Agmt 2006 Mercy Housing California XXXIII

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NOW THEREFORE, in consideration of their mutual undertakings and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows. 1. THE LOAN AND DISBURSEMENT OF LOAN PROCEEDS. 1.1 Loan and Note. Agency agrees to loan to Borrower, and Borrower agrees to borrow from and repay to Agency, a sum in the maximum principal amount of Seven Hundred Twenty-Seven Thousand Dollars ($727,000) upon the terms and conditions and for the purposes set forth in this Agreement. The Loan shall be evidenced by a promissory note (the "Predevelopment Note") which shall be dated as of the Effective Date and executed by Borrower substantially in the form attached hereto as Exhibit B. Provided that Borrower has complied with all conditions set forth in Section 1.6, the proceeds of the Loan ("Loan Proceeds") shall be disbursed in accordance with Section 1 .5 hereof. Agency shall have the right to terminate this Agreement if: (i) Borrower is unable to obtain firm commitments for construction and permanent financing for the Project within 18 months following the Effective Date (or such later date that the Agency may in its reasonable discretion approve), or (ii) Borrower is unable to commence construction of the Project within two years following the Effective Date (or such later date that the Agency may in its reasonable discretion approve). If Agency terminates this Agreement pursuant to this Section, Borrower and Mercy shall promptly convey to Agency all agreements, plans, specifications, reports and studies financed by the Agency pursuant to this Agreement or otherwise, and Agency shall be entitled to exercise its rights under the Assignment Agreement. 1.2 Maturity Date. The entire outstanding principal balance of the Loan together with interest accrued thereon (if any) and any other sums due under the Predevelopment Note shall be payable in one lump sum on the earlier of (i) the date that the term of the Ground Lease commences, or (ii) the second anniversary of the Effective Date (the "Maturity Date"). Borrower acknowledges and agrees that (i) the sum of Twenty-Five Thousand Dollars ($25,000) (the "Advance") has been disbursed prior to the date hereof pursuant to the ENRA Amendment, and (ii) the amount of the Advance is included within the principal amount of the Loan set forth above. 1.3 Security for the Loan: Recourse. (a) The Predevelopment Note shall be secured by the assignment to Agency of Borrower's and Mercy's respective interests in and rights to any and all architectural contracts, plans, specifications, reports, and studies relating to the Property or the Project which Borrower or Mercy has obtained or which will be prepared pursuant to any and all agreements Borrower or Mercy has entered into as of the time Agency exercises its rights under the Assignment Agreement. The Assignment Agreement shall be executed substantially in the form attached hereto as Exhibit C. 809163-1 2