SUBORDINATION AGREEMENT - INDIGO APARTMENTSSubordination Agreement -
Public
U.S. Department of Housing
and Urban Development
Office of Housing
1
OMB Approval No. 2502-0598
(Exp. 04/30/24)
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180 and 2424.
Project Name: Indigo Apartments
HUD Project No: 067-35633
THIS SUBORDINATION AGREEMENT ("Agreement") is entered into this
day of June, 2025 by and among (i) BERKADIA COMMERCIAL MORTGAGE LLC
("Senior Lender"), (ii) COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF
CLEARWATER, FLORIDA, a public body politic of the State of Florida created pursuant to
Part III, Chapter 163, Florida Statutes ("Subordinate Lender"), and (iii) SAH INDIGO
HOLDINGS LP, a Florida limited partnership ("Borrower").
Recitals
WHEREAS, Borrower is the owner of that certain 208 unit (together with 1
manager unit) residential rental development known as "Indigo Apartments"
("Project"), located 801 Chestnut St, Clearwater, FL 33756 and has leasehold
interest in the property underlying the Project. Senior Lender has made or is making
the senior mortgage loan as described on Schedule A hereto to Borrower in the
original principal amount(s) as shown on Schedule A, evidenced by the Note
described in Schedule A ("Senior Note"), and secured by, among other things, the
Security Instrument as described in Schedule A (collectively, "Senior Security
Instrument"), covering the property described in Exhibit A attached hereto together
with all improvementsthereon and personal property used relative thereof, all as more
particularly described in the Senior Security Instrument ("Mortgaged Property").
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WHEREAS, Borrower has requested Senior Lender to permit Subordinate
Lender to make a subordinate loan to Borrower in the amount of $2,000,000.00
("Subordinate Loan"), pursuant to the Subordinate Loan Documents as defined
below, and secured by, among other things, a mortgage lien against the Mortgaged
Property.
WHEREAS, Senior Lender, with the approval of the U.S. Department of Housing
and Urban Development ("HUD"), has agreed to permit Subordinate Lender to make the
Subordinate Loan and to place a subordinate mortgage lien against the Mortgaged
Property subject to all of the conditions contained in this Agreement and in accordance
with Program Obligations. "Program Obligations" means (1) all applicable statutes
and any regulations issued by the Secretary pursuant thereto that apply to the Project,
including all amendments to such statutes and regulations, as they become effective,
except that changes subject to notice and comment rulemaking shall become effective
only upon completion of the rulemaking process, and (2) all current requirements in
HUD handbooks and guides, notices, and mortgagee letters that apply to the Project,
and all future updates, changes and amendments thereto, as they become effective,
except that changes subject to notice and comment rulemaking shall become effective
only upon completion of the rulemaking process, and provided that such future updates,
changes and amendments shall be applicable to the Project only to the extent that they
interpret, clarify and implement terms 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: Handbooks, guides, notices, and mortgagee letters
are available on "HUDCLIPS," at www.hud.gov.
NOW, THEREFORE, in order to induce Senior Lender to permit Subordinate
Lender to make the Subordinate Loan to Borrower and to place a subordinate mortgage
lien against the Mortgaged Property, and in consideration thereof, Senior Lender,
Subordinate Lender and Borrower agree as follows:
1. Definitions.
In addition to the terms defined in the Recitals to this Agreement, for purposes of
this Agreement the following terms have the respective meanings set forth below:
(a) "Affiliate" is any person or business concern that directly or indirectly
controls policy of a principal or has the power to do so is an affiliate. Persons
and business concerns controlled by the same third party are also affiliates.
(b) "Bankruptcy Proceeding" means any bankruptcy, reorganization,
insolvency, composition, restructuring, dissolution, liquidation, receivership,
assignment for the benefit of creditors, or custodianship action or proceeding
under any federal or state law with respect to Borrower, any guarantor of any of
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the Senior Indebtedness, any of their respective properties, or any of their
respective partners, members, officers, directors, or shareholders.
(c) "Borrower" means all entities identified as "Borrower" in the first
paragraph of this Agreement, together with any successors, heirs, and assigns
(jointly and severally). Borrower shall include any entity taking title to the
Mortgaged Property, whether or not such entity assumes the Senior Note,
provided that the term "Borrower" shall not include Senior Lender in the event
that Senior Lender may acquire title to the Mortgaged Property. Whenever the
term "Borrower" is used herein, the same shall be deemed to include the obligor
of the debt secured by the Senior Security Instrument.
(d) "Business Day" means any day other than Saturday, Sunday or any
other day on which Senior Lender or HUD is not open for business.
(e) "Covenant Event of Default" is defined in the Senior Security
Instrument.
(f) "Entity" means an estate, trust, partnership, corporation, limited liability
company, limited liability partnership, governmental department or agency or any
other entity which has the legal capacity to own property.
