Agenda Item: 11:00a.m.-BDate: 11/29/2012

FRESNO CITY COUNCil

Supplemental Information Packet

Agenda Related Items - Meeting of November 29, 2012Supplemental Packet Date: November 27, 2012

Item(s)

City of Fresno as Housing Successor Agency-Item 11:00a.m.-"B",Approve Subordination Agreement between Fulton Plaza, LLC, Greystone

Funding Corp., and the City of Fresno as Housing Successor Agency

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City of

FRESNOREPORT TO THE CITY OF FRESNOAS HOUSING SUCCESSOR AGENCY

MEETING: 11/29/12

APPROVED BY

DATE:

FROM:

BY:

SUBJECT:

November 29, 2012

MARLENE MURPHEY, Executive Director

Debra Barletta, Finance Director

APPROVE SUBORDINATION AGREEMENT BETWEEN FULTON PLAZA, LLC("FULTON PLAZA"), GREYSTONE FUNDING CORPORATION ("GREYSTONE") ANDTHE CITY OF FRESNO AS HOUSING SUCCESSOR AGENCY ("HOUSING SUCCESSOR")TO MODIFY AND SUBORDINATE THE FORMER DEVELOPMENT AGENCY'S $400,000LOAN AND DECLARATION OF COVENANTS AND RESTRICTIONS TO GREYSTONE'S$8.5 MILLION SECTION 223(F) HUD INSURED PERMANENT LOAN FOR THE IRONBIRD LOFTS PROJECT

RECOMMENDATIONIt is recommended that the City of Fresno as Housing Successor approve and authorize execution ofrelated documents substantially in the form attached for the following:

1) Subordination Agreement (please refer to Exhibit"A") between Fulton Plaza, Greystone andHousing Successor to subordinate the former Redevelopment Agency's $400,000 loan toGreystone's $8.5 million Section 223(f) HUD-insured permanent loan;

2) Amendment to Promissory Note (please refer to Exhibit "B") between Fulton Plaza andHousing Successor to modify the repayment terms of the former Redevelopment Agency's$400,000 subordinate loan to conform to the requirements of HUD; specifically, that thematurity date of the subordinate loan must be co-terminus with HUD's senior loan and mayonly be repaid from surplus cash (i.e. residual receipts);

3) A Continuing and Personal Guaranty from each member of the Fulton Plaza limited liabilitycompany (please refer to Exhibit "C") in favor of the Housing Successor wherein themembers personally guaranty the repayment of the original Promissory Note in accordancewith its original terms in the event the surplus cash from the project is insufficient to makeany or all of the payment amounts; and,

4) Amendment to Declaration of Covenants and Conditions (please refer to Exhibit "D") tosubordinate the former Redevelopment Agency's Declaration of Restrictions and Covenantsto Greystone's loan security instrument.

EXECUTIVE SUMMARY

Fulton Plaza, LLC, the developer of the Iron Bird Lofts, is converting its project construction loan to apermanent loan financed under HUD's Section 223(f) Program. Greystone Funding Corporation, the

REPORT TO CITY OF FRESNO AS HOUSING SUCCESSORAgreement with Fulton Plaza, LLCNovember 29,2012Page 2

HUD-approved lender, has therefore requested that the Housing Successor modify and subordinate theformer Redevelopment Agency's $400,000 loan and Declaration of Restrictions and Covenants toHUD's Section 223(f) loan security instruments.

BACKGROUND

On April 16, 2007, the former Redevelopment Agency entered into a Disposition and DevelopmentAgreement with Fulton Plaza, LLC for the development of a mixed use residential and commercialproject, known as the Iron Bird Lofts, consisting of a total of 80 residential units and approximately16,000 square feet of commercial retail and office space. To assist with the construction of 16affordable housing units, the Agency provided a principal only loan of $400,000 amortized over 30years beginning in 2007 with the first principal payment due June 2013.

Fulton Plaza, LLC is now in the process of converting the balance of the construction loan to apermanent loan through Greystone Funding Corporation. The permanent financing will be provided byGreystone Funding Corporation and insured by HUD under the Section 223(f) mortgage loan program.This HUD-insured mortgage program provides funding for the refinance of existing multi-familyprojects that have been completed for at least three years and were originally financed with aconventional construction loan.

Greystone Funding Corporation is requesting the following:

Housing Successor to subordinate the $400,000 loan to the permanent loan: The Deed ofTrust for the $400,000 loan provides that Fulton Plaza may refinance the construction loanprovided that the combined amounts of all loans do not exceed 100% ofthe appraised value of theproject. The combined amount of all loans will total $10,254,900 and the appraised value asdetermined by Seevers, Jordan, Ziegenmeyer by a Self-Contained Appraisal Report dated May 7,2012 is $11,600,000; consequently, staff recommends approval of said subordination.

Housing Successor to amend the Promissory Note of the $400,000 loan to extend the term sothat it is co-terminus with the permanent loan and to provide for repayment of the loanfrom surplus cash generated from the project: Each member of the Fulton Plaza limitedliability company (please refer to Exhibit "C") have agreed to personally execute a ContinuingPersonal Guaranty and Covenant in favor of the Housing Successor wherein the memberspersonally guaranty the repayment ofthe original Promissory Note in accordance with its originalterms in the event the surplus cash from the project is insufficient to make any or all of the$15,384.62 annual payment amounts commencing on June 30, 2013; consequently, staffrecommends approval of said promissory note amendment. Further, Fulton Plaza has agreed tomake an early principal payment in the amount of $15,384.62 contemporaneously with approvalof and prior to execution of the following documents: amendment of the promissory note;declaration of covenants and conditions; and, subordination agreement.

REPORT TO CITY OF FRESNO AS HOUSING SUCCESSORAgreement with Fulton Plaza, LLCNovember 29,2012Page 3

Housing Successor to execute a Declaration of Covenants and Conditions to subordinate theformer Redevelopment Agency's Declaration of Restrictions and Covenants to Greystone'sloan security instrument: HOD is requesting that the restrictive covenants be automaticallyterminated in the event of foreclosure. This is a standard condition of HOD guaranteed loans. Asa consequence of this refinancing, the annual debt service for the project will be reduced from$887,385 (DCR of .90) to $458,985 (DCR of 1.74) and will therefore have a significantly positiveeffect upon the financial health of the project and substantially mitigate the likelihood offoreclosure. Staff is recommending approval of said Declaration of Covenants and Conditions.

ATTACHMENTS

Exhibit A - Subordination AgreementExhibit B - Amendment to Promissory NoteExhibit C - Continuing and Personal Guaranty of Darius Assemi

Signature pages of Continuing and Personal Guaranty for: Farid Assemi, FarshidAssemi, Massoud Assemi, Reza Assemi, Said Assemi

Exhibit D - Amendment to Declaration of Covenants and Conditions

Recording requested by: ))

When recorded mail to: )))))

._._.. __•..._.•..._.•.._..._._._--_.__._._.._.~(Space above this line for recorder's use)

Project Name: Iron Bird LoftsHUD Project Number: 121-11139

SUBORDINATION AGREEMENT

THIS SUBORDINATION AGREEMENT ("Agreement") is entered into this __ day ofNovember, 2012, by and among (i) GREYSTONE FUNDING CORPORATION, A VIRGINIA CORPORATION ("SeniorLender"), (ii) CITY OF FRESNO AS HOUSING SUCCESSOR, A PUBLIC AGENCY ("Subordinate Lender"), and(iii) FULTON PLAZA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY ("Borrower").

Recitals:

WHEREAS, Borrower is the owner of that certain 80 unit residential rental development known as"Iron Bird Lofts" ("Project"), located at 1901 Fulton Street, Fresno, California 93721. Senior Lender hasmade or is making the senior mortgage loan as described on Schedule A hereto ("SeniorIndebtedness") to Borrower in the original principal amount(s) as shown on Schedule A, evidenced bythe Note described in Schedule A ("Senior Note"), and secured by, among other things, the SecurityInstrument as described in Schedule A (collectively, "Senior Security Instrument"), covering theproperty described in Exhibit A attached hereto together with all improvements thereon and personalproperty used relative thereof, ali as more particularly described in the Senior Security Instrument("Mortgaged Property").

WHEREAS, Borrower has requested Senior Lender to permit Subordinate Lender to make asubordinate loan to Borrower in the amount of $400,000.00 ("Subordinate Loan") and to secure theSubordinate Loan by, among other things, placing a mortgage lien against the Mortgaged Property.

WHEREAS, Senior Lender, with the approval of the U.S. Department of Housing and UrbanDevelopment ("HUD"), has agreed to permit Subordinate Lender to make the Subordinate Loan and to placea subordinate mortgage lien against the Mortgaged Property subject to all of the conditions contained in thisAgreement and in accordance with Program Obligations. "Program Obligations" means (1) all applicablestatutes and any regulations issued by the Secretary pursuant thereto that apply to the Project, includingall amendments to such statutes and regulations, as they become effective, except that changes subjectto notice and comment rulemaking shall become effective only upon completion of the rulemakingprocess, and (2) all current requirements in HUD handbooks and guides, notices, and mortgagee lettersthat apply to the Project, and all future updates, changes and amendments thereto, as they becomeeffective, except that changes subject to notice and comment rulemaking shall become effective onlyupon completion of the rulemaking process, and provided that such future updates, changes andamendments shall be applicable to the Project only to the extent that they interpret, clarify and implementterms in this Agreement rather than add or delete provisions from such document. Handbooks, guides,notices, and mortgagee letters are available on HUD's official website:(http://www.hud.gov/offices/adm/hudclips/index.cfm, or a successor location to that site).

NOW, THEREFORE, in order to induce Senior Lender to permit Subordinate Lender to make theSubordinate Loan to Borrower and to place a subordinate mortgage lien against the Mortgaged Property, andin consideration thereof, Senior Lender, Subordinate Lender and Borrower agree as follows:

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1. Definitions.

In addition to the terms defined in the Recitals to this Agreement, for purposes of this Agreement thefollowing terms have the respective meanings set forth below:

(a) "Affiliate" is defined in 24 CFR 200.215, or any successor regulation.

(b) "Bankruptcy Proceeding" means any bankruptcy, reorganization, insolvency,composition, restructuring, dissolution, liquidation, receivership, assignment for the benefit ofcreditors, or custodianship action or proceeding under any federal or state law with respect toBorrower, any guarantor of any of the Senior Indebtedness, any of their respective properties, orany of their respective partners, members, officers, directors, or shareholders.

(c) "Borrower" means all entities identified as "Borrower" in the first paragraph of thisAgreement, together with any successors, heirs, and assigns (jointly and severally). Borrowershall include any entity taking title to the Mortgaged Property, whether or not such entity assumesthe Senior Note, provided that the term "Borrower" shall not include Senior Lender in the eventthat Senior Lender may acquire title to the Mortgaged Property. Whenever the term "Borrower" isused herein, the same shall be deemed to include the obligor of the debt secured by the SeniorSecurity Instrument

(d) "Business Day" means any day other than Saturday, Sunday or any other day onwhich Senior Lender or HUD is not open for business.

(e) "Covenant Event of Default" is defined in the Senior Security Instrument

(f) "[INTENTIONALLY OMITTEDj"

(g) "Entity" means an estate, trust, partnership, corporation, limited liability company,limited liability partnership, governmental department or agency or any other entity which has thelegal capacity to own property.

(h) "[INTENTIONALLY OMITTED]"

(i) "Monetary Event of Default" is defined in the Senior Security Instrument

(j) "Non-Project Sources" means any funds that are not derived from Project Sources.

