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for the purposes set forth in this Agreement for construction of Improvements approved by the City. The City <br />Loan shall be evidenced by a City Note, which shall be dated as of the Effective Date. <br />1.2REPAYMENT; INTEREST RATE; FORGIVENESS. <br />1.2.1LOAN TERM AND REPAYMENT. The Term of this Agreement shall be ten (10) <br />years. Provided that Borrower is not in default under the Loan Documents, the City shall forgiveone tenth <br />th <br />(1/10 <br />) of the principal of the City Loan, which is equal to Thirty Thousand Dollars ($30,000.00), annually on <br />th <br />the anniversary of the Effective Date of the Agreement. On the tenth (10) anniversary of the Effective Date, <br />provided that no default or breach by Borrower has occurred pursuant to Article IV, the entire outstanding <br />principal and interest accrued on the City Loan shall be forgiven. If Borrower sells or transfers the Property <br />or changes the use of the Property without written approval from the City, the City Loan shall become due <br />and payable upon sale. <br />1.2.2TIMELINE TO SPEND THE LOAN. Borrower shall expend the entire City Loan <br />within twenty-four (24) months of the effective date of this Agreement. <br />1.2.3INTEREST. Interest shall accrue on the principal balance of the City Loan at a rate <br />of three percent (3%) simple interest per annum. <br />1.3PREPAYMENT. Borrower may, without premium or penalty, at any time and from time to <br />time, prepay all or any portion of the outstanding principal balance due under the City 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 />1.4USE OF PROCEEDS. Borrower shall use the proceeds of the City Loan (the “City Loan <br />Proceeds”) solely and exclusively to pay for the construction of the Improvements described in Exhibit Band <br />in accordance with the budget and timeline specified in Exhibit B. <br />1.5DISBURSEMENT OF PROCEEDS. Borrowershall submit separate written requests for <br />each disbursement of City Loan funds with supporting evidence for all amounts requested (each a <br />”Requisition”). Borrower shall submit each Requisition to the Community Development Director, or her/his <br />designee, stating the requisition or invoice number (e.g., Invoice #1) and purpose and amount of the <br />requested disbursement. Borrower shall attach copies of any documents supporting the Requisition, <br />including estimates, bids, receipts, invoices, contracts, payment schedules, or evidence of Borrower’s <br />payment of 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 the <br />City Loan Proceeds. <br />1.6RESERVED. <br />1.7CONDITIONS PRECEDENT TO DISBURSEMENT OF PROCEEDS. City’s obligation to <br />disburse the City Loan Proceeds is conditioned upon the satisfaction of all of the following conditions: <br />(a) Borrower’s delivery to City of fully executed Loan Documents; <br />2 <br />3239132.3 City Loan Agreement <br /> <br />