(g) "Monetary Event of Default" is defined in the SeniorSecurity
Instrument.
(h) "Non -Project Sources" means any funds that are not derived from
Project Sources.
(i) "Project Sources" means the Mortgaged Property (as defined in the
Senior Security Instrument), any proceeds of the Senior -Indebtedness, and any
reserve or deposit made with Senior Lender or any other party as required by
HUD in connection with the Senior Indebtedness.
(j) "Senior Indebtedness" means all present and future indebtedness,
obligations, and liabilities of Borrower to Senior Lender under or in connection
with the Senior Loan Documents.
(k) "Senior Lender" means the Entity named as such in the first
paragraph on page 1 of this Agreement, its successors and assigns.
(1) "Senior Loan Documents" means the Senior Note, the Senior
Security Instrument, and the Regulatory Agreement between Borrower and HUD,
as such documents may be amended from time to time and all other documents
at any time evidencing, securing, guaranteeing, or otherwise delivered in
connection with the Senior Indebtedness, as identified in Schedule A
(m) "Senior Security Instrument Default" means a "Monetary Event of
Default" or a "Covenant Event of Default" as defined in the Senior Security
Instrument.
(n) "Subordinate Indebtedness" means all present and future
indebtedness, obligations, and liabilities of Borrower to Subordinate Lender
under or in connection with the Subordinate Loan or the Subordinate Loan
Documents.
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(o) "Subordinate Lender" means the Entity named as such in the first
paragraph on page 1 of this Agreement.
(p) "Subordinate Loan Documents" means the Subordinate Note, the
Subordinate Mortgage, and all other documents at any time evidencing, securing,
guaranteeing, or otherwise delivered in connection with the Subordinate
Indebtedness, as identified in Schedule B. The terms Subordinate Note and
Subordinate Mortgage are defined in Schedule B.
(q) "Subordinate Loan Enforcement Action" means the acceleration of
all or any part of the Subordinate Indebtedness, the advertising of or
commencement of any foreclosure or trustee's sale proceedings, the exercise of
any power of sale, the acceptance of a deed or assignment in lieu of foreclosure
or sale, the collecting of rents, the obtaining of or seeking of the appointment of a
receiver, the seeking of default interest, the taking of possession or control of any
of the Mortgaged Property, the commencement of any suit or other legal,
administrative, or arbitration proceeding based upon the Subordinate Note or any
other of the Subordinate Loan Documents, the exercising of any banker's lien or
rights of set-off or recoupment, or the taking of any other enforcement action
against Borrower, any other party liable for any of the Subordinate Indebtedness
or obligated under any of the Subordinate Loan Documents, or the Mortgaged
Property.
(r) "Subordinate Mortgage" means that certain Leasehold Mortgage by
and between Subordinate Lender and Borrower.
(s) "Subordinate Mortgage Default" means any act, failure to act, event,
conditions, or occurrence which allows (but for any contrary provision of this
Agreement), or which with the giving of notice or the passage of time, or both,
would allow (but for any contrary provision of this Agreement), Subordinate
Lender to take a Subordinate Loan Enforcement Action.
(t) "Subordinate Note" means that certain Promissory Note executed by
Borrower in favor of Subordinate Lender.
(u) "Surplus Cash" is defined herein to mean the same as that term is
defined in the Regulatory Agreement between Borrower and HUD.
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2. Permission to Allow Mortgage Lien Against Mortgaged
Property.
Senior Lender consents, subject to the provisions of this Agreement, to permit
Subordinate Lender to record the Subordinate Mortgage and other recordable Subordinate
Loan Documents against the Mortgaged Property (which are subordinate in all respects to
the lien of the Senior Security Instrument) to secure Borrower's obligation to repay the
Subordinate Note and all other obligations, indebtedness and liabilities of Borrower to
Subordinate Lender under and in connection with the Subordinate Loan. Senior Lender
agrees that the existence of the Subordinate Loan does not create a basis for default of
the Senior Indebtedness. Such consent is subject to the condition that each of the
representations and warranties made by Borrower and Subordinate Lender in Section 3
are true and correct on the date of this Agreement and on the date on which the proceeds
of the Subordinate Loan are disbursed to Borrower. If any of the representations and
warranties made by Borrower and Subordinate Lender in Section 3 are not true and
correct on the date of this Agreement, the provisions of the Senior Loan Documents
applicable to unpermitted liens on the Mortgaged Property shall apply.
3. Borrower's and Subordinate Lender's Representations and Warranties.
Borrower and, with respect to subsections (a) through (d) below, Subordinate
Lender each make the following representations and warranties to Senior Lender:
(a) Subordinate Loan Documents. The Subordinate Loan is evidenced
by the Subordinate Note and is secured by the Subordinate Mortgage.
