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EXHIBIT 2 <br />EXHIBIT D <br />any Affordable Unit, Developer shall provide the City with at least thirty (30) days' written notice <br />of the determined amount, and the City shall have ten (10) days to approve or disapprove of the <br />proposed Affordable Sales Price. The Affordable Sales Price for Affordable Units shall be <br />adjusted quarterly until all Affordable Units are sold and, thereafter, determined in connection with <br />each re -sale, as applicable. <br />3.4 Notice to City. Prior to entering into an agreement for the transfer of an Affordable <br />Unit, Developer shall provide at least thirty (30) days written notice to the City, along with a <br />proposed written agreement setting forth the terms of the sale, including the proposed Affordable <br />Sales Price. For the initial sale of an Affordable Unit from Developer to a Homebuyer, Developer <br />shall also provide a proposed equity share promissory note and a deed of trust. <br />3.5 Homebuyer Documents. The sale of each Affordable Unit is subject to satisfaction <br />of the following conditions: <br />3.5.1 City and Homebuyer shall enter into the Homebuyer Loan Agreement, <br />which memorializes a loan from the City to Homebuyer in the amount equal to the difference <br />between (a) the Affordable Sales Price for the Affordable Unit and (b) the fair market value of the <br />Affordable Unit without any restrictions on affordability or resale price as set forth herein, which <br />amount shall be the amount of the City Promissory Note. The Homebuyer Loan Agreement shall <br />also set forth the terms of the Affordable Housing Resale Restrictions, the City Deed of Trust, and <br />the Notice of Affordability Restrictions (collectively, the "City Loan Documents"). The Parties <br />agree and understand that the Homebuyer Loan Agreement does not require the payment of funds <br />from City to Homebuyer, but rather evidences a promise to pay the amount of the City Promissory <br />Note in the event of a breach of the obligations, covenants, and restrictions set forth in the City <br />Loan Documents. <br />3.5.2 Each Homebuyer shall execute the Affordable Housing Resale Restrictions, <br />the City Deed of Trust, and the Notice of Affordability Restrictions, each of which shall be <br />recorded against the Affordable Unit. <br />3.5.3 Each Homebuyer of an Affordable Unit shall execute the City Promissory <br />Note, which shall be secured by the City Deed of Trust. <br />3.6 Equity Sharing Agreement. The Affordable Housing Resale Restrictions for each <br />initial sale from Developer to a Homebuyer shall include an equity sharing agreement in <br />accordance with California Government Code § 65915(c)(2)(A). The City and Developer agree <br />that Developer shall recapture the equity share pursuant to Government Code § 65915(c)(2)(C). <br />the amount of the equity share shall be determined in accordance with this Section 3.6, and shall <br />be evidenced by a promissory note secured by a deed of trust in favor of Developer. <br />3.6.1 Except in the event of a conflict with requirements of another public funding <br />source, the following provisions of the equity sharing agreement shall be enforced when the initial <br />Homebuyer sells an Affordable Unit: <br />(i) The Homebuyer selling the Affordable Unit shall retain the <br />value of any improvements and the down payment that were paid for by the seller, and the <br />seller's proportionate share of appreciation. <br />11 <br />5 53 94.00101 \42405 923.1 <br />