KOTTINGER GARDENS PHASE 1 - AFFORDABLE HOUSING LOAN AGMT

This Note is secured by a Deed of Trust,Assignment of Rents, Security Agreement and Fixture Filing ("Deed of Trust") dated as of the date hereof, executed by Borrower for the benefit of City and encumbering the property described therein. City shall be entitled to the benefits of the security provided by the Deed of Trust and shall have the right to enforce the covenants and agreements contained herein, in the Deed of Trust, the Loan Agreement, and the other City Documents, including without limitation, that certain Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants dated as of the date hereof, executed by and between City and Borrower and recorded in the Official Records of Alameda County (the "Regulatory Agreement"). The rent restrictions and other requirements set forth in the Regulatory Agreement shall remain effective for the full term of the Regulatory Agreement and shall survive the repayment of this Note. The Loan Agreement, the City HOME Loan Agreement,this Note,the City HOME Note,the Regulatory Agreement, the Deed of Trust, the City HOME Deed of Trust, and the Ground Lease are collectively referred to herein as the "City Documents." 1. PAYMENTS. 1.1 PAYMENT DATES; MATURITY DATE. Annual payments on this Note shall be payable on a residual receipts basis with fifty percent (50%)of all Surplus Cash (defined below)payable to City and the other Subordinate Lenders (defined below)on a pro rata basis as described 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 this Note become subject to any rights, offset, deduction or counterclaim on the part of Borrower. The entire outstanding principal balance of this Note, together with interest accrued thereon and all other sums accrued hereunder 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 date hereof; provided however, the Maturity Date shall not be earlier than the date of expiration or termination of the Regulatory Agreement to be recorded by the California Tax Credit Allocation Committee (TCAC) against the Property in connection with an allocation of federal Low-Income Housing Tax Credits for the Project at about the time that the Project is placed in service. 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 City's Share (defined below)of Fifty Percent(50%)of Surplus Cash generated by the Project during the previous calendar year to reduce the indebtedness owed under this Note. The respective annual shares of Surplus Cash that the City and the County of Alameda ("County") shall be entitled to receive shall be based on the proportional share of financing that each such entity has provided for development of the Project. Based upon: (i) the City loan in the amount of Twelve Million,Nine Hundred Forty Thousand, Four Hundred Eighty-Six Dollars ($12,940,486), and (ii) County loans in the aggregate amount of One Million, Three Hundred and Six Thousand, Thirty-Six Dollars ($1,306,036), the City share will be Ninety and 83/100 percent (90.83%) ("City's Share")and the County share will be Nine and 17/100 percent(9.17%) ("County's Share"). City and County are collectively referred to herein as the "Subordinate OAK#4829-4624-9261 v6 2