(b) Terms of the Subordinate Loan. The original principal amount of
the Subordinate Note is $2,000,000.00. Interest on the Subordinate Note accrues
monthly at the rate of 0% per annum. The Subordinate Note is due and payable
in full forty-three (43) years from the date of execution of the Subordinate Note
("Maturity"). The Maturity term of the Subordinate Note does not end before the
maturity term of the Senior Note, unless the Subordinate Note is forgivable as set
forth below and Borrower satisfies all requirements in the Subordinate Loan
Documents to result in the Subordinate Note being eligible for forgiveness. The
principal of the Subordinate Note will have a balloon principal payment of
$2,000,000.00 due at Maturity. The promissory note evidencing the Subordinate
Note obligates Borrower to make payments as follows: Borrower will pay the full
principal balance on Maturity, subject to Section 3(c) immediately below.
(c) Required HUD Language in Subordinate Note. The Subordinate
Note contains or incorporates the following provisions:
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"As long as HUD is the insurer or holder of the Senior Note (as
such term and other capitalized terms are defined in the form
Subordination Agreement, HUD -92420M) on FHA Project No.
067-35633, the following provisions ("HUD Provisions") shall be
in full force and effect:
(1) any payments due under the Subordinate Note shall be
payable only (i) from permissible distributions from Surplus Cash of
the Project; 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. In no event may payments due under all
subordinate debt of Maker cumulatively exceed 75% of available
Surplus Cash. The restriction on payment imposed by this paragraph
shall not excuse any default caused by the failure of the Borrower to
pay the indebtedness evidenced by the Subordinate Note;
(2) no prepayment of the Subordinate Note shall be made until
after final endorsement by HUD of the Senior Note, unless such
prepayment is made from Non -Project Sources and is approved in
writing by HUD.
(3) this Subordinate Note is non-negotiable and may not be sold,
transferred, assigned, or pledged by the Subordinate Lender except
with the prior written approval of HUD;
(4) Interest on the Subordinate Note shall not be compounded as
long as HUD is the insurer or holder of the Note secured by the
Security Instrument;
(5) Maker hereby waives presentment, demand, protest and
notice of demand, protest and nonpayment of this Subordinate Note;
(6) the terms and provisions of this Subordinate Note are also for
the benefit of and are enforceable by HUD against any party hereto,
their successors and assigns. This Subordinate Note may not be
modified or amended without the written consent of HUD; and
(7) in the event of any conflict between the terms of the
Subordinate Note and the HUD Provisions, the terms of the HUD
Provisions shall control."
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(d) Relationship of Borrower to Subordinate Lender. Subordinate
Lender is not an Affiliate of Borrower.
(e) Subordinate Loan Documents. Borrower certifies that the executed
Subordinate Loan Documents are substantially in the same forms as those submit-
ted to, and approved by, HUD prior to the date of this Agreement. Upon execution
and delivery of the Subordinate Loan Documents, Borrower shall deliver to Senior
Lender an executed copy of each of the Subordinate Loan Documents, certified to
be true, correct and complete.
(f) Senior Loan Documents. The executed Senior Loan Documents
are the same forms as approved by HUD prior to the date of this Agreement. Upon
execution and delivery of the Senior Loan Documents, Borrower shall deliver to
Subordinate Lender an executed copy of each of the Senior Loan Documents,
certified to be true, correct and complete.
4. Deliveries.
Borrower shall submit the following items to Senior Lender and HUD at
closing:
(a) Title Evidence. Evidence of title (title policy or title policy
endorsement, as appropriate) insuring the lien of the Senior Security Instrument
which insures that (i) the lien of the Subordinate Mortgage is subordinate to the
lien of the Senior Mortgage, and (ii) this Agreement has been recorded among
the applicable land records.
(b) Loan Documents. A complete set of the Subordinate Loan
Documents, including this Subordination Agreement.
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 in right of payment, to the extent and in the manner
provided in this Agreement, to the prior payment of the indebtedness evidenced by
the Senior Loan Documents, and (ii) the Subordinate Mortgage and the other
Subordinate Loan Documents are and shall be subject and subordinate in all
respects to the liens, terms, covenants and conditions of the Senior Security
Instrument and the other Senior Loan Documents and to all advances heretofore
made or which may hereafter be made pursuant to the Senior Security Instrument
and the other Senior Loan Documents (including but not limited to, all sums
advanced for the purposes of (1) protecting or further securing the lien of the Senior
Security Instrument, curing defaults by Borrower under the Senior Loan Documents
or for any other purpose expressly permitted by the Senior Security Instrument, or
(2) constructing, renovating, repairing, furnishing, fixturing or equipping the
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Mortgaged Property).
(b) Subordination of Subrogation Rights. Subordinate Lender agrees
that if, by reason of its payment of real estate taxes or other monetary obligations of
Borrower, or by reason of its exercise of any other right or remedy under the
Subordinate Loan Documents, it acquires by right of subrogation or otherwise a lien
on the Mortgaged Property which (but for this subsection) would be senior to the
lien of the Senior Security Instrument, then, in that event, such lien shall be subject
and subordinate to the lien of the Senior Security Instrument.
