “Borrower”), has an existing loan (the “Loan”) for the construction and long-term financing of an affordable multifamily housing development with 272 units (the “Project”) located at 154 West 600 South, Salt Lake City, Utah (the “Property”); and WHEREAS, the Project construction is complete; and WHEREAS, the Borrower has requested that the terms of the Loan be amended as described on the attached term sheet (the “Term Sheet”); and WHEREAS, on November 4, 2020 and February 3, 2021, the Housing Trust Fund Advisory Board (the “Board”) recommended approval of the loan amendment as set forth on the Term Sheet; and WHEREAS, the City recommends the loan amendment described on the attached Term Sheet based on its underwriting of the Project. NOW THEREFORE, BE IT RESOLVED by the City Council of Salt Lake City, Utah: 1. That the City Council hereby approves amending the existing loan documents as set forth on the Term Sheet, subject to revisions that do not materially adversely affect the rights and obligations of the City hereunder. 2. That Erin Mendenhall, Mayor of Salt Lake City, Utah, on behalf of Salt Lake City Corporation is hereby authorized to negotiate and execute the requisite loan documents and any other relevant documents consistent with the Term Sheet, and incorporating such other terms and agreements as recommended by the City Attorney’s Office, and to act in accordance with their terms. Passed by the City Council of Salt Lake City, Utah, this __________ day of ____________, 2021. SALT LAKE CITY COUNCIL By CHAIR ATTEST: CITY RECORDER Approved As To Form Salt Lake City Attorney’s Office By: ____________________________ Kimberly K. Chytraus Date: __________________________ March 24, 2021 Loan Amendment Term Sheet Project: Garden Lofts Borrower: Garden Lofts Holdings, LP Address: 154 West 600 South Loan Amount: $1,000,000 Loan Maturity: 38-year term Interest Rate: 2.5% simple interest per annum Interest Accrual: Current interest accrual is $12,500 (payments are current) Repayment Terms: Payment is interest only for the first 3 years. First payment is due April 1, 2021 in the amount of $75,000. Then surplus cash payments. Collateral and Priority: Current – Second priority Deed of Trust behind Citibank Amendment – Third priority Deed of Trust behind Citibank (Original Citibank loan and new Citibank loan) (Olene Walker Housing Loan Fund has a loan that is junior to the City) Conditions: Standard loan conditions approved by City Attorney’s Office Unit Affordability Requirements: Current – All units are 60% Area Median Income (AMI) or below Amendment – All units income average to 60% AMI or below (range from 20% AMI – 80% AMI) Exhibit 2 Updated LURA 2.Set-Aside Election. The Project Owner agrees that all 272 units of the Project shallbe restricted as provided for herein and in paragraph 13. The Project Owner agrees that for each taxable year in the extended use period, as defined in IRC § 42, 40% or more of the residential units in the Project are both rent restricted, as defined in IRC §42, and occupied by individuals (hereinafter "low-income tenants") whose income does not exceed the imputed income limitation designated by the Project Owner with respect to the respective unit. The average of the imputed income limitation designated by the Project Owner shall not exceed 60% of the area median gross income, as more specifically provided in paragraph 13, with respect to the county in which the Project is located, as annually determined and published by H.U.D. 13.Rent and Incom e Limits. The Project Owner agrees that 272 units of the Project will be leased, throughout the extended use period as set forth in paragraph 9 above, (i) for a maximum monthly rental fee which is affordable to the tenants residing therein ( as calculated below), and (ii) to individuals whose annual income (as defined under Section 8 of the United States Housing Act of 193 7), aggregated for all individuals residing in a given unit, does not exceed the percentages set forth below of area median income for the county in which the unit is located: Units T\rpe Income Limits 3 1 bedroom 1 bath units 80% of area median income 2 2 bedroom 2 bath units 80% of area median income 36 1 bedroom 1 bath units 70% of area median income 16 2 bedroom 2 bath units 70% of area median income 20 Studio units 60% of area median income 81 1 bedroom 1 bath units 60% of area median income 49 2 bedroom 2 bath units 60% of area median income 13 3 bedroom 2 bath units 60% of area median income 28 1 bedroom 1 bath units 5 0% of area median income 14 2 bedroom 2 bath units 50% of area median income 7 1 bedroom 1 bath units 40% of area median income 3 2 bedroom 2 bath units 40% of area median income For purposes of determining the affordability of monthly rental payments, the maximum monthly rental fee is calculated as follows: a.First, multiply the monthly rent limit applicable to the unit as calculated by Utah Housing for the applicable year, based on bedroom size, based on 50% of area median income for the county in which the unit is located, by 2 (to arrive at a rental amount based on 100% of area median income); 2 1485082.2 Exhibit 3 Draft Subordination Agreement 21616387-v2 WHEN RECORDED MAIL TO: Citibank, N.A. Transaction and Asset Management Group 388 Greenwich Street, Trading 6th Floor New York, New York 10013 Attention: Tanya Jimenez Re: Garden Lofts Apartments Citi Deal ID No. 24974 FIRST AMENDMENT TO SUBORDINATION AND INTERCREDITOR AGREEMENT (SLC Corporation) THIS FIRST AMENDMENT TO SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Amendment”) dated as of the ____ day of January, 2021, is made by and between SALT LAKE CITY CORPORATION, a municipal corporation of the State of Utah (“Junior Lender”), and CITIBANK, N.A., a national banking association (“Senior Lender”) and acknowledged by GARDEN LOFTS HOLDINGS, LP, a Utah limited partnership (“Borrower”). R E C I T A L S A. Junior Lender, Senior Lender and Borrower entered into that certain Subordination and Intercreditor Agreement dated as of December 19, 2017, recorded with the Salt Lake County Recorder’s Office (the “Recorder’s Office”) as Entry No. 12684036, in Book 10631, Page 9114, relating to (1) a tax exempt loan made to Borrower in the aggregate maximum principal amount of $27,300,000, and (2) a certain junior loan made to Borrower by Junior Lender in the original principal amount of $1,000,000 (the “Junior Loan”) (as the same may be further amended from time to time, the “Original Agreement”); B. Junior Lender, Senior Lender and Borrower have agreed to amend the Original Agreement with respect to certain definitions pertaining to the Senior Loan thereunder to include a new taxable loan from Senior Lender to Borrower in the original principal amount of [$1,200,000], evidenced by the following: a certain Multifamily Permanent Note dated the date hereof in the amount of the Taxable Senior Loan made by Borrower to the order of Senior Lender, secured by a certain Subordinate Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of January 1, 2021, granted by Borrower for the benefit of Senior Lender and to be recorded with the Recorder’s Office, and a certain Loan Covenant Agreement dated as of January 1, 2021, by and between Borrower and Senior Lender, and such other documents, agreements and instruments executed in connection therewith; and C. Capitalized terms used but not defined in this Amendment shall have the meanings given them in the Original Agreement, NOW THEREFORE, for TEN DOLLARS ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Junior Lender, Senior Lender, and Borrower (collectively, the “Parties”) hereby agree as follows: First Amendment to Subordination and Intercreditor Agreement (SLC Corp) – Garden Lofts Apartments Page 2 1. The following new definitions are added to Section 1 of the Original Agreement: ““Senior Loan” means the Senior Loan, as defined in Recital A, together with that certain taxable loan from Senior Lender to Borrower in the original principal amount of [$1,200,000]. ““Senior Loan Agreement” means, collectively, the Borrower Loan Agreement, as defined in Recital B; the Construction Funding Agreement as defined in Recital D; and that certain Loan Covenant Agreement dated as of January 1, 2021, by and between Borrower and Senior Lender. ““Senior Note” means the Note, as defined in Recital B, together with that certain taxable Multifamily Permanent Note dated January [___], 2021, in the original principal amount of [$1,200,000] made by Borrower to the order of Senior Lender. ““Senior Security Instrument” means the Senior Security Instrument, as defined in Recital C, together with that certain Subordinate Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of January 1, 2021, granted by Borrower for the benefit of Senior Lender and to be recorded with the Salt Lake County Recorder’s Office.” 2. In all other respects, the terms, provisions, and conditions of the Original Agreement, as hereby amended or modified, are hereby ratified and confirmed and shall remain in full force and effect. 3. This Amendment may be executed in any one or more counterparts and all so executed shall constitute one and the same instrument, binding on all parties, even though all parties are not signatory to the same document. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] First Amendment to Subordination and Intercreditor Agreement (SLC Corp) – Garden Lofts Apartments Page S-1 IN WITNESS WHEREOF, the undersigned have caused this Amendment to be signed and delivered under seal by their respective duly authorized representatives as of the date set forth above. The undersigned intend that this Amendment shall be deemed signed and delivered as a sealed instrument. JUNIOR LENDER: SALT LAKE CITY CORPORATION, a Utah municipal corporation By: _________________________________________ Name: Erin Mendenhall Title: Mayor Approved as to Form Salt Lake City Attorney’s Office By: ________________________________ Name: _______________________________ Title: Senior City Attorney ATTEST: ______________________________________ ________________, Salt Lake City Recorder STATE OF UTAH COUNTY OF SALT LAKE On January __, 2021, before me, _______________________, personally appeared Erin Mendenhall who, personally known to me or 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/she/they executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature _______________________________ of Notary Public First Amendment to Subordination and Intercreditor Agreement (SLC Corp) – Garden Lofts Apartments Page S-2 SENIOR LENDER: CITIBANK, N.A., a national banking association By: _____________________________ Name: Kathy Millhouse Title: Vice President Citi Deal ID No. 24974 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF On __________________ before me, _______________________ (here insert name and title of the officer), personally appeared Kathy Millhouse who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) 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. Signature _______________________________ (Seal) First Amendment to Subordination and Intercreditor Agreement (SLC Corp) – Garden Lofts Apartments Page S-3 ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE: BORROWER: GARDEN LOFTS HOLDINGS, LP, a Utah limited partnership By: Garden Lofts GP, LLC, a Utah limited liability company By: ______________________________ Name: Jeffrey S. Nielson Title: Manager STATE OF UTAH COUNTY OF SALT LAKE On January __, 2021, before me, _______________________, personally appeared Jeffrey S. Nielson who, personally known to me or 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/she/they executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature _______________________________ of Notary Public Exhibit 4 Recorded Subordination Agreement WHEN RECORDED MAIL TO: Citibank, N.A. Transaction Management Group/Post Closing 390 Greenwich Street, 2nd Floor New York, New York 10013 Attention: Tanya Jimenez Re: Garden Lofts Apartments Deal No. 24974 RECORDED DEC 1 4 2017 CITY RECORDER SUBORDINATION AND INTERCREDITOR AGREEMENT l 7267 l l 4-v4 (SLC Corporation) PRO PrRTY OF SALT LAl<E CITY Rl:CC) <DE R'S OFFICE P.O . BOX l '.lS5 l 5 SALT LAl<E C ITY, UTAH 84 114 -55 1 5 SUBORDINATION AND INTERCREDITOR AGREEMENT (SLC Corporation) THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "Agreement") dated as of December_, 2017, is made by and between SALT LAKE CITY CORPORATION, a municipal corporation of the State of Utah ("Junior Lender") and CITIBANK, N.A., a national banking association ("Senior Lender"), and acknowledged by GARDEN LOFTS HOLDINGS, LP, a Utah limited partnership ("Borrower"). The date of this Agreement as set forth above is for reference purposes only, and this Agreement will not be effective and binding until the Closing Date (as defined in the Borrower Loan Agreement). RECITALS: A. Borrower has applied to the Utah Housing Corporation, an independent body politic and corporate constituting a public corporation, organized and existing under the laws of the State of Utah ("Governmental Lender"), for a loan (the "S enior Loan") for the acquisition, construction, development, equipping and/or operation of a 272-unit multifamily residential project located in the City and County of Salt Lake, Utah, known or to be known as Garden Lofts Apartments (the "Mortgaged Property"). B. The Senior Loan is evidenced by (i) that certain Multifamily Note, dated as of the Closing Date, in the maximum principal amount of [$26,330,000] made by Borrower payable to the order of Governmental Lender (the "Note"), and (iii) that certain Borrower Loan Agreement, dated as of December 1, 2017, by and between Borrower and Governmental Lender (the "Borrower Loan Agreement"). C. The Senior Loan is secured by, among other things, that certain Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated as of December 1, 2017, executed by Borrower for the benefit of Governmental Lender ( as the same may from time to time be extended, consolidated, substituted for, modified, increased, amended and supplemented, the "Senior Security Instrument"), recorded in the office of the Salt Lake County Recorder as Entry No. __ in Book __ , at Pages ___ , which Senior Security Instrument encumbers the Mortgaged Property. D. Borrower has requested that Senior Lender enter into that certain Funding Loan Agreement (the "Funding Loan Agreement"), dated as of December I , 2017, by and among Governmental Lender, U.S. Bank National Association, a national banking association organized and existing under the laws of the United States of America, as fi scal agent, and Senior Lender, pursuant to which Funding Lender will make a loan to Governmental Lender (the "Funding Loan"), the proceeds of which will be used to make the Senior Loan to Borrower pursuant to the Borrower Loan Agreement. The Senior Loan will be advanced to Borrower pursuant to that certain Construction Funding Agreement, dated as of December 1, 2017, by and between Borrower and Senior Lender (the "Construction Funding Agreement"). E. The Note, the Senior Security Instrument, the Borrower Loan Agreement, the Funding Loan Documents (as defined in the Funding Loan Agreement) and all other Senior Loan Subo rd ination and lntercredito r Agreement (SLC Corporation) PROPERTY OF SALT LAl<E CITY RECORDER 'S OFF ICE P.O . BOX 145515 SALT LAKE CITY, UTAH 84 114-5515 Lofts Apartments Documents (as hereinafter defined) have each been assigned by Governmental Lender to Senior Lender to secure the Funding Loan. F. Junior Lender is making a loan (the "Junior Loan") to Borrower in the original principal amount of $1,000,000 under its Housing Trust Fund Program, which Junior Loan is evidenced by a certain Promissory Note, dated as of the date hereof, made by Borrower to Junior Lender (the "Junior Note") and secured by, the Junior Security Instrument (as hereinafter defined) encumbering the Property, and will be advanced to Borrower pursuant to that certain Loan Agreement (the "Junior Loan Agreement") dated as of the date hereof between Borrower and Junior Lender. G. As a condition to the making of the Senior Loan, Senior Lender requires that Junior Lender execute and deliver this Agreement prior to the making of the Junior Loan and the granting of the Junior Security Instrument by Borrower. NOW, THEREFORE, for Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce the making of the Senior Loan and to induce Senior Lender to consent to the Junior Loan and the Junior Security Instrument, Junior Lender hereby agrees as follows: 1. Definitions. Capitalized terms used but not defined in this Agreement shall have the meanings ascribed thereto in the Senior Security Instrument. As used in this Agreement, the terms set forth below shall have the respective meanings indicated: "Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency, composition, restructuring, dissolution, liquidation, receivership , assignment for the benefit of creditors, or custodianship action or proceeding under any federal or state law with respect to Borrower, any guarantor of any of the Senior Indebtedness, any of their respective properties, or any of their respective partners, members, officers, directors, or shareholders. "Casualty" means the occurrence of damage to or loss of any of the Property by fire or other casualty. "Condemnation" means any proposed or actual condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Property, whether direct or indirect. "Enforcement Action" means any exercise of any of Junior Lender's remedies under the Junior Security Instrument or any of the other Junior Loan Documents, including, without limitation, any of the following: (i) the acceleration of all or any part of the Junior Indebtedness, (ii) the commencement of any judicial or non-judicial action of proceeding to enforce any obligation of Borrower under any of the Junior Loan Documents, collect any monies payable to Borrower or have a receiver appointed to collect any monies payable to Borrower, or foreclose the lien(s) created by the Junior Security Instrument, (iii) the filing or joining in the filing of any involuntary Bankruptcy Proceeding against Borrower or any person or entity which owns a direct or indirect interest in Borrower, (iv) the advertising of or commencement of any foreclosure or trustee's sale proceedings, (v) the exercise of any power of sale, (vi) the acceptance of a deed or assignment in lieu of foreclosure or sale, (vii) the collecting of Rents , (viii) the obtaining of or seeking of the appointment of a receiver, (ix) the seeking of default PROPERTY OF SALT LAKE CITY RECORDER'S OFFICE Subordination and lntercredi tor Agreement (S LC Corporation ) 2 P.O . BOX 145515 Garden Lofts Apartments SALT LAKE CITY, UTAH 84114-5515 interest, (x) the taking of possession or control of any of the Property, (xi) the commencement of any suit or other legal, administrative, or arbitration proceeding base d upon the Juni or Note or any other of the Junior Loan Documents, (xii) the exercising of any banker's lien or rights of set- off or recoupme nt, or (xiii) the taking of any other enforcement action against Borrower, any other party liable for any of the Junior Indebtedness or obligated under any of the Junior Loan Documents, or the Property. "Enforcement Action Notice" means a written notice from Junior Lender to Senior Lender, given following a Junior Loan Default and the expiration of any notice or cure periods provided for such Junior Loan Default in the Junior Loan Documents, setting forth in reasonable detail the Enforcement Action proposed to be taken by Junior Lender. "Junior In debtedness" means all indebtedness of any kind at any time evidenced or secured by, or arising under, the Junior Loan Documents, whether incurred, arising or accruing before or after the filing of any Bankruptcy Proceeding. "Junior Loan Defaulf' means any act, failure to act, event, condition, or occurrence which constitutes, or which with the giving of notice or the passage of time, or b oth, would constitute, an "Event of Default" as defined in the Junior Security Instrument. "Junior Loan Documents" means, collectively, the Junior Note, the Junior Security Instrument, the Junior Loan Agreement and all other documents evidencing, securing or delivered in connection with the Junior Loan, all of which are listed on Exhibit B attached hereto , together with such modifications, amendments and supplements thereto as are approved in writing by Senior Lender prior to their execution. "Junior Security Instrum ent" means that certain Trust Deed with Assignment of Rents, dated as of the date hereof, made by Borrower for the benefit of Junior Lender, as the same may from time to time be extended, consolidated, substituted for, modified, amended or supplemented upon receipt of the consent of Senior Lender. "Loss Proceeds" means all monies received or to be received under any insurance p olicy, from any condemning authority, or from any other source, as a result of any Condemnation or Casualty. "Property" means (i) the land and improvements known or to be known as Garden Lofts Apartments and located in the City and County of Salt Lake, State of Utah, which Property is more particularly described on Exhibit A attached hereto, and (ii) all furniture, fixtures and equipment located at such apartments and other property, accounts, depo sit s and rights and interests of Borrower encumbered by the Senior Security Instrument and/or the other Senior Loan Documents. "Sen ior Indebtedness" means all indebtedness of any kind at any time evidenced or secured by, or arising under, the Senior Loan Documents, whether incurred, arising or accruing before or after the filing of any Bankruptcy Proceeding. "Senior Loan Do cuments" means, collectively, the Senior Security Instrument, the Senior Note, the Senior Loan Agreement and all of the oth~r:. documents , instruments and agreements now or hereafter evidencing, securing or otherwise 11JJ8{eg:ih 9crJt~HibB,~th the Senior Loan, 11 l fhCORDER'S OFF ICE P.O. BOX 1 45515 Subordination and lntercreditor Agree ment (S LC Corporatio n) 3 SALT LAKE CITY, UTAH 841 bli\-a~5.Jt§ Apartments as the same may from time to time be extended, consolidated, substituted for , modified, increased, amended and supplemented in accordance with the provisions of this Agreement. "Senior Loan Default" means any act, failure to act, event , condition, or occurrence which constitutes an "Event of Default" as defined in the Senior Security Instrument. 2. Junior Loan and Junior Loan Documents are Subordinate; Acts by Senior Lender do not Affect Subordination. (a) Junior Lender hereby covenants and agrees on behalf of itself and its successors and permitted assigns that the Junior Indebtedness is and shall at all times continue to be, subordinate, subject and inferior (in payment and priority) to the prior payment in full of the Senior Indebtedness, and that the liens, rights, payment interests, priority interests and security interests granted to Junior Lender in connection with the Junior Loan and under the Junior Loan Documents are, and are hereby expressly acknowledged to be in all respects and at all times , subject, subordinate and inferior in all respects to the liens, rights, payment , priority and security interests granted to Senior Lender under the Senior Loan and the Senior Loan Documents and the terms, covenants, conditions, operations and effects thereof. (b) Except as expressly set forth herein, repayment of the Junior Indebtedness, is and shall be postponed and subordinated to repayment in full of the Senior Loan. Prior to a Senior Loan Default (regardless of whether such Senior Loan Default occurs prior to or during the pendency of a Bankruptcy Proceeding), Junior Lender shall be entitled to receive and retain payments made pursuant to and in accordance with the terms of the Junior Loan Documents; provided, however, that no such payment is made more than ten (10) days in advance of the due date thereof. Junior Lender agrees that from and after such time as it has received from either Senior Lender or Borrower written notice that a Senior Loan Default then exists (which has not been expressly waived in writing by Senior Lender), Junior Lender shall not receive or accept any payments under the Junior Loan. If (i) Junior Lender receives any payment, property, or asset of any kind or in any form on account of the Junior Indebtedness (including, without limitation, any proceeds from any Enforcement Action) after a Senior Loan Default of which Junior Lender has been given notice of, or (ii) Junior Lender receives, voluntarily or in voluntarily, by operation of law or otherwise, any payment, property, or asset in or in connection with any Bankruptcy Proceeding, such payment, property, or asset will be received and held in trust for Senior Lender. Junior Lender will promptly remit, in kind and properly endorsed as necessary, all such payments, properties, and assets to Senior Lender. Senior Lender shall apply any payment, asset, or property so received from Junior Lender to the Senior Indebtedness in such order, amount (with respect to any asset or property other than immediately available funds), and manner as Senior Lender shall determine in its sole and absolute discretion. (c) Without limiting the complete subordination of the Junior Indebtedness to the payment in full of the Senior Indebtedness, in any Bankruptcy Proceeding, upon any payment or distribution (whether in cash, property, securities, or otherwise) to creditors (i) the Senior Indebtedness shall first be paid in full in cash before Junior Lender shall be S ubordination a nd lntercredi tor Agreement (SLC Corporati on) PROPERTY OF SALT LAl<E 4 C ITY RECORDER'S OFFICE Ga rden Lo ft s Apartments P.O BOX 145515 SALT LAKE C ITY, UTAH 84114~55 15 entitled to receive any payment or other distribution on account of or in respect of the Junior Indebtedness, and (ii) until all of the Senior Indebtedness is paid in full in cas h , any payment or distribution to which Junior Lender would be entitled but for this Agreement (whether in cash, property, or other assets) shall be made to Senior Lender. (d) The subordination of the Junior Indebtedness shall continue in the event that any payment under the Senior Loan Documents (whether by or on behalf of Borrower, as proceeds of security or enforcement of any right of set-off or otherwise) is for any reason repaid or returned to Borrower or its insolvent estate, or avoided, set aside or required to be paid to Borrower, a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law. In such event, the Senior Indebtedness or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding to the extent of any repayment, return, or other action, as if such payment on account of the Senior Indebtedness had not been made. (e) The subordination of the Junior Loan Documents and of the Junior Indebtedness shall apply and continue notwithstanding (i) the actual date and time of execution, delivery, recording, filing or perfection of the Senior Security Instrument and other Senior Loan Documents and of the Junior Security Instrument and other Junior Loan