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EXHIBIT 3 <br />7. Loan Renavment from Refinancing Proceeds. <br />The Borrower shall make a loan payment to the City from every Refinancing that occurs <br />during the term of this Note not to exceed the outstanding balance of principal and interest on <br />this Note, to the extent of the City's Percentage of the Refinancing Proceeds (if any), as follows: <br />the cash proceeds from such Refinancing shall be applied first to pay Closing Costs; next, the <br />amount necessary to pay in full all amounts owing on the Senior Loan; next to pay any amounts <br />due to the Limited Partner pursuant to the Partnership Agreement; next, the Borrower shall pay <br />to the City fifty percent (50%) of the then remaining unapplied Refinancing Proceeds not to <br />exceed the outstanding balance on this Note. The remaining Refinancing proceeds shall remain <br />with Borrower to be used by Borrower as determined by the General Partners of Borrower, <br />including, without limitation, for distribution to the partners of the Borrower. Such payment shall <br />be due within 30 days of the date of such Refinancing, and shall be applied first to any accrued <br />but unpaid interest, then to reduce the principal balance of the Loans. The City shall not be <br />required to reconvey the lien of the Deed of Trust if Sale Proceeds are insufficient to repay the <br />City Loan in full. <br />8. Loan Repayment from Sale Proceeds. <br />The Borrower shall make a loan payment, not to exceed the outstanding balance of <br />principal and interest on this Note, to the City from any Sale that occurs during the term of the <br />City Loan, to the extent of the City's Percentage of the Sale Proceeds, as follows: gross sale <br />proceeds are applied first to pay Closing Costs, next to pay in full all amounts owing on the <br />Senior Loan; next the Borrower shall pay to the City fifty percent (50%) of the then remaining <br />unapplied Sale Proceeds, not to exceed the outstanding amount of principal and interest due on <br />this Note. This fifty percent (50%) represents the total payment due under the City Note. The <br />remaining Sale Proceeds shall remain with Borrower. Such payment shall be due on the date of <br />such Sale, and shall be applied first to any accrued but unpaid interest, then to reduce the <br />principal balance of the Loans. The City shall not be required to reconvey the lien of the Deed of <br />Trust if Sale Proceeds are insufficient to repay the City Loan in full. <br />9. Buy Out Option. <br />Prior to the initial disbursement under this Note, the Borrower shall grant to the City a Right of <br />First Refusal (subject to any purchase option and/or right for first refusal granted to one or more <br />of the general partners of the Borrower) (the "City Right of First Refusal") to acquire the <br />Property if Borrower desires to transfer the Property to an entity which is not affiliated with one <br />or more of Borrower's general partners. The City Right of First Refusal shall be in form and <br />substance acceptable to the City and the Limited Partner and shall comply with all applicable <br />Tax Credit requirements. <br />3 <br />80A-113 <br />