(c) Payments Before Senior Security Instrument Default Until
Subordinate Lender receives a default notice of a Senior Security Instrument
Default from Senior Lender, Subordinate Lender shall be entitled to retain for its
own account all payments made under or pursuant to the Subordinate Loan
Documents provided that such payments are otherwise permitted under the terms
of this Agreement.
(d) Payments After Senior Security Instrument Default. Borrower
agrees that, after it receives notice (or otherwise acquires knowledge) of a Senior
Security Instrument Default, it will not make any payments under or pursuant to the
Subordinate Loan Documents (including but not limited to principal, interest,
additional interest, late payment charges, default interest, attomey's fees, or any
other sums secured by the Subordinate Mortgage) without Senior Lender's prior
written consent. Subordinate Lender agrees that, after it receives a default notice
from Senior Lender with written instructions directing Subordinate Lender not to
accept payments from Project Sources on account of the Subordinate Loan, it will
not accept any payments under or pursuant to the Subordinate Loan Documents
(including but not limited to principal, interest, additional interest, late payment
charges, default interest, attorney's fees, or any other sums secured by the
Subordinate Mortgage) unless either (i) such payment is being made solely from
Non -Project Sources or (ii) such payment is made with Senior Lender's prior written
consent. If Subordinate Lender receives written notice from Senior Lender that the
Senior Security Instrument Default which gave rise to Subordinate Lender's
obligation not to accept payments has been cured, waived, or otherwise suspended
by Senior 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 by Borrower prior to Subordinate Lender's
receipt of a new default notice from Senior Lender in accordance with the
provisions of this Section 5(d).
(e) Remitting Subordinate Loan Payments to Senior Lender. If, after
Subordinate Lender receives a default notice from Senior Lender in accordance
with subsection (d) above, Subordinate Lender receives any payments under the
Subordinate Loan Documents (other than payments permitted under subsection (d)
above), Subordinate Lender agrees that such payment or other distribution will be
received and held in trust for Senior Lender and unless Senior Lender otherwise
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,
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interest on and other amounts due under the Senior Loan Documents in
accordance with the provisions of the Senior Loan Documents. By executing this
Agreement, Borrower specifically authorizes Subordinate Lender to endorse and
remit any such payments to Senior Lender, and specifically waives any and all
rights to have such payments retumed to Borrower or credited against the
Subordinate Loan. Borrower and Senior Lender acknowledge and agree that
payments received by Subordinate Lender, and remitted to Senior Lender under
this Section 5, shall not be applied or otherwise credited against the Subordinate
Loan, nor shall the tender of such payment to Senior Lender waive any
Subordinate Mortgage Default which may arise from the inability of Subordinate
Lender to retain such payment or apply such payment to the Subordinate Loan.
(f) Agreement Not to Commence Bankruptcy Proceeding.
Subordinate Lender agrees that during the term of this Agreement it will not
commence, or join with any other creditor in commencing any Bankruptcy
Proceeding with respect to Borrower, without Senior Lender's prior written consent.
6. Default Under Subordinate Loan Documents.
(a) Notice of Default and Cure Rights. Subordinate Lender shall
deliver to Senior Lender a default notice within five Business Days in each case
where Subordinate Lender has given a default notice to Borrower. Failure of
Subordinate Lender to send a default notice to Senior Lender shall not prevent the
exercise of Subordinate Lender's rights and remedies under the Subordinate Loan
Documents, subject to the provisions of this Agreement. Senior Lender shall have
the opportunity, but not the obligation, to cure any Subordinate Mortgage Default
within 60 days following the date of such notice; provided, however that
Subordinate Lender shall be entitled, during such 60 -day 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.
(1) If a covenant Subordinate Mortgage Default occurs and is
continuing, Subordinate Lender agrees that it will not, for a period of one
hundred eighty (180) days after giving notice of such Subordinate Mortgage
Default to Senior Lender and HUD (the "Standstill Period"), commence
foreclosure proceedings with respect to the Mortgaged Property under the
Subordinate Loan Documents or exercise any other rights or remedies it
may have under the Subordinate Loan Documents with respect to the
Mortgaged Property, including, but not limited to accelerating the
Subordinate Loan, collecting rents, appointing (or seeking the appointment
of) a receiver or exercising any other rights or remedies thereunder without
Senior Lender's prior written consent. During the Standstill Period,
Subordinate Lender agrees to use best efforts to resolve the Subordinate
Mortgage Default, in an effort to avoid the pursuit of available remedies by
the Subordinate Lender. After the expiration of the Standstill Period and in
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the event Subordinate Lender forecloses on the Mortgaged Property, the
purchaser must comply with HUD's Previous Participation regulations and
processes, Transfer of Physical Asset requirements, and Program
Obligations before it can take title to the Mortgaged Property.