Documents, and (ii) the availability of any collateral to Senior Lender, including the availability of any collateral other than the Property. (f) By reason of, and without in any way limiting, the full subordination of the Junior Indebtedness and the Junior Loan Documents provided for in this Agreement, all rights and claims of Junior Lender under the Junior Security Instrument or under the Junior Loan Documents in or to the Property or any portion thereof, the proceeds thereof, the Leases thereof, the Rents, issues and profits therefrom, and the Loss Proceeds payable with respect thereto, are expressly subject and subordinate in all respects to the rights and claims of Senior Lender under the Senior Loan Documents in and to the Property or any portion thereof, the proceeds thereof, the Leases thereof, the Rents , issues and profits therefrom, and the Loss Proceeds payable with respect thereto. (g) If Junior Lender, by indemnification, subrogation or otherwise, shall acquire any lien, estate, right or other interest in any of the Property (unless such interest is otherwise excluded from this Agreement as agreed to in writing by Senior Lender), that lien, estate, right or other interest shall be fully subject and subordinate to the receipt by Senior Lender of payment in full of the Senior Indebtedness, and to the Senior Loan Documents, to the same extent as the Junior Indebtedness and the Junior Loan Documents are subordinate pursuant to this Agreement. Junior Lender hereby acknowledges and agrees that Senior Lender may, without the consent or approval of Junior Lender, agree with Borrower to extend, consolidate, modify, increase or amend any or all the Senior Loan D ocuments and otherwise act or fail to act with respect to any matter set forth in any Senior Loan Document (including, without limitation, the exercise of any rights or remedies, waiver, forbearance or delay in enforcing any rights or remedies, the declaration of acceleration, the declaration of defaults or events of default, the release, in whole or in part, of any collateral or other Subordin ation and lnterc redi to r Agreement (SLC Corporation) 5 PROPERTY OF SALT LAl~E CITY RECORDER'S OFF ICE X 145515 Garden Lofts Apartments ~~L/L~l(E C ITY, UTAH 841 14-5515 property, and any consent, approval or waiver), and all such extensions, consolidations, modifications, amendments acts and omissions shall not release, impair or otherwise affect Junior Lender's obligations and agreements hereunder. Notwithstanding the foregoing or any contrary provision of this Agreement, except as otherwise currently set forth in the Senior Loan Documents, Senior Lender agrees that it will not, without Junior Lender's prior written consent in each instance: (i) change the term of the Senior Loan and/or the maturity date of the Senior Indebtedness, (ii) increase the principal amount of the Senior Note or the Senior Indebtedness other than increases pursuant to protective advances made by Senior Lender, or (iii) increase the interest rate payable under the Senior Note or the Senior Loan Documents. 3. Junior Lender Agreements. (a) Without the prior written consent of Senior Lender in each instance, Junior Lender shall not (i) amend, modify, waive, extend, renew or replace any provision of any of the Junior Loan Documents in any material manner, or (ii) pledge, assign, transfer, convey, or sell any interest in the Junior Indebtedness or any of the Junior Loan Documents; or (iii) accept any payment on account of the Junior Indebtedness other than a regularly scheduled payment of interest or principal and interest made not earlier than ten (10) days prior to the due date thereof; or (iv) take any action which has the effect of increasing the Junior Indebtedness; or (v) appear in, defend or bring any action in connection with the Property; or (vi) take any action concerning environmental matters affecting the Property. Regardless of any contrary provision in the Junior Loan Documents, Junior Lender shall not collect payments for the purpose of escrowing for any cost or expense related to the Property or for any portion of the Junior Indebtedness. (b) Junior Lender hereby agrees that Senior Lender may, at its option (but without any obligation to do so), at any time (including during the pendency of a Bankruptcy Proceeding), purchase the Junior Loan at par (and without liability for any prepayment premiums or liquidated damages set forth in the Junior Loan Documents). Such transfer and assignment of the Junior Loan shall be without representation or recourse, except that Junior Le nder shall represent that it is the sole holder of the Junior Loan, that it has authority to assign and convey the Junior Loan Documents, that, to the best of its knowledge, there are no defaults or breaches under the Junior Loan Documents, and as to the total amount then outstanding under the Junior Loan .. Junior Lender shall give Senior Lender a concurrent copy of each notice of a Junior Loan Default, Enforcement Action Notice or other material notice given by Junior Lender under the Junior Loan Documents. Notwithstanding any contrary provision in the Junior Loan Documents, Senior Lender shall have the right, but shall not have any obligation, to cure any Junior Loan Default until ninety (90) days following Senior Lender's receipt of an Enforcement Action Notice gi ven by Junior Lender as a consequence of the Junior Loan Default. Senior Lender shall not be subrogated to the rights of Junior Lender under the Junior Loan Documents by reason of Senior Lender hav ing cured any Junior Loan Default. However, Junior Lender acknowledges that all amounts advanced or expended by Senior Lender to cure a Junior Loan Default shall be added to and become a part of the Senior Indebtedness pursuant to the terms of the Senior Security Ins trument. Subordina tion and In tercreditor Agreement (SLC Corp ora tion) 6 PPOPERTY OF SALT LAl<E CITY RECORDER 'S OFF ICE P.O. BOX 145515 Garden Lofts A_partments SALT LAKE CITY, UTAH 84 1 14-55 I 5 (c) In the event and to the extent that each of Senior Lender and Junior Lender have under their respective loan documents certain approval or consent rights over the same subject matters (regardless of whether the obligations or rights are identical or substantially identical), Junior Lender shall have no right to object to any such action or approval taken by Senior Lender and shall consent thereto and be bound thereby. Without limiting the generality of the foregoing, Senior Lender shall have all approval, consent and oversight rights in connection with any insurance claims relating to the Property, any decisions regarding the use of insurance proceeds after a casualty loss or condemnation awards, the hiring or firing of property managers, or otherwise related in any way to the Property, and Junior Lender shall have no right to object to any such action or approval taken by Senior Lender and shall consent thereto and be bound thereby. ( d) Junior Lender agrees that in any action commenced to enforce the obligation of Borrower to pay any portion of the Junior Indebtedness, the judgment shall not be enforceable personally against Borrower or Borrower's assets, and the recourse of Junior Lender for the collection of the Junior Indebtedness shall be limited to actions against the Property and the rents, profits , issues, products, and income from the Property. (e) Junior Lender shall not commence or JOm with any other creditor in commencing any Bankruptcy Proceeding involving Borrower, and Junior Lender shall not initiate and shall not be a party to any action, motion or request, in a Bankruptcy Proceeding involving any other person or entity, which seeks the consolidation of some or all of the assets of Borrower into such Bankruptcy Proceeding. In the event of any Bankruptcy Proceeding relating to Borrower or the Property or, in the event of any Bankruptcy Proceeding relating to any other person or entity into which (notwithstanding the covenant in the first sentence of this clause) the assets or interests of Borrower are consolidated, then in either event, the Senior Loan shall first be paid in full before Junior Lender shall be entitled to receive and retain any payment or distribution in respect to the Junior Loan. Junior Lender agrees that (i) Senior Lender shall receive all payments and distributions of every kind or character in respect of the Junior Loan to which Junior Lender would otherwise be entitled, but for the subordination provisions of this Agreement (including without limitation , any payments or distributions during the pendency of a Bankruptcy Proceeding involving Borrower or the Property), and (ii) the subordination of the Junior Loan and the Junior Loan Documents shall not be affected in any way by Senior Lender electing, under Section 111 l(b) of the federal bankruptcy code, to have its claim treated as being a fully secured claim. In addition , Junior Lender hereby covenants and agrees that, in connection with a Bankruptcy Proceeding inv olving Borrower, neither Junior Lender nor any of its affiliates shall (i) make or participate in a loan facility to or for the benefit of Borrower on a basis that is senior to or pari passu with the liens and interests held by Senior Lender pursuant to the Senior Loan Documents, (ii) not vote affirmatively in favor of any plan of reorganization or liquidation unless Senior Lender has also voted affirmatively in favor of such plan, and (iii) not contest the continued accrual of interest on the Senior Indebtedness, in accordance with and at the rates specified in the Senior Loan Documents, both for periods before and for periods after the commencement of such Bankruptcy Proceedings. Junior Lender shall execute and deliver to Senior Lender powers of attorney, assignments or other instruments as may PROPERTY OF SALT LAl<E CITY RECORDER'S OFFICE Subordination and In tercreditor Ag reement (S LC Corporation) 7 P.O. BOX 1 45515 Garden Lofts ,}Partments SALT LAl<E CITY, UTAH 841 14-5015 be requested by Senior Lender in order to enable it to exercise the above-described authority or powers with respect to any or all of the Junior Loan Documents, and to collect and receive any and all payments or distributions which may be payable or deliverable at any time upon or with respect to any of the Junior Loan Documents to Junior Lender. (f) Junior Lender covenants and agrees that the effectiveness of this Agreement and the rights of Senior Lender hereunder shall be in no way impaired, affected, diminished or released by any renewal or extension of the time of payment of the Senior Loan, by any delay, forbearance, failure, neglect or refusal of Senior Lender in enforcing payment thereof or in enforcing the lien of or attempting to realize upon the Senior Loan Documents or any other security which may have been given or may hereafter be given for the Senior Loan, by any waiver or failure to exercise any right or remedy under the Senior Loan Documents, or by any other act or failure to act by Senior Lender. Junior Lender acknowledges that Senior Lender, at its sole option, may release all or any portion of the Property from the lien of the Senior Security Instrument, and may release or waive any guaranty, surety or indemnity providing additional collateral to Senior Lender, and Junior Lender hereby waives any legal or equitable right in respect of marshaling it might have, in connection with any release of all or any portion of the Property by Senior Lender, to require the separate sales of any portion of the Property or to require Senior Lender to exhaust its remedies against any portion of the Property or any other collateral before proceeding against any other portion of the Property or other collateral (including guarantees) for the Senior Loan. Senior Lender may pursue all rights and remedies available to it under the Senior Loan Documents, at law, or in equity, regardless of any Enforcement Action Notice or Enforcement Action by Junior Lender. Except as otherwise provided herein, at any time or from time to time and any number of times, without notice to Junior Lender and without affecting the liability of Junior Lender, (a) the time for payment of the Senior Indebtedness may be extended or the Senior Indebtedness may be renewed in whole or in part; (b) the time for Borrower's performance of or compliance with any covenant or agreement contained in the Senior Loan Documents, whether presently existing or hereinafter entered into , may be extended or such performance or compliance may be waived; (c) the maturity of the Senior Indebtedness may be accelerated as provided in the Senior Loan Documents; (d) any Senior Loan Document may be extended, consolidated, modified or amended b y Senior Lender and Borrower in any respect, including, but not limited to, an increase in the principal amount; and (e) any security for the Senior Indebtedness may be modified, exchanged, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Senior Indebtedness. If, after the occurrence of a Senior Loan Default, Senior Lender acquires title to any of the Property pursuant to a mortgage foreclosure conducted in accordance with applicable law, the lien, operation, and effect of the Junior Security Instrument and other Junior Loan Documents automatically shall terminate with respect to such Property upon Senior Lender's acquisition of title. (g) Junior Lender acknowledges that it entered into the transactions contemplated by the Junior Loan Documents and made the Junior Loan to Borrower without reliance upon any information or advice from Senior Le nder. Junior Lender made its own underwriting analysis in connecp ~, ~t~,l~FJBµJ;g fl ~@,<l,11, its own credit C ITY RECORDEl~'S OFF ICE P.O. BOX 1455 15 S ub ordinatio n and lntercreditor Agreement (SLC Corporation) 8 SALT LAl<E C ITY, UTAH 8 da1ct"h4 bfft5 Ap~rtments review of Borrower, and investigated all matters pertinent, in Junior Lender's judgment, to its determination to make the Junior Loan to Borrower. Junior Lender acknowledges that it is a sophisticated, experienced commercial lender, and was represented by competent counsel in connection with this Agreement. (h) Junior Lender hereby represents and warrants that, as of the date hereof, the entire proceeds of the Junior Loan have been disbursed to Borrower. Junior Lender hereby further represents and warrants that: (i) Junior Lender is now the owner and holder of the Junior Loan Documents; (ii) the Juni.or Loan Documents are now in full force and effect; (iii) the Junior Loan Documents have not been modified or amended; (iv) no default or event which, with the passing of time or giving of notice would constitute a default, under the Junior Loan Documents has occurred; (v) the current outstanding principal balance of the Junior Indebtedness is $1,000,000; (vi) no scheduled monthly payments under the Junior Loan Documents have been or will be prepaid except with the prior written consent of Senior Lender; (vii) none of the rights of Junior Lender under any of the Junior Loan Documents are subject to the rights of any third parties, by way of subrogation, indemnification or otherwise; and (viii) there are no other Junior Loan Documents other than those listed on Exhibit B hereto. Borrower further represents and warrants that it has provided to Senior Lender a true, complete, and correct copy of all the Junior Loan Documents. 