(k) "Project Sources" means the Mortgaged Property (as defined in the Senior SecurityInstrument), any proceeds of the Senior loan, and any reserve or deposit made with SeniorLender or any other party as required by HUD in connection with the Senior loan.

(I) "Senior Indebtedness" means all present and future indebtedness, obligations, andliabilities of Borrower to Senior Lender under or in connection with the Senior loan or Senior LoanDocuments.

(m) "Senior Lender" means the Entity named as such in the first paragraph on page 1of this Agreement, its successors and assigns.

(n) "Senior Loan Documents" means the Senior Note, the Senior Security Instrument,and the Regulatory Agreement between Borrower and HUD, as such documents may beamended from time to time and all other documents at any time evidencing, securing,guaranteeing, or otherwise delivered in connection with the Senior Indebtedness.

(0) "[INTENTIONALLY OMITTED]"

(p) "Senior Security Instrument Default" means a "Monetary Event of Default" or a"Covenant Event of Default" as defined in the Senior Security Instrument

(q) "Subordinate Indebtedness" means all present and future indebtedness,obligations, and liabilities of Borrower to Subordinate Lender under or in connection with the

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Subordinate Loan or the Subordinate Loan Documents.

(r) "Subordinate Lender" means the Entity that qualifies under Program Obligations andnamed as such in the first paragraph on page 1 of this Agreement.

(s) "Subordinate Loan Documents" means that certain Promissory Note dated April16, 2007 between Borrower and Subordinate Lender, the Subordinate Mortgage, and all otherdocuments at any time evidencing, securing, guaranteeing, or otherwise delivered in connectionwith the Subordinate Indebtedness.

(t) "Subordinate Loan Enforcement Action" means the acceleration of all or any partof the Subordinate Indebtedness, the advertising of or commencement of any foreclosure ortrustee's sale proceedings, the exercise of any power of sale, the acceptance of a deed orassignment in lieu of foreclosure or sale, the collecting of rents, the obtaining of or seeking of theappointment of a receiver, the seeking of default interest, the taking of possession or control ofany of the Mortgaged Property, the commencement of any suit or other legal, administrative, orarbitration proceeding based upon the Subordinate Note or any other of the Subordinate LoanDocuments, the exercising of any banker's lien or rights of set-off or recoupment, or the taking ofany other enforcement action against Borrower, any other party liable for any of the SubordinateIndebtedness or obligated under any of the Subordinate Loan Documents, or the MortgagedProperty.

(u) "Subordinate Mortgage Default" means any act, failure to act, event, conditions, oroccurrence which allows (but for any contrary provision of this Agreement), or which with thegiving of notice or the passage of time, or both, would allow (but for any contrary provision of thisAgreement), Subordinate Lender to take a Subordinate Loan Enforcement Action.

(v) "Subordinate Mortgage" means that certain Deed of Trust and Assignment ofRents dated for reference April 16, 2007, and recorded in the Office of the Fresno CountyRecorder as Document Number 2011-0064635,

(w) "Surplus Cash" is defined herein to mean the same as that term is defined in theRegulatoryAgreement between Borrowerand HUD.

2. Permission to Place Mortgage Lien Against Mortgaged Property.

Senior Lender agrees, subject to the provisions of this Agreement, to permit Subordinate Lender torecord the Subordinate Mortgage and other recordable Subordinate Loan Documents against the MortgagedProperty (which are subordinate in all respects to the lien of the Senior Security Instrument) to secureBorrower's obligation to repay the Subordinate Note and all other obligations, indebtedness and liabilities ofBorrower to Subordinate Lender under and in connection with the Subordinate Loan. Such permission issubject to the condition that each of the representations and warranties made by Borrower and SubordinateLender in Section 3 are true and correct on the date of this Agreement and on the date on which theproceeds of the Subordinate Loan are disbursed to Borrower. If any of the representations and warrantiesmade by Borrower and Subordinate Lender in Section 3 are not true and correct on both of those dates, theprovisions of the Senior Loan Documents applicable to unpermitted liens on the Mortgaged Property shallapply.

3. Borrower's and Subordinate Lender's Representations and Warranties.

Borrower and, with respect to subsections (a) through (d) below, Subordinate Lendereach make thefollowing representationsand warranties to Senior Lender:

(a) Subordinate Loan Documents. The Subordinate Loan is evidenced by theSubordinate Note and is secured by the Subordinate Mortgage.

(b) Terms of the Subordinate Loan. The original principal amount of the SubordinateNote is $400,000.00. Interest on the Subordinate Note accrues monthly at the rate of 0.00% perannum. The Subordinate Note is due and payable in full on j"Maturity").

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The principal of the Subordinate Note will be fully amortized at Maturity. The promissory noteevidencing the Subordinate Note obligates Borrower to make payments as follows: $15,384.62,on each June 30, until the Maturity Date, subject to available Surplus Cash. As long as HUD isthe insurer or holder of the Senior Note on FHA Project No. 121-11139, any payments due fromproject income under the Subordinate Note shall be payable only (i) from Surplus Cash of theProject; but in no event greater than seventy-five percent (75%) of the total amount of Surplus Cash;or (ii) from monies received from Non-Project Sources. No prepayment of the Subordinate Noteshall be made until after final endorsement by HUD of the Senior Note, unless such prepayment ismade from Non-Project Sources and is approved in writing by HUD. The restriction on paymentimposed by this paragraph shall not excuse any default caused by the failure of the maker to pay theindebtedness evidenced by the Subordinate Note.

(c) Relationship of Borrower to Subordinate Lender. Subordinate Lender is not anAffiliate of Borrower.

(d)Senior Note.

Term. The term of the Subordinate Note does not end before the term of the

(e) Subordinate Loan Documents. The executed Subordinate Loan Documents aresubstantially in the same forms as those submitted to, and approved by, HUD prior to the date of thisAgreement. Upon execution and delivery of the Subordinate Loan Documents, Borrower shalldeliver to Senior Lender an executed copy of each of the Subordinate Loan Documents, certified tobe true, correct and complete.

(f) Senior Loan Documents. The executed Senior Loan Documents are the sameforms as-approved by HUD prior to the date of this Agreement. Upon execution and delivery of theSenior Loan Documents, Borrower shali deliver to Subordinate Lender an executed copy of each ofthe Senior Loan Documents, certified to be true, correct and complete.

4. Deliveries.

Borrower shall submit the following items to Senior Lender and HUD not later than ten(10) Business Days after the date of the initial disbursement of proceeds of the Subordinate Loan.

(a) Title Policy Endorsement. An endorsement to the policy of title insuranceinsuring the lien of the Senior Security Instrument which insures that (i) the lien of the SubordinateMortgage is subordinate to the lien of the Senior Mortgage, and (ii) this Agreement has beenrecorded among the applicable land records.

(b) Certification. A certification from Borrower and Subordinate Lender to HUD thatthe Subordinate Loan Documents do not contain any changes from the Subordinate LoanDocuments submitted to, and approved by, HUD, before the date of this Agreement.

(c) Loan Documents. A complete set of the Subordinate Loan Documents.

5. Terms of Subordination.

(a) Agreement to Subordinate. Senior Lender and Subordinate Lender agree that: (i)the indebtedness evidenced by the Subordinate Loan Documents is and shall be subordinated inright of payment, to the extent and in the manner provided in this Agreement, to the prior payment infull of the indebtedness evidenced by the Senior Loan Documents, and (ii) the Subordinate Mortgageand the other Subordinate Loan Documents are and shall be subject and subordinate in all respectsto the liens, terms, covenants and conditions of the Senior Security Instrument and the other SeniorLoan Documents and to all advances heretofore made or which may hereafter be made pursuant tothe Senior Security Instrument and the other Senior Loan Documents (including but not limited to, allsums advanced for the purposes of (1) protecting or further securing the lien of the Senior Security

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Instrument, curing defaults by Borrower under the Senior Loan Documents or for any other purposeexpressly permitted by the Senior Security Instrument, or (2) constructing, renovating, repairing,furnishing, fixturing or equipping the Mortgaged Property).

(b) Subordination of Subrogation Rights. Subordinate Lender agrees that if, byreason of its payment of real estate taxes or other monetary obligations of Borrower, or by reason ofits exercise of any other right or remedy under the Subordinate Loan Documents, it acquires by rightof subrogation or otherwise a lien on the Mortgaged Property which (but for this subsection) would besenior to the lien of the Senior Security Instrument, then, in that event, such lien shall be subject andsubordinate to the lien of the Senior Security Instrument.

(c) Payments Before Senior Security Instrument Default. Until Subordinate Lenderreceives a default notice of a Senior Security Instrument Default from Senior Lender, SubordinateLender shall be entitled to retain for its own account all payments made under or pursuant to theSubordinate Loan Documents provided that such payments are otherwise permitted under the termsof this Agreement.

(d) Payments After Senior Security Instrument Default. Borrower agrees that, afterit receives notice (or otherwise acquires knowledge) of a Senior Security Instrument Default, it willnot make any payments under or pursuant to the Subordinate Loan Documents (including but notlimited to principal, interest, additional interest, late payment charges, default interest, attorney's fees,or any other sums secured by the Subordinate Mortgage) without Senior Lender's prior writtenconsent. Subordinate Lender agrees that, after it receives a default notice from Senior Lender withwritten instructions directing Subordinate Lender not to accept payments from Project Sources onaccount of the Subordinate Loan, it will not accept any payments under or pursuant to theSubordinate Loan Documents (including but not limited to principal, interest, additional interest, latepayment charges, default interest, attorney's fees, or any other sums secured by the SubordinateMortgage) unless either (i) such payment is being made solely from Non-Project Sources or (ii) suchpayment is made with Senior Lender's prior written consent. If Subordinate Lender receives writtennotice from Senior Lender that the Senior Security Instrument Default which gave rise to SubordinateLender's obligation not to accept payments has been cured, waived, or otherwise suspended bySenior Lender, the restrictions on payment to Subordinate Lender in this Section 5 shall terminate,and Senior Lender shall have no right to any subsequent payments made to Subordinate Lender byBorrower prior to Subordinate Lender's receipt of a new default notice from Senior Lender inaccordance with the provisions of this Section 5(d).

(e) Remitting Subordinate Loan Payments to Senior Lender. If, after SubordinateLender receives a default notice from Senior Lender in accordance with subsection (d) above,Subordinate Lender receives any payments under the Subordinate Loan Documents (other thanpayments permitted under subsection (d) above), Subordinate Lender agrees that such payment orother distribution will be received and held in trust for Senior Lender and unless Senior Lenderotherwise notifies Subordinate Lender in writing, will be promptly remitted in kind to Senior Lender,properly endorsed to Senior Lender, to be applied to the principal of, interest on and other amountsdue under the Senior Loan Documents in accordance with the provisions of the Senior LoanDocuments. By executing this Agreement, Borrower specifically authorizes Subordinate Lender toendorse and remit any such payments to Senior Lender, and specifically waives any and all rights tohave such payments returned to Borrower or credited against the Subordinate Loan. Borrower andSenior Lender acknowledge and agree that payments received by Subordinate Lender, and remittedto Senior Lender under this Section 5, shall not be applied or otherwise credited against theSubordinate Loan, nor shall the tender of such payment to Senior Lender waive any SubordinateMortgage Default which may arise from the inability of Subordinate Lender to retain such payment orapply such payment to the Subordinate Loan.

(f) Agreement Not to Commence Bankruptcy Proceeding. Subordinate Lenderagrees that during the term of this Agreement it will not commence, or join with any other creditor incommencing any Bankruptcy Proceeding with respect to Borrower, without Senior Lender's prior

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written consent.

