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F. As a condition of the Loan, the Borrower will execute and the City will cause to be recorded the Regulatory Agreement which will restrict occupancy of eleven (11) residential units in the Project to eligible households at affordable rents to households whose income is fifty percent (50 %) or less of the area median income for the County of Alameda, adjusted for household size, as determined by HUD ( "Very Low - Income Households ") NOW THEREFORE, IN CONSIDERATION of the mutual agreements, obligations, and representations, and in further consideration for the making of the Loan, the Borrower and City hereby agree as follows: ARTICLE I LOAN TERMS 1.0 Loan The City agrees to loan to Borrower, and the Borrower agrees to borrow from and repay to City, an amount not to exceed Six Hundred Fifty Thousand Dollars ($650,000), subject to the terms and conditions of this Agreement. The Loan shall be evidenced by a promissory note executed by Borrower substantially in the form attached hereto as Exhibit C (the "Note ") bearing simple interest at the rate of three percent (3 %) per annum with a term of twenty (20) years, and will be secured by a deed of trust substantially in the form attached hereto as Exhibit D (the "Deed of Trust ") which will be recorded against the Project prior to any disbursements hereunder. 1.1 Payment Dates, Maturity Date Annual payments on the outstanding principal balance of the Note shall be payable on a residual receipts basis with fifty percent (50 %) of all Surplus Cash (defined below) payable to City toward principal and accrued interest, subject however to Section 1.2 below. Payments shall be credited first to any unpaid late charges and other costs and fees then due, then to accrued interest, and then to principal. In no event shall any amount due under the Note become subject to any rights, offset, deduction or counterclaim on the part of Borrower. The entire outstanding principal balance of the Note, together with interest accrued thereon and any other sums accrued hereunder shall be payable in full on the date (the "Maturity Date ") which is the earlier of (i) the twentieth (20 anniversary of the date upon which the City issues a final certificate of occupancy or equivalent for the Project, or (ii) the twenty- second (22 anniversary of the origination date of the Note. 1.2 Annual Payments From Surplus Cash By no later than June 1 of each year following the issuance of a final certificate of occupancy or equivalent for the Project, Borrower shall pay to City fifty percent (50 %) of all Surplus Cash generated by the Project during the previous calendar year to reduce the indebtedness owed under the Note. No later than May 1 of each year following the issuance of a final certificate of occupancy for the Project, Borrower shall provide to City calculation of Surplus Cash for the previous calendar year, accompanied by such supporting documentation as City may reasonably request, including without limitation, an independent audit prepared for the Project by a certified public accountant in accordance with generally accepted accounting principles. No later than November 1 of each year following issuance of the final certificate of occupancy for the Project, 1908324.5