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BRIGGS AND MO AN (c) F &C Member may obtain "take out" mezzanine financing and use the proceeds of such financing to pay amounts due under the HRA Notes provided PNC determines, in its reasonable discretion, that the terms of the "take out" mezzanine financing are not less favorable to PNC than the terms of the HRA financing; 2. Before PNC has made its first advance to F &C Apartments and after the PNC Loan has been paid in full (principal, interest and any fees or reimbursements), the HRA may sue F &C Member for defaults under the HRA Loan Agreement or the HRA Notes; 3. The Debt Subordination Agreement prohibits the HRA from suing F &C Member after PNC's first advance and before PNC has been paid in full, but it does not prevent the HRA from foreclosing the Membership Interest Pledge described below. If the HRA attempts to enforce the HRA Loan Agreement or the HRA Notes in violation of the Debt Subordination Agreement, PNC may seek an injunction to stop the HRA. If F &C Member makes or if the HRA receives payments other than as described in Section 1 above or in Section VI below, the Debt Subordination Agreement requires the HRA to pay those amounts over to PNC for application to the PNC Loan. The HRA Loan Agreement obligates F &C Ramsey and F &C Member to grant the HRA a first lien security interest in their membership interests in F &C Apartments, and the Debt Subordination Agreement expressly recognizes the HRA's right to foreclose that security interest and become the owner of F &C Apartments if F &C Member defaults under the HRA Loan Agreement or the HRA Notes. We assume that if the HRA forecloses its security interest, PNC will, if it has not already done so, commence foreclosure of the PNC Mortgage and seek to have a receiver appointed to complete construction and /or operate the Project until the foreclosure is complete. Unless the HRA can persuade PNC to enter into some type of workout agreement to allow the HRA to complete construction and /or operate the project, the affect of the HRA's foreclosure of its security interest would likely be to trigger a foreclosure of the PNC Mortgage and give HRA the right to redeem the property from that foreclosure. Note, however that because the HRA does not have a mortgage on the Property, the HRA cannot effectively prevent F &C Apartments from conveying the Property to PNC pursuant to a deed in lieu of foreclosure a (although such a conveyance would be a default under the Development Agreement and allow the HRA to terminate the TIF Note) . Under the terms of the Development Agreement, F &C Member is required to cause Flaherty & Collins Construction, Inc. to execute a corporate guaranty guaranteeing the full performance of F &C Member's obligations and the payment of the amounts due under the terms of the Promissory Note evidencing the $1.42 MM loan from the HRA to F &C Member and is obligated to deliver a personal guaranty of David Flaherty guaranteeing the full performance of 4509147v3 V. MEMBERSHIP PLEDGE AGREEMENT VI. GUARANTIES 4