6. Default Under Subordinate Loan Documents.

(a) Notice of Default and Cure Rights. Subordinate Lender shall deliver to SeniorLender a default notice within five Business Days in each case where Subordinate Lender has givena default notice to Borrower. Failure of Subordinate Lender to send a default notice to Senior Lendershall not prevent the exercise of Subordinate Lender's rights and remedies under the SubordinateLoan Documents, subject to the provisions of this Agreement. Senior Lender shall have theopportunity, but not the obligation, to cure any Subordinate Mortgage Default within 60 days followingthe date of such notice; provided, however that Subordinate Lender shall be entitled, during such 60­day period, to continue to pursue its rights and remedies under the Subordinate Loan Documents,subject to the limitations set forth in Section 6(b) below.

(b) Subordinate Lender's Exercise of Remedies After Notice to Senior Lender. Ifa Subordinate Mortgage Default occurs and is continuing, Subordinate Lender agrees that it will notcommence foreclosure proceedings with respect to the Mortgaged Property under the SubordinateLoan Documents or exercise any other rights or remedies it may have under the Subordinate LoanDocuments with respect to the Mortgaged Property, including, but not limited to accelerating theSubordinate Loan, collecting rents, appointing (or seeking the appointment of) a receiver orexercising any other rights or remedies thereunder without Senior Lender's prior written consent.However, the preceding sentence shall not (i) limit Subordinate Lender's right to bring an actionseeking recovery solely from Non-Project Sources or (ii) preclude Subordinate Lender fromexercising or enforcing all the rights available to Subordinate Lender under the Subordinate LoanDocuments and/or under applicable law to enforce covenants and agreements of Borrower relatingto income, rent or affordability restrictions.

7. Default Under Senior Loan Documents.

(a) Notice of Default and Cure Rights. Senior Lender shall deliver to SubordinateLender a default notice within five Business Days in each case where Senior Lender has given adefault notice to Borrower (provided that Senior Lender shall have no liability to Borrower,Subordinate Lender or to any other Entity for failure to timely give such notice). Failure of SeniorLender to send a default notice to Subordinate Lender shall not prevent the exercise of SeniorLender's right and remedies under the Senior Loan Documents, subject to the provisions of thisAgreement. Borrower agrees that Subordinate Lender shall have the opportunity, but not theobligation, to cure either a Monetary Event of Default or a Covenant Event of Default within 30 daysfollowing the date of such notice, or any time prior to an assignment of the Senior SecurityInstrument from Senior Lender to HUD, whichever date is later. Subordinate Lender acknowledgesthat Senior Lender shall be entitled during such period described above to continue to pursue itsremedies under the Senior Loan Documents. Subordinate Lender shall have the opportunity to curea Covenant Event of Default during such period described above so long as there is no MonetaryEvent of Default under the Senior Loan Documents. All amounts paid by Subordinate Lender toSenior Lender to cure any default under the Senior Loan Documents shall be deemed to have beenadvanced by Subordinate Lender pursuant to, and shall be secured by the lien of, the SubordinateMortgage.

(b) Cross Default. Subordinate Lender agrees that, notwithstanding any contraryprovision contained in the Subordinate Loan Documents, a Senior Security Instrument Default shallnot constitute a default under the Subordinate Loan Documents if no other default occurred underthe Subordinate Loan Documents.

8. Conflict.

Borrower, Senior Lender and Subordinate Lender each agrees that, in the event of anyconflict or inconsistency between the terms of the Senior Loan Documents, the Subordinate Loan

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Documents and the terms of this Agreement, the terms of this Agreement shall govern and controlsolely as to the following: (a) the relative priority of the security interests of Senior Lender andSubordinate Lender in the Mortgaged Property; and (b) solely as between Senior Lender andSubordinate Lender, the notice requirements, cure rights, and the other rights and obligations whichSenior Lender and Subordinate Lender have agreed to as expressly provided in this Agreement.Borrower acknowledges that the terms and provisions of this Agreement shall not, and shall not bedeemed to: extend Borrower's time to cure any Senior Security Instrument Default or SubordinateMortgage Default, as the case may be; give Borrower the right to notice of any Senior SecurityInstrument Default or Subordinate Mortgage Default, as the case may be other than that, if any,provided, respectively under the Senior Loan Documents or the Subordinate Loan Documents, asapplicable; or create any other right or benefit for Borrower as against Senior Lender or SubordinateLender.

9. Rights and Obligations of Subordinate Lender under the Subordinate LoanDocuments and of Senior Lender under the Senior Loan Documents.

Subject to each of the other terms of this Agreement, all of the following provisions shallsupersede any provisionsof the Subordinate Loan Documents covering the same subject matter:

(a) Protection of Security Interest. Subordinate Lender shall not, without the priorwritten consent of Senior Lender in each instance, take any action which has the effect of increasingthe indebtedness outstanding under, or secured by, the Subordinate Loan Documents, except thatSubordinate Lender shall have the right to advance funds to cure Senior Security InstrumentDefaults pursuant to Section 7(a) above and advance funds pursuant to the Subordinate Mortgagefor the purpose of paying real estate taxes and insurance premiums, making necessary repairs tothe Mortgaged Property and curing other defaults by Borrower under the Subordinate LoanDocuments.

(b) Condemnation or Casualty. In the event of either: a taking or threatened takingby condemnation or other exercise of eminent domain of all or a portion of the Mortgaged Property(collectively, a "Taking"); or the occurrence of a fire or other casualty resulting in damage to all or aportion of the Mortgaged Property (collectively, a "Casualty"), at any time or times when the SeniorSecurity Instrument remains a lien on the Mortgaged Property the following provisions shall apply:

(1) Subordinate Lender hereby agrees that its rights (under the SubordinateLoan Documents or otherwise) to participate in any proceeding or action relating to a Takingand/or a Casualty, or to participate or join in any settlement of, or to adjust, any claimsresulting from a Taking or a Casualty shall be and remain subordinate in all respects toSenior Lender's rights under the Senior Loan Documents with respect thereto, andSubordinate Lender shall be bound by any settlement or adjustment of a claim resultingfrom a Taking or a Casualty made by or with the written consent of Senior Lender; and

(2) All proceeds received or to be received on account of a Taking or aCasualty, or both, shall be applied (to payment of the costs and expenses of repair andrestoration and/or to payment of the Senior Security Instrument) in the manner determinedby Senior Lender in its sole discretion; provided, however, that if Senior Lender elects toapply such proceeds to payment of the principal of, interest on and other amounts payableunder the Senior Security Instrument, any proceeds remaining after the satisfaction in full ofthe principal of, interest on and other amounts payable under the Senior Security Instrumentshall be paid to, and may be applied by, Subordinate Lender in accordance with theapplicable provisions of the Subordinate Loan Documents. Any proceeds then remainingafter the satisfaction in full of the principal of, interest on and other amounts payable underthe Subordinate Loan Documents shall be paid by the Subordinate Lender to Borrower.

(c) No Modification of Subordinate Loan Documents. Borrower and SubordinateLender each agrees that, until the principal of, interest on and all other amounts payable under the

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Senior Loan Documents have been paid in full, it will not, without the prior written consent of SeniorLender in each instance, increase the amount of the Subordinate Loan, increase the requiredpayments due under the Subordinate Loan, decrease the term of the Subordinate Loan, increase theinterest rate on the Subordinate Loan, or otherwise amend the Subordinate Loan terms in a mannerthat creates an adverse effect upon Senior Lender under the Senior Loan Documents. Anyunauthorized amendment of the Subordinate Loan Documents without Senior Lender's consent shallbe void ab initio and of no effect whatsoever.

10. Modification of Senior Loan Documents; Refinancing of Senior Indebtedness.

Subordinate Lender consents to any agreement or arrangement in which Senior Lender waives,postpones, extends, reduces or modifies any provisions of the Senior Loan Documents, including anyprovision requiring the payment of money. Subordinate Lender further agrees that its agreement tosubordinate hereunder shall extend to any new mortgage debt which is for the purpose of refinancing all orany part of the Senior Security Indebtedness in accordance with Program Obligations (including reasonableand necessary costs associated with the closing and/or the refinancing); and that all the terms and covenantsof this Agreement shall inure to the benefit of any holder of any such refinanced debt; and that all referencesto the Senior Indebtedness, the Senior Note, the Senior Security Instrument, the Senior Loan Documentsand Senior Lender shall mean, respectively, the indebtedness related to the refinance loan, the refinancenote, the security instrument securing the refinance note, all documents evidencing securing or otherwisepertaining to the refinance note and the holder of the refinance note.

11. Default by Subordinate Lender or Senior Lender.

If Subordinate Lender or Senior Lender defaults in performing or observing any of the terms,covenants or conditions to be performed or observed by it under this Agreement, the other, non-defaultingLender shall have the right to all available legal and equitable relief.

12. Notices.

Each notice, request, demand, consent, approval or other communication (hereinafter in this Sectionreferred to collectively as "notices" and referred to singly as a "notice") which Senior Lender or SubordinateLender is required or permitted to give to the other party pursuant to this Agreement shall be in writing andshall be deemed to have been duly and sufficiently given if: (a) personally delivered with proof of deliverythereof (any notice so delivered shall be deemed to have been received at the time so delivered); or (b) sentby Federal Express (or other similar national overnight courier) designating next Business Day delivery (anynotice so delivered shall be deemed to have been received on the next Business Day following receipt by thecourier); or (c) sent by United States registered or certified mail, return receipt requested, postage prepaid, ata post office regularly maintained by the United States Postal Service (any notice so sent shall be deemed tohave been received two Business Days after mailing in the United States), addressed to the respectiveparties as follows:

SENIOR LENDER:

Greystone Funding Corporation419 Belle Air LaneWarrenton, VA 20186Attention: General Counsel

With a copy to:

U.S. Department of Housing and Urban DevelopmentDirector - Office of Multifamily Asset ManagementRoom 6160

Subordination AgreementEXHIBIT A

HUD-92420M (04/11)

9

451 Seventh Street, S.w.Washington, DC 20410

SUBORDINATE LENDER:

City of Fresno as Housing Successor2600 Fresno StreetFresno, California 93721Attention: _

BORROWER:

Fulton Plaza, LLC.1677 W Shaw Avenue, Ste 101Fresno, CA 93711

Either party may, by notice given pursuant to this Section, change the person or persons and/or address oraddresses, or designate an additional person or persons or an additional address or addresses for itsnotices, but notice of a change of address shall only be effective upon receipt.

13. [Intentionally Omitted.]

14. General.

(a) Assignment/Successors. This Agreement shall be binding upon Borrower, SeniorLender and Subordinate Lender and shall inure to the benefit of the respective legal successors andassigns of Senior Lender and Subordinate Lender.

(b) No Partnership or Joint Venture. Senior Lender's permission for the placementof the Subordinate Loan Documents does not constitute Senior Lender as a joint venturer or partnerof Subordinate Lender. Neither party hereto shall hold itself out as a partner, agent or Affiliate of anyother party hereto.

(e) Senior Lender's and Subordinate Lender's Consent. Wherever Senior Lender'sconsent or approval is required by any provision of this Agreement, such consent or approval may begranted or denied by Senior Lender in its sole and absolute discretion, unless otherwise expresslyprovided in this Agreement. Wherever Subordinate Lender's consent or approval is required by anyprovision of this Agreement, such consent or approval may be granted or denied by SubordinateLender in its sole and absolute discretion, unless otherwise expressly provided in this Agreement.

