Agmt 2009 Alameda County Allied Housing Program

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similar developments; premiums for property damage and liability insurance; utility service costs not paid for directly or indirectly by tenants; maintenance and repair costs; fees far licenses and permits required for the operation of the Project; organizational costs (e.g., annual franchise tax payments) and costs associated with accounting, tax preparation and legal fees of Borrower incurred in the ordinary course of business; expenses for security services; advertising and marketing costs; payment of deductibles in connection with casualty insurance claims not paid from reserves; tenant services; the amount of uninsured losses actually replaced, repaired or restored and not paid from reserves; cash deposits into operating reserves in an amount reasonably approved by City or required by the holder of any Approved Seniox Loan, but in no event more than three percent (3%} of Annual Operating Expenses {excluding developer fees, asset management fees, and partnership management fees), and only if the accumulated operating reserve exceeds twelve months' gross Project rent; cash deposits into reserves for capital replacements in the amount required by the holder of any Approved Senior Loan but not less than $300 per unit per year, and only if the accumulated capital reserve exceeds twelve months of required reserves; and other ordinary and reasonable operating expenses. 1.4 EXCLUSIONS FROM ANNUAL OPERATING EXPENSES. Annual Operating Expenses shall exclude the following: debt service payments on any loan which is not an Approved Senior Loan, including without limitation, unsecured loans or loans secured by deeds of trust which are subordinate to the City Deed of Trust; depreciation, amortization, depletion.or other non-cash expenses; capital expenditures; expenses paid for with disbursements from any reserve account; any amount paid to Borrower, or any entity controlled by the persons or entities in control of Borrower. Notwithstanding the foregoing limitation regarding payments to Borrower and related parties, fees paid to a property management agent or xesident services agent shall ba° included in Annual Operating Expenses in accordance with the limitations set forth in Section 1.3.3 above even if paid to an affiliate of Borrowex or a partner of Borrower. 1.S DUE ON SALE. The entire unpaid principal balance and all interest and other sums accrued hereunder shall be due and payable upon the Transfer (as defined in the Regulatory Agreement} absent City consent, of all or any part of the Project or the Property or any interest therein other than a Transfer permitted without City consent pursuant to the Regulatory Agreement. Without limiting the generality of the foregoing, this Note shall not be assumable without City's prior written consent, which consent maybe granted or denied in City's sole discretion; provided however, this Note maybe assumed in connection with Transfers as described in the Regulatory Agreement. 1.6 PREPAYMENT. Borrower may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding principal balance due under this Note, provided that each such prepayment is accompanied by accrued intexest on the amount of principal prepaid calculated to the date of such prepayment. Prepayments shall be applied first to ariy unpaid late charges and other casts and fees then due, then to accrued but unpaid interest, and then to principal. Prepayment of this Note shall not affect the term or conditions of the Regulatory Agreement. 1.7 MANNER OF PAYMENT. All payments of principal and interest on this Note shall be made in lawful money of the United States of America to City at 83 S East 14th Street, San Leandro, California 94577 or such other place as City shall designate to Borrower in writing, or by wire transfer of immediately available funds to an account designated by City in writing. SECURED PROMISSORY NOTE 3 MISSION BELL APARTMENTS 1232840-4