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party On the Closing Date the Escrow Agent shall cause the Memorandum, the Regulatory Agreement, and the Deed of Trust to be recorded in the Official Records ARTICLE IV CITY FINANCIAL ASSISTANCE 4 1 Loan and Note, Predevelopment Loans 411 4 1 2 Predevelopment Loan Pursuant to the DDA, the City has provided a loan to MidPen using City Low-Income Housing Funds to fund certain Project predevelopment expenses in the amount of One Hundred Twenty Five Thousand Five Hundred Seventy Five and 29/100 Dollars ($125,575 29) (the "Predevelopment Loan") MidPen's obligation to repay the Predevelopment Loan is evidenced by the First Amendment to Predevelopment Promissory Note dated as of March 1, 2016 (the "Predevelopment Note") Pursuant to the Assignment and Assumption Agreement, Developer has assumed MidPen's obligation to repay the outstanding balance of the Predevelopment Note and the interest accrued thereon. On the Closing Date, the Predevelopment Note will be cancelled and superseded by the Note As of the Effective Date, One Hundred Twenty Five Thousand Five Hundred Seventy Five and 29/100 Dollars of the proceeds of the Predevelopment Loan have been disbursed. As of the Effective Date, interest in the amount of[ Dollars ($ )] (the "Predevelopment Loan Interest") has accrued on the outstanding pnncipal balance of the Predevelopment Loan 4 1.3 Construction/Permanent Loan In order to increase the affordability of the Project, the City has agreed to allow the outstanding principal balance of the Predevelopment Loan and the interest accrued thereon to be "rolled over" into a construction/permanent loan for the Project, and has agreed to loan the undisbursed balance of the Predevelopment Loan together with additional funds to Developer in the amount of Two Million, Six Hundred Ninety Nine, Seven Hundred Eighty Four 71/100 Dollars ($2,699,784 71), upon the terms and conditions and for the purposes set forth in this Agreement The total amount of the construction/permanent loan (the "Loan") shall be equal to Two Million, Eight Hundred Twenty Five, Three Hundred Sixty Dollars ($2,825,360) which is equal to the sum of. (a) the outstanding pnncipal balance of the Predevelopment Note as of the date of this Note, and (b) the amount of additional funds to be loaned to Borrower pursuant to this Loan Agreement. The Loan shall be evidenced by the Note which shall be dated as of the Closing Date and executed by Developer substantially in the form attached hereto as Exhibit B. In accordance with the Assignment and Assumption Agreement, and as set forth in the Note, Developer will be obligated to pay to City the pnncipal balance of the Note, the interest accrued thereon, and the Predevelopment Loan Interest Provided that Developer has complied with all conditions precedent to disbursement of the Loan set forth in Section 4.6, the remaining proceeds of the Loan ("Loan Proceeds") shall be disbursed pursuant to approved draw requests as described in Section 4.6 (o). The Parties agree that City shall disburse the Loan Proceeds only for the purpose of funding Project construction and development costs. OAK#4822-6539-6013 v5 8