GROUND LEASE - RIDGE VIEW COMMONS II

Amended and Restated Ground Lease dated as of the date hereof and executed by and between City and Borrower ("Ground Lease") shall remain effective for the full term of such documents, and shall survive the repayment of this Note. Capitalized terms used without definition herein shall have the meanings ascribed to such terms in the Ground Lease. The Ground Lease, this Note, the Deed of Trust, and the Regulatory Agreement are collectively referred to herein as the "City Documents." PAYMENTS. 1.1 INTEREST RATE. Interest shall accrue on the principal balance of this Note outstanding from time to time at the rate of Four and 79/100 percent (4.79%) compounded annually (the Applicable Federal Rate). Interest shall be calculated on the basis of a year of 365 days, and charged for the actual number of days elapsed. 1.2 ANNUAL PAYMENT DATES; MATURITY DATE. Annual payments toward principal and interest accrued on this Note shall be payable on a residual receipts basis as described below. Such annual 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 City Building Inspector signs off on the final inspection of the Project following completion of rehabilitation and issues a certificate of occupancy or equivalent for the Project, and (ii) the fifty-seventh (57th) anniversary of the date of this Note; provided however, the Maturity Date shall not be earlier than the date of expiration or termination of the Regulatory Agreement that the California Tax Credit Allocation Committee (CTCAC) will cause to be recorded against Borrower's leasehold interest in the Property at about the time that the Project is placed in service in connection with the allocation of federal Low -Income Housing Tax Credits for the Project. Notwithstanding the provisions of Section 1.2. and 1.3 of this Note, Borrower acknowledges that until such time that Aggregate Rent payable under the Ground Lease has been paid in full, City will apply Surplus Cash payments received from Borrower toward Rent due under the Ground Lease in lieu of applying such payments toward the sums due under this Note. When Aggregate Rent has been paid in full, City will apply Surplus Cash payments received from Borrower toward the sums due under this Note. 1.3 ANNUAL PAYMENTS FROM SURPLUS CASH. During the 15 -year period commencing upon the date that the Project's senior construction loan converts to a permanent loan ("Conversion Date"), by no later than June 30 of each year, Borrower shall pay to City thirty-three and 33/100 percent (33.33%) of all Surplus Cash generated by the Project during the previous calendar year to reduce the indebtedness owed under this Note; provided however, the first such payment shall include thirty-three and 33/100 percent (33.33%) of Surplus Cash accrued prior to the Conversion Date. Commencing upon the earlier of (a) the commencement of the sixteenth (10h) year following the Conversion Date, and (b) the date that any deferred developer fee has been fully paid, annual payments due under this Note shall increase to equal fifty percent (50%) of Surplus Cash generated by the Project during the previous calendar year. Each payment of Surplus Cash due pursuant to this Section shall be due and payable to the City by not later than June 30 for the previous calendar year. D-1 4859-3312-3005v5