4. Standstill Agreement; Right to Cure Senior Loan Default. (a) Until such time as any of the Senior Indebtedness has been repaid in full and the Senior Security Instrument has been released and discharged, Junior Lender shall not without the prior written consent of Senior Lender, which may be withheld in Senior Lender's sole and absolute discretion, take any Enforcement Action, including, without limitation, (i) accelerate the Junior Loan, (ii) exercise any of Junior Lender's remedies under the Junior Security Instrument or any of the other Junior Loan Documents (including, without limitation, the commencement of any judicial or non-judicial action of proceeding (a) to enforce any obligation of Borrower under any of the Junior Loan Documents, (b) to collect any monies payable to Borrower, (c) to have a receiver appointed to collect any monies payable to Borrower; or (d) to foreclose the lien(s) created by the Junior Security Instrument) or (iii) file or join in the filing of any involuntary Bankruptcy Proceeding against Borrower or any person or entity which owns a direct or indirect interest in Borrower; provided, however, that such limitation on the remedies of Junior Lender shall not derogate or otherwise limit Junior Lender's rights, following an event of default under the Junior Loan Documents to (a) compute interest on all amounts due and payable under the Junior Loan at the default rate described in the Junior Loan Documents, (b) compute prepayment premiums and late charges, and (c) enforce against any person , other than Borrower and any guarantors or indemnitors under the Senior Loan Documents, any guaranty of the obligations of Borrower under the Junior Loan. (b) Senior Lender shall, simultaneously with the sending of any notice of a Senior Loan Default to Borrower, send to Junior Lender a copy of said notice under the Senior Loan Documents; prov ided, however, failure to do so s hall not affect the validity PROPERTY OF SALT LAl<c CITY RECORDER'S OFflCE Subordination a nd lntercreditor Ag reeme nt (S LC Corp oration) 9 P.O . BOX 145515 Garde n Lofts Af a rtments SALT LAKE CITY, UTAH 84114 -55 5 of such notice or any obligation of Borrower to Senior Lender and shall not affect the relative priorities between the Senior Loan and the Junior Loan as set forth herein. Borrower covenants and agrees to forward to Junior Lender, within three (3) business days of Borrower's receipt thereof, a copy of any notice of a Senior Loan Default Borrower receives from Senior Lender. (c) Junior Lender shall have the right, but shall have no obligation, to cure any Senior Loan Default; provided, if Junior Lender shall elect to cure any such Default, it shall so notify Senior Lender and shall commence and complete such curing within any applicable notice or grace period, if any, as Borrower is permitted by the terms of the Senior Loan Documents to cure such Senior Loan Default. Junior Lender shall not be subrogated to the rights of Senior Lender under the Senior Loan Documents by reason of Junior Lender having cured any Senior Loan Default. However, Senior Lender acknowledges that, to the extent so provided in the Junior Loan Documents, amounts advanced or expended by Junior Lender to cure a Senior Loan Default may be added to and become a part of the Junior Indebtedness. (d) Junior Lender agrees that, notwithstanding any contrary prov1s10n contained in the Junior Loan Documents, a Senior Loan Default shall not constitute a default under the Junior Loan Documents if no other default occurred under the Junior Loan Documents. (e) Junior Lender acknowledges that any conveyance or other transfer of title to the Property pursuant to a foreclosure of the Junior Security Instrument (including a conveyance or other transfer of title pursuant to the exercise of a power of sale contained in the Junior Security Instrument), or any deed or assignment in lieu of foreclosure or similar arrangement, shall be subject to the transfer provisions of the Senior Loan Documents; and the person (including Junior Lender) who acquires title to the Property pursuant to the foreclosure proceeding ( or pursuant to the exercise of a power of sale contained in the Junior Security Instrument) shall not be deemed to be automatically approved by Senior Lender. 5. Insurance. Junior Lender agrees that all original policies of insurance required pursuant to the Senior Security Instrument shall be held by Senior Lender. The preceding sentence shall not preclude Junior Lender from requiring that it be named as a loss payee, as its interest may appear, under all policies of property damage insurance maintained by Borrower with respect to the Property or that it be named as an additional insured under all policies of liability insurance maintained by Borrower with respect to the Property. Nothing in this paragraph shall affect the priority of payment of the proceeds of property damage insurance under the Senior Security Instrument. 6. Default. Junior Lender and Borrower acknowledge and agree that a default by either such party under this Agreement shall, at the sole option of Senior Lender, constitute a default under the Senior Loan Documents. Each party hereto acknowledges that in the event any party fails to comply with its obligations hereunder, the other parties shall have all rights available at law and in equity, including the right to obtain specific performance of the obligations of such defaulting party and injunctive relief. No failure or delay on the part of any Sub ordination and lnte rc reditor Agreement (S LC Corporation) 10 PROPERTY OF SALT LAl<E CITY RECORDER'S OFFICE P.O. BOX 1 45515 Garde n Lofts Apartments SALT LAl<E CITY, UTAH 84114-5515 party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. 7. Enforcement Costs. Borrower agrees to reimburse Senior Lender for any and all costs and expenses (including reasonable attorneys' fees) incurred by Senior Lender in connection with enforcing its rights against Junior Lender under this Agreement. 8. Notices. Any notice which any party hereto may be required or may desire to give hereunder shall be deemed to have been given and shall be effective only if it is in writing and (i) delivered personally, (ii) mailed, postage prepaid, by United State registered or certified mail , return receipts requested, (iii) delivered by overnight express courier or (iv) sent by telecopier, in each instance addressed as follows: To Junior Lender: If to Senior Lender: With a copy to: Prior to the Conversion Date, with a copy to: City of Salt Lake PO Box 145488 451 South State Street, Room 406 Salt Lake City, Utah 84114 Attention: Housing & Neighborhood Development Facsimile: (801) 535-6131 Citibank, N .A . 388 Greenwich Street, 8th Floor New York, New York 10013 Attention: Transaction Management Group Re: Garden Lofts Apartments Deal No. 24974 Facsimile: (212) 723-8209 Citibank, N.A. 325 East Hillcrest Drive, Suite 160 Thousand Oaks , California 91360 Attention: Operations Manager/ Asset Manager Re: Garden Lofts Apartments Deal No. 24974 Facsimile: (805) 557-0924 Citibank, N.A. 388 Greenwich Street, 8th Floor New York, New York 10013 Attention: Account Specialist Re: Garden Lofts Apartments Deal No. 24974 Facsimile: (212) 723-8209 Following the Conversion Citibank N .A. Date, with a copy to: c/o Berkadia Commercial Servicing Department 323 Norristown Road, Suite 300 Ambler, Pennsylvania 19002 PROPERTY OF SALT LA!<E CITY RECORDER'S OFFICE Subordination and lnterc redito r Ag reement (S LC Corporati on) 11 P.O . BOX l 455 l 5 Gar d v.n Lofts J).pa rtmen ts SALT LAl<E CITY, UTAH tl4 1 14 -o..> 1 -i Attention: Client Relations Manager Re: Garden Lofts Apartments Deal No . 24974 Facsimile: (215) 328 -0305 And a copy of any notices Citibank, N.A. of default sent to: 388 Greenwich Street New York, New York 10013 Attention: General Counsel 's Office Re: Garden Lofts Apartments Deal No . 24974 Facsimile: (646) 291-5754 or at such other addresses or to the attention of such other persons as may from time to time be designated by the party to be addressed by written notice to the other in the manner herein provided. Notices, demands and requests given in the manner aforesaid shall be deemed sufficiently served or given for all purposes hereunder when received or when delivery is refused or when the same are returned to sender for failure to be called for. 9. WAIVER OF TRIAL BY JURY. TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF THE PARTIES HERETO (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS W AIYER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VO LUNT ARIL Y WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL. 10. Term. The term of this Agreement shall commence on the date hereof and shall continue until the earliest to occur of the following events: (i) the payment of all of the principal of, interest on and other amounts payable under the Senior Loan Documents; (ii) the payment of all of the principal of, interest on and other amounts payable under the Junior Loan Documents, other than by reason of payments which Junior Lender is obligated to remit to Senior Lender pursuant to the terms hereof; (iii) the acquisition by Senior Lender of title to the Property pursuant to a foreclosure, or a deed in lieu of foreclosure , of ( or the exercise of a power of sale contained in) the Senior Security Instrument; or (iv) the acquisition by Junior Lender of title to the Property pursuant to a foreclosure, or a deed in lieu of foreclosure , of ( or the exercise of a power of sale contained in) the Junior Security Instrument, but only if such acquisition of title does not violate any of the terms of this Agreement. Subordina tion and In terc redito r Ag reement (S LC Corporation) 12 PROPERTY OF StLT LAl<E CITY RECOF?DER'S OFFICE P.O. BOX l 45515 SALT LAKE C ITY, UTAH 84114-5515 Garden lofts Apa rtments 11. Miscellaneous. (a) Junior Lender shall, within ten (10) business days following a request from Senior Lender, provide Senior Lender with a written statement setting forth the then current outstanding principal balance of the Junior Loan, the aggregate accrued and unpaid interest under the Junior Loan, and stating whether, to the knowledge of Junior Lender, any default or event of default exists under the Junior Loan, and containing such other information with respect to the Junior Indebtedness as Senior Lender may require. Upon notice from Senior Lender from time to time, Junior Lender shall execute and deliver such additional instruments and documents, and shall take such actions, as are required by Senior Lender in order to further evidence or effectuate the provisions and intent of this Agreement. (b) This Agreement shall bind and inure to the benefit of all successors and assigns of Junior Lender and Senior Lender. Senior Lender may assign its interest in the Senior Loan Documents without notice to or consent of Junior Lender. Junior Lender may only assign its rights and interests hereunder following the prior written consent of Senior Lender, which consent may be withheld or conditioned in its sole and absolute discretion. (c) Senior Lender hereby consents to the Junior Loan and the Junior Loan Documents; provided, however, that this Agreement does not constitute an approval by Senior Lender of the terms of the Junior Loan Documents. Junior Lender hereby consents to the Senior Loan and the Senior Loan Documents; provided, however, that this Agreement does not constitute an approval b y Junior Lender of the terms of the Senior Loan Documents. (d) This Agreement may be executed in multiple counterparts, each of which shall constitute an original document and all of which together shall constitute one agreement. (e) IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, MA TIERS OF CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER, THIS AGREEMENT HAS BEEN ENTERED INTO AND DELIVERED IN, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAW. (f) Time is of the essence m the performance of every covenant and agreement contained in this Agreement. (g) If any provision or remedy set forth in this Agreement for any reason shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or remedy of this Agreement and this Agreement shall be construed as if such invalid, ill egal or unenforceable prov ision or Subordination and lntercreditor Agreement (SLC Collloration) 13 PROPERTY OF Sfa.LT l.Al<E CITY RECORDEr,?'S OFFICE P.O . BOX 145 515 SALT LAl<E CITY, UTAH @Wie1 lf-ts p1a!J11ents remedy had never been set forth herein, but only to the extent of such invalidity, illegality or unenforceability. (h) Each party hereto hereby represents and warrants that this Agreement has been duly authorized, executed and delivered by it and constitutes a legal, valid and binding agreement enforceable in all material respects in accordance with its terms. (i) Borrower hereby acknowledges and consents to the execution of this Agreement, and agrees to be bound by the provisions hereof that are applicable to Borrower. Solely as between Senior Lender and Junior Lender, all of the signatories below hereby agree that to the extent of any conflict between the terms and provisions of this Agreement and the terms and provisions of the Senior Loan Documents and/or the Junior Loan Documents respectively, the terms and provisions of this Agreement shall govern and control. By executing this Agreement in the place provided below, Borrower hereby (i) acknowledges the provisions hereof, (ii) agrees not to take any action inconsistent with Senior Lender's rights or Junior Lender's rights under this Agreement, (iii) waives and relinquishes to the maximum extent permitted by law any and all rights, defenses and claims now existing or hereinafter accruing relating to Junior Lender's forbearance from exercising any rights and remedies pursuant to Section 4 of this Agreement, including, without limitation, any defenses based on the statute of limitations or any equitable defenses, such as laches, and (iv) acknowledges and agrees that (A) this Agreement is entered into for the sole protection and benefit of Senior Lender and Junior Lender (and their respective successors, assigns and participants), and no other person (including Borrower) shall have any benefits, rights or remedies under or by reason of this Agreement, (B) nothing in thi s Agreement is intended, or shall be construed to , relieve or discharge the obligations or liabilities of any third party (including Borrower under the Senior Loan Documents and the Junior Loan Documents), (c) neither of them nor any of their affiliates shall be, or be deemed to be, beneficiaries of any of the provisions hereof or have any rights hereunder whatsoever, and (D) no provision of this Agreement is intended to , or shall be construed to , give any such third party (including Borrower) any right subrogating to the rights of, or action against, Senior Lender or Junior Lender. (j) No amendment, supplement, modification, waiver or termination of this Agreement shall be effective against any party unless such amendment, supplement, modification, waiver or termination is contained in a writing signed by such party. (k) No party other than Senior Lender and Junior Lender shall have any rights under, or be deemed a beneficiary of any of the provisions of, this Agreement. (1) Nothing herein or in any of the Senior Loan Documents or Junior Loan Documents shall be deemed to constitute Senior Lender as a joint venturer or partner of Junior Lender. 12. REPRESENTATION REGARDING ETHICAL STANDARDS FOR CITY OFFICERS AND EMPLOYEES AND FORMER CITY OFFICERS AND EMPLOYEES. Senior Lender and Borrower each represents , solely with respect to itself and its agents and Subordination a nd lnte rcredito r Agreem ent (SLC Corporation) 14 PROPERTY OF SALT LA!<E CITY RECORDER'S OfflCF P.O. BOX 145515 Garden Lofts Apartments SALT LAl<E CIW, UTAH 84114-5515 employees, that it has not: ( 1) provided an illegal gift or payoff to a City officer or employee or former City officer or employee, or his or her relative or business entity; (2) retained any person to solicit or secure this contract upon an agreement or understanding for a commission, percentage, or brokerage or contingent fee , other than bona fide employees or bona fide commercial selling agencies for the purpose of securing business; (3) knowingly breached any of the ethical standards set forth in City's conflict of interest ordinance, Chapter 2.44, Salt Lake City Code; or (4) knowingly influenced, and hereby promises that it will not knowingly influence, a City officer or employee or former City officer or employee to breach any of the ethical standards set forth in City's conflict of interest ordinance, Chapter 2.44, Salt Lake City Code 13. Attached Exhibits. The following Exhibits are attached to this Agreement and are incorporated by reference herein as if more fully set forth in the text hereof: Exhibit A -Legal Description Exhibit B -Junior Loan Documents Exhibit C-Modifications to Subordination and Intercreditor Agreement The terms of thi s Agreement are modified and supplemented as set forth in said Exhibits. To the extent of any conflict or inconsistency between the terms of said Exhibits and the text of this Agreement, the terms of said Exhibits shall be controlling in all respects. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Subordination and lntercreditor Agreement (SLC Corporation) 15 Pl~OPERTY OF SALT LA:<:: CITY f<ECORDE:R'S CF-ICE P.O . BOX 145515 SALT LAl<E Clfr, UTl"\HGag'zt f,~t P~'titt s IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Subordination and Intercreditor Agreement or caused this Subordination and Intercreditor Agreement to be duly executed and delivered by their respective authorized representatives as of the date first set forth above. ATTEST: r STATE OF UTAH COUNTY OF SALT LAKE JUNIOR LENDER: SALT LAKE CITY CORPORATION, a Utah municipal corporation By: ~fl'),(?~ acquelineM.Biskupski,Mayor Approved as to Form Salt Lake City Attorney's Office By:m:KefuK nnberly K. Chytraus t9oil:'.:'. Attorney Date: \ 2D I] On December l3 2017 before me, ~ \ 1\"\0V\.t... rb\rl:\t)( , personally appeared Jacqueline M. Biskupski who, personally known to me or 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/she/they executed the same in his/her authorized capacity, and that by his/her s ignature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature ~ Subordination and lnte rcreditor Agree ment (S LC Co)l'.loration) of Notary Public NOTARY PUBLIC SIMONE BUTLER 697404 COMM ISSION EXPIRES OCTOBER 25, 2021 STATE OF UTAH S-1 P,,OPEr.Ty _)~ ! I I'\ Cl'IY l~ECORDER" OF, I ~'-" P.O BCX l 45515 SALT LA1<1: CffY, U iAH a 4°ttf1s~s{rrt ments SENIOR LENDER: CITIBANK, N .A. By:------------ Name: Bryan Barker Title: Authorized Signatory GENERAL ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. ST A TE OF CALIFORNIA COUNTY OF ----- ) ) ) On December_, 2017, before me, _______________ , N otary Public, personally appeared Bryan Barker, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) 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. Signature of Notary Public Subordina tion and lntercred itor Agreement (S LC Corpora tio n) S-2 (Seal) PROPERTY OF SALT LAl<E C ITY RECORDER'S OFFICE P.O . BOX l 45515 SALT LAl<E C ITY, UTAH 84114-5515 Garden Lofts Apartme nts ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE: STATE OF UTAH ) ) COUNTY OF SALT LAKE ) BORROWER: GARDEN LOFTS HOLDINGS, LP, a Utah limited partnership By: Garden Lofts GP, LLC, a Utah limited liability company Its: General Partner By: --------- Name: Jeffrey S. Nielson Title: Manager On December , 2017 before me, , Notary Public, personally appeared Jeffrey S. Nielson, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name(s) is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Sub ordinati o n and lntercredito r Agreeme nt (SLC Corp oration) Signature of Notary Public S-3 PROPERTY OF SALT LAl<E CITY RECORDER 'S OFFICE P.O. BOX l 45515 SALT LAKE CITY, UTAH 84114-5515 Gard e n Lofts Apartments EXHIBIT A LEGAL DESCRIPTION All of Lot 1, SALT CITY PLAZA MINOR SUBDIVISION, located in the Southeast Quarter of Section 1, Township 1 South, Range 1 West, Salt Lake Base and Meridian, more particularly described as follows: Beginning at a point on the West line of Lot 5, Block 32, Plat "A", Salt Lake City Survey, said point also being in the East right-of-way line of 200 West Street, said point lies South 00°01 '45" West from the Northwest comer of said Lot 5, along the West line of Lot 5, 239.40 feet, said point also lies South 00°00'48" East along the monument line of 200 West Street 306.39 feet and North 89°59'12" East 70.81 feet from the Salt Lake City Survey Monument in the intersection of200 West Street and 500 South Street and running thence North 89°54'10" East 165. 04 feet to the East line of said Lot 5; thence North 00°01 '44" East along said East line 129 .87 feet; thence East 36.58 feet; thence South 6.65 feet; thence East 19.13 feet; thence South 7.33 feet; thence East 65.14 feet; thence South 45 °00'00" East 15.84 feet ; thence East 44.16 feet ; thence South 45 °00'00" East 11.73 feet; thence East 103 .58 feet; thence South 45°00'00" East 27.06 feet; thence East 22.84 feet to the East line of Lot 7 of said Block 32; thence South 00°01 '41" West along said East line and the extension thereof 171 .50 feet; thence South 89°54'05" West 95.03 feet; thence South 00°01'42" West 198 .60 feet; thence South 89°53'54" West 32.88 feet; thence South 00°01 '42" West 127.56 feet to the South line of Lot 2 of said Block 32, said point also being on the North right-of-way line of 600 South Street; thence South 89°53'46" West along said right-of-way 202.18 feet to the Southwest comer of Lot 3 of said Block 32 ; thence North 00°01'44" East along the West line of said Lot 3 and the extension thereof 354.95 feet; thence South 89 °54'06" West 165.04 feet to the West right-of- way line of said 200 West Street; thence North 00°01 '45" East along said West line 66.04 feet to the point of beginning. Tax Parcel No.: 15-01-476-021 Subordination and lntercreditor Agreeme nt (S LC Corporation) A-1 PROPERTY OF SALT LAl<E CITY RECORDER'S Off ICE P.O. BOX 145515 SALT LAKE CITY, UTAH 84114-5515 Gardea Lofts Apartments EXHIBITB JUNIOR LOAN DOCUMENTS 1. Promissory Note, dated as of the date hereof, made by Garden Lofts Holdings, LP, a Utah limited partnership ("Borrower") to Salt Lake City Corporation, a municipal corporation of the State of Utah ("Junior Lender"). 2 . Loan Agreement, dated as of the date hereof, by and between Borrower and Junior Lender. 3. Trust Deed with Assignment of Rents, dated as of the date hereof, made b y Borrower for the benefit of Junior Lender. Subordination and lntercreditor Agreement (S LC Coll)oralion) B-1 PROPERTY OF SALT LAl<E CITY RECORDER'S OFFICE P.O BOX 145515 SALT LAl<E CITY, UTAH 84114-5515 Garden Lofts Apartments EXHIBIT C MODIFICATIONS TO SUBORDINATION AND INTERCREDITOR AGREEMENT The following modifications are made to the text of the Agreement that precedes this Exhibit: None. Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Agreement. Subord ination and Intercreditor Agreement (SLC Corporation) C-1 Garden Lofts Apartments Exhibit 5 Recorded HTF Loan LOAN AGREEMENT Garden Lofts Holdings, LP (Garden Lofts Project) RECORDED DEC 1 4 2017 _________________ C_ITY____:_;Ro=-ECORDER THIS AGREEMENT is by and between SALT LAKE CITY CORPORATION, a munici pal corporation of the state of Utah, hereinafter called the "City," and Garden Lofts Holdings, LP, hereinafter called the "Borrower," and is dated the date that the City Recorder attests the applicable City signature (which date shall be the recordation date). WHEREAS, the Borrower has applied to the City for a loan from the City's Housing Trust Fund for the Garden Lofts project located at 154 West 600 South in Salt Lake City, Utah (the "Project"); and WHEREAS, the City is willing to make said loan to the Borrower on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE 1 THE LOAN SECTION 1.01-THE LOAN, NOTE AND RATE Subject to the terms and conditions of this Agreement, the City hereby agrees to loan to Borrower, and the Borrower hereby agrees to borrow from the City and repay to the City or its assigns, a sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000) (the "Loan"). The obligation of the Borrower to repay the Loan shall be evidenced by a Promissory Note (the "Note") of the Borrower in a form satisfactory to the City, dated on the date on which the Loan is made (the "Closing Date "), payable over thirty-five (35) years with payments commencing and continuing as more fully set forth in the Note, and pa yable to the order of the City for the amount of the Loan with interest on the unpaid principa l at the rate of two and one-half perce nt (2 .5%) per annum. The City's loan shall be secured by a trust deed (the "Trust Deed ") on the Proje ct. The documents evidencing and securing the Loan are herein collectively referred to as the "Loan Documents." SECTION 1.02-THE TERM AND REPAYMENT (a). The term of the Loan shall be for thirty-eight (38) years beginning upon date of funding. The first three (3) years Borrower shall pay interest only. The first payment shall be due at the end of the three (3) year interest only period on April 1 , 2021 in the amount of $75,000 (the "First Payment"). Subsequent payments