(d) Further Assurances; UCC Financing Statements. Subordinate Lender, SeniorLender and Borrower each agree, at Borrower's expense, to execute and deliver all additionalinstruments and/or documents reasonably required by any other party to this Agreement in order toevidence that the Subordinate Loan Documents are subordinate to the lien, covenants andconditions of the Senior Loan Documents, or to further evidence the intent of this Agreement. SeniorLender is hereby authorized to file any and all UCC financing statement amendments required toreflect the priority of the Senior Indebtedness.

(e) Amendment. This Agreement shall not be amended except by written instrumentsigned by all parties hereto.

(f) Governing Law. This Agreement shall be governed by the laws of the State inwhich the Mortgaged Property is located, except as, so long as the Senior loan is insured or heldby HUD, and solely as to rights and remedies of HUD, federal jurisdiction may be appropriatepursuant to any federal requirements. The State courts, and with respect to HUD's rights andremedies, federal courts, and governmental authorities in the State and county in which the

Subordination AgreementEXHIBIT A

HUD-92420M (04/11)

10

Mortgaged Property is located, shall have exclusive jurisdiction over all controversies which shallarise under or in relation to the Subordinate Loan Documents. Borrower irrevocably consents toservice, jurisdiction, and venue of such courts for any such litigation and waives any other venueto which it might be entitled by virtue of domicile, habitual residence or otherwise.

(9) Severable Provisions. If any provision of this Agreement shall be invalid orunenforceable to any extent, then the other provisions of this Agreement, shall not be affectedthereby and shall be enforced to the greatest extent permitted by law.

(h) Term. The term of this Agreement shall commence on the date hereof and shallcontinue until the earliest to occur of the following events: (i) the payment of all of the principal,interest on and other amounts payable under the Senior Loan Documents; (ii) the payment of all ofthe principal, interest on and other amounts payable under the Subordinate Loan Documents, otherthan by reason of payments which Subordinate Lender is obligated to remit to Senior Lenderpursuant to Section 4 hereof; (iii) the acquisition by Senior Lender of title to the Mortgaged Propertypursuant to a foreclosure; or (iv) the acquisition by Subordinate Lender of title to the MortgagedProperty pursuant to a foreclosure or a deed in lieu of foreclosure of, or the exercise of a power ofsale contained in, the Subordinate Mortgage, but only if such acquisition of title does not violate anyof the terms of this Agreement. Notwithstanding the foregoing, in the event the Senior Indebtednessis refinanced, the term of this Agreement shall continue and the Subordinate Indebtedness andSubordinate Loan Documents shall be subordinate to any such indebtedness related to the refinanceloan as provided in Section 10 above.

(i) Counterparts. This Agreement may be executed in any number of counterparts,each of which shall be considered an original for all purposes; provided, however, that all suchcounterparts shall together constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and yearfirst written above.

SENIOR LENDERGreystone Funding Corporation, a Virginia corporation

Lisa Anderson, Vice PresidentBy:----:-c-,-----:-c---::c-,.,-----

SUBORDINATE LENDER:City of Fresno as Housing Successor, a public agency

Marlene Murphey, Executive DirectorBy:_~:-:-_-:-:-,--_-=-_,--,-- _

BORROWER:Fulton Plaza, LLC, a California limited liabilitycompanyBy: Assemi Corporation, a California corporation,Manager

Massoud Asserni, President

Subordination AgreementEXHIBIT A

HUD-92420M (04/11)

Subordination AgreementEXHIBIT A

[Jurats to be added]

HUD-92420M (04/11)

11

AMENDMENT TO PROMISSORY NOTE

This Amendment to Promissory Note ("Amendment") is made November _, 2012, by FULTONPLAZA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY ("Borrower") and the CITY OF FRESNO AS HOUSINGSUCCESSOR, A PUBLIC AGENCY ("Lender").

Recitals:

A. Borrower and Lender, as successor to the Redevelopment Agency of the City of Fresno, areparties to that certain Promissory Note dated April 16, 2007 (the "Subordinate Note") in the originalprincipal amount of $400,000, and which was made in connection with Borrower's development of amixed-used residential and commercial project commonly known as the "Iron Bird Lofts" (the "Project")and referred to as FHA Project No. 121-11139

B. Borrower has obtained financing from Greystone Funding Corporation ("Senior Lender") for thebenefit of the Project, which loan is insured by the United States Department of Housing and UrbanDevelopment ("HUD"). The loan will be evidenced by a note (the "Senior Note"), a Multifamily Deed ofTrust, Assignment of Leases and Rents, and Security Agreement (the "Senior Security Instrument"),and a HUD Multifamily Regulatory Agreement (the "Regulatory Agreement").

C. To meet the requirements of HUD, the maturity date of the Subordinate Note may be no earlierthan that of the Senior Note and the Subordinate Note may only be repaid from Surplus Cash (definedbelow).

D. Borrower and Lender desire to amend the terms of the Subordinate Note to conform to therequirements of HUD.

Agreement:

NOW, THEREFORE, the parties agree as follows:

1. Defined Terms. Capitalized terms in this Amendment not otherwise defined herein shall havethe meaning ascribed to those terms in the Subordinate Note.

2. Amendment of Maturity Date. The Maturity Date, as defined in the preamble of the SubordinateNote, is hereby amended to mean and refer to . , and all unpaid principal shallbe due and payable on the foregoing date.

3. Addition of HUD Restriction. The following paragraph is hereby inserted into the SubordinateNote:

Notwithstanding anything to the contrary contained in this Note, as long as HUD is theinsurer or holder of the Senior Note on FHA Project No. 121-11139, any payments due fromproject income under the Subordinate Note shall be payable only (i) from Surplus Cash of theProject; but in no event greater than seventy-five percent (75%) of the total amount of Surplus Cash;or (ii) from monies received from Non-Project Sources. No prepayment of the Subordinate Noteshall be made until after final endorsement by HUD of the Senior Note, unless such prepayment ismade from Non-Project Sources and is approved in writing by HUD. The restriction on paymentimposed by this paragraph shall not excuse any default caused by the failure of the maker to pay theindebtedness evidenced by the Subordinate Note.

The term "Surplus Cash" shall have the meaning ascribed to such term as set forth in theRegulatory Agreement. The term "Non-Project Sources" shall have the meaning ascribed to suchterm as set forth in the Senior Security Instrument.

EXHIBIT B

4. No Other Changes. All other terms of the Subordinate Note remain the same and theSubordinate Note, as modified by this Amendment, remains in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day andyear first written above.

"BORROWER"Fulton Plaza, LLC, a California limited liabilitycompanyBy: Assemi Corporation, Manager

"LENDER"City of Fresno as Housing Successor Agency, apublic agency

Marlene Murphey, Executive DirectorMassoud Assemi, PresidentBy:---:-:--;-:---:-c::---:-:--;----

EXHIBIT' B

CONTINUING PERSONAL GUARANTY AND COVENANT

THIS CONTINUING PERSONAL GUARANTY AND COVENANT ("Agreement") is made November=----,-----,--' 2012 ("Effective Date"), by Darius Assemi, an individual and as Trustee of the Amended andRestated Darius Assemi Revocable Trust ("Guarantor"), in favor of the City of Fresno as HousingSuccessor, a public agency ("Lender").

RECITALS:

A. Fulton Plaza, LLC ("Borrower") and Lender are parties to that certain Disposition andDevelopment Agreement dated April 16, 2007, and recorded in the office of the Fresno County Recorder asDocument No. 2007-0098540 (the "DDA"), pursuant to which Borrower has constructed a mixed useresidential and commercial development consisting of a total of 80 residential units (16 of which arededicated to rent to persons and families of low and moderate income as defined in Section 50093 of theCalifornia Health & Safety Code) and approximately 16,000 square feet of commercial retail and officespace.

B. As part of the DDA, Lender has made a loan (the "Agency Loan") to Borrower in the originalprincipal amount of $400,000, as evidenced by that certain Promissory Note dated April 16, 2007 (the"Note"), and as secured by that certain Deed of Trust and Assignment of Rents dated April 16, 2007, andrecorded May 12, 2011, in the office of the Fresno County Recorder as Document No. 2011-0064635 (the"Deed of Trust"). The Note requires Borrower to make annual payments of $15,384.62 to Lendercommencing June 30, 2013 until maturity, upon which all principal shall be due and payable. The DDA, theDeed of Trust, the Note, and all other documents evidencing, securing, or otherwise delivered in connectionwith the DDA are collectively referred to herein as the "Loan Documents."

C. Borrower has applied, and expects to receive, a permanent financing loan (the "PermanentLoan") insured by the U.S. Department of Housing and Development ("HUD"), which requires that Lendersubordinate the Note and Deed of Trust to the Permanent Loan on the terms and conditions of theSubordination Agreement approved by HUD as document HUD-92420M (the "Subordination Agreement").Among the requirements of the Subordination Agreement, Lender would agree that Borrower's obligation tomake payments under the Note are subject to the availability of "Surplus Cash," as that term is defined inthe Subordination Agreement. Thus, Lender would agree to modify the terms of the Note so that Borrower'sis not obligated to make payments under the Note unless Surplus Cash is available, as further provided inthe Subordination Agreement.

D. Moreover, pursuant to the terms of the Subordination Agreement, Lender would agree that,in the event of default under the Permanent Loan, Lender will not accept funds from "Project Sources," asdefined in the Subordination Agreement.

E. Guarantor is a member of Borrower, or has an ownership or beneficial interest in a memberof Borrower, and has received financial benefit from the Agency Loan and, with Lender's agreement toaccept the terms of the Subordination Agreement, would receive financial benefit from the Permanent Loan.Lender has agreed to execute the Subordination Agreement on the terms required, conditioned upon and inreliance on Guarantor's prior execution of this Agreement.

AGREEMENT:

NOW, THEREFORE, in order to induce Lender to enter into the Subordination Agreement, and inconsideration thereof, and for other valuable consideration, the receipt and adequacy of which are herebyacknowledged, Guarantor and Lender agree as follows:

1. Recitals. All the foregoing recitals are true and correct and incorporated herein by this reference asif fully set forth herein.

2. Subordination Agreement. Following execution of this Agreement, Lender shall execute theSubordination Agreement.

1EXHIBI'J' C

3. Guaranty.

3.1. Guaranteed Obligations Defined. The term "Guaranteed Obligations" is used in thisAgreement in its most comprehensive sense and means and includes, without limitation, any and all debts,obligations, covenants, loans, advances, obligations, liabilities, claims, suits, actions, proceedings, damages,losses, costs, expenses, diminution in value, fines, penalties, charges, fees, expenses, judqments, awards,amounts paid in settlement, or damages of any kind or nature owed by Borrower to Lender, or for whichBorrower is liable to Lender, heretofore, now, or hereafter made, incurred or created, with or without notice toGuarantor, arising from or related to the Loan, Loan Documents, and Subordination Agreement, or any ofthem, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent,liquidated or unliquidated, determined or undetermined, secured or unsecured, whether at stated maturity, byacceleration, or otherwise, whether on original, renewed, extended or revised terms (including, withoutlimitation, those evidenced by new or additional instruments or agreements or those changing the applicablerate of interest or which release any obligor with respect thereto), whether principal, interest, fees, orexpenses, whether Borrower may be liable individually or jointly with others, whether recovery upon suchindebtedness or other Guaranteed Obligations may be or hereafter becomes barred by any statute oflimitations, and whether such indebtedness or other Guaranteed Obligations may be or hereafter becomeinvalid or otherwise unenforceable. Guaranteed Obligations includes, but is not limited to, all real propertytaxes and assessments affecting the Property, all costs and expenses, including insurance premiums, ofmaintaining in full force all policies of insurance required pursuant to the Loan Documents or SubordinationAgreement, and all costs and expenses, including repair and maintenance costs, required in order tomaintain the Property in the condition required under the Loan Documents or Subordination Agreement.

