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4.1.3 Construction/Permanent Loan. The City's construction/permanent loan for the Project (the "Loan ") shall be evidenced by a Secured Promissory Note in the amount of Loan Funds (the "Note ") dated as of the closing date for the Loan (the "Closing Date ") and executed by Developer substantially in tlic form attached hereto as Exhibit E -2 . The Note shall be secured by a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the "Deed of Trust ") executed by Developer as Trustor for the benefit of City substantially in the form attached hereto as Exhibit F and recorded against the Property. Provided that Developer has complied with all conditions precedent to disbursement of the Loan set forth in Section 4.5.2 the proceeds of the Loan ( "Loan Proceeds ") shall be disbursed in accordance with Section 4.4 hereof. Developer shall be permitted to use the Loan Proceeds only for the purposes set forth in Section 4.4 4.2 Interest Rate yment Dates Date. The outstanding principal balance of the Note will bear interest at 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 earlier o£ (i) the fifty-fifth (55 anniversary of the date of issuance of the final certificate of occupancy for the Project, and (ii) the fifty -ninth (59 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 occurrence of an Event of Developer Default, including without limitation, Developer's failure to commence or complete construction of the Project within the times periods specified in Section 3.8 4.3 Security. As security for repayment of the Note, Developer shall execute the Deed of Trust in favor of City as beneficiary 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, shall be substantially in the form attached hereto as Exhibit F , and shall be recorded in the Official Records on the Closing Date. The Deed of Trust may be subordinated only to the Permitted Exceptions. Developer acknowledges that the Deed of Trust will secure Developer's performance of Developer's obligations pursuant to this Agreement and the Regulatory Agreement which may survive repayment of the Note, and that the Deed of Trust shall not be reconveyed prior to Developer's satisfaction of such obligations. 4.4 Use and Disbursement of Proceeds. The Loan Proceeds shall be used 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 City) and to fund acquisition of the Property and construction of the Project consistent with the approved Financing Plan, as it may be updated with City approval, and Project approvals. 4.5 Conditions to Disbursement of Predevelo ment Funds and Loan Proceeds. 4.5.1 Conditions to Disbursement of Phase 1 Predevelo ment Funds. City shall not be obligated to disburse the Phase 1 Predevelopment Funds prior to the satisfaction of all of the following conditions: 1865087.6 19