shall thereafter be made annually ("Annual Payments") comme nc ing on April 1, 2022 and on each April 1 thereafter, until all monies owed to the City have been paid in full. The maximum amount of th e Annual Payment shall be $42,899.43; provided, howeve r, the amount of each Annual Payment shall be limited to the amount of the available Surplus Cash, it being understood that the Borrower shall not be in default if it pays the Surplus Cash, or if there is no Surplus Cash, if no Annual Payment is made for the period when no Surplus Cash is available. Borrower will provide a copy of Borrower's full annual audit each year within thirty (30) days of the completion of the annual audit and such annual audit shall be the conclusive evidence of the availability of Surplus Cash for repayment of the Loan. The City acknowledges that available Surplus Cash will be split evenly between payment on the City's Loan and the Olene Walker Housing Trust Fund Loan. (b). For purposes of this Agreement, "Surplus Cash" shall mean with respect to any period, 75% any revenues of the Borrower remaining after paying, or setting aside funds for paying, all of the following: (i) All sums due or currently required to be paid (including but not limited to any deposits to a principal reserve fund) under that project loan agreement (the "Senior Loan Agreement"), defined in that certain Subordination Agreement (the "Subordination Agreement") dated as of December __ , 2017, by and between Citibank, N.A. ("Senior Mortgagee"), City and Borrower; (ii) All deposits to any replacement reserve, completion/repair reserve or other reserve or escrow required by the Borrower's Senior Mortgagee and investor limited partner; (iii) All fees due or currently payable by the Borrower in connection with any loan senior to the City's loan as such requirements are described in Senior Loan Agreement and Subordination Agreement; and (iv) All reasonable operating expenses of the mortgaged property defined in the Senior Loan Documents (the "Mortgaged Property"), including but not limited to real estate taxes, insurance premiums, utilities, building maintenance, painting and repairs, management fees, payroll , administrative expenses, legal expenses and audit expenses (including any fees, deposits or escrows payable under the Borrower's organizational documents, but excluding any developer fees payable with respect to the Mortgaged Property). (c). Interest shall commence accruing on the date of this Agreement. Each Annual Payment shall be applied first to accrued interest, then to currently due interest, and then to the repayment of principal. If Surplus Cash is not sufficient to make a full First or Annual Payment required under this loan then the unpaid principal portion of such payment shall be deferred and the interest shall accrue and be added to the next Annual Payment. If the Loan has not been fully repaid by the end of the loan term, or if the Loan has not otherwise been paid in full, the City, at its discretion, may call the entire outstanding loan amount due or at the City's sole discretion renegotiate the Loan with the Borrower. Borrower acknowledges that the Loan shall become immediately due and payable to the City if the use of the Project changes from what is described in Section 1.04, without the prior written of consent of the City which consent shall not be unreasonably withheld, conditioned , or delayed. Borrower acknowledges that the City will require an annual report from the Borrower. The annual report will include information on the two hundred seventy two (272) units funded by the City. Borrower will provide documentation on tenant income verifying units are occupied by persons at 60% of area median income or below. These reports will be reviewed and verified by the Housing and Neighborhood Development Staff. 2 All payments shall be applied first to late fees, if any, then to interest, and then to principal. All payments shall be made when due to the City at its address as City may designate in writing. SECTION 1.03-PERSONAL GUARANTEE Not applicable . SECTION 1.04-PURPOSE OF LOAN The purpose of this Loan is for the construction of the Project consisting of 272 income restricted rental units for households earning at or below 60% of the area median income. The Borrower agrees that it shall apply funds received by it under this Agreement in accordance with the purpose stated above . The Borrower further agrees that no application of any funds received from the City hereunder shall be made in violation of federal or state law or Salt Lake City ordinances. SECTION1 .05-DUL Y ORGANIZED The Borrower certifies that it is a Utah limited partnership in good standing , having been organized on October 16, 2017. SECTION 1.06-TERMS, COVENANTS AND CONDITIONS Borrower agrees to abide by and be bound by the attached Terms , Covenants and Conditions marked as Exhibit "A," and the Use of Proceeds marked as Exhibit "B," and incorporated herein by this reference . Borrower acknowledges that it has received a copy of such Terms, Covenants and Conditions, and the Use of Proceeds, has read the same, and accepts them as legal binding parts of this Loan Agreement. SECTION 1.07-FEES Not applicable. IN WITNESS WHEREOF, the parties hereto are signing this Agreement as of the date stated in the introductory clause. RECORDED DEC t 4 2017 CITY RECORDER ATTEST: ~ City RBCOrder 3 CITY: Salt Lake City Corporation, a Utah municipal corporation By Q::r&f/1:/:~ STATE OF UTAH :ss COUNTY OF SALT LAKE ) GARDEN LOFTS HOLDINGS, LP, a Utah limited partnership By: Garden Lofts GP , LLC, a Utah limited liability company its General Partner The foregoing instrument was duly acknowledged before me this ] 4~ day of December, 2017, by Jeffrey S. Nielson, Manager of Garden Lofts GP, LLC , a Utah limited liability company that is the General Partner for Garden Lofts Holdings LP, a Utah limited partnership . • ARNAE BALLANTYNE ttJWff PIAIJC•STAlE OFIIJ'AH COMMISSION# 680146 COMM, EXP. 01·18-2019 Salt Lak e County, Utah 4 ACKNOWLEDGEMENT OF RECEIPT OF COPY OF TERMS, COVENANTS AND CONDITIONS TO LOAN AGREEMENT COMES NOW the Undersigned, hereinafter referred to as the "Borrower ," and acknowledges receipt of a copy of Ex hibit A, "Terms , Covenants and Conditions," and Exh ibit B, "Use of Proceeds" to Loan Agreement and acknowledges that he has read the same, and acknowledges his agreement t o accept them as legal and binding parts of the Loan Agreement. DATED this / 4ft day of December, 2017. GARDEN LOFTS HOLDINGS, LP, a Utah li m ited partnership By: Garden Lofts GP, LLC, a Utah lim ited liability company its General Partner Jeffrey S Nielson 5 SALT LAKE CITY CORPORATION EXHIBIT "A" TO LOAN AGREEMENT TERMS, COVENANTS AND CONDITIONS It is expressly agreed by the parties that this Exhibit is incorporated in and a part of that certain Loan Agreement by and between Salt Lake City Corporation (the "City") and Garden Lofts Holdings, LP, a Utah limited partnership, (the "Borrower"), and that all of the terms, conditions and provisions set forth below are to apply to that Agreement and are made a part of that Agreement as though they were expressly rewritten , incorporated and included therein. ARTICLE II REPRESENTATIONS AND WARRANTIES The Borrower Represents and Covenants the Following: SECTION 2.01: DULY AUTHORIZED The making and performance by the Borrower of this Agreement, and the execution and delivery of the Note, and any security agreements and Instruments have been duly authorized by all necessary action, including but not limited to company, partnership or individual action, and will not violate any law, rule, regulation, order, writ, judgment, decree, determination or award presently in effect having applicability to the Borrower or any provision of the Borrower's Partnership Agreement, dated ___________ (the "Partnership Agreement"), or result in a breach of or constitute a default under any indenture or bank loan or credit agreement or any other agreement or instrument to which the Borrower is a party or by which it or its property may be bound or affected. SECTION 2.02: LEGALLY BINDING INSTRUMENTS When this Agreement is executed by the Borrower and the City, and when the Note is executed and delivered by the Borrower for value , each such instrument shall constitute the legal, valid, and binding obligation of the Borrower in accordance with its terms. Any security agreements and instruments, financing statements, mortgages, trust deeds, and other liens on collateral or real estate with respect to the Loan shall constitute legal, valid and binding liens. The City acknowledges it is subordinating its Loan and the collateral for such Loan as set forth in the Subordination Agreement to certain senior financing previously disclosed to the City and will share second priority with the lien in favor of the Olene Walker Housing Loan Fund (the "Olene Walker Loan") SECTION 2.03: NO LEGAL SUITS There are no legal actions, suits , or proceedings pending or, to the knowledge of the Borrower, threatened against the Borrower before any court or administrative agency, whi c h, if determined adversely to the Borrower, would have a material adverse effect on the financial condition or business of the Borrower. 6 SECTION 2.04: NO LEGAL AUTHORIZATION NEEDED No authorization, consent or approval, or any formal exemption of any Governmental body, regulatory authorities (Federal, State or Local) or mortgagee, creditor or third party is or was necessary to the valid execution and delivery by the Borrower of this Agreement, the Note, any security agreement, financing statement or the Trust Deed. SECTION 2.05: NOT IN DEFAULT The Borrower is not in default of any obligation , covenant, or condition contained in any bond, debenture, note or other evidence of indebtedness or any mortgage or collateral instrument securing the same. SECTION 2.06. TAXES ARE PAID The Borrower ha s filed all tax returns which are required and has paid or made provision for the payment of all taxes which have or may become due pursuant to said returns or pursuant to any assessments levied against the Borrower or its personal or real property by any ta xing agency, federal, state or local. No tax liability has been asserted by the Internal Revenue Service or other taxing agency, federal, state or local for taxes materially in excess of those already provided for the Borrower knows of no basis for any such deficiency assessment. SECTION 2.07: NO ADVERSE CHANGE The Borrower certifies th at there has been no adverse change since the date of loan application in the financial condition , organization, operation, business prospects, fi xed properties, or personnel of the Borrower. ARTICLE Ill CONDITIONS OF LENDING The obligation of the City to make the Loan shall be subject to the fulfillment at the t ime of funding of each of the following conditions: SECTION 3 .01 : EX ECUTION OF AUTHORIZATION The Borrower shall have executed and delivered to the City the loan commitmen t, if applicable. SECTION 3.02: EXECUTION AND DELIVERY OF NOTE AND LOAN AGREEMENT The Borrower shall have executed and delivered to the City this Loan Agreement and the Note in a form satisfactory to the City and its counsel. SECTION 3.03: EX ECUTION AND DELIVERY OF SECURITY AGREEMENT AND MORTGAGE If required by the City, the Borrower shall have executed and delivered to the City a security ag reement and financing statements in a form satisfactory to the City, giving the City 7 security in all of the collateral and personal property acquired with the Loan proceeds, and/or the Borrower shall have executed and delivered to the City, the Trust Deed on the real estate . Said security agreement (the "Security Agreement"), financing statements (the "Financing Statements") and Trust Deed shall be free and clear of all prior liens and encumbrances, except as provided for Section 2.02 herein . The Security Agreement, Financing Statements and Trust Deed are to secure payment of the principal of the Note, the interest thereon, and any other sums payable by the Borrower hereunder. SECTION 3.04: EXECUTION AND CERTIFICATION OF RESOLUTION OF BOARD OF DIRECTORS OR CERTIFICATE OF PARTNERSHIP If required by the City, the Borrower shall have executed and delivered to the City a duly certified copy of a Resolution of the Manager of the General Partner of the Borrower authorizing the execution and delivery by the Borrower of this Agreement, the Note, and Security Agreement and Trust Deed. SECTION 3.05: CORPORATE OR PARTNERSHIP PAPERS The Borrower shall have delivered to the City if requested , copies of the Borrower's Partnership Agreement, Certificate of Limited Partnership, W-9. SECTION 3.06 : TITLE INSURANCE Borrower shall provide to Lender a current title commitment for City's review, At Closing, the Borrower shall have secured lenders title insurance in the form and issued by companies satisfactory to the City, in the amount of the Loan, insuring the City's lien under the Trust Deed , subject only to exceptions approved by the City if no loan commitment is issued. The title policy shall show no delinquent taxes or assessments affecting the real property or any part thereof on the date of closing except as approved by the City. SECTION 3.07 : GOVERNMENTAL APPROVAL The Borrower shall have secured all necessary approvals or consents, if required, of Governmental bodies having jurisdiction with respect to its business .. If this Loan is to be used for construction , Borrower shall have obtained all required building and other applicable permits and approvals . SECTION 3.08 : APPROVAL