KOTTINGER GARDENS PHASE 1 - AFFORDABLE HOUSING LOAN AGMT

dated as of November 22, 2013 (the "Predevelopment Note"). Pursuant to the Assignment and Assumption Agreement, Developer has assumed MidPen's obligation to repay the portion of the Predevelopment Loan proceeds that were disbursed for Project predevelopment costs and the interest accrued thereon. On the Closing Date, the Predevelopment Note will be amended to reduce the stated principal amount to reflect the foregoing assumption by Developer. As of the Effective Date, Two Million, Six Hundred Twenty-Seven Thousand,Nine Hundred and Fifteen and 86/100 Dollars ($2,627,915.86) of the proceeds of the Predevelopment Loan have been disbursed for the Project, and One Hundred Twenty-Five Thousand, Five Hundred Seventy-Five and 29/100 Dollars ($125,575.29)of the proceeds of the Predevelopment Loan have been disbursed for Phase II, leaving an undisbursed balance of Forty-Six Thousand, Five Hundred Eight and 85/100 Dollars ($46,508.85). As of the Effective Date, interest in the amount of Twenty-Eight Thousand, Six Hundred Forty-Eight and 81/100 Dollars ($28,648.81) (the "Predevelopment Loan Interest") has accrued on the outstanding principal balance of the Predevelopment Loan that was disbursed for the Project. 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 that has been disbursed for Project expenses and the interest accrued thereon to be"rolled over" into a construction/permanent loan for the Project, and has agreed to loan additional funds to Developer in the amount of Ten Million, Three Hundred Twelve Thousand, Five Hundred Seventy and 14/100 Dollars($10,312,570.14), 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 Twelve Million,Nine Hundred Forty Thousand, Four Hundred Eighty- Six Dollars ($12,940,486) which is equal to the sum of: (a)the outstanding principal balance of the Predevelopment Note disbursed for Project expenses 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 principal 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. 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 OAK#4822-6539-6013 v6 9