Commercial Rehab - FH Dailey with Deed - Signed

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ARTICLE I 11187,\►i114:7IT, 1-1 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 Forty Five Thousand Dollars ($45,000), 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 1.4(b)) without City's written consent. 1.2.1 LOAN FORGIVENESS. On the seventh (7th) 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 SECURITY. As security for repayment of the Note, Owner shall execute the Deed of Trust in favor of City as beneficiary pursuant to which City shall be provided a lien against the Property and the Improvements. The Deed of Trust shall be dated as of the Effective Date, shall be substantially in the form attached hereto as Exhibit F, and shall be recorded in the official records of Alameda County. Absent the written consent of City, the Deed of Trust may be subordinated only to the title exceptions identified in Section 1.3.1 or as City shall approve in writing ("Permitted Exceptions"). City shall reconvey the Deed of Trust upon the full repayment of the Loan or upon forgiveness of the Loan pursuant to Section 1.2.1. 1.3.1 PERMITTED EXCEPTIONS. City agrees that the Deed of Trust may be recorded subject to the following title exceptions: None. 1.4 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. W