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3.02. City_ Notes and Deed of Trust Developer's obligation to repay the City Loan shall be evidenced by a promissory note or notes in the form or forms set forth in Attachment D, attached hereto and incorporated herein by reference, and shall be subject to the terms and conditions therein contained. Each City Note shall be secured by a deed of trust on the Property in the form of a standard, short form deed of trust issued by a trustee selected by the City, with City named as beneficiary thereon. Developer shall duly execute each City Note and its corresponding deed of trust and deliver the same to the City or its designated agent as a condition of the City's obligation to fund the City Loan. The City agrees to undertake, in good faith, any determination referenced in any City Note pertaining to possible deferrals of installment payments on the said Note provided Developer provides City with the information necessary to make such determinations and access to Developer's books and records to verify such information. 3.03. Lien Priority As a condition to City's obligation to fund the City Loan, there shall be no liens upon the Property having priority over any deed of trust securing any City Note, other than those specified in Attachment E, attached hereto and incorporated herein, unless otherwise consented to by the City Manager or delegee. 3.04. Funding of City Loan The City Loan shall be made by depositing the loan proceeds into a construction escrow account established pursuant to Section 3.06. In addition to other conditions set forth hereinabove, the funding of the City Loan is conditional upon the Developer having obtained all necessary permits. for the project and upon the concurrent funding of the Lender Loan. 3.05. Equity Deposif If the loans to be made by the City and Lender are insufficient to cover the entire estimated construction costs of the Project, Developer shall deposit into the construction escrow account provided for in Section 3.06 of this Agreement the amount required to make up the deficit.. 3.06. Construction Escrow Account All loan proceeds and equity deposits shall be placed in a non -interest bearing construction escrow account with United States Page 5 of 10 Pages EXHIBIT I