OF OTHERS The Borrower shall have secured all necessary approvals or consents required with respect to this transaction by any mortgagor, creditor or other party having any financial interest in the Borrower. The Borrower will provide evidence of all funding commitments and executed tax credit investor agreement. ARTICLE IV AFFIRMATIVE COVENANTS OF THE BORROWER The Borrower agrees to comply with the following covenants from the date hereof until the City has bee n fully repaid with interest, unless the City or its a ssigns sh all otherwise consent in writing: 8 SECTION 4.01: PAYMENT OF THE LOAN The Borrower agrees to pay punctually the principal and interest on the Note according to its terms and conditions and to pay punctually any other amounts that may become due and payable to the City under or pursuant to the terms of this Agreement or Note. In the event City or its agent or assignee accepts a late payment after the date on which such payment is due, the Borrower agrees to pay a late payment charge equal to five percent of the late amount or ONE HUNDRED and NO/100THS DOLLARS ($100.00), whichever is greater, as compensation for additional collection efforts. Subject to any provisions to the contrary in the Senior Loan document or Subordination Agreement, the Borrower reserves the right to prepay at any time all or any part of the principal amount of the Note without the payment of penalties or premiums. All payments on this Note shall be applied first to late charges, if any, then to the interest due on the Note, and then to the principal due on the Note. SECTION 4.02: PAYMENT OF OTHER INDEBTEDNESS The Borrower agrees to pay punctually the principal and interest due on any other indebtedness now or hereafter at any time owing by the Borrower to the City or any other entity. SECTION 4 .03: MAINTAIN AND INSURE PROPERTY The Borrower agrees at all times to maintain the property provided as security for this Loan in such condition and repair that the City's security interest therein will be adequately protected. If the security is real property, the Borrower also agrees to maintain during the term of the Loan adequate hazard insurance policies covering fire and extended coverage and such other hazards as may be deemed appropriate in amounts and form sufficient to prevent the Borrower from becoming a co-insurer and issued by companies satisfactory to the City with acceptable loss payee clauses in favor of the City. The Borrower further agrees, if at any time during the life of the Loan the Borrower's property is declared to be within a flood hazard area, to purchase Federal Flood Insurance, if available. Such insurance shall be in an amount equal to the lesser of: i) the amount of the Loan; ii) the insurable value of the property; or iii) the maximum limit of coverage available. Subject to any provisions to the contrary in the Senior Loan document or Subordination Agreement, and notwithstanding anything to the contrary contained in the Loan Documents, City agrees to apply all insurance proceeds resulting from casualty to or damage of the real property, including improvements, securing the loan {the "Project") and all payments or awards resulting from a taking for any public or quasi-public purpose by any lawful power or authority by exercise of the power of condemnation or eminent domain toward the restoration , replacement or rebuilding of the Project, or any part thereof, as nearly as possib,le to its value, condition and operational character immediately prior to any such damage, destruction or taking ("Restoration"), provided sufficient funds are available from all sources to complete such Restoration . 9 The Borrower agrees to obtain and maintain during the entire term of this Loan a comprehensive general liability policy of insurance with minimum coverage amounts as required by City from time to time, but for the present, a minimum of $2,000,000 per occurrence and $3,000,000 aggregate. Said insurance shall provide for a minimum of thirty (30) day's prior written notice of cancellation to the City, but cancellation shall not relieve Borrower of this obligation to provide insurance. On all such coverage, City shall be named as an additional insured. Borrower shall furnish to City appropriate certificates of insurance verifying such present and continued coverage, concurrently with the execution hereof. Borrower also agrees to provide additional certificates as changes occur in policies or coverage during the term of this Loan. All policies of insurance provided shall be issued by insurance companies qualified to do business in the State of Utah and listed on the United States Treasury Department's current Department of Treasury Fiscal Services List 4 70, or having a general policyholder's rating of not less than "A-" in the most current available A.M. Best Co., lnc.'s, Best Insurance Report. Upon request, Borrower shall provide satisfactory evidence of appropriate insurance coverage. SECTION 4.04: PAY ALL TAXES The Borrower agrees to duly pay and discharge all taxes, assessments, and governmental charges upon it or against its properties prior to the date on which the penalties attach thereto, except that the Borrower shall not be required to pay any such tax, assessment, or governmental charge which is being contested by it in good faith and by appropriate proceedings. SECTION 4.05: PROVIDE AFFORDABLE HOUSING The loan funds at issue are being provided on the specific condition that no less than one hundred percent (100%) of the total units to be built in the development will be offered and leased under terms affordable to households at or below 60% of area median income, as defined for purposes of administration of the federal Low Income Housing Tax Credit program for a period of not less than fifty-five (55) years from the date the units are first placed into service. The Borrower agrees that any variance from that condition will constitute a breach the conditions of the loan and all loan amounts and interest owing thereon shall immediately become due and payable. The Borrower will provide documentation to the City at initial lease up and through annual reports demonstrating compliance with the affordability restrictions. SECTION 4.06: MAINTAIN LEGAL EXISTENCE The Borrower agrees to maintain its existence, rights , privilege, and franchises within the State of Utah, and remain qualified to do business in each jurisdiction in which its present or future operations or its ownership of property require such qualification. SECTION 4.07: PROVIDE FINANCIAL AND PROJECT INFORMATION The Borrower agrees to maintain adequate records and books of account, in which complete entries will be made reflecting all of its business and financial transactions, such entries to be made in accordance with generally accepted principles of good accounting practice consistently applied in the case of financial transactions. 10 In addition, the Borrower agrees to deliver to the City financial statements, certified by an authorized officer of the Borrower to be true and accurate copies, upo n request. Borrower shall have completed and deliver to City an annual aud it within 30 days of completion. The Bo rrower further agrees to provide written notice to the City of any public hearing or meeting before any administrative or other public agency that may, in any manner, affect the collateral, personal property or real estate securing the Loan (the "Collate ral"). The Borrower agrees to prov ide the City the following notifications and documentation: 1) quarterly progress reports post-closing through project completion; 2) notification of material changes to project financing sources or costs (defined as a change greater than 5%); 3) notification of project lease up; 4) notification of project completion; 5) project certificate of occupancy; 6) final cost certification; 7) property management agent contact information and management agreement. SECTION 4.08: RIGHT TO INSPECTION The Borrower agrees to grant the City, until the Note has been fully repaid with interest, the right during normal business hours to inspect the Collateral used to secure the Loan; and the Borrower further agrees to provide the City free access to the Borrowe r's premises for the purpose of such inspection to determine the condition of the Collateral provided such entry and inspection shall not unreasonably interfere with the construction or operation of the Collateral. SECTION 4.09: NULL AND VOID COVENANTS The Borrower agrees that in the event any provision of this Loan Agreement or any other instrument executed at closing, or the application thereof to any person or circumstances, shall be declared null and void, invalid, or held for any reason to be unenforceable by a Court of competent jurisdiction, the remainder of such agreement shall ne ve rth e less remain in full force and effect, and to this end, the provisions of all covenants, conditions, and agreements described herein are deemed separate. SECTION 4.10: EXPENSES AND CLOSING COSTS If required by the City, the Borrower agrees to pay all fees and charges incurred with respect to the Loan, or its making, or transfer to the City in any way connected therewith , including, but not limited to, the fees and out-of-pocket expenses of local counsel employed by the City, title insurance and survey costs , recording and filing fees, mortgage taxes, documentary stamp, and any other assessments, fees and expenses payable in connection with this transaction and with the enforcement of this Loan Agreement a nd Note. In the event the processing of the Loan is terminated, for whatever reason, or the Loan is not funded , for whatever reason, Borrower agrees to pay all fees of legal counsel employed by City to assist Borrower at the rate of $100.00 per hour, plus out-of-pocket expenses, and the fees of the representative of City at the rate of $150.00 per hour, plus out-of-pocket expenses, within thirty (30) days after billing . Interest shall accrue on unpaid fees at the rate of eighteen percent (18%) per annum compounded monthly. 11 SECTION 4.11: NOTICE OF DEFAULT The Borrower agrees to give written notice to the City of any event, within ten (10) days of the event, which constitutes an Event of Default under this Loan Agreement as described in Article VI herein, or that would, with notice or lapse of time or both, constitute an Event of Default under this Loan Agreement. SECTION 4.12: INDEMNIFICATION Borrower agrees and covenants to hold the City harmless, indemnify and defend it and its officers and agents of and from any and all claims of loss, damages or injury sustained by any person or damage to property and all expenses, including reasonable attorneys' fees , incurred or thereby arising from Borrower's performance under this agreement, including but not limited to any event of default under Article VI herein by the Borrower's principals, staff, agents, contractors or employees. Nothing herein shall be construed to require the Borrower to indemnify the City against the City's negligence or willful misconduct. If any of the following events of default referred to in the subsections listed below ("Event of Default") shall occur and be continuing at the time of such demand, the entire unpaid principal balance of the Note, and the interest then accrued thereon, shall become and be immediately due and payable upon demand, without presentment or protest, if not cured within the applicable cure period following written notice from the City as set forth in this Article VI. The Loan shall be in default whether it is voluntary or involuntary, with or without limitation, it occurred or was brought about by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rules or regulation of any administrative governmental body, provided, however, that such sum shall not be then payable if Borrower's payments have been waived or the time for making the Borrower's payments has been extended by the City. SECTION 4.13: EXPENSES OF COLLECTION OR ENFORCEMENT The Borrower agrees, if at any time the Borrower defaults on any provision of this Loan Agreement, to pay the City or its assigns, in addition to any other amounts that may be due from the Borrower, an amount equal to the reasonable costs and expenses of collection, enforcement or correction or waiver of the default incurred by the City or its assigns in such collection, enforcement, correction, or waiver of default, including reasonable attorneys' fees actually incurred . SECTION 4.14: OTHER CONDITIONS The Borrower agrees to identify City funding on construction signage and in any public project descriptions. ARTICLE V NEGATIVE COVENANTS OF THE BORROWER The Borrower covenants and agrees that, from the date hereof until payment in full of the Note, unless the City or its assigns shall otherwise consent in writing, it will not enter into any agreement or other commitme nt the performance of which would constitute a breach of any 12 of the covenants contained in this Loan Agreement, including, but not limited to, the following covenants: SECTION 5.01: ENCUMBER THE COLLATERAL The Borrower shall neither create nor suffer to exist any mortgage, pledge, lien, charge or encumbrance, including liens arising from judgments on the Collateral except as of record or disclosed to the City in writing prior to the making of the loan hereunder. SECTION 5.02: SELL THE COLLATERAL The Borrower shall not sell, convey, or suffer to be conveyed, lease, assign, transfer, or otherwise dispose of the Collateral unless approved in writing by the City; provided however, that nothing herein shall