Agmt 2006 Mercy Housing California XXXIII (4)

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the leasehold interest in the Property or the Improvements (other than as permitted or approved pursuant to Article VII); (ii) the occurrence of an Event of Default causing the Loan to be immediately due and payable, or (iii) the expiration of the term of the Loan. Repayment of the Loan shall be on a "residual receipts" basis as described in the Note. 9.3 Use of Proceeds. Developer shall use the proceeds of the Loan solely to fund specific development activities associated with the Project (in an amount and for only such development activities as are approved for funding by the Agency) and to fund rehabilitation ofthe Project consistent with the approved Financing Plan and Project approvals. 9.4 Rent/Operating Subsidy. Pursuant to the terms and conditions set forth in the Loan Agreement, during the first 30 years following issuance of a certificate of occupancy for the Project, the Agency will provide an operating subsidy to cover essential Project operating expenses to the extent that Project revenue is insufficient. The cumulative total of annual operating subsidy payments shall not exceed the sum of Five Million Seven Hundred Twelve Thousand, Seven Hundred and Nine Dollars ($5,712,709) over the 30-year period. Agency's obligation to provide operating subsidies shall terminate upon the Transfer of the Property or the Improvements other than as permitted pursuant to Article VII. Upon issuance of a certificate of occupancy for the Project, Agency shall disburse funds to Developer to cover the projected shortfall for the first year of Project operation provided that Developer has provided a written request therefor accompanied by such documentation of projected revenue and expenses as Agency shall reasonably require. 9.5 Refinancing. Agency agrees that commencing at the end of the IS-year low-income housing tax credit compliance period, Developer may refinance the Loan and any loan Developer obtains for the Project from the Federal Home Loan Bank's Affordable Housing Program. Agency agrees that debt service on such refinancing shall be included as a component of Annual Operating Expenses in the Ground Lease, the Loan Agreement and the Note. ARTICLE X DEFAULTS AND REMEDIES 10.1 Termination Without Fault. The occurrence of any ofthe following constitutes a basis for either Party to terminate this Agreement without fault of the other Party: a. Developer, despite good faith and diligent efforts, is unable to satisfy all of the conditions precedent to the Agency's obligation to lease the Property to Developer, set forth in Article II, by not later than January 31,2007 or such later date mutually agreed upon by the Agency and Developer; b. Developer is unable to obtain an allocation of tax credits, and the Parties do not agree upon an alternative means to finance the Project in accordance with Section 1.3.1; c. The Agency, despite good faith and diligent efforts, is unable to convey the Property to Developer, and Developer is otherwise entitled to such conveyance; 803698-6 30