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D. The Borrower has or will execute a promissory note (the "Senior Lienholder Note ") in the original principal amount not to exceed Seven Hundred Thousand and No /100 Dollars ($700,000) in favor of Senior Lienholder (the "Senior Lienholder Loan") which will be secured by a deed of trust to be recorded in the office of the Recorder concurrently herewith (the "Senior Lienholder Deed of Trust "). The Senior Lienholder Note and Senior Lienholder Deed of Trust shall be referred to herein as the "Senior Lienholder Loan Documents." E. It is a condition precedent to obtaining the Senior Lienholder Loan that the Senior Lienholder Deed of Trust shall unconditionally be and remain at all times a lien or charge upon the Property, prior and superior to the lien or charge of the Subordinate Lienholder Documents. F. Senior Lienholder is willing to make said loan provided the Senior Lienholder Deed of Trust securing the same is a lien or charge upon the Property prior and superior to the lien or charge of the Subordinate Lienholder Documents and provided that the Subordinate Lienholder will specifically and unconditionally subordinate the lien or charge of the Subordinate Lienholder Documents to the lien or charge of the Senior Lienholder Deed of Trust. G. It is to the mutual benefit of the parties herein that Senior Lienholder make such loan to the Borrower and the Subordinate Lienholder is willing that the Senior Lienholder Deed of Trust shall, when recorded, constitute a lien or charge upon the Property which is unconditionally prior and superior to the lien or charge of the Subordinate Lienholder Documents. In consideration of the mutual benefit accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, and in order to induce Senior Lienholder to make the loan referred to, it is hereby declared, understood and agreed as follows: 1. The Senior Lienholder Deed of Trust and any modifications (other than further advances of principal or increases in the interest rate), renewals, or extensions thereof, shall unconditionally be and remain at all times a lien or charge on the Property prior and superior to the lien or charge of the Subordinate Lienholder Documents. 2. That Senior Lienholder would not make its loan above described without this subordination agreement. 3. That with regard to the priority given to each deed of trust hereinbefore specifically described, this agreement shall be the sole and only agreement with regard to the subordination of the lien or charge of the Subordinate Lienholder Documents to the lien or charge of the Senior Lienholder Deed of Trust, and shall supersede and cancel any prior agreements as to such subordination including, but not limited to, those provisions, if any, contained in the Subordinate Lienholder Documents which provide for the subordination of the lien or charge thereof to another deed of trust or mortgage. 4. In the event of foreclosure on the Property, the Senior Lienholder Deed of Trust shall be prior and superior to the rights of the Agency and the City. C: \Documenis and Settings\tliaoVncal Swings \Temporary Internet Files \OLK49\SLO - Mission Bell Final Subordination Agreement Fremont Bank.DOC •