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the purpose of securing loans approved pursuant to the approved Financing Plan for the purpose <br />of financing the acquisition of the Property, the design and construction of the Improvements, <br />other expenditures reasonably necessary for development of the Property pursuant to this <br />Agreement, and the rehabilitation and/or refinancing of the Project. Developer shall not enter <br />into any conveyance for such financing without the prior written approval of the City Manager or <br />his or her designee. As used herein, the terms "mortgage" and "deed of trust" shall mean any <br />security instrument used in financing real estate acquisition, construction and land development. <br />8.1.1 Regulatory Agreement to be Senior to Mortgages. City agree that if <br />required by construction and/or permanent lenders the Memorandum of this Agreement, the <br />Deed of Trust, and the Regulatory Agreement may be subordinated to deeds of trust or other <br />security instruments approved by the City pursuant to a written instrument conforming to the <br />requirements of California Health and Safety Code Section 33334.14(a)(4) and including without <br />limitation, the provisions set forth in Section 8.4 below. <br />8.2 Holder Not Obligated to Construct. The holder of any mortgage, deed of trust <br />authorized by this Agreement shall not be obligated to construct or complete the Improvements <br />or to guarantee such construction or completion. Nothing in this Agreement shall be deemed to <br />permit or authorize any such holder to devote the Property or any portion thereof to any uses, or <br />to construct any improvements thereon, other than those uses or improvements provided for or <br />authorized by this Agreement. <br />8.3 Notice of Default and Right to Cure. Whenever City delivers any notice of <br />default hereunder, City shall concurrently deliver a copy of such notice to each holder of record <br />of any mortgage or deed of trust secured by the Property provided that City has been provided <br />with the address for delivery of such notice. City shall have no liability to any such holder for <br />any failure by the City to provide such notice to such holder. Each such holder shall have the <br />right, but not the obligation, at its option, to cure or remedy any such default or breach. <br />8.4 City Right to Cure Defaults. In the event of a breach or default by Developer <br />under a mortgage or deed of trust secured by the Property, City may (but has no obligation to) <br />cure the default, without acceleration of the subject loan, following prior notice thereof to the <br />holder of such instrument and Developer. In such event, Developer shall be liable for, and City <br />shall be entitled to reimbursement from Developer for all costs and expenses incurred by City <br />associated with and attributable to the curing of the default or breach and such sum shall <br />constitute a part of the indebtedness secured by the Deed of Trust. <br />8.5 Holder to be Notified. Developer, for itself, its successors and assigns hereby <br />warrants and agrees that each term contained herein dealing with security financing and rights of <br />holders shall be either inserted into the relevant deed of trust or mortgage or acknowledged by <br />the holder prior to its creating any security right or interest in the Property. <br />5055770.1 18 <br />