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Subordinate Loan Agreement, as amended by the Subordinate Loan Agreement Amendment and the City Modification Agreement, is referred to herein as the "Subordinate Loan Agreement ". D. Senior Lender and Subordinate Lender shall be referred to collectively in this Agreement as "Lenders ", and each is referred to individually as a "Lender'. The Senior Loan and the Subordinate Loan shall be referred to collectively in this Agreement as the "Loans ", and each individually as a "Loan ". The Loans are being made to Borrower to finance the acquisition, construction and /or rehabilitation of seventy (70) units of a multifamily residential project (collectively for purposes of this Agreement, the "Improvements ") on the Property. Each of the documents set forth on Exhibit B hereto, together with all other documents and materials entered into by Borrower with Subordinate Lender (other than the "Senior Affordability Restrictions" defined below, except for those sections of the Senior Affordability Restrictions listed on Exhibit B) shall be referred to herein as the "Subordinate Loan Documents ". E. The Lenders agree that it is to their mutual benefit that each Lender make its respective Loan to Borrower. Subordinate Lender is willing to specifically and unconditionally subordinate the Subordinate Loan Documents to the liens and charges of the Senior Deed of Trust and other Senior Loan Documents and shall at all times and in all respects be wholly subordinate and inferior in claim and right to the Senior Loan and Senior Loan Documents. F. If Borrower satisfies the "Conversion Conditions" contained in that certain Loan Purchase Agreement of even date herewith by and among Borrower, Senior Lender and California Community Reinvestment Corporation, a California nonprofit public benefit corporation ( "CCRC "), CCRC will purchase up to $5,426,500 of the Senior Loan, and the Senior Loan will convert to a term loan on the Conversion Date (as defined in the Loan Purchase Agreement). NOW, THEREFORE, in order to induce the Senior Lender to permit the Subordinate Lender to make the Subordinate Loan to the Borrower and to place a subordinate mortgage lien against the Property, and in consideration thereof, the Senior Lender, the Subordinate Lender and the 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: "Affiliate" means, when used with respect to a Person, any corporation, partnership, joint venture, limited liability company, limited liability partnership, trust or individual controlled by, under common control with, or which controls such Person (the term "control' for these purposes shall mean the ability, whether by the ownership of shares or other equity interests, by contract or otherwise, to elect a majority of the directors of a corporation, to make management decisions on behalf of, or independently to select the managing partner of, a partnership, or otherwise to have the power independently to remove and then select a majority of those individuals exercising managerial authority over an entity, and control shall be conclusively presumed in the case of the ownership of 50% or more of the equity interests). "Borrower" means the Person named as such in the first paragraph of this Agreement and any other Person (other than the Senior Lender) who acquires title to the Property after the date of this Agreement. "Business Day" means any day other than Saturday, Sunday or a day on which the Senior Lender is not open for business. "Default Notice" means: (a) a copy of the written notice from the Senior Lender to the Borrower stating that a Senior Loan Default has occurred under the Loan; or (b) a copy of the written notice from the Subordinate Lender to the Borrower stating that a Subordinate Loan Default has occurred under any Subordinate Loan. Each Default Notice shall specify the default upon which such Default Notice is based. -2- DWT 28855 L38v5 4900000 - 001785