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1.2 REPAYMENT; INTEREST RATE; FORGIVENESS. <br />1.2.1 LOAN TERM AND REPAYMENT. The Term of this Agreement shall be twenty <br />(20) years. Provided that Participant is not in default under the Loan Documents, the City shall forgive one <br />twentieth (1/20) or One Thousand One Hundred Twenty Dollars ($1,120.00) of the outstanding principal <br />loan balance annually on the anniversary of the Effective Date of the Agreement. On the 20th anniversary <br />of the Effective Date, provided that no default or breach by Participant has occurred pursuant to Article IV, <br />the entire outstanding principal and interest accrued on the Loan shall be forgiven. <br />1.2.2 INTEREST. Interest shall accrue on the principal balance of the Loan at a rate of <br />three percent (3%) simple interest per annum. <br />1.3 PREPAYMENT. Participant may, without premium or penalty, at any time and from time <br />to time, prepay all or any portion of the outstanding principal balance due under the Note. Any prepayment <br />of principal must be accompanied by interest accrued but unpaid to the date of receipt of prepayment. <br />Prepayments shall be applied first to any unpaid late charges and other costs and fees then due, then to <br />accrued but unpaid interest and then to principal. <br />1.4 USE OF PROCEEDS. Participant shall use the proceeds of the Loan (the "Loan <br />Proceeds") solely and exclusively to pay for costs related to the Improvements described in Exhibit C and <br />in accordance to the budget and timeline specified in Exhibit C. <br />1.5 DISBURSEMENT OF PROCEEDS. Participant shall submit separate written requests for <br />each disbursement of Loan funds, each in substantially the form attached hereto as Exhibit D, with <br />supporting evidence for all amounts requested (each a "Requisition"). Participant shall submit each <br />Requisition to the City Manager, or his designee, stating the purpose and amount of the requested <br />disbursement. Participant shall attach copies of any documents supporting the Requisition, including <br />estimates, bids, receipts, invoices, contracts, payment schedules, or evidence of Participant's payment of <br />preconstruction and rehabilitation expenses required to fund the Improvements. The supporting <br />documents shall state the time period in which work was performed, and the expenses to be funded with <br />the Loan proceeds. <br />1.6 NO OBLIGATION TO DISBURSE PROCEEDS UPON DEFAULT. Notwithstanding any <br />other provision of this Agreement, the City shall have no obligation to disburse any portion of the Loan <br />Proceeds if there is an occurrence of an Event of Default (defined below) under the Loan Documents. <br />ARTICLE II <br />CONSTRUCTION OF THE IMPROVEMENTS <br />2.1 CONSTRUCTION SCHEDULE. Participant shall adhere to the Project Construction Time <br />Schedule attached hereto under the Scope of Work as Exhibit C. Participant must obtain written approval <br />from the City for any changes to the Construction Schedule. <br />Fiscal Year 09-10 2 San Leandro <br />Capital Improvement Loan Agreement <br />