3.2. Guaranty of Payment. Guarantor absolutely and unconditionally guarantees and agrees topay to Lender, on demand, in lawful money of the United States of America, an amount equal to the amountof the Guaranteed Obligations.

3.3. Guaranty of Performance. Subject to any limitation expressly set forth in this Agreement, ifat any time Borrower, its successors, or permitted assigns fails, neglects, or refuses to perform when dueany of its obligations, responsibilities, or undertakings as expressly provided under the terms and conditionsof the Loan Documents, then Guarantor shall promptly and without delay pay such amounts or perform orcause to be performed such obligations, responsibilities, or undertakings as required under the terms andconditions of the Loan Documents and this Agreement.

3.4. Expenses; Reduction of Guaranteed Obligations. In addition to Guarantor's liability forpayment and performance of the Guaranteed Obligations and SUbject to any limitation expressly set forth inthis Agreement, Guarantor also agrees to bear and be liable to Lender for the expenses set forth in Section22 of this Agreement below. No payment by Guarantor to Lender shall reduce the obligation of Guarantorhereunder unless Lender actually applies such payment to reduce the Guaranteed Obligations. Likewise, nopayment received by Lender from Borrower, from any other person, or from proceeds of any collateral for theGuaranteed Obligations granted by Borrower or any other person, shall reduce Guarantor's liabilityhereunder, unless Lender actually applies such payment to reduce the Guaranteed Obligations.

4. Covenant to Ensure Full Payment. Notwithstanding anything to the contrary in this Agreement,and independent of Guarantor's other obligations pursuant to this Agreement, Guarantor covenants that itwill ensure full payment and performance of the Guaranteed Obligations, according to the terms of the LoanDocuments prior to any modification by the Subordination Agreement. Without limiting the generality of theforegoing, and by way of example only: if Borrower would have been required to make a payment of$15,384.62 under the terms of the Note prior to modification by the Subordination Agreement, but Borroweris allowed to make a lesser payment due to the limited availability of Surplus Cash, then Guarantor shall beimmediately obligated to pay Lender the shortfall such that Lender receives $15,384.62, as Lender wouldhave been entitled to prior to entering into the Subordination Agreement (the "Supplemental Payment").Payments made pursuant to this paragraph shall be credited against Borrower's liability under theGuaranteed Obligations. Guarantor covenants to only make Supplemental Payments from Non-ProjectSources, as defined in the Subordination Agreement. It is the intent of the parties that this paragraph willconstitute an independent covenant and not a guaranty; however, to the extent applicable, all other terms,conditions, and waivers contained in this Agreement shall apply to the obligations under this paragraph. In

2EXHIJ3IT C

the event the obligations under this paragraph are construed as a guaranty, they shall be construed as aguaranty of the Guaranteed Obligations prior to modification by the Subordination Agreement, withGuarantor consenting to the subsequent modification of the Loan Documents and Guaranteed Obiigations bythe Subordination Agreement.

5. Additional Credit. Additional credit under the Loan Documents or otherwise may be granted fromtime to time at Borrower's request and without further authorization from or notice to Guarantor and shallautomatically be deemed part of the Guaranteed Obligations. Lender need not inquire into Borrower's poweror authority of its members, officers, or agents acting or purporting to act on its behalf. Each credit grantedto Borrower under the Loan Documents or otherwise shall be deemed to have been granted at Guarantor'sinstance and request and in consideration of, and in specific reliance on, this Agreement.

6. Absolute. This Agreement is irrevocable, absolute, present, and unconditional. The obligations ofGuarantor under this Agreement shall not be affected, reduced, modified, or impaired on the happening fromtime to time of any of the following events, whether or not with notice to (except as notice is otherwiseexpressly required) or the consent of Guarantor:

6.1. Failure to Give Notice. The failure to give notice to Guarantor of the occurrence of a defaultunder the terms and provisions of this Agreement or the Loan Documents, as the case may be;

6.2. Modifications or Amendments. The modification or amendment, whether material orotherwise, of any obligation, covenant, or agreement set forth in this Agreement or Loan Documents, as thecase may be;

6.3. Lender's Failure to Exercise Rights. Any failure, omission, delay by, or inability by Lender toassert or exercise any right, power, or remedy conferred on Lender in this Agreement or the LoanDocuments, as the case may be, including the failure to execute on collateral held for this Agreement or theLoan Documents, if any;

6.4. Release of Security. Any release of any real or personal property or other security now heldor to be held by Lender for the performance of the Guaranteed Obligations, if any;

6.5. Borrower's Termination. A termination, dissolution, consolidation, or merger of Borrowerwith or into any other entity;

6.6. Borrower's Bankruptcy. The voluntary or involuntary liquidation, dissolution, sale, or otherdisposition of all or substantially all of Borrower's assets, the marshalling of Borrower's assets and liabilities,the receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,arrangement, composition with creditors, or readjustment of, or other similar proceedings affecting Borrower,Guarantor, or any of the assets of either;

6.7. Assignment of Rights. The assignment (in accordance with the terms of this Agreement orthe Loan Documents, as the case may be) of any right, title, or interest of Lender in this guaranty or the LoanDocuments to any other person;

68. Validity of Loan Documents. The lack of validity or enforceability of any of the LoanDocuments (or any other agreement or instrument related to the Loan Documents); or

6.9. Extent of Guarantor's Obligations. Any other cause or circumstance, foreseen orunforeseen, whether similar or dissimilar to any of the foregoing; it being the intent of Guarantor thatGuarantor's obligations under this Agreement shall not be discharged reduced, limited, or modified exceptby: (a) actual payment of amounts owing to Lender pursuant to this Agreement and/or the Loan Documents,and then only to the extent of such actual payment or payments; and (b) full performance of obligationsunder this Agreement and/or Loan Documents, then only to the extent of such performed or dischargedobligation or obligations.

6.10. Exercise of,Lender Rights. Any action of Lender authorized pursuant to Section 7 below.

:3EXHIBIT C

7. Authorization of Lender. Guarantor authorizes Lender, without notice or demand and withoutaffecting its liability under this Agreement, and without consent of Guarantor or prior notice to Guarantor,from time to time to:

7.1. Modify Loan Documents. Make any modifications to the Loan Documents;

7.2. Assignment. Assign the Loan Documents and this Agreement;

7.3. Modify Security. Take, hold, or release security for the performance of the GuaranteedObligations with the consent of the party providing such security;

7.4. Refund Borrower. Refund to Borrower any payment received by Lender on anyindebtedness guaranteed in this Agreement, in which case payment of the amount refunded shall be fullyguaranteed;

7.5. Additional Guarantors. Accept or discharge (in whole or in part) additional guarantors of theGuaranteed Obligations;

7.6. Order of Sale. Direct the order and manner of any sale of all or any part of security now orlater held under the Loan Documents or this Agreement, and also bid at any such sale to the extent allowedby law; and

7.7. ApPlication of Proceeds. Apply any payments or recovery from Borrower, Guarantor, or anysource, and any proceeds of any security, to Borrower's obligations under the Loan Documents in suchmanner, order, and priority as Lender may elect, whether or not those obligations are guaranteed by thisAgreement or secured at the time of such application.

8. Obligations Independent; Waivers.

8.1. Guarantor agrees that:

8.1.1. the obligations under this Agreement are joint and several and are independent ofand in addition to the undertakings of Borrower pursuant to the Loan Documents, any evidence ofindebtedness issued in connection with the Loan, any deed of trust or security agreement given tosecure the Loan, any other guarantees given in connection with the Loan, and any other obligationsof Guarantor to Lender;

8.1.2. a separate action may be brought to enforce the provisions of this Agreementwhether Borrower is a party in any action or not;

8.1.3. Lender may at any time, or from time to time, in its sole discretion:

8.1.3.1. sell or purchase any of the collateral now or later held by Lender inconnection with any of the Guaranteed Obligations, at public or private sale, or at anybroker's board, in the manner permitted by law, and after all costs and expenses of everykind for collection, sale, or delivery, the net proceeds of any sale may be applied by Lenderon any of the Guaranteed Obligations; or

8.1.3.2. settle or compromise with Borrower, or any other person liable, any of theGuaranteed Obligations, or subordinate the payment of it, or any part of it, to the payment ofany other debts or claims, that may at any time be due or owing to Lender or any otherperson or corporation;

8.1.4. Lender will be under no obligation to marshal any assets in favor of Guarantor or inpayment of any of tile Guaranteed Obligations; and

fj

E:XHIEHT C

8.2. Waiver of Rights.

8.2.1. Guarantor waives the right to require Lender to: proceed against Borrower, anotherguarantor, or any other person; proceed against or exhaust any security held by any person; orpursue any other remedy available to Lender.

8.2.2. Guarantor waives all rights of subrogation, indemnity, any rights to collectreimbursement from Borrower, and any right to enforce any remedy that Lender now has, or may have,against Borrower.

8.2.3. Guarantor waives any benefit of, and any right to participate in, any security now orlater held by Lender.

8.2.4. Guarantor waives any defense it may have now or in the future based on anyelection of remedies by Lender that destroys Guarantor's subrogation rights or Guarantor's rights to proceedagainst Borrower for reimbursement, and Guarantor acknowledges that it shall be liable to Lender eventhough Guarantor may well have no such recourse against Borrower.

8.2.5. Guarantor waives presentment, demand, protest, notice of acceptance, notice ofdishonor, notice of nonperformance, and any other notice with respect to any of the Guaranteed Obligationsand this Agreement, and promptness in commencing suit against any party, or in giving any notice to ormaking any claim or demand on Guarantor.

8.2.6. Guarantor waives any defense based on any legal disability or other defense ofBorrower, any other guarantor, or other person or by reason of the cessation or limitation of the liability ofBorrower from any cause other than full payment of all sums payable under the Note and the performance ofthe other Guaranteed Obligations.

8.2.7. Guarantor waives notice of: (a) acceptance and reliance on this Agreement; (b)notice of renewal, extension, or modification of any Guaranteed Obligation under this Agreement; and (c)notice of default or demand in the case of default.

8.2.8. Guarantor waives any right or defense it may now or hereafter have based on: (a)Lender's full or partial release of any party who may be obligated to Lender; (b) Lender's full or partialrelease or impairment of any collateral that is now or may later be held by Lender in connection with any ofthe Guaranteed Obligations; and (c) the modification or extension of the Guaranteed Obligations.

8.2.9. Guarantor waives any and all suretyship defenses now or later available to it underthe California Civil Code or the California Commercial Code.

8.2.10. Guarantor waives any statute of limitation affecting liability under this Agreement orthe enforceability of this Agreement and further waives any defense that might otherwise exist because ofthe expiration of the statute of limitations on the Loan Documents or any of them, including but not limited toany rights arising under California Code of Civil Procedure Section 359.5.

8.2.11. Guarantor waives any duty of Lender to disclose to Guarantor any facts Lender maynow know or later learn about Borrower or Borrower's financial condition regardless of whether Lender hasreason to believe that any such facts materially increase the risk beyond that which Guarantor intends toassume, or has reason to believe that such facts are unknown to Guarantor, or has a reasonable opportunityto communicate such facts to Guarantor, it being understood and agreed that Guarantor is fully responsiblefor and is capable of being and keeping informed of Borrower's financial condition and of all circumstancesbearing on the risk of nonpayment of any indebtedness guaranteed under this Agreement.

