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(b) Each Party acknowledges that it has been offered a satisfactory opportunity to
<br />review each of the Recorded Items and related documents to the extent that it wishes to review them.
<br />(c) Each Party acknowledges that its payment interests pursuant to the Recorded
<br />Items and any related documents shall have the relative priority with respect to payment interests
<br />pursuant to the other Recorded Items as set forth above. In addition, Junior Lender agrees that
<br />repayment of the indebtedness secured by the Junior Deed of Trust is and shall be postponed and
<br />subordinated to repayment in full of the indebtedness secured by the Bank Deed of Trust; provided,
<br />however, that Junior Lender may accept regularly scheduled payments due under its Junior Loan so
<br />long as no default has occurred and is continuing under the Bank Loan Documents. Junior Lender
<br />agrees that from and after such time as it has received from either Bank or Borrower written notice
<br />that a default then exists under the Bank Loan Documents (as defined hereinbelow) (which has not
<br />been expressly waived in writing by Bank) or otherwise has actual knowledge of such a default,
<br />Junior Lender shall not receive or accept any payments under the Junior Loan. If (i) Junior Lender
<br />receives any payment, property, or asset of any kind or in any form on account of the Junior Loan
<br />after a default under the Bank Loan Documents of which Junior Lender has actual knowledge or has
<br />been given notice of, or (ii) Junior Lender receives, voluntarily or involuntarily, by operation of law
<br />or otherwise, any payment, property, or asset in or in connection with any bankruptcy proceeding,
<br />such payment, property, or asset will be received and held in trust for Bank. Junior Lender will
<br />promptly remit, in kind and properly endorsed as necessary, all such payments, properties, and assets
<br />to Bank. Bank shall apply any payment, asset, or property so received from Bank to the outstanding
<br />indebtedness under the Bank Loan in such order, amount (with respect to any asset or property other
<br />than immediately available funds), and manner as Bank shall determine in its sole and absolute
<br />discretion.
<br />(d) Junior Lender shall not, without either the prior written consent of Bank
<br />(which consent may be granted or withheld in Bank's sole and absolute discretion), pursue any
<br />remedy including, without limitation, the acceleration and/or demand of all or any part of the
<br />obligations secured by the Junior Deed of Trust, any foreclosure proceeding, exercise of power of
<br />sale, exercise of any rights as a secured party under the Uniform Commercial Code, any other public
<br />or private sale, acceptance of a tender of title to all or any portion of the Property in full or partial
<br />satisfaction of the Junior Deed of Trust, obtaining of a receiver, obtaining of a restraining order,
<br />protective order or injunction, seeking of default interest, taking possession or control of all or any
<br />portion of the Property, applying any funds pledged to Junior Lender or to any other obligation,
<br />exercising of any right of setoff against Borrower, initiating or voluntarily participating in any action
<br />or proceeding against Borrower or any of Borrower's assets, to enforce collection or payment of all
<br />or any portion of the obligations to Junior Lender or to enforce rights against all or any portion of the
<br />Property. Notwithstanding the foregoing, such limitation on the remedies of Junior Lender shall not
<br />derogate or otherwise limit Junior Lender's rights, following an event of default under the Junior
<br />Loan to (a) compute interest on all amounts due and payable under the Junior Loan at the default rate
<br />described in the Junior Note, (b) compute prepayment premiums and late charges, (c) enforce against
<br />any person, other than Borrower and any guarantors or indemnitors under the Bank Loan, any
<br />guaranty of the obligations of Borrower under the Junior Loan, and (d) seek specific performance or
<br />M
<br />Subordination Agreement (City Loan) North Harbor Village
<br />4865-1649-6244, v. 5
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