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A. It shall be secured by a first deed of trust in a form approved by the City. B. The loan shall be amortized over 30 years. C. It shall not be assignable or assumable. D. Principal and interest payments shall be payable each month. Interest shall be 5% per annum. E. Monthly payments shall be based on interest at 1.25% per annum. F. Interest at 3.75% to be deferred (non-compounded), and paid, together with the outstanding principal balance, on the earlier of the sale of the property, within twelve months of termination for any reason (including but not limited to retirement, election by City or by Employee, death or disability) of Employee's employment, within 6 months after the new residence (defined below) ceases to be Employee's principal residence or 30 years after recordation of the deed of trust. G. Employee must sell his home in Riverside and use all of the net proceeds ("net proceeds" is defined as the gross consideration agreed to be paid to the Employee less sales commissions, other costs of sale customarily incurred by a seller of residential real property in Riverside, and escrow and transfer costs customarily incurred by a seller of residential real property in Riverside) as a down payment toward the purchase of the home (sometimes referred to as the "new residence") in Redwood City or the Bay Area, as the case may be, and/or to pay for improvements to the new residence, as long as the costs of said improvements are incurred and the improvements are completed within one (1) year (''improvement period") after escrow on the purchase of the new residence closes. Within thirty (30) days after escrow closes with respect to Employee's purchase of the new residence and within thirty (30) days after the improvement period, Employee shall render to the City an accounting of the manner in which he allocated and/or spent the net proceeds. H. Employee must maintain the new residence as his principal residence and in good condition as long as the loan remains unpaid. I. Employee must obtain and maintain all appropriate insurances subject to the reasonable approval of the City, including but not limited to property and casualty insurance covering the full replacement value of the new residence and naming the City as the loss payee. Employee must pay all the costs (e.g., title insurance, fire insurance, appraisal fees, escrow costs, termite inspection reports, contractor inspection reports, etc.) which a borrower of funds for residential real property in Northern California is customarily required by a commercial lender to pay. K. The loan to value ratio cannot exceed 70%. L. At the time of sale, the proceeds shall be applied in the following order of priority: C:L-°ublicLRedwood City - Employment Agreement with Yamamoto clean 7-24-01.wpd 3