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Restated Note) to the Redevelopment Agency of the City of San Leandro (the "Agency ") or its successor in interest to reduce the outstanding balance payable to the Agency pursuant to that certain Secured Promissory Note in the original principal amount of Three Hundred Thousand Dollars ($300,000), dated as of May 6, 2002, executed by Citizen's Housing Corporation for the benefit of the Agency, and subsequently assumed by Borrower (the "Agency Note "). Upon repayment of all sums due pursuant to the Restated Note and all sums due pursuant to the Agency Note, Borrower shall make payments on the Note in accordance with the terms set forth in the Note. 4.3 Security. As security for repayment of the Note and the Restated Note, Borrower shall execute an Amended and Restated Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing for the benefit of City substantially in the form attached hereto as Exhibit C (the "Deed of Trust ") pursuant to which City shall be provided a lien against the Property and the Improvements. The Deed of Trust shall be dated as of the Closing Date, and shall be recorded in the Official Records on the Closing Date. 4.4 Closing Costs Borrower shall pay all recording fees, transfer taxes, escrow fees and closing costs incurred in connection with the transactions contemplated hereby. Borrower shall pay for the cost of any lender's policy of title insurance that City elects to acquire in connection with the transactions contemplated hereby. 4.5 Use and Disbursement of Proceeds. The Loan Proceeds shall be used solely to fund rehabilitation of the Improvements and such other expenses related to the Project as City shall approve. Upon satisfaction of the conditions set forth in Section 4.6 provided that Borrower has provided City with written requisition(s) specifying the amount and use of the requested Loan Proceeds accompanied by copies of bills and invoices from third parties and such other documentation as City may reasonably require, City will disburse the Loan Proceeds to Borrower (or will authorize such disbursement from escrow). Subsequent disbursements shall be made to Borrower no more than once per calendar month, upon City's receipt of written requisitions and supporting documentation as described in this Section. City reserves the right to enter into an intercreditor or other agreement governing construction inspection and disbursement of the Loan Proceeds. 4.6 Conditions to Disbursement of Loan Proceeds. City's obligation to fund the Loan and disburse the Loan Proceeds is conditioned upon the satisfaction of all of the following conditions: (i) Borrower's execution and delivery to City of this Agreement, the Restated Note, the Note, the Deed of Trust, and the Regulatory Agreement. (ii) The conveyance of the Property to Borrower. (iii) Recordation of the Deed of Trust and the Regulatory Agreement in the Official Records. (iv) The issuance by an insurer satisfactory to City of an A.L.T.A. lender's policy of title insurance ( "Title Policy ") for the benefit of City in the amount of the Loan, insuring that the lien of the Deed of Trust is subject only to exceptions numbers 7 through 11 1755895.2 12