(2) Subordinate Lender further agrees that if a monetary
Subordinate Mortgage Default occurs and is continuing, it will not commence
foreclosure proceedings with respect to the Mortgaged Property under the
Subordinate Loan Documents or exercise any other rights or remedies it
may have under the Subordinate Loan Documents with respect to the
Mortgaged Property, including, but not limited to accelerating the
Subordinate Loan, collecting rents, appointing (or seeking the appointment
of) a receiver or exercising any other rights or remedies thereunder without
Senior Lender's prior written consent. The preceding prohibition on
foreclosure for a monetary Subordinate Mortgage Default excludes the
acceleration of any part or all of the Subordinate Indebtedness resulting from
a covenant Subordinate Mortgage Default.
(3) Nothing in this subsection (b) shall (i) limit Subordinate
Lender's right to bring an action seeking recovery solely from Non -Project
Sources or (ii) preclude Subordinate Lender from exercising or enforcing all
the rights available to Subordinate Lender under the Subordinate Loan
Documents and/or under applicable law to enforce covenants and
agreements of Borrower relating to income, rent or affordability restrictions.
7. Default Under Senior Loan Documents.
(a) Notice of Default and Cure Rights. Senior Lender shall deliver to
Subordinate Lender a default notice within five Business Days in each case where
Senior Lender has given a default 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 Senior Lender to send a default notice
to Subordinate Lender shall not prevent the exercise of Senior Lender's right and
remedies under the Senior Loan Documents, subject to the provisions of this
Agreement. Borrower agrees that Subordinate Lender shall have the opportunity,
but not the obligation, to cure either a Monetary Event of Default or a Covenant
Event of Default within 30 days following the date of such notice, or any time prior
to an assignment of the Senior Security Instrument from Senior Lender to HUD,
whichever date is later. Subordinate Lender acknowledges that Senior Lender shall
be entitled during such period described above to continue to pursue its remedies
under the Senior Loan Documents. Subordinate Lender shall have the opportunity
to cure a Covenant Event of Default during such period described above so long as
there is no Monetary Event of Default under the Senior Loan Documents. All
amounts paid by Subordinate Lender to Senior Lender to cure any default under
the Senior Loan Documents shall be deemed to have been advanced by
Subordinate Lender pursuant to, and shall be secured by the lien of, the
Subordinate Mortgage.
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(b) Cross Default. Subordinate Lender certifies that the Subordinate
Loan Documents do not contain a cross default provision. Notwithstanding any
contrary provision contained in the Subordinate Loan Documents, a Senior Security
Instrument Default shall not constitute a default under the Subordinate Loan
Documents if no other default occurred under the Subordinate Loan Documents.
8. Conflict.
Borrower, Senior Lender and Subordinate Lender each agrees that, in the event of
any conflict or inconsistency between the terms of the Senior Loan Documents, the
Subordinate Loan Documents and the terms of this Agreement, the terms of this
Agreement shall govem and control solely as to the following: (a) the relative priority ofthe
security interests of Senior Lender and Subordinate Lender in the Mortgaged Property;
and (b) solely as between Senior Lender and Subordinate Lender, the notice
requirements, cure rights, and the other rights and obligations which Senior 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 be
deemed to: extend Borrower's time to cure any Senior Security Instrument Default or
Subordinate Mortgage Default, as the case may be; give Borrower the right to notice of
any Senior Security Instrument 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, as applicable; or create any other right or benefit for
Borrower as against Senior Lender or Subordinate Lender.
9. Rights and Obligations of Subordinate Lender under the Subordinate
Loan Documents and of Senior Lender under the Senior Loan Documents.
Subject to each of the other terms of this Agreement, all of the following provisions
shall supersede any provisions of the Subordinate Loan Documents covering the same
subject matter:
(a) Protection of Security Interest. Subordinate Lender shall not,
without the prior written consent of Senior Lender in each instance, take any action
which has the effect of increasing the indebtedness outstanding under, or secured
by, the Subordinate Loan Documents, except that Subordinate Lender shall have
the right to advance funds to cure Senior Security Instrument Defaults pursuant to
Section 7(a) above and advance funds pursuant to the Subordinate Mortgage for
the purpose of paying real estate taxes and insurance premiums, making
necessary repairs to the Mortgaged Property and curing other defaults by Borrower
under the Subordinate Loan Documents.
