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<br />period, the Bay Area Senior Services may continue to make yearly payments to assist the <br />affordability of the Project in the event that the Bay Area Senior Services and Lessor mutually <br />agree to such extension. <br /> <br />3.] 0 ~l1h()rr1in~tlnn <br /> <br />(a) In addition to the Lessee's right to encumber its leasehold estate in the Land <br />and its fee in the Improvements, the Lessor agrees to encumber its fee title in the Land with any <br />regulatory agreement and any deed of trust from any Lender. Upon written request by the Lessee, <br />the Lessor agrees to provide the subordination provided in this Section, subject to the conditions <br />described below, including the following: <br /> <br />(1) The liability of the Lessor under any documents executed in <br />connection with any Other Loan shall be limited by the express terms of the instrument of <br />subordination. The limitations shall include: the limitation of the Lessor's liability solely to the <br />interest or interests subordinated, and the Lessor's right not to execute any instrument which <br />would obligate Lessor for the payment of the Other Loan secured by a deed of trust to which the <br />fee is subordinated. <br /> <br />(2) The Lessee shall not be in Material Default under the terms of this <br />Lease at the time of a request for subordination. "Material Default" shall mean any material <br />breach by the Lessee under this Lease, including, without limitation, the failure to pay rent then <br />due and payable, or, the filing of a bankruptcy petition by or against the Lessee. The Lessee <br />shall not be in Material Default if the Lessee has commenced to cure the Material Default at the <br />time in question and diligently pursues such cure to completion. <br /> <br />(b) Provided the conditions of this Section are satisfied, the Lessor shall, <br />within ten (10) days after written request by the Lessee, execute, acknowledge and deliver an <br />instrument of subordination, together with other documents as may be reasonably required by a <br />Lender from the Lessor to effectuate the provisions of this Section, without any charge by the <br />Lessor to the Lessee for execution of such documents, subject to the terms and conditions <br />contained in Section 3.10(a). The Lessor will immediately pay overto the Lessee proceeds <br />received by the Lessor, if any, of any Other Loan and the proceeds of any Other Loan received <br />by Lessor shall be considered a trust fund to be paid to Lessee. The agreement of subordination <br />contained in this Lease shall be self-operative and no further instrument of subordination shall be <br />necessary unless it be required by a Lender, or a title insurance company insuring any interest of <br />a I.,ender. If any proceeds are made payable to both the Lessor and the Lessee, the Lessor shall <br />immediately sign any papers necessary to transfer the proceeds to the Lessee. <br /> <br />ARTICLE 4: MORT(;A(;F T OA NS <br /> <br />4. I 1 ()"n Ohlig"tion. <br /> <br />Nothing contained in this Lease shall relieve the Lessee of its obligations and <br />responsibilities under any Other Loans to operate the Project as set forth in the Other Loan <br /> <br />144\ I 05\ 153233.23 <br /> <br />H <br />