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2890662.3 12 <br />ARTICLE IV <br />CITY FINANCIAL ASSISTANCE <br />4.1 Loan. Using funds from the City’s Housing Successor fund, the City shall <br />provide a loan in the amount of One Million Dollars ($1,000,000) (the “Loan”) to Developer <br />upon the terms and conditions and for the purposes set forth in this Agreement. The Loan shall <br />be evidenced by a promissory note (the “Note”) substantially in the form attached hereto as <br />Exhibit E, and shall be secured by a deed of trust (the “Deed of Trust”) executed by Developer <br />as Trustor substantially in the form attached hereto as Exhibit F and recorded against the <br />Property subordinate only to such liens as City shall approve in writing. The outstanding <br />principal balance of the Note will accrue [three percent (3%)] simple annual interest <br />commencing upon the date of disbursement. <br />Provided that Developer has complied with all conditions precedent to disbursement of <br />the Loan set forth in Section 4.5, the proceeds of the Loan (“Loan Proceeds”) shall be disbursed <br />in accordance with Section 4.4 hereof. The Parties agree that City shall disburse Loan Proceeds <br />only for the purposes set forth in Section 4.4. <br />4.2 Payment Dates; Maturity Date. Annual payments shall be due and payable on a <br />residual receipts basis in accordance with the formula set forth in the Note. The entire <br />outstanding principal balance of the Loan together with accrued interest and all other sums due <br />under the City Documents shall be payable in full on the fifty-fifth (55th) anniversary of the date <br />that City issues the final certificate of occupancy for the Project. <br />4.3 Security. As security for repayment of the Note, Developer shall execute the <br />Deed of Trust pursuant to which City shall be provided a lien against the Property and the <br />Improvements. The Deed of Trust shall be recorded in the Official Records on the date that <br />Developer acquires the Property. The Deed of Trust may be subordinated only to such liens and <br />subject only to such title exceptions as City may approve in writing. The City acknowledges that <br />Developer’s construction and permanent lender(s) may require the subordination of the Deed of <br />Trust. Developer acknowledges that the Deed of Trust secures performance of Developer’s <br />obligations pursuant to this Agreement and the Regulatory Agreement which may survive <br />repayment of the Note, and that the Deed of Trust shall not be reconveyed prior to Developer’s <br />satisfaction of such obligations. <br />4.4 Use and Disbursement of Proceeds. The Loan Proceeds shall be used solely to <br />fund acquisition of the Property and/or construction of the Project, and closing, escrow and other <br />costs approved by the City. <br />4.5 Conditions to Disbursement of Loan Proceeds. City’s obligation to fund the <br />Loan and disburse the proceeds thereof is conditioned upon the satisfaction of all of the <br />following conditions: <br />34