8.2.12. Guarantor waives any defense based on Lender's election, in any proceedinginstituted under the Federal Bankruptcy Code, of the application of Section 1111 subd. (b)(2) of the FederalBankruptcy Code or any successor statute.

EXHIBIT C

8.2.13. Guarantor waives any defense based on any borrowing or any grant of a securityinterest under § 364 of the Federal Bankruptcy Code.

8.2.14. Guarantor waives any defense based on any statute or rule of law that provides thatthe obligation of a surety must be neither larger in amount nor in any other respects more burdensome thanthat of a principal.

8.2.15. Guarantor waives any defense based on the application by Borrower of theproceeds of the Loan for purposes other than the purposes represented by Borrower to Lender or intendedor understood by Lender or Guarantor.

8.2.16. Guarantor waives, to the fullest extent permitted by law, all rights and benefits underSection 2809 of the California Civil Code purporting to reduce a guarantor's obligations in proportion to theprincipal obligation.

8.2.17. Guarantor waives any defense based on any lack of authority of the officers,directors, partners, or agents purporting to act on behalf of Borrower or any principal of Borrower or anydefect in the formation of Borrower or any principal of Borrower.

8.2.18. Guarantor waives to the fullest extent permitted by law, all rights and benefits underCalifornia Code of Civil Procedure Section 580a, purporting to limit the amount of any deficiency judgmentthat might be recoverable following the occurrence of a trustee's sale under a deed of trust; California Codeof Civil Procedure Section 580b, stating that no deficiency may be recovered on a real property purchasemoney obligation; and California Code of Civil Procedure Section 580d, stating that no deficiency may berecovered on a note secured by a deed of trust on real property in case the real property is sold under thepower of sale contained in the deed of trust, if those statutory sections have any application.

8.2.19. Guarantor agrees that the payment of all sums payable under the GuaranteedObligations or any other act that tolls any statute of limitations applicable to any of the GuaranteedObligations will similarly operate to toll the statute of limitations applicable to Guarantor's liability.

8.2.20. Without limiting the generality of any other waiver or provision of this Agreement,Guarantor waives, to the maximum extent such waiver is permitted by law, any and all benefits or defensesarising directly or indirectly under anyone or more of: (a) California Civil Code §§ 2799, 2808, 2809, 2810,2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2846, 2847, 2848, 2849, 2850, 2899, and 3433; (b)Chapter 2 of Title 14 of the California Civil Code; (c) California Code of Civil Procedure §§ 580a, 580b, 580c,580d, and 726; or (d) California Commercial Code § 3605.

8.2.21. Guarantor waives all rights and defenses arising out of an election of remedies bythe creditor, even though that election of remedies, such as a nonjudicial foreclosure with respect to securityfor a guaranteed obligation, has destroyed the guarantor's rights of subrogation and reimbursement againstthe principal by the operation of California Code of Civil Procedure Section 580d or otherwise. Furthermore,Guarantor understands and acknowledges that if Lender forecloses judicially or nonjudicially against any realproperty security for the Loan, that foreclosure could impair or destroy any ability that Guarantor may have toseek reimbursement, contribution, or indemnification from Borrower or others based on any right Guarantormay have of subrogation, reimbursement, contribution, or indemnification for any amounts paid by Guarantorunder this Agreement. Guarantor further understands and acknowledges that in the absence of thisprovision, the potential impairment or destruction of Guarantor's rights, if any, may entitle Guarantor to asserta defense to this Agreement based on California Code of Civil Procedure Section 580d, as interpreted inUnion Bank v. Gradsky, 265 Cal. App. 2d 40, 71 Cal. Rptr. 64 (2d Dist. 1968). By executing this Agreement,Guarantor freely, irrevocably, and unconditionally:

(i) waives and relinquishes that defense, and agrees that Guarantor will be fully liable underthis Agreement even though Lender may foreclose judicially or nonjudicially against any realproperty security for the Guaranteed Obligations;

6EXI-IIBTT C

(ii) agrees that Guarantor will not assert that defense in any action or proceeding that Lendermay commence to enforce this Agreement;

(iii) acknowledges and agrees that the rights and defenses waived by Guarantor under thisAgreement include any right or defense the Guarantor may have or be entitled to assertbased upon or arising out of anyone or more of California Code of Civil Procedure Sections580a, 580b, 580d, or 726, or California Civil Code Section 2848; and

(iv) acknowledges and agrees that Lender is relying on this waiver in making the GuaranteedObligations, and that this waiver is a material part of the consideration that Lender isreceiving for making the Loan.

9. Lender's Rights on Borrower's Default. Guarantor agrees that on Borrower's default Lender mayelect to non-judicially or judicially foreclose against any real or personal property security securingBorrower's obligations or any part of them, or accept an assignment of any such security in lieu offoreclosure, or compromise or adjust any part of such obligations, or make any other accommodation withBorrower or Guarantor, or exercise any other remedy against Borrower or any security. No such action byLender shall release or limit Guarantor's liability to Lender, even if the effect of that action is to depriveGuarantor of the right to collect reimbursement from Borrower or any other person for any sums paid toLender or bar or prejudice Guarantor's rights of subrogation, contribution, or indemnity against Borrower orany other person. Without limiting the foregoing, it is understood and agreed that, on any foreclosure orassignment in lieu of foreclosure of any security held by Lender, such security shall no longer exist and thatany right that Guarantor might otherwise have, on full payment of the Borrower's obligations by Guarantor toLender, to participate in any such security or to be subrogated to any rights of Lender with respect to anysuch security shall be nonexistent; nor shall Guarantor be deemed to have any right, title, interest, or claimunder any circumstances in or to any real or personal property held by Lender or any third party followingany foreclosure or assignment in lieu of foreclosure of any such security.

10. Right of Setoff. Lender is authorized at any time and from time to time, without notice to Guarantor(any notice being expressly waived by Guarantor), to set off and apply all deposits (general or special, timeor demand, provisional or final) at any time held and other indebtedness at any time owing by Lender to orfor the credit or the account of Guarantor against any of the obligations of Guarantor now or later existingunder this Agreement. Lender agrees promptly to notify Guarantor after any setoff and application, providedthat the failure to give notice will not affect the validity of the setoff and application. The rights of Lenderunder this section are in addition to other rights and remedies (including, without limitation, other rights ofsetoff) that Lender may have.

11. Subordination. Until the Guaranteed Obligations have been paid or otherwise discharged in full,Guarantor subordinates any and all liability or indebtedness of Borrower owed to Guarantor to the obligationsof Borrower to Lender that arise under the Guaranteed Obligations, and any liability or indebtedness ofBorrower to Guarantor will, if Lender requests, be collected, enforced, and received by Guarantor as trusteefor Lender and be paid over to Lender, but without reducing or limiting in any manner the liability ofGuarantor under the other provisions of this Agreement. However, Guarantor may receive payment ofcurrent reasonable salary and current reasonable payments made in the ordinary course of business forgoods provided or services actually rendered.

12. Effect of Borrower's Bankruptcy. The liability of Guarantor under this Agreement shall in no waybe affected by:

12.1. Release of Borrower. Release or discharge of Borrower in any creditor proceeding,receivership, bankruptcy, or other proceeding;

12.2. Modification of Borrower's Liability. Impairment, limitation, or modification of Borrower'sliability or the estate, or of any remedy for the enforcement of Borrower's liability, which may result from theoperation of any present or future provision of the Bankruptcy Code (Title 11 of the United States Code, asamended; 11 USC §§ 101-1532) or any bankruptcy, insolvency, debtor relief statute (state or federal), anyother statute, or from the decision of any court;

'7EX1-1IBJT C

12.3. Rejection of Debt. Rejection or disaffirmance of any indebtedness included in theGuaranteed Obligations, or any portion of any such indebtedness, in any such proceeding; or

12.4. Cessation of Borrower's Liability. Cessation from any causes whatsoever, whetherconsensual or by operation of law, of Borrower's liability to Lender resulting from any such proceeding.

12.5. Modification and Replacement of Guaranteed Obligation. If the Guaranteed Obligations arerestructured or replaced in connection with a bankruptcy proceeding or case, Guarantor shall remain liableas guarantor of such restructured or replaced obligation.

12.6. Claims in Bankruptcy. Guarantor shall file all claims against Borrower in any bankruptcy orother proceeding in which the filing of claims is required or allowed by law on any indebtedness of Borrowerto Guarantor, and shall assign to Lender all rights of Guarantor on any such indebtedness. If Guarantordoes not file any such claim, Lender, as attorney-in-fact for Guarantor, is authorized to do so in Guarantor'sname, or, in Lender's discretion, to assign the claim and to file a proof of claim in the name of Lender'snominee. In all such cases, whether in bankruptcy or otherwise, the person or persons authorized to paysuch claim shall pay to Lender the full amount of any such claim, and, to the full extent necessary for thatpurpose, Guarantor assigns to Lender all of Guarantor's rights to any such payments or distributions to whichGuarantor would otherwise be entitled.

13. Guaranty of Payment. Guarantor's liability on this Agreement is a guaranty of payment andperformance, not of collection or collectability.

14. Application of Payments. With or without notice to Guarantor, Lender, in its sole discretion and atany time and from time to time and in such manner and on such terms as it deems fit may, apply any or allpayments or recoveries from Borrower, from Guarantor, or from any other guarantor or endorser under thisor any other instrument, or realized from any security, in such manner, order, or priority as Lender sees fit, tothe indebtedness of Borrower to Lender under the Loan Documents, whether such indebtedness isguaranteed by this Agreement or is otherwise secured or is due at the time of such application.

15. Cessation of Liability. Guarantor's liability under this Agreement shall not in any way be affectedby the cessation of Borrower's liability for any reason other than full performance of all GuaranteedObligations, including, but not limited to, the obligations under the Loan Documents and including, withoutlimitation, any and all obligations to indemnify Lender.

16. Representations and Warranties. Guarantor represents and warrants to Lender that:

16.1. Legal Status. Guarantor has all requisite power and has all material governmental licenses,authorizations, consents, and approvals necessary to carryon Guarantor's business as now being or asproposed to be conducted.

16.2. No Breach. Neither the execution and delivery of this Agreement nor compliance with itsterms and provisions shall conflict with or result in a breach of, or require any consent under any agreementor instrument by which Guarantor is bound.

16.3. Authority and Power. This Agreement has been duly and validly executed and delivered byGuarantor and constitutes its legal, valid, and binding obligation, enforceable against Guarantor inaccordance with its terms.

16.4. Financial Statements. All financial statements and data with respect to Guarantor thatGuarantors has provided for review by Lender: (i) are complete and correct in all material respects as of thedate given; (ii) accurately present the financial condition of Guarantor on each date as of which and theresults of Guarantor's operations for the periods for which they have been furnished; and (iii) have beenprepared in accordance with generally accepted accounting principles consistently applied throughout theperiods covered.

(j

EXJ-1IBIT C

16.5. Material Adverse Change. There has been no adverse change in the financial condition oroperations of Guarantor since the date of the financial statements and data provided by Guarantor for reviewby Lender, other than changes in the ordinary course of business, none of which have been materiallyadverse individually or in the aggregate.

16.6. Organizational Documents. All documentation regarding the legal status, organizationalmakeup, and ownership of Guarantor and Borrower that Guarantor has provided for review by Lender: (i) iscomplete and correct in all material respects as of the date given; and (ii) has not materially changed prior tothe Effective Date.

16.7. Other Information. All other reports, papers, and written data and information given toLender by Guarantor with respect to Guarantor are accurate and correct in all material respects andcomplete insofar as completeness may be necessary to give Lender a true and accurate knowledge of thesubject matter.

