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4.2 Interest Rate, Payment Dates, Cost Savings; Maturity Date The principal balance of the Note outstanding from time to time will bear interest at a rate equal to 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 commencing upon City's issuance of a final certificate of occupancy or equivalent for the Project 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 date (the "Maturity Date") which is the earlier of(i) the fifty-fifth (55th) anniversary of the date upon which the Project construction loan converts to permanent financing, or(ii) the fifty- seventh (57th) 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 expiration of all applicable cure periods following the occurrence of an Event of Developer Default. 4 2.1 Affordable Housing Program (AHP) Funds, Excess Proceeds Developer received an award under the Affordable Housing Program (AHP) of$8,000 for Project construction financing, and the Parties agree that if Developer obtains AHP funds for the Project (the "AHP Loan"), the amount of the Loan shall be reduced by the total amount of the AHP funds obtained. If at the time Developer obtains such AHP funds, the amount of undisbursed Loan Proceeds is less than the AHP award, Developer shall pay to the City as a reduction of the outstanding principal balance of the Note, the amount equal to the difference between the total AHP award and the amount of undisbursed Loan Proceeds 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 Improvements and Developer's leasehold interest in the Property The Deed of Trust shall be substantially in the form attached hereto as Exhibit C , and shall be recorded in the Official Records on the Closing Date The Deed of Trust may be subordinated only to such liens and encumbrances consistent with the approved Financing Plan as City shall approve in writing. 4 4 Prepayment; Acceleration (a) Prepayment. Developer shall have the right to prepay the Loan at any time and from time to time, without penalty or premium, provided that any prepayment of principal must be accompanied by interest accrued but unpaid to the date of prepayment. Prepayments shall be applied first to accrued but unpaid interest and then to principal Any such prepayment shall have no effect upon Developer's obligations under the Regulatory Agreement which shall survive for the full term of the Regulatory Agreement (b) Due On Transfer or Encumbrance Unless City agrees otherwise in wnting, the entire unpaid principal balance and all interest and other sums accrued under the Note shall be due and payable upon the Transfer absent the prior written consent of City of all or any part of or interest in the Property or the Project except as otherwise permitted pursuant to this Agreement or the Ground Lease (c) Default. The City shall have the right to accelerate the maturity date and OAK#4822-6539-6013 v5 9