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that, to the extent so provided in the Subordinating Party's Security Documents, amounts advanced or
<br />expended by Subordinating Party to cure an event in default under the Loan Documents may be added to
<br />and become a party of the Subordinating Party's Loan. In the event that an Event of Default occurs and
<br />Bank has recorded a notice of default, then for the period from the date of recordation of the notice of
<br />default, until the date of recordation of a notice of sale, so long as the noticed default continues,
<br />Subordinating Party shall have the right, but not the obligation, in lieu of curing any default under the Loan
<br />Documents, to purchase the Loan. Such purchase will be accomplished by Subordinating Party paying to
<br />Bank the outstanding principal amount of the Loan, plus all accrued and unpaid interest thereon and any
<br />prepayment premium, together with reasonable expenses incurred by Bank in connection therewith
<br />(including reasonable attorneys' fees and costs), in exchange for the assignments of the Loan Documents
<br />without recourse or warranty except that Bank will warrant that it owns and has all requisite authority to
<br />transfer the Loan at the time of the transfer. Borrower acknowledges and agrees, by executing the
<br />joinder attached hereto, that after the Loan has been assigned to Subordinating Party or its nominee,
<br />Bank shall be relieved from all liability to Borrower under or in connection with the Loan Documents.
<br />6. BANK'S RIGHT TO CURE DEFAULT UNDER SUBORDINATING PARTY'S LOAN.
<br />Upon the occurrence of a default under the Subordinating Party's Loan, Subordinating Party shall: (a)
<br />concurrently with notifying Borrower of the occurrence of such event of default, notify Bank at its address
<br />set forth above of the occurrence of such default or event of default; (b) permit Bank to cure or correct
<br />(provided that such event of default is curable) any such event of default within thirty (30) calendar days
<br />after receipt of such notice ("Bank Cure Period"); provided, however, that Subordinating Party has the
<br />continuing right to commence to pursue its remedies under the Subordinating Party's Loan Documents on
<br />account of such default during the Bank Cure Period, including but not limited to the right to accelerate
<br />the Subordinating Party's Loan, record a notice of default and to obtain a receiver; provided further, that if
<br />the cure is completed during the Bank Cure Period, Subordinating Party will rescind any notice of default
<br />after reimbursement of all of its costs incurred in connection with the default, including, without limitation,
<br />attorneys fees and court costs; and (c) accept all payments and all acts done by Bank on behalf of
<br />Borrower within the Bank Cure Period as though the same had been timely done and performed by
<br />Borrower, so that such acts and payments shall fully and totally cure and correct all such defaults,
<br />breaches, failures or refusals for all purposes.
<br />7. SUBORDINATION TO PERMANENT FINANCING, Subordinating Party acknowledges
<br />that it has been advised by Borrower that Borrower intends to repay the amounts outstanding under the
<br />Loan, in whole or in part, by obtaining permanent financing in the future by one or more lenders, which
<br />permanent financing would be secured by, among other things, a deed of trust or deeds of trust
<br />encumbering the Project which would be senior to the effect of Subordinating Party's Security Documents
<br />(but not to Subordinating Party's Restrictions, other than Sections 3.5 and 18 thereof). In order to enable
<br />Borrower (or its successors or assigns, "Borrower's Successor") to obtain permanent financing to repay
<br />the Loan, Subordinating Party hereby agrees that within twenty (20) days after written request by
<br />Borrower or Borrower's Successor, Subordinating Party shall execute a subordination agreement (in form
<br />and substance substantially similar to this Agreement) subordinating the effect of Subordinating Party's
<br />Security Documents to the lien and effect of one (1) or more deeds of trust encumbering the Project in an
<br />amount not to exceed $9,470,000.
<br />8. RECEIPT AND APPLICATION OF INSURANCE PROCEEDS AND CONDEMNATION
<br />AWARDS: RECEIPT AND APPLICATION OF PROCEEDS FROM BONDS.
<br />(a) Receipt and Application of Insurance Proceeds and Condemnation Awards.
<br />Notwithstanding anything stated to the contrary in any of Subordinating Party's Security Documents, so
<br />long as the Deed of Trust continues to encumber all or portions of the Project, all insurance proceeds that
<br />may become available from time to time as a result of damage or destruction to all or portions of the
<br />Improvements and all condemnation awards that may become available from time to time as a result of
<br />the condemnation of all or portions of the Project shall be held by Bank, disbursed by Bank and applied
<br />by Bank in accordance with the terms and conditions of the Deed of Trust and the other the Loan
<br />Documents and Subordinating Party shall have no right to hold, disburse or apply any of such proceeds
<br />and/or awards. Without limiting the generality of the foregoing, the Bank shall have all approval, consent
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<br />4821-4251-8639v.4 0096250-000012
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