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3. APPLICATION OF PAYMENTS UNDER SUBORDINATING PARTY'S LOAN. Until such
<br />time as all amounts outstanding under the Loan have been indefeasibly paid in full, prior to the
<br />occurrence of an Event of Default (as such term is defined in the Loan Documents), Subordinating Party
<br />shall be entitled to receive and retain payments made pursuant to and in accordance with the
<br />Subordinating Party's Loan documents; provided, however, that no such payment is made more than
<br />ninety (90) days in advance of its scheduled due date. Upon the occurrence of an Event of Default under
<br />the Loan Documents, after Subordinating Party receives notice of such Event of Default from Bank with
<br />written instructions directing Subordinating Party not to accept payments from Borrower on account of the
<br />Subordinating Party's Loan (including, but not limited to, principal, interest additional interest, late
<br />payment charges, default interest, attorneys' fees, or any other sums secured by the Subordinating
<br />Party's Deed of Trust), all amounts (including, without limitation, all insurance proceeds and
<br />condemnation awards) received by Subordinating Party from, or for the account of, Borrower under
<br />Subordinating Party's Loan shall be immediately remitted to Bank at the address set forth above to be
<br />applied by Bank in reduction of amounts outstanding under the Loan, in such amounts and in such order
<br />as Bank shall determine. In the event that any payment is made to Subordinating Party which is not
<br />permitted under this Agreement, such payment shall be held by Subordinating Party in trust for the benefit
<br />of Bank and shall be paid immediately to Bank for application to the payment of all of indebtedness and
<br />obligations remaining unpaid under the Loan. If Subordinating Party receives written notice from Bank
<br />that the Event of Default which gave rise to the Subordinating Party's obligation not to accept payments
<br />has been cured, waived, or otherwise suspended by Bank, the restrictions on payment to Subordinating
<br />Party in this Section 3 shall terminate, and Bank shall have no right to any subsequent payments made to
<br />Subordinating Party by Borrower prior to Subordinating Party's receipt of a new notice from Bank of an
<br />Event of Default in accordance with this Section 3. Without limiting the complete subordination of the
<br />Subordinating Party's Loan to the payment in full of the Loan, in any bankruptcy, insolvency, receivership
<br />or similar proceeding, upon any payment or distribution to creditors, the Loan shall be paid in full first in
<br />cash before the Subordinating Party shall be entitled to receive any payment or other distribution on
<br />account of or in respect to the Subordinating Party's Loan and, until the entire Loan is paid in full in cash,
<br />any payment or distribution to which the Subordinating Party will be entitled but for this Agreement
<br />(whether in cash, property or other assets) shall be paid to Bank.
<br />4. SUBORDINATION TO MODIFICATION OF LOAN. If Bank extends or otherwise
<br />modifies the terms of the Loan (including any amendment or modification which requires the
<br />Subordinating Party's prior written consent pursuant to Paragraph 1 and for which Subordinating Party
<br />has granted such consent), Subordinating Party, upon 20 days' prior notice to Subordinating Party, shall
<br />execute a new subordination agreement, in the form of this Agreement, confirming Subordinating Party's
<br />subordination of the effect of Subordinating Party's Security Documents against the Project to the lien or
<br />charge of the Deed of Trust. The execution of such new subordination agreement, however, shall not be
<br />a condition to the effectiveness of the subordination of Subordinating Party's Security Documents against
<br />the Project to the lien or charge of the Deed of Trust, which subordination shall be automatic.
<br />5. SUBORDINATING PARTY'S RIGHT TO CURE DEFAULTS. Upon the occurrence of an
<br />Event of Default, Bank shall: (a) concurrently with notifying Borrower of the occurrence of such event of
<br />default, notify Subordinating Party at its address set forth above of the occurrence of such event of
<br />default; (b) permit Subordinating Party to cure or correct (provided that such event of default is curable)
<br />any such event of default within thirty (30) calendar days after receipt of such notice ("Subordinating
<br />Party Cure Period"); provided, however, that Bank has the continuing right to commence to pursue its
<br />remedies under the Loan Documents on account of such default during the Subordinating Party Cure
<br />Period, including but not limited to the right to accelerate the Loan, record a notice of default and to obtain
<br />a receiver; provided further, that if the cure is completed during the Subordinating Party Cure Period,
<br />Bank will rescind any notice of default after reimbursement of all of its costs incurred in connection with
<br />the default, including, without limitation, attorneys' fees and court costs; and (c) accept all payments and
<br />all acts done by Subordinating Party on behalf of Borrower within the Subordinating Party's Cure Period
<br />as though the same had been timely done and performed by Borrower, so that such acts and payments
<br />shall fully and totally cure and correct all such defaults, breaches, failures or refusals for all purposes.
<br />Subordinating Party shall not be subrogated to the rights of Bank under the Loan Documents by reason of
<br />Subordinating Party having cured any default under the Loan Documents; however, Bank acknowledges
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