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obligees. In lieu of such performance and payment bonds, subject to City's approval of the form and substance thereof, Borrower may submit evidence satisfactory to the City of the contractor's ability to commence and complete rehabilitation of the Improvements in the form of an irrevocable letter of credit, pledge of cash deposit, certificate of deposit, or other marketable securities held by a broker or other financial institution, with signature authority of the City required for any withdrawal, or a completion guaranty in a form and from a guarantor acceptable to City. Such evidence must be submitted to City in approvable form in sufficient time to allow for City's review and approval prior to the scheduled construction start date. 3.20 Insurance Requirements. Borrower shall maintain and shall cause its contractors to maintain all applicable insurance coverage specified in Article X . ARTICLE IV CITY FINANCIAL ASSISTANCE 4.1 Loan and Note. In order to increase the affordability of the Project, City agrees to provide a loan to Borrower in the principal amount of One Hundred Thousand Dollars ($100,000) (the "Loan ") upon the terms and conditions and for the purposes set forth in this Agreement. To fund the Loan, the City will use Sixty -Five Thousand Dollars ($65,000) in funds from the City's Affordable Housing Trust Fund, and contingent upon HUD approval of an amendment to the City's Fiscal Year 2011 -2012 Consolidated Annual Action Plan, Thirty -Five Thousand Dollars ($35,000) in Community Development Block Grant (CDBG) funds. The Loan shall be evidenced by a secured promissory note in the amount of the Loan (the "Note "), executed by Borrower substantially in the form attached hereto as Exhibit B . 4.2 Interest Rate, Payment Dates, Maturity Date. The outstanding principal balance of the Note will bear interest at a rate equal to three percent (3 %) simple annual interest commencing upon the date of disbursement. Annual payments shall be due and payable on a residual receipts basis in accordance with the formula set forth in the Note. The entire outstanding principal balance of the Loan together with accrued interest and all other sums due under the City Documents shall be payable in full on the date (the "Maturity Date ") which is the fifty -fifth (55 anniversary of the Loan origination date. Notwithstanding the foregoing, the City shall have the right to accelerate the Maturity Date and declare all sums payable under the Note immediately due and payable upon the expiration of all applicable cure periods following the occurrence of an Event of Borrower Default. 4.2.1 Original City Loan, Existing Agency Loan. As additional consideration for the Loan, Borrower agrees to execute and deliver to City an Amended and Restated Secured Promissory Note (the "Restated Note ") substantially in the form attached hereto as Exhibit B -1 which shall supersede in its entirety that certain Secured Promissory Note in the original principal amount of Seven Hundred Thousand Dollars ($700,000), dated as of May 6, 2002, executed by Citizen's Housing Corporation for the benefit of City, and subsequently assumed by Borrower. The Restated Note shall be payable on a residual receipts basis as set forth in the Restated Note and shall be secured by the Deed of Trust described in Section 4.3 In addition, Borrower agrees that following repayment of all sums due to City pursuant to the Restated Note, on an annual basis, Borrower shall pay sixty percent (60 %) of Surplus Cash (as defined in the 1755895.2 11