Agmt 2006 Mercy Housing California XXXIII

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(b) The Agency agrees that it will not seek to obtain payment from or a personal judgment against the Borrower for the payment of any amounts due under the Predevelopment Note or under this Agreement following an Event of Default (as defined in Section 4.1), or following the Borrower's inability to develop the Property under the circumstances permitted in the DDA or the Ground Lease. The Agency's sole recourse for payments of any amounts due under the Predevelopment Note or this Agreement will be limited to the exercise of the Agency's rights under the Assignment Agreement, regardless of the then current value of such rights; provided, however, that this Subsection (b) does not limit in any way the Agency's right to recover losses incurred by the Agency as a result of Borrower's fraud, willful misrepresentation or misapplication of funds. 1.4 Use of Loan Proceeds. The Loan Proceeds shall be used solely and exclusively for predevelopment costs for the Project as set forth in Exhibit A and such other costs related to the Project as the Agency may approve in writing. Funds shall be disbursed to Borrower on a cost-reimbursement basis in accordance with Section 1.5. As more particularly described in Exhibit A, Borrower's predevelopment activities shall include the preparation of engineering reports, architectural plans, and financial analyses necessary to apply for construction and permanent financing for the Project. 1.5 Disbursement of Proceeds. Upon satisfaction of the conditions set forth in Section 1.6, provided that Borrower has provided Agency with a written requisition specifying the amount and use of the requested Loan Proceeds accompanied by copies of third-party invoices, evidence of Borrower's payment for services rendered in connection with the Project, and such other documentation as Agency may reasonably require, the Agency shall disburse Loan Proceeds for Borrower's predevelopment costs in the amounts and for the items set forth in the Predevelopment Budget attached hereto as Exhibit A. 1.6 Conditions Precedent to Disbursement of Funds. (a) Agency's obligation to disburse the Loan Proceeds is conditioned upon satisfaction of all of the following conditions: (i) Borrower's execution and delivery to the Agency of this Agreement, the Predevelopment Note, and the Assignment Agreement; (ii) Borrower's delivery to the Agency of consents to the assignment of agreements, plans, specifications, studies, reports and other work product prepared for the Project, executed by the Project architect and the other parties preparing such plans, specifications, studies, reports and other work product; (iii) Borrower's delivery to the Agency of evidence of insurance coverage in the form and in such amounts as set forth in the attached Exhibit 809163-1 3