16.8. No Default. Guarantor is not in default in the performance, observance, or fulfillment of anyof the material obligations, covenants, or conditions in any agreement or instrument to which Guarantor is aparty.

16.9. Taxes. Guarantor has filed all federal, state, provincial, county, municipal, and otherincome tax returns required to have been filed by Guarantor and has paid all taxes that have become duepursuant to the returns or pursuant to any assessments received by Guarantor, and Guarantor does notknow of any basis for any material additional assessment against it in respect of those taxes.

16.10. Claims and Proceedings. There are no claims, actions, proceedings, or investigationspending against Guarantor.

16.11. Borrower's Status. Borrower, as well as its members and managers, have observed alllegal formalities, and Borrower is adequately capitalized, such that Borrower would not be considered analter ego of its members; and Guarantor covenants to continue taking all steps necessary to ensureBorrower, and any successor-entity, is not considered an alter ego of its members, owners, shareholders, orpartners.

17. Information Not Required. Guarantor represents that Guarantor is fully aware of Borrower'sfinancial condition and operation and is in a position by virtue of Guarantor's relationship to Borrower toobtain all necessary financial and operational information conceming Borrower. Lender need not disclose toGuarantor any information about:

17.1. Loan Documents. The Loan Documents or any modification of them, and any action ornon-action in connection with them;

17.2. Other Guaranteed Obligations. Any other obligation guaranteed in this Agreement;

17.3. Borrower's Financial Condition. The financial condition or operation of Borrower; or

17.4. Other Guarantors. Any other guarantors.

18. Revival of Agreement. If a claim ("Claim") is made on Lender at any time (whether before or afterpayment or performance in full of any Guaranteed Obligation, and whether such claim is asserted in abankruptcy proceeding or otherwise) for repayment or recovery of any amount or other value received byLender (from any source) in payment of, or on account of, any Guaranteed Obligation and if Lender repayssuch amount, returns value or otherwise becomes liable for all or part of such Claim by reason of: (a) anyjudgment, decree, or order of any court or administrative body; or (b) any settlement or compromise of suchClaim, this Agreement will continue to be effective or be reinstated, as the case may be, and Guarantor shallremain liable to Lender (jointly and severally with all other guarantors pursuant to Section 30) for the amountso repaid or returned or for which Lender is liable to the same extent as if such payments or value had never

')

EXIUlJI'j' C

been received by Lender, despite any termination of this Agreement or the canceilation of any note or otherdocument evidencing any Guaranteed Obligation.

19. Residence; Community Property.

19.1. If Guarantor is an individual, Guarantor represents and warrants that his/her state ofresidence is California.

19.2. If Guarantor is an individual, Guarantor warrants and represents that s/he is:[_X_l singleL-l married

19.3. If Guarantor is married individual, Guarantor acknowledges that this Agreement is withrecourse against the separate property and assets of such individual and against the marital communityproperty and assets of such individual and his or her spouse.

19.4. Anyone signing this Agreement solely as the spouse of a Guarantor will bind only his/hermarital community property and community assets and will not bind his/her sole and separate property andassets, if any, to the payment and performance of obligations under this Agreement.

20. Precedence of Documents. In the event of any conflict or inconsistency between the terms of thisAgreement and those of the Subordination Agreement or the Loan Documents (as modified by theSubordination Agreement), the terms and conditions of this Agreement shall control.

21. Other Expenses; Indemnity. In addition to Guarantor's other liability under this Agreement,Guarantor agrees to pay to Lender, on demand, reasonable attorneys' fees and all other costs and expenseswhich may be incurred by Lender in the interpretation, enforcement or attempted enforcement by Lender ofthis Agreement or any collateral for this Agreement, including, but not limited to, proceedings in anybankruptcy or other insolvency case or other proceedings touching the Guaranteed Obligations or thisAgreement, or both, in any manner, whether or not legal proceedings or suit are instituted, together withinterest thereon at the rate provided by law and including, without limitation, ail reasonable attorneys' feesand related costs of enforcement of any and ail judgments and awards and upon any appeal relating thereto.Additionally, Guarantor agrees to indemnify, defend and hold Lender harmless from ail liability, loss,damage, or expense (including, without limitation, attorneys' fees and expenses) that Lender may incurunder this Agreement, the Loan Documents, or the Subordination Agreement, or in connection with themaking of any of the loans or financial arrangements guaranteed by this Agreement, the enforcement of anyof Lender's rights or remedies, any action taken by Lender under this Agreement, or by reason or in defenseof any claims and demands that may be asserted against Lender arising out of the Property.

22. Modification by Subordination Agreement. Any reference in this Agreement to modification of theLoan Documents or the Guaranteed Obligations by the Subordination Agreement shall include both: (i)modifications or amendments made by operation of the Subordination Agreement; or (ii) actual modificationsor amendments to the Loan Documents entered into pursuant to the Subordination Agreement.

23. Submission to Jurisdiction. Guarantor irrevocably submits to the nonexclusive jurisdiction of theUnited States District Court for the Eastern District and of any California court sitting in Fresno County,California, for any and all legal proceedings arising from or relating to this Agreement and the LoanDocuments.

24. Notice. Except for any notice required by Governmental Requirements to be given in anothermanner: (a) ail notices required or permitted by this Agreement shail be in writing; (b) each notice toGuarantor shall be sent (i) for personal delivery by a delivery service that provides a record of the date ofdelivery, the individual to whom delivery was made, and the address where delivery was made, (ii) bycertified United States mail, postage prepaid, return receipt requested or (iii) by nationaily recognizedovernight delivery service, marked for next-business-day delivery; and (c) all notices shall be addressed tothe appropriate party at its address as follows or such other addresses as may be designated by notice givenin compliance with this provision:

10EXHIBIT C

Lender:

Guarantor:

City of Fresno as Housing Successor2344 Tulare Street, Suite 200Fresno, CA 93721Attn: Executive Director

Darius Assemi1396 W. Herndon Avenue, Suite 101Fresno, CA 93711

Notices will be deemed effective on the earliest of: (a) actual receipt; (b) rejection of delivery; or (c) if sent bycertified mail, the third day on which regular United States mail delivery service is provided after the day ofmailing or, if sent by overnight delivery service, on the next day on which such service makes next-business­day deliveries after the day of sending.

25. No Waiver. No failure or delay by Lender or its assigns in exercising any right, power, or privilegeunder this Agreement shall operate as a waiver; nor shall any single or partial exercise of any right, power, orprivilege preclude any other or further such exercise or the exercise of any other right, power, or privilege.

26. California Law. This Agreement shall be governed by and construed in accordance with the internallaws of the State of California.

27. Advice of Counsel. Guarantor expressly declares that it knows and understands the contents ofthis Agreement and has had an opportunity to consult with an attorney as to its form and content.

28. Attorney Fees. Guarantor agrees to pay all costs, including, without limitation, attorneys' fees andexpenses, incurred by Lender in enforcing the terms of this Agreement or the Loan Documents, whether ornot suit is filed.

29. Assignment. This Agreement shall be binding on Guarantor and Guarantor's heirs, representatives,successors, and assigns and shall inure to the benefit of Lender, its successors and assigns, and theirsuccessors and assigns and respective personal representatives, successors, and assigns according to thecontext of this Agreement. Guarantor shall not have the right to assign the obligations in this Agreement.Lender may assign its rights under this Agreement in connection with an assignment of all or part of theGuaranteed Obligation. Notice is hereby waived as to any such assignment by Lender.

30. Joint and Several. The obligations of Guarantor will be in addition to any obligations of Guarantorunder any other guarantees of, or covenants regarding, the Guaranteed Obligations or any obligations ofBorrower or any other persons or entities previously given or later to be given to Lender, and this Agreementwill not affect or invalidate any other guarantees or covenants. If this Agreement is issued by more than oneparty, or if any other party guarantees, or makes covenants regarding, the obligations of Borrower, theobligations of Guarantor and any others under this Agreement shall be joint and several, and Lender mayproceed against anyone or more of those parties without waiving its right to proceed against any of theothers.

31. Captions. The captions and Section headings appearing in this Agreement are included solely forconvenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

32. Severability. If any provision in this Agreement is invalid and unenforceable in the jurisdictionwhose law is applied to this Agreement or in any particular context, then, to the fullest extent permitted bylaw: (a) the other provisions shall remain in full force and effect in such jurisdiction or context and shall beliberally construed in favor of Lender in order to carry out the parties' intentions as nearly as possible; and (b)the invalidity or unenforceability of any provision in that jurisdiction or context shall not affect the validity orenforceability of such provision in any other jurisdiction.

33. Entire Agreement. This Agreement embodies the entire agreement and understanding betweenGuarantor and Lender pertaining to the subject matter of this Agreement, and supersedes all prior

11EXHIBIT C

agreements, understandings, negotiations, representations, and discussions, whether verbal or written, ofthe parties, pertaining to that subject matter. Guarantor is not relying on any representations, warranties, orinducements from Lender that are not expressly stated in this Agreement.

34. Further Assurances. Guarantor shall promptly and duly execute and deliver to Lender such furtherdocuments and assurances and take such further action as Lender may from time to time reasonablyrequest, including, without limitation, any amendments to this Agreement to establish and protect the rights,interests, and remedies created or intended to be created in favor of Lender.

35. Gender; Singular Includes Plural. As used in this Agreement, the singular includes the plural, andthe masculine includes the feminine and neuter, and vice versa, if the context so requires.

36. Amendments and Waiver. No amendment or waiver of any provision of this Agreement or consentto any departure from any provision by Guarantor will be effective unless it is in writing and signed byLender, and then the waiver or consent will be effective only in the specific instance and for the specificpurpose for which it is given. No notice to or demand on Guarantor will in any case entitle it to any other orfurther notice or demand in similar or other circumstances.

37. Continuing Liability. Guarantor shall continue to be liable under this Agreement despite thetransfer by Borrower of all or any portion of the property encumbered by any of the Loan Documents, if any.

38. Time Is of the Essence. Time is of the essence under this Agreement and any amendment,modification, or revision of this Agreement.

39. Cumulative Rights. The extent of Guarantor's liability and all rights, powers, and remedies ofLender under this Agreement, and under any other agreement now or at any future time in force betweenLender and Guarantor, shall be cumulative and not alternative, and such rights, powers, and remedies shallbe in addition to all rights, powers, and remedies given to Lender by law. This Agreement is in addition toand exclusive of the guaranty of any other guarantor of any indebtedness of Borrower to Lender.

40. Counterparts, This Agreement may be executed in any number of counterparts and by differentparties in separate counterparts, each of which when executed and delivered will be deemed to be anoriginal, and all counterparts taken together will constitute one and the same instrument.

[Signatures on following page.]

12EXHIBIT c:

IN WITNESS WHEREOF, the undersigned has executed and delivered this Agreement as of the date firstabove written.

GUARANTOR:

Darius Assemi, an individual

Darius Assemi, Trustee of the Amended andRestated Darius Assemi Revocable Trust

CITY OF FRESNO AS HOUSING SUCCESSOR,a public agency

Marlene Murphey, Executive Director

Date: _

ATTEST:YVONNE SPENCE, CMCEx. Officio Clerk

APPROVED AS TO FORM:FRANCINE M. KANNE

Interim Ex. Officio Attorney

Raj Singh Badhesha, DeputyDeputyBy_-::_-,- _

Date: _ Date: _

13EXHIBIT C

IN WITNESS WHEREOF, the undersigned has executed and delivered this Agreement as of the date firstabove written.

