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made in lawful money of the United States of America. Each of the monthly payments, when paid, <br />shall be applied first to the payment of owed interest (at 1.25% per annum) and the balance to the <br />payment of principal. <br /> <br /> The undersigned authorizes the Note Holder, at its option, to make automatic payroll <br />deductions from salary payments otherwise owed by the Note Holder to the undersigned, Stan T. <br />Yamamoto, or to designate a bank to which sufficient funds shall be paid by the undersigned to cover <br />the monthly loan payment specified hereinabove. Such deductions, if made by the Note Holder, shall <br />have priority over all other deductions except to the extent that such other deductions are required <br />by law. In the event of any such deduction, the Note Holder and the undersigned may agree to <br />proration of the full monthly payment over the number of payrolls each month. <br /> <br /> The difference between the amount of interest accruing on the loan at the rate of 5.00% per <br />annum and the amount of interest paid on the loan at the rate of 1.25% per annum ("Interest <br />Differential") shall accrue as deferred interest and shall be payable as follows: The Interest <br />Differential shall not itself accrue interest. All the Interest Differential shall be payable in a lump sum <br />when the loan is due and payable or when the undersigned elect to pay the loan through refinancing <br />or as otherwise provided herein. Attached hereto as Exhibit "A" and incorporated by this reference <br />is a table showing the comparative amounts of monthly interest and prindpal owed under a <br />hypothetical loan of $650,000, amortized over a 360 month period at 1.25% per annum and 5.0% <br />per annum. By way of example and assuming that the loan which is the subject of this Note is that <br />which is reflected in Exhibit "A", were this Note paid offat the end of the 12e month after the interest <br />commencement date, in addition to the accrued but unpaid interest required to be monthly paid at <br />1.25% per annum and the principal balance, the undersigned would owe to the Note Holder <br /> <br />C:'~ublic'~l~lwood City - Promissory Note clean 7-24-01.WlXl 2 <br /> <br /> <br />