(b) Condemnation or Casualty. In the event of: a taking or threatened
taking by 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 a portion of the Mortgaged Property
(collectively, a "Casualty"), at any time or times when the Senior Security
Instrument remains a lien on the Mortgaged Property the following provisions shall
apply:
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(1) Subordinate Lender hereby agrees that its rights (under the
Subordinate Loan Documents or otherwise) to participate in any proceeding
or action relating to a Taking and/or a Casualty, or to participate or join in
any settlement of, or to adjust, any claims resulting from a Taking or a
Casualty shall be and remain subordinate in all respects to Senior Lender's
rights under the Senior Loan Documents with respect thereto, and
Subordinate Lender shall be bound by any settlement or adjustment of a
claim resulting from 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 a Casualty, or both, shall be applied (to payment of the costs and
expenses of repair and restoration and/or to payment of the Senior Security
Instrument) in the manner determined by Senior Lender in its sole discretion
consistent with the Senior Loan Documents; provided, however, that if
Senior Lender elects to apply such proceeds to payment of the principal of,
interest on and other amounts payable underthe Senior Security Instrument,
any proceeds remaining after the satisfaction in full of the principal of,
interest on and other amounts payable under the Senior Security Instrument
shall be paid to, and may be applied by, Subordinate Lender in accordance
with the applicable provisions of the Subordinate Loan Documents. Any
proceeds then remaining after the satisfaction in full of the principal of,
interest on and other amounts payable under the Subordinate Loan
Documents shall be paid by the Subordinate Lender to Borrower.
(c) No Modification of Subordinate Loan Documents. Borrower and
Subordinate Lender each agrees that, until the principal of, interest on and all other
amounts payable under the Senior Loan Documents have been paid in full, it will
not, without the prior written consent of Senior Lender in each instance, increase
the amount of the Subordinate Loan, increase the required payments due under the
Subordinate Loan, decrease the term of the Subordinate Loan, increase the
interest rate on the Subordinate Loan, or otherwise amend the Subordinate Loan
terms in a manner that creates an adverse effect upon Senior Lender under the
Senior Loan Documents. Any unauthorized amendment of the Subordinate Loan
Documents without Senior Lender's consent shall be void ab initio and of no effect
whatsoever.
10. Modification of Senior Loan Documents; Refinancing of Senior
Indebtedness; Transfer of Physical Assets.
(a) 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 any provision requiring the payment of
money, provided however, there shall be no modification of the Senior Loan
Documents without the consent of the Subordinate Lender if such modification
would increase the principal amount of the Senior Indebtedness beyond the
original principal amount of the Senior Indebtedness (excluding any amounts
having been advanced by Senior Lender for the protection of its security interest
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pursuant to the Senior Loan Documents), increase the interest rate of the
Senior Indebtedness, or decrease the original maturity term of the Senior
Indebtedness.
(b) Subordinate Lender agrees that its agreement to subordinate hereunder shall
extend to any new mortgage debt which is for the purpose of refinancing all or
any part of the Senior Indebtedness in accordance with Program Obligations
(including reasonable and necessary costs associated with the closing and/or
the refinancing); and that all the terms and covenants of this Agreement shall
inure to the benefit of any holder of any such refinanced debt; and that all
references to the Senior Indebtedness, the Senior Note, the Senior Security
Instrument, the Senior Loan Documents and Senior Lender shall mean,
respectively, the indebtedness related to the refinance loan, the refinance note,
the security instrument securing the refinance note, all documents evidencing,
securing or otherwise pertaining to the refinance note and the holder of the
refinance note, provided however, there shall be no refinancing of the Senior
Indebtedness without the consent of the Subordinate Lender if such refinancing
would increase the principal amount of the Senior Indebtedness beyond the
original principal amount of the Senior Indebtedness (excluding any amounts
having been advanced by Senior Lender for the protection of its security interest
pursuant to the Senior Loan Documents), increase the interest rate of the
Senior Indebtedness, or decrease the original maturity term of the Senior
Indebtedness.
(c) Subordinate Lender agrees that the term of the Subordinate Indebtedness will
be extended if HUD grants a deferment of amortization or forbearance that
results in an extended maturity of the Senior Indebtedness.
(d) Subordinate Lender agrees that the term of the Subordinate Indebtedness will
be extended if the Subordinate Note is due, and there are no Surplus Cash
funds or Residual Receipts (if applicable) available for repayment, and the
Senior Indebtedness has not been repaid in full. (The parties agree that
distributions of Residual Receipts must be approved by HUD and can only be
approved by the terms of a written agreement between HUD and the Borrower).
(e) Subordinate Lender further agrees that the Subordinate Indebtedness is
assumable when a sale or transfer of physical assets occurs, and the Senior
Indebtedness remains in place.
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 -defaulting Lender shall have the right to all available legal and
equitable relief.
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12. Notices.
