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Priority and Subordination Agreement 10 Teanaway Court The Parties agree that the Lenders do not have any obligation to each other to advance funds or to see to the application of their respective loan proceeds and that any application of such proceeds contrary to the terms of any loan documents shall not defeat the subordinations granted herein in whole or in part. The Parties agree that except for such obligations as the Partnership may have to other Parties hereto pursuant to agreements with such Parties (i) the Parties do not have any obligations to each other to advance funds or to see to the application of their respective loan proceeds, (ii) any application of such proceeds contrary to the terms of any loan documents shall not defeat the subordinations granted herein in whole or in part, and (iii) nothing contained in this Agreement shall impair the right of any Party to pursue any right or remedy available to it in any of the agreements, covenants, regulatory agreements, deeds of trust or options referenced herein. Notwithstanding any other provisions of this Agreement, the priorities established hereunder shall not apply to nor affect the security position of any security agreement or pledge of cash accounts or other property to which only one Party hereto has been granted a security interest. 3. SUBORDINATION OF SUBORDINATE INDEBTEDNESS. a. The Subordinate Indebtedness is and shall at all times continue to be subject and subordinate in right of payment to the prior payment in full of the Senior Indebtedness. b. Until receipt of notice of a Senior Loan Default, the Subordinate Lender shall be entitled to collect and retain for its own account all payments made on account of the principal of and interest on its Subordinate Indebtedness in accordance with the requirements of its Subordinate Loan Documents; provided no such payment is made more than ten (10) days in advance of the due date thereof and provided further that the aggregate amount of such payments does not exceed 75% of then available Surplus Cash. However, immediately upon Subordinate Lender’s receipt of notice of a Senior Loan Default, Subordinate Lender will not accept any payments on account of its Subordinate Indebtedness without the consent of the Senior Lender unless and until the Subordinate Lender receives notice from the Senior Lender that the Senior Loan Default has been cured or waived, and the provisions of Section 3(c) of this Agreement shall apply; provided that if and when the Subordinate Lender has the right to pursue an Enforcement Action under Section 6 below, the Subordinate Lender may receive and retain any proceeds from a foreclosure sale or trustee’s sale pursuant to the Subordinate Deed of Trust, and upon any foreclosure sale or trustee’s sale pursuant to the Senior Deed of Trust, the Subordinate Lender shall have such right to make a claim for excess proceeds, if any, as provided by applicable law and consistent with Section 2 hereof, and to receive and retain any such proceeds as may be allowed by a court of competent jurisdiction. In addition, if the Senior Lender has given notice of a Senior Loan Default and one year thereafter the Senior Lender has not accelerated the Senior Indebtedness owing and has not commenced legal action based on the Senior Loan Default, then so long as the Subordinate Lender has not received notice that