GUARANTOR

Amir Reza Assemi, an individual

Amir Reza Assemi, as Trustee of the of the RezaAssemi Trust established by Trust Agreementdated November 1, 2011

CITY OF FRESNO AS HOUSING SUCCESSOR,a public agency

By: _Marlene Murphey, Executive Director

Date: _

ATTEST:YVONNE SPENCE, CMCEx. Officio Clerk

APPROVED AS TO FORM:FRANCINE M. KANNE

Interim Ex. Officio Attorney

Raj Singh Badhesha, DeputyBy: -,__--------

Deputy

Date: _ Date: _

13

IN WITNESS WHEREOF, the undersigned has executed and delivered this Agreement as of the date firstabove written.

GUARANTOR:

Massoud Assemi, an individual Johanna Assemi, an individual

Massoud Assemi, Trustee of the MassoudAssemi and Johanna L. Assemi Family Trustu/a/d June 6, 2005

Johanna Assemi, Trustee of the MassoudAssemi and Johanna L. Assemi FamilyTrust u/a/d June 6, 2005

CITY OF FRESNO AS HOUSING SUCCESSOR,a public agency

Marlene Murphey, Executive Director

Date: _

ATTEST:YVONNE SPENCE, CMCEx. Officio Clerk

APPROVED AS TO FORM:FRANCINE M. KANNE

Interim Ex. Officio Attorney

Raj Singh Badhesha, DeputyDeputyBy_---::-----: _

Date: _ Date: _

13

IN WITNESS WHEREOF, the undersigned has executed and delivered this Agreement as of the date firstabove written.

GUARANTOR:

Farid Assemi, an individual

Farid Assemi, Trustee of the Amended andRestated Farid Assemi Revocable Trust

CITY OF FRESNO AS HOUSING SUCCESSOR,a public agency

Marlene Murphey, Executive Director

Date: _

ATTEST:YVONNE SPENCE, CMCEx. Officio Clerk

APPROVED AS TO FORMFRANCINE M. KANNE

Interim Ex. Officio Attorney

DeputyBy_--=,..- _

Date: _ Date: _

13

IN WITNESS WHEREOF, the undersigned has executed and delivered this Agreement as of the date firstabove written.

GUARANTOR:

Farshid Assemi, an individual Sonia Assemi, an individual

Farshid Assemi, Trustee of the Amended andRestated Farshid Assemi and Sonia RosemaryAssemi Revocable Trust

Sonia Assemi, Trustee of the Amended andRestated Farshid Assemi and Sonia RosemaryAssemi Revocable Trust

CITY OF FRESNO AS HOUSING SUCCESSOR,a public agency

Marlene Murphey, Executive Director

Date: _

ATTEST:YVONNE SPENCE, CMCEx. Officio Clerk

APPROVED AS TO FORM:FRANCINE M. KANNE

Interim Ex. Officio Attorney

Raj Singh Badhesha, DeputyDeputyBy_--::,-- _

Date: _ Date: _

13

IN WITNESS WHEREOF, the undersigned has executed and delivered this Agreement as of the date firstabove written.

GUARANTOR:

Said Assemi, an individual

Said Assemi, as Trustee of the Said and BobbiH. Assemi Family Trust, Trust A, established byDeclaration of Living Trust dated August 11,1995

CITY OF FRESNO AS HOUSING SUCCESSOR,a public agency

Marlene Murphey, Executive DirectorBy:_---,-----,--_---,-----,--_-:::-_---,---=----,--__

Date: _

ATTEST:YVONNE SPENCE, CMCEx. Officio Clerk

APPROVED AS TO FORM:FRANCINE M. KANNE

Interim Ex. Officio Attorney

Raj Singh Badhesha, DeputyBy:--::-c-::-:-..,--,---,-----,-- _

DeputyBy_-= _

Date: _ Date: _

Recording requested by:

When recorded mail to:

)))))))

__L_(Space above this line forrecorde(s-lffie)

Project Name: Iron Bird LoftsHUD Project Number: 121-11139

AMENDMENT TO DECLARATION OF COVENANTS AND CONDITIONS

This Amendment to Declaration of Covenants and Conditions ("Amendment") is made as ofNovember _, 2012, by FULTON PLAZA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY ("Borrower") andthe CITY OF FRESNO AS HOUSING SUCCESSOR, APUBLIC AGENCY ("Agency").

Recitals:

WHEREAS, Borrower has obtained financing from Greystone Funding Corporation (the "Lender")for the benefit of the project known as the Iron Bird Lofts (the "Project"), which loan is secured by aMultifamily Deed of Trust, Assignment of Leases and Rents, and Security Agreement ("SecurityInstrument") dated as of October _, 2012, and recorded in the Recorder's Office of Fresno County,California (the "Records") on as Document Number , and is insured bythe United States Department of Housing and Urban Development ("HUD");

WHEREAS, Borrower has received a loan from the Agency, which Agency is requiring certainrestrictions be recorded against the Project; and

WHEREAS, Borrower entered into that certain Declaration of Covenants and Restrictions("Restrictive Covenants") with respect to the Project, dated as of May 3, 2011 and recorded in theRecorder's Office of Fresno County, California on June 3, 2011, as Document Number 2011-0074447;

WHEREAS, HUD is requiring that the lien and covenants of the Restrictive Covenants besubordinated to the lien, covenants, and enforcement of the Security Instrument; and

WHEREAS, the Agency has agreed to subordinate the Restrictive Covenants to the lien of theMortgage Loan in accordance with the terms of this Amendment.

NOW, THEREFORE, in consideration of the foregoing and for other consideration the receipt andsufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Amendment of Restrictive Covenants. The Restrictive Covenants are hereby amended to add anew Section 11 as follows:

11. HUD Requirements. The HUD Rider to Restrictive Covenants, attached hereto as Exhibit B,is incorporated by reference into the Restrictive Covenants for such time as the Project is subjectto a mortgage, deed of trust or security instrument insured or held by the Secretary of Housingand Urban Development ("HUD"), or its successors or assigns.

2. No Other Changes. All other terms of the Restrictive Covenants, except as set forth in thisAmendment, remain the same and the Restrictive Covenants remain in full force and effect.

EXHIBIT D

BORROWER:FULTON PLAZA, LLC, A CALIFORNIA LIMITED LIABILITY

COMPANYBy: Assemi Corporation, Manager

AGENCY:CITY OF FRESNO AS HOUSING SUCCESSOR, A PUBLIC

AGENCY

Marlene Murphey, Executive DirectorMassoud Assemi, PresidentBy:_---:-:-_-----,--,-_-:-=------,-:-------, _

EXHIBIT 0

EXHIBIT ATO AMENDMENT TO DECLARATION OF COVENANTS AND CONDITIONS

WHEREAS, Borrower has obtained financing from Greystone Funding Corporation (the "Lender")for the benefit of the project known as the Iron Bird Lofts (the "Project"), which loan is secured by aMultifamily Deed of Trust, Assignment of Leases and Rents, and Security Agreement ("SecurityInstrument") dated as of October _' 2012, and recorded in the Recorder's Office of Fresno County,California (the "Records") on as Document Number , and is insured bythe United States Department of Housing and Urban Development ("HUD");

WHEREAS, Borrower has received a loan from the Agency, which Agency is requiring certainrestrictions be recorded against the Project; and

WHEREAS, Borrower entered into that certain Declaration of Covenants and Restrictions("Restrictive Covenants") with respect to the Project, dated as of May 3, 2011 and recorded in theRecorder's Office of Fresno County, California on June 3, 2011, as Document Number 2011-0074447;

WHEREAS, HUD is requiring that the lien and covenants of the Restrictive Covenants besubordinated to the lien, covenants, and enforcement of the Security Instrument; and

WHEREAS, the Agency has agreed to subordinate the Restrictive Covenants to the lien of theMortgage Loan in accordance with the terms of this Amendment.

NOW, THEREFORE, in consideration of the foregoing and for other consideration the receipt andsufficiency of which are hereby acknowledged, the parties hereby agree as follows:

(a) In the event of any conflict between any provision contained elsewhere in the RestrictiveCovenants and any provision contained in this Amendment, the provision contained in this Amendmentshall govern and be controlling in all respects.

(b) The following terms shall have the following definitions:

"HUD" means the United States Department of Housing and Urban Development.

"HUD Regulatory Agreement" means the Regulatory Agreement between Borrower andHUD with respect to the Project, as the same may be supplemented, amended ormodified from time to time.

"Lender" means Greystone Funding Corporation, its successors and assigns.

"Mortgage Loan" means the mortgage loan made by Lender to the Borrower pursuant tothe Mortgage Loan Documents with respect to the Project.

"Mortgage Loan Documents" means the Security Instrument, the HUD RegulatoryAgreement and all other documents required by HUD or Lender in connection with theMortgage Loan.

"National Housing Act" means the National Housing Act of 1934, as amended.

"Program Obligations" has the meaning set forth in the Security Instrument.

"Security Instrument" means the mortgage or deed of trust from Borrower in favor ofLender, as the same may be supplemented, amended or modified.

"Surplus Cash" has the meaning specified in the HUD Regulatory Agreement.

EXHIBIT D

"Residual Receipts" has the meaning specified in the HUD Regulatory Agreement.

(c) Notwithstanding anything in the Restrictive Covenants to the contrary, except therequirements in 26 U.s.C. 42(h)(6)(E)(ii), the provisions hereof are expressly subordinate to (i) theSecurity Instrument, (ii) the HUD Regulatory Agreement and (iii) Program Obligations. In the event of anyconflict between the provisions of the Restrictive Covenants and the provisions of the Security Instrument,HUD Regulatory Agreement, or Program Obligations, the provisions of the Mortgage Loan Documentsand Program Obligations shall control and supersede the enforcement of the Restrictive Covenants.

(d) In the event of foreclosure, the Restrictive Covenants (including without limitation, anyand all land use covenants and/or restrictions contained herein) shall automatically terminate, with theexception of the requirements of 26 U.S.C. 42(h)(6)(E)(ii) above, or as otherwise approved by HUD.

(e) Borrower and the Agency acknowledge that Borrower's failure to comply with thecovenants provided in the Restrictive Covenants does not and shail not serve as a basis for default underthe terms of the Security Instrument, the HUD Regulatory Agreement, or any other document relating tothe Mortgage Loan to Borrower for the Project, provided that, nothing herein limits the Agency's ability toenforce the terms of the Restrictive Covenants to the extent not in conflict with the Mortgage LoanDocuments or Program Obligations.

(f) Except for the Agency's reporting requirement, in enforcing the Restrictive Covenants theAgency will not file any claim against the Project or any reserve or deposit required by HUD in connectionwith the Security Instrument or HUD Regulatory Agreement, or the rents or other income from theproperty other than a claim against:

Available surplus cash, if the Borrower is a for-profit entity;

Available distributions and residual receipts authorized for release by HUD, if theBorrower is a limited distribution entity; or

Available residual receipts authorized by HUD, if the Borrower is a non-profit entity.

(g) For so long as the Mortgage Loan is outstanding, Borrower and Agency shall not furtheramend the Restrictive Covenants without HUD's prior written consent.

Subject to the HUD Regulatory Agreement, the Agency may require the Borrower to indemnify and holdthe Agency harmless from all loss, cost, damage and expense arising from any claim or proceedinginstituted against Agency relating to the subordination and covenants set forth in the RestrictiveCovenants, provided, however, that Borrower's obligation to indemnify and hold the Agency harmlessshall be limited to available surplus cash and/or residual receipts of the Borrower.

EXHIBIT D