Each notice, request, demand, consent, approval or other communication
(hereinafter in this Section referred to collectively as "notices" and referred to singly as a
"notice") which Senior Lender or Subordinate Lender is required or permitted to give to the
other party pursuant to this Agreement shall be in writing and shall be deemed to have
been duly and sufficiently given if: (a) personally delivered with proof of delivery thereof
(any notice so delivered shall be deemed to have been received at the time so delivered);
or (b) sent by Federal Express (or other similar national overnight courier) designating next
Business Day delivery (any notice so delivered shall be deemed to have been received on
the next Business Day following receipt by the courier); or (c) sent by United States
registered or certified mail, retum receipt requested, postage prepaid, at a post office
regularly maintained by the United States Postal Service (any notice so sent shall be
deemed to have been received two Business Days after mailing in the United States),
addressed to the respective parties as follows:
SENIOR LENDER:
BERKADIA COMMERCIAL MORTGAGE LLC
323 Norristown Road, Suite 300
Ambler, Pennsylvania 19002
Attn: Servicing Department
FHA Project No. 067-35633
With a copy to:
U.S. Department of Housing and Urban Development
Director - Office of Multifamily Asset Management
Room 6160
451 Seventh Street, S.W. Washington,
DC 20410
SUBORDINATE LENDER:
Community Redevelopment Agency of the City of
Clearwater Florida
P.O. Box 4748
Clearwater, Florida 33758
Attention: Michael Fuino
Either party may, by notice given pursuant to this Section, change the person or persons
and/or address or addresses, or designate an additional person or persons or an
additional address or addresses for its notices, but notice of a change of address shall only
be effective upon receipt.
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13. General.
(a) Assignment/Successors. This Agreement shall be binding upon
Borrower, Senior Lender and Subordinate Lender and shall inure to the benefit of
the respective legal successors and assigns of Senior Lender and Subordinate
Lender.
(b) No Partnership or Joint Venture. Senior Lender's permission for
the placement of the Subordinate Loan Documents does not constitute Senior
Lender as a joint venturer or partner of Subordinate Lender. Neither party hereto
shall hold itself out as a partner, agent or Affiliate of any other party hereto.
(c) Senior Lender's and Subordinate Lender's Consent. Wherever
Senior Lender's consent or approval is required by any provision of this Agreement,
such consent or approval may be granted or denied by Senior Lender in its sole
and absolute discretion, unless otherwise expressly provided in this Agreement.
Wherever Subordinate Lender's consent or approval is required by any provision of
this Agreement, such consent or approval may be granted or denied by
Subordinate Lender in its sole and absolute discretion, unless otherwise expressly
provided in this Agreement.
(d) Further Assurances; UCC Financing Statements. Subordinate
Lender, Senior Lender and Borrower each agree, at Borrower's expense, to
execute and deliver all additional instruments and/or documents reasonably
required by any other party to this Agreement in order to evidence that the
Subordinate Loan Documents are subordinate to the lien, covenants and conditions
of the Senior Loan Documents, or to further evidence the intent of this Agreement.
Senior Lender is hereby authorized to file any and all UCC financing statement
amendments required to reflect the priority of the Senior Indebtedness.
(e) Amendment. This Agreement shall not be amended except by
written instrument signed by all parties hereto.
(f) Governing Law. This Agreement shall be governed by the laws of
the State in which the Mortgaged Property is located, except, so long as the
Senior Indebtedness is insured or held by HUD, and solely as to rights and
remedies of HUD, federal jurisdiction may be appropriate pursuant to any federal
requirements. The State courts, and with respect to HUD's rights and remedies,
federal courts, and governmental authorities in the State in which the Mortgaged
Property is located, shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to the Subordinate Loan Documents. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.
(g) Severable Provisions. If any provision of this Agreement shall be
invalid or unenforceable to any extent, then the other provisions of this Agreement
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shall not be affected thereby 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 shall continue until the earliest to occur of the following events: (i) the
payment of all of the principal of, interest on and other amounts payable under the
Senior Loan Documents; (ii) the payment or the forgiveness of all of the principal of,
interest on and other amounts payable under the Subordinate Loan Documents,
other than by reason of payments which Subordinate Lender is obligated to remit to
Senior Lender pursuant to Section 5 hereof; (iii) the acquisition by Senior Lender of
title to the Mortgaged Property pursuant to a foreclosure; or (iv) the acquisition by
Subordinate Lender of title to the Mortgaged Property pursuant to a foreclosure or a
deed in lieu of foreclosure of, or the exercise of a power of sale contained in, the
Subordinate Mortgage, but only if such acquisition of title does not violate any of the
terms of this Agreement. Notwithstanding the foregoing, in the event the Senior
Indebtedness is refinanced or a transfer of physical assets occurs, the term of this
Agreement shall continue and the Subordinate Indebtedness and Subordinate Loan
Documents shall be subordinate to any such indebtedness related to the refinanced
or transferred loan 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 such counterparts shall together constitute one and the
same instrument.
Each signatory below hereby certifies that each of their statements and
representations contained in this Agreement and all their supporting documentation
thereto are true, accurate, and complete. This Agreement has been made, presented,
and delivered for the purpose of influencing an official action of HUD in insuring the
Loan, and may be relied upon by HUD as a true statement of the facts contained
therein.
