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2 <br /> <br /> <br />ARTICLE I <br />LOAN TERMS <br />1.1 LOAN AND NOTE. City agrees to loan to Tenant, and Tenant agrees to <br />borrow from and, subject to the provisions of Section 1.2.1, repay to City, the lesser of <br />Twenty Thousand Dollars ($20,000), or fifty percent of the project cost upon the terms <br />and conditions and for the purposes set forth in this Agreement. The Loan shall be <br />evidenced by the Note which shall be dated as of the Effective Date and executed by <br />Tenant substantially in the form attached hereto as Exhibit C. Provided that Tenant has <br />complied with all conditions set forth in Section 2.3, the Loan Proceeds shall be disbursed <br />in accordance with Section 2.2 hereof. The Parties agree that the City shall disburse Loan <br />Proceeds only for and to the extent necessary for the purposes set forth in Section 2.1. <br />1.2 INTEREST RATE; REPAYMENT. The outstanding principal balance of the <br />Note shall accrue interest at the rate of three percent (3%) simple interest per annum. The <br />entire outstanding principal balance of the Loan together with accrued interest and all other <br />sums due under the Loan Documents shall be payable in full upon the occurrence of an <br />Event of Default or upon the event of a Transfer (as defined in Section 1.4(b)) without City’s <br />written consent. <br /> 1.2.1 LOAN FORGIVENESS. On the fifth (5th) anniversary of the Effective <br />Date, the entire outstanding balance of the Loan, together with accrued interest, shall be <br />forgiven, provided that no Event of Default has arisen under the Loan Documents. <br />1.3 SECURITY. As security for repayment of the Note, Tenant shall execute the <br />Leasehold Deed of Trust in favor of City as beneficiary pursuant to which City shall be <br />provided a lien against the Property and the Improvements. The Leasehold Deed of Trust <br />shall be dated as of the Effective Date, shall be substantially in the form attached hereto as <br />Exhibit F, and shall be recorded in the official records of Alameda County. Absent the <br />written consent of City, the Leasehold Deed of Trust may be subordinated only to the title <br />exceptions identified in Section 1.3.1 or as City shall approve in writing (“Permitted <br />Exceptions”). City shall reconvey the Leasehold Deed of Trust upon the full repayment of <br />the Loan or upon forgiveness of the Loan pursuant to Section 1.2.1. <br /> 1.3.1 PERMITTED EXCEPTIONS. City agrees that the Leasehold Deed of <br />Trust may be recorded subject to the following title exceptions: None. <br />1.4 PREPAYMENT; ACCELERATION. <br />(a) Prepayment. The Note or any portion of the outstanding principal balance <br />due under the Note may be prepaid at any time and from time to time, without penalty or <br />premium. Any prepayment of principal must be accompanied by interest accrued but <br />unpaid to the date of receipt of prepayment. Prepayments shall be applied first to accrued <br />but unpaid interest and then to principal. In no event shall any amount due under the Note <br />become subject to any rights of offset, deduction or counterclaim on the part of Tenant. <br />DocuSign Envelope ID: ACE7FE70-EFEF-4CC1-BCEF-41A2C1B71328