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County shall record a Notice of Reconveyance as to the deed of trust on the Southern Property. 1.6 Security for and Interest on the Segments 8-10 Balance. If at the time of the second Closing Date the City is obligated to purchase only Segments 8-10 and the Segments 8- 10 Balance is to be paid in installments, (a)the City's obligation to pay installments on the Segments 8-10 Balance($1,687,250) shall be by a promissory note secured by a deed of trust on the Southern Property and (b) interest on the Segments 8-10 Balance shall accrue at the LAIF rate prevailing on the payment date; provided, however, that if the second Closing Date is within two years of the first Closing Date,no interest shall accrue on the Segments 8-10 Balance until two years after the first Closing Date. The deed of trust on the southern Property for the purchase of the Segments 8-10 shall be a first deed of trust if the balance has been paid on the Southern Property. If, at the second Closing Date, there remains a balance on City's note for the purchase of the Southern Property, the deed of trust securing the Segments 8-10 purchase shall be second in position only to the deed of trust securing the Southern Property acquisition and any intervening or subsequent liens, encumbrances, assessments,judgments or other obligations secured by or placed against the Southern Property after the first Closing Date shall be paid in full by the City prior to the second Closing Date. The City may pay the Segments 8-10 Balance in full, or any amount of the Segments 8-10 Balance in excess of its installment payment, at any time without penalty. If a deed of trust has been recorded against the Southern Property for the Segments 8-10 Balance, once the Segments 8-10 Balance has been paid in full, County shall record a Notice of Reconveyance as to the deed of trust on the Southern Property. 1.7 Deposit of Security for City's Purchase of the Northern Property: Forfeiture and Land Use Designations. At the first Closing Date, City shall deposit into an escrow account One Million Dollars. Except as provided in sections 1.7.1 and 1.7.2,these funds, plus accrued interest, shall be returned to the City on the second Closing Date. 1.7.1 If condition (a) of Section 1.4 has been satisfied and the City, for whatever reason, elects not to purchase the Northern Property, the City(a) will forfeit the One Million Dollars to the County in lieu of all other remedies available to the County and(b) will initiate an amendment to the land use designations applicable to the Northern Property such that their designations are compatible with land use designations of adjacent properties to allow the highest and best use of the Northern Property. 1.7.2 If condition(a) of Section 1.4 has not been satisfied and the City elects not to purchase Segment 7, and whether or not conditions (a) or(b) of Section 1.4 have been satisfied, if City, for whatever reason, does not purchase the balance of the Northern Property (i.e., Segments 8-10), City(a) will forfeit $843,625 (of its One Million Dollars in escrow) to the County in lieu of all other remedies available to the County (with the remainder of the escrow account returned to City) and (b) will initiate an amendment to the land use designations applicable to the Northern Property such that their designations are compatible with the land use designations of adjacent properties to allow the highest and best use of the Northern Property. 4