[Signature Page to follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
SENIOR LENDER:
BERKADIA COMMERCIAL MORTGAGE LLC
a Delaware limited liability company
By:
Dede Matthews
Authorized Representative
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18
SUBORDINATE LENDER:
COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF CLEARWATER, FLORIDA
Jesus Nino
Executive Director
Approved as to form:
FQ r Michael P. Fuino
CRA Attorney Clearwater
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'rest:
)---tati170/6C
Rosemarie Call
City Clerk
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BORROWER:
Signed, sealed, and delivered in the presence of:
*Note: two witnesses are required*
For: SAH Indigo Holdings LP
a Florida Limited Partnership
Federal Employee ID Number: 99-4711284
By: SAH Indigo Holdings GP, LLC,
a Florida limited liability company,
its General Partner
By:
Witness #1 Signature Name: Eric Ray
Print Name• Title: Authorized Signatory
Address. Address: 249 Royal Palm Way, Suite 301
Palm Beach, FL 33480
Witness #2 Signature
Print Name.
Address:
STATE OF
COUNTY OF
Date:
19
The foregoing instrument was acknowledged before me by means of () physical presence
or () online notarization, this day of , 2025 by Eric Ray, Authorized
Signatory of SAH Indigo Holdings GP, LLC, a Florida limited liability company, the
General Partner of SAH Indigo Holdings LP, a Florida Limited Partnership who is ( )
personally known to me or ( ) who has produced as
identification.
(Signature)
(NOTARY STAMP/SEAL ABOVE) (Name of Notary, typed, printed, or stamped)
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Schedule A — List of Senior Loan Documents
Schedule B — List of Subordinate Loan Documents
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EXHIBIT A: LEGAL DESCRIPTION
Parcel 1:
21
That leasehold estate created by that Ground Lease by and between Housing Finance Authority of
Pinellas County, Florida, as Trustee of the Pinellas County Land Assembly Trust - Indigo Apartments,
dated May 16, 2025, and SAH Indigo Holdings, LP, a Florida limited partnership, as evidenced by
that Memorandum of Ground Lease to be recorded, in the Public Records of Pinellas County,
Florida, over the following described real property (excluding the improvements thereon):
Lots 1, 2, 3, 4, 5, 6, 9, 10 and 11; LESS the West 50 feet of the South 118 feet thereof, Block 17,
MAGNOLIA PARK SUBDIVISION, according to the map or plat thereof, as recorded in Plat Book 3,
Page 43, of the Public Records of Pinellas County, Florida.
Parcel 2:
The buildings and improvements (being the buildings and improvements only and not including an
interest in the fee simple title to the land underlying the buildings and improvements) located upon
the following described real property:
Lots 1, 2, 3, 4, 5, 6, 9, 10 and 11; LESS the West 50 feet of the South 118 feet thereof, Block 17,
MAGNOLIA PARK SUBDIVISION, according to the map or plat thereof, as recorded in Plat Book 3,
Page 43, of the Public Records in Pinellas County, Florida.
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SCHEDULE A: LIST OF SENIOR LOAN DOCUMENTS
1. Note (Multistate) by Borrower to Senior Lender;
2. Multifamily Mortgage, Assignment of Leases and Rents and Security Agreement
(Florida) by and between Borrower and Senior Lender;
3. Rider to Security Instrument by and between Borrower and Senior Lender;
4. Addendum to Multifamily Mortgage, Assignment of Leases and Rents and
Security Agreement (Florida) by and between Borrower and Senior Lender;
5. Building Loan Agreement by and between Borrower and Senior Lender;
6. Regulatory Agreement for Multifamily Projects by and between Borrower and
HUD;
7. Borrower's Disclosure and Certification by Borrower;
8. Lender's Certificate by Senior Lender;
9. Construction Contract by and between Borrower and Langerman Construction,
LLC, as the general contractor ("General Contractor");
10. Design/Supervisory Architect's Insurance Certification by Gallo Herbert
Architects, LLC to HUD;
11. Borrower's Oath to HUD;
12. Agreement and Certification by and among Borrower, Senior Lender and
General Contractor;
13. Escrow Agreement for Working Capital by and between Senior Lender and
Borrower;
14. Financing Letter by Senior Lender to HUD;
15. Statement For Loan Guarantees and Loan Insurance by Senior Lender;
16. Extension Fee Agreement by and between Borrower and Senior Lender;
17. Estoppel Certificate for Ground Lease by Borrower and County Lender to Senior
Lender and HUD;
18. UCC Financing Statement (Pinellas County)
19. UCC Financing Statement (State of Florida).
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SCHEDULE B: LIST OF SUBORDINATE LOAN DOCUMENTS
1. Promissory Note by Borrower for the benefit of Subordinate Lender
2. Leasehold Mortgage by and between the Subordinate Lender and
Borrower
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