preclude the lease of individual residential dwelling units. SECTION 5.03: CHANGE OWNERSHIP Except as otherwise stated in the senior loan documents and the restated limited liability partnership agreement, Borrower shall not permit any material change in the ownership structure, control, or operation of the general partner of the Borrower without the written permission of the City, which permission shall not be unreasonably withheld, conditioned, or delayed. ARTICLE VI EVENTS OF DEFAULT If any of the following events of default referred to in the subsections listed below ("Event of Default") shall occur and be continuing at the time of such demand, the entire unpaid principal balance of the Note, and the interest then accrued thereon, shall become and be immediately due and payable upon demand, without presentment or protest, if not cured within the applicable cure period following written notice from the City as set forth in this Article VI. The Loan shall be in default whether it is voluntary or involuntary, with or without limitation, it occurred or was brought about by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rules or regulation of any administrative governmental body, provided, however, that such sum shall not be then payable if Borrower's payments have been waived or the time for making the Borrower's payments has been extended by the City. SECTION 6.01: NON-PAYMENT OF LOAN If the Borrower shall fail to make payment when due of any installment of principal on the Note, or interest accrued thereon and if the default shall remain unremedied for fifteen (15) days after written notice from the City to Borrower. SECTION 6 .02 : NON-PAYMENT OF OTHER INDEBTEDNESS If default shall be made in the payment when due of any installment of principal or of interest accrued on any of the Borrower's other indebtedness secured by any or all of the collateral securing this Loan, including, but not limited to, the Trust Deed of any other lender on 13 this Project or transaction, and if such default shall remain unremedied for thirty (30) days after written notice from the City to Borrower or within any longer applicable cure period. SECTION 6.03: INCORRECT REPRESENTATION OR WARRANTY Any representation or warranty contained in, or made in connection with the execution and delivery of this Loan Agreement, or in any certificate furnished pursuant hereto, shall prove to have been incorrect when made in any material respect and such misrepresentation or warranty has a material adverse effect on the enforceability of the Loan Documents or the value of the Collateral. SECTION 6 .04: DEFAULT IN COVENANTS The Borrower shall default in the performance of any other term, covenant, or agreement contained in this Loan Agreement, and such default shall continue unremedied for thirty (30) days after written notice thereof shall have been given to the Borrower by the City unless the same cannot reasonably be cured within the 30 days in which case the period for cure will be 90 days. SECTION 6.05: VOLUNTARY INSOLVENCY If the Borrower shall become insolvent or shall cease to pay its debts as they mature or shall voluntarily file a petition seeking reorganization of, or the appointment of a receiver, trustee, or liquidation for it or a substantial portion of its assets or to effect a plan or other arrangement with creditors, or shall be adjudicated bankrupt, or shall make a voluntary assignment for the benefit of creditors. SECTION 6.06: INVOLUNTARY INSOLVENCY If an involuntary petition shall be filed against the Borrower under any bankruptcy, insolvency, or similar law or seeking the re-organization of or the appointment of any receiver, trustee, or liquidator for the Borrower, or of a substantial party of the property of the Borrower, or a writ or warrant of attachment or similar process shall be issued against a substantial part of the property of the Borrower, and such petition shall not be dismissed , or such writ or warrant of attachment or similar process shall not be released or bonded within ninety (90) days after filing or levy. SECTION 6.07: JUDGMENTS If any final judgment for the payment of money that is not fully covered by liability insurance and is in excess of $100,000.00 shall be rendered against the Borrower, and within thirty (30) days, shall not be discharged, or an appeal therefrom taken and execution thereon effectively stayed pending such appeal, and, if such judgment be affirmed on such appeal, the same shall not be discharged within thirty (30) days. 14 ARTICLE VII MISCELLANEOUS SECTION 7.01: WAIVER OF NOTICE No failure or delay on the part of the City in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. No modification or waiver of any provision of this Loan Agreement or of the Note , nor any consent to any department by the Borrower therefrom, shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 7.02: AMENDMENTS; MISCELLANEOUS The Borrower and the City or its assigns, with the concurrence of the City, hereby expressly reserve all rights to amend any provisions of this Agreement, to consent to or waive any departure from the provisions of this Loan Agreement, to amend or consent to or waive departure from the provisions of the Note, and to release or otherwise deal with any collateral security for payment of the Note, provided, however, all such amendments shall be in writing and executed by the City or its assigns and the Borrower. City agrees that the Loan Documents will not be considered to be in default until the expiration of all contracted notice and cure periods provided to the Borrower. The terms of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. City agrees to deliver a copy of this Agreement to any transferee of its interests in the Loan Documents. If any provision of this Agreement is determined to be unenforceable for any reason , it shall be adjusted rather than voided, to the greatest extent possible, to achieve the intent of the parties. All of the other provisions shall be deemed valid and enforceable to the greatest extent possible. SECTION 7.03: NOTICES All notices, consents, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given to a party hereto if mailed by certified mail , prepaid, to the City at its address set forth below, and to the Borrower at the address set forth below or at such other addresses as any party may have designated in writing to an y other party hereto: CITY: Director Housing and Neighborhood Development PO Box 145488 451 South State Street, Room 406 Salt Lake City, Utah 84114-5488 15 BORROWER: Garden Lofts Holdings, LP 620 South State Street Salt Lake City, UT 84111 Attention: Jeffrey Nielson INVESTOR LIMITED PARTNER: SECTION 7.04: PAYMENTS GSB LIHTC Investor LLC Urban Investment Group c/o Goldman Sachs Bank USA 200 West Street New York, New York 10282 Attention: Urban Investment Group Portfolio Manager Email: gs-uig-docs@gs.com gs-uig-portfo li o-ma nager@gs.co m with a copy to: GSB LIHTC Investor LLC Urban Investment Group c/o Goldman Sachs Bank USA 200 West Street New York, NY 10282 Attention: Michael Lohr Email: michael.l ohr@gs.com with a copy to: Jones Day 100 High Street Boston, MA 0211 O Attention: John D. Kelley Telephone No.: (617) 449-6939 Email: jkelley@jonesday.co m The Borrower shall make payments to the City in accordance with the terms, conditions and instructions contained in the Note. SECTION 7.05: SURVIVAL OF REPRESENTATIONS AND WARRANTIES All agreements, representations, and warranties made by the Borrower here in, or any other document or certificate delivered to the City in connection with the transactions contemplated by this Loan Agreement, shall survive the delivery of this Agreement, the Note , 16 Trust Deed and the Security Agreements hereunder, and shall continue in full force and effect so long as the Note is outstanding. SECTION 7.06: SUCCESSORS AND ASSIGNS This Loan Agreement shall be binding upon the Borrower, its successors and assigns, except that the Borrower may not assign or transfer its rights without City's prior written consent. This Agreement shall inure to the benefit of the City, its successors and assigns, and , except as otherwise expressly provided in particular provisions hereof, all subsequent holders of the Note. SECTION 7.07: COUNTERPARTS This Loan Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. SECTION 7.08: GOVERNING LAW This Loan Agreement and the Note and Security Agreements, Financing Statements and/or Trust Deed shall be deemed contracts made in the State of Utah and , for all purposes, shall be construed in accordance with Utah Law. SECTION 7 .09: ARTICLE AND SECTION HEADINGS Article and Section headings used in this Agreement are for convenience only and shall not affect the construction of this Agreement. SECTION 7 .10: BORROWER DEFINED/USE OF PRONOUNS The word "Borrower'' shall be deemed and taken to mean the party identified as such in the Preamble to this Agreement. The use of the neuter singular pronoun to refer to Borrower or City shall be deemed a proper reference even though Borrower or City may be an individual, a partnership, a corporation, or a group of two or more individuals or corporations . The necessary grammatical changes required to make the provisions of this Loan Agreement apply in the plural sense where there is more than one Borrower and the corporations, associations, partnerships, or individuals, males or females , shall in all instances be assumed as though in each fully e x pressed . SECTION 7.11 : NON-RECOURSE TO BORROWER Notwithstanding anything contained herein or in the Trust Deed to the contrary, it is understood and agreed that the liability of the Borrower for the repayment of the indebtedness evidence by this Note and the performance of the obligations secured by the Trust Deed (the "Secured Obligations") shall be limited solely to the Collateral , and that the City waives any right to seek or obta in a deficiency judgment against the Borrower, Borrower's partners, and the officers, directors, members, pa rtners, shareholders, or employees of Borrower's partners , and agrees that it will look solely to the Collateral for, and that no other property or assets of the Borrower shall be subject to, levy, execution or other enforcement procedure for the satisfaction of the remedies of the City, or for any paym ent required to be made under this Note or for the performance of any of the Secure d Obligations; provided that the foreg o ing no n-recourse provisions (i) shall not constitute a release, forgiveness , waiver or remiss ion of the Secured 17 Obligations, but rather evidence City's agreement not to sue Borrower for any deficiency with respect to the Secured Obligations that may remain unpaid after City's realizati on upon the Collateral, and (ii) shall not limit the right of the City to name the Borrower as a party in any action or suit for foreclosure and sale under the Trust Deed or any other document executed in connection herewith to the extent necessary for foreclosure judgments or other realization upon the Collateral. Notwithstanding the foregoing provisions of this Section 7 .11, Borrower shall be personally liable and shall not be exculpated for any deficiency, loss or damage suffered by City, including City's reasonable attorney's fees and costs, resulting from Borrower's (a) fraud, intentional misrepresentation or gross negligence in connection with the transactions contemplated by the Loan Agreement; (b) waste or deterioration of the Collateral prior to an event of default hereunder; (c) misappropriation of any insurance proceeds payable to City under the Trust Deed; or (d) failure to pay any ta xes, assessments or other charges which could create liens on any of the Collateral which are or could become senior to the liens of the City, or any other liens arising from the consensual acts of Borrower directly, but not otherwise, which are or could become senior to the liens of City in such Collateral, excluding any such consensual liens appearing in City's title insurance policy issued in connection herewith. Nothing herein shall be construed to impose any liability on the Investment Member with respect to the Secured Obligations. SECTION 7.12: REPRESENTATION REGARDING ETHICAL STANDARDS FOR CITY OFFICERS AND EMPLOYEES AND FORMER CITY OFFICERS AND EMPLOYEES Borrower represents as to itself that it has not: ( 1) provided an illegal gift or payoff to a City officer or employee or former City officer or employee, or his or her relative or business entity; (2) retained any person to solicit or secure this contract upon an agreement or understanding for a commission, percentage, or brokerage or contingent fee, other than bona fide employees or bona fide commercial selling agencies for the purpose of securing business; (3) knowingly breached any of the ethical standards set forth in City's conflict of interest ordinance, Chapter 2.44, Salt Lake City Code; or (4) knowingly influenced, and hereby promises that it will not knowingly influence, a City officer or employee or former City officer or employee to brea ch any of the ethical standards set forth in City's conflict of interest ordinance, Chapter 2.44, Salt Lake City Code . 18 EXHIBIT "B" TO LOAN AGREEMENT USE OF PROCEEDS Borrower will use the proceeds of the $1,000,000 loan it receives from Salt Lake City Corporation's Housing Trust Fund for the development of the Garden Lofts Apartment Project located at 154 West 600 South in Salt Lake City, Utah as follows: ITEM AMOUNT Development of multi-family apartment units 1,000,000 TOTAL $1,000,000 19 Exhibit 6 Recorded Deed of Trust