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remaining principal secured by the Senior Deed of Trust, plus the reasonable cost of refinancing, (b) the interest rate payable under the note given in connection with the refinancing is less than the interest rate payable under the note secured by the Senior Deed of Trust prior to refinancing, and (c) the Borrower does not obtains an additional junior loan which will create an indebtness over the current balance of the existing loans on the property, and c) no Disqualifying Event has occurred. 5. Shared Appreciation. In addition to the repayment of the principal and payment of interest as provided in the Note and this Agreement, Borrower agrees to pay Lender/Agency a share of any appreciation in the value of the Dwelling between the date of its purchase by the Borrower and the date of its sale, repayment of the Note prior to sale of the Dwelling, or upon the happening of any Disqualifying Event. The amount of shared appreciation payment required shall be based upon the Value of the Dwelling less the Cost of the Dwelling and any Additional Costs as those terms are defined herein below and the formula as defined herein below. The share appreciation calculation appliedtowards the loan is outlined in the Shared Appreciation Disclosure Addendum and supporting schedule, provided with this Shared Appreciation Agreement. "Cost of the Dwelling" shall mean the purchase price paid by the Borrower plus any escrow fees and the cost of title insurance paid by them at the time the Dwelling is purchased. The parties agree that the Cost of the Dwelling is $347,633. _ "Additional Costs" shall mean the verified cost of any capital improvement made to the Dwelling by the Borrower which is in excess of $2,000, and the cost of which may be added to the basis of the Dwelling for federal income tax purposes under the Internal Revenue Code ("Code"). It shall be the responsibility of Borrower to retain all records and to substantiate any Additional Costs. "Value" shall mean: a) if the Dwelling is sold at fair market value in a bona fide sale transaction to a third party, the gross sales price less a reasonable real estate commission and costs of sale which would be deductible in determining the gain under the Code, or b) if the Dwelling is not sold, the fair market value (without the deduction of any anticipated costs of sale) as determined by the appraiser selected by Borrower in accordance with this agreement. If the Dwelling is not sold or not sold at fair market value in a bona fide sales transaction to a third party, "Value" shall mean and be determined as follows: Lender/Agency shall provide a list of five (5) residential real estate appraisers who have had experience in the sale of residential property in the area where the Dwelling is located for a period of at least five (5) years. Borrower shall select one of said Appraisers from this list and said Appraiser shall make the appraisal. The appraisal shall be binding upon both parties. In the event that the Borrower does not select an appraiser within twenty (20) days following submission of the list by Lender/Agency, Lender/Agency may select one of the appraisers who shall make the appraisal. Both parties shall cooperate with the appraiser in the making of such appraisal. The cost of the appraisal shall be shared between the parties in the proportion in which they are entitled to share in the Shared Appreciation. Lender/Agency's share of the Shared Appreciation shall be payable in cash upon the sale of the Dwelling, or within twenty (20) days following delivery of the appraisal to the parties by the appraiser selected. 6. Shared Appreciation Formula. Shared Appreciation shall be calculated by multiplying the multiple factor or factors ("Multiple Factor") described below, times a proportion represented by the Agency's loan to -Cost of the Dwelling a. Multiple Factor During FirstFive Years of Loan. During the first five (5) years ofthe loan, the Multiple shall be 1.5. Thus, for example, if the Cost of the Dwelling is $400,000 and the Lender/Agency's loan is $100,000, this proportion would be 25% ($100,000/$400,000). Therefore, to calculate the Shared Appreciation payment during the first five (5) years, one would multiply 1.5 times 25% yielding 37.5%. In this example, if the Dwelling sold for $600,000 (that is an Redwood City First Time Homebuyer Silent Loan Program - Shared appreciation agreement April 23, 2001 Page iiluiii re02.veo31sF