2000 Washington Ave - Lots of Love Child Care Center

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2 ARTICLE I LOAN TERMS 1.1 LOAN AND NOTE. City agrees to loan to Owner, and Owner agrees to borrow from and, subject to the provisions of Section 1.2.1, repay to City the lesser of Twenty Thousand Dollars ($20,000), or fifty percent of the project cost upon the terms and conditions and for the purposes set forth in this Agreement. The Loan shall be evidenced by the Note which shall be dated as of the Effective Date and executed by Owner substantially in the form attached hereto as Exhibit C. Provided that Owner has complied with all conditions set forth in Section 2.3, the Loan Proceeds shall be disbursed in accordance with Section 2.2 hereof. The Parties agree that the City shall disburse Loan Proceeds only for and to the extent necessary for the purposes set forth in Section 2.1. 1.2 INTEREST RATE; REPAYMENT. The outstanding principal balance of the Note shall accrue interest at the rate of three percent (3%) simple interest per annum. The entire outstanding principal balance of the Loan together with accrued interest and all other sums due under the Loan Documents shall be payable in full upon the occurrence of an Event of Default or upon the event of a Transfer (as defined in Section 1.3(b)) without City’s written consent. 1.2.1 LOAN FORGIVENESS. On the fifth (5th) anniversary of the Effective Date, the entire outstanding balance of the Loan, together with accrued interest, shall be forgiven, provided that no Event of Default has arisen under the Loan Documents. 1.3 PREPAYMENT; ACCELERATION. (a) Prepayment. The Note or any portion of the outstanding principal balance due under the Note may be prepaid at any time and from time to time, without penalty or premium. Any prepayment of principal must be accompanied by interest accrued but unpaid to the date of receipt of prepayment. Prepayments shall be applied first to accrued but unpaid interest and then to principal. In no event shall any amount due under the Note become subject to any rights of offset, deduction or counterclaim on the part of Owner. (b) Due On Sale. Unless City agrees otherwise in writing, the entire unpaid principal balance and all interest and other sums accrued under the Note shall be due and payable upon the Transfer absent the prior written consent of City, of all or any part of or interest in the Premises or the Improvements, other than a lease of the Improvements or part thereof entered into in the ordinary course of business. “Transfer” shall include any assignment, hypothecation, mortgage, pledge, encumbrance or conveyance of the Lease, Business, or the Improvements. ARTICLE II USE AND DISBURSEMENT OF PROCEEDS 2.1 USE OF PROCEEDS. Owner shall use the proceeds of the Loan (“Loan Proceeds”) solely and exclusively to pay for costs billed to Owner by third-parties in DocuSign Envelope ID: 48E3EBFC-3FF5-4238-BC9E-4D8C2D3ECF64