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Section 1.2 Exhibits The following exhibits are attached to this Agreement and incorporated into this Agreement by this reference: EXHIBIT A: Legal Description of the Property ARTICLE 2 LOAN PROVISIONS Section 2.1 Loan. The City shall loan to the Borrower the Loan in the principal amount of One Million Five Hundred Thousand Dollars ($1,500,000) for the purposes set forth in Section 2.4 of this Agreement. The obligation to repay the Loan shall be evidenced by the Note. Section 2.2 Interest. (a) The outstanding principal balance of the Loan shall accrue simple interest at the rate of three percent (3 %) per annum, commencing on the date of disbursement. (b) In the event of Default, interest on the Loan shall begin to accrue, as of the date of Default (following the expiration of applicable notice and cure periods), and continuing until such time as the Loan funds are repaid in full or the Default is cured, at the default rate of the lesser of ten percent (10 %), compounded annually, or the highest rate permitted by law. Section 2.3 Repayment of the Loan, The Loan shall be repaid as follows: (a) The following definitions shall apply for the purposes of this Section 2.3 (i) "Annual Operating Costs" shall mean, with respect to a particular fiscal year, costs incurred for operation and maintenance of the Project, including but not limited to: property taxes and assessments imposed on the Project; debt service currently due on Approved Financing (excluding debt service owed to the Other City Loan and the HELP Loan); annual fees charged in connection with any Approved Financing, property management fees and reimbursements, insurance premiums; utility services not paid for directly by tenants; maintenance and repair; any annual license or occupancy fees required for operation of the Project; security services; advertising and marketing; mandatory deposits into reserve funds; payment of any previously unpaid portion of the Borrower fee; extraordinary operating costs specifically approved in writing by the City; payments of deductibles in connection with casualty insurance claims; the amount of uninsured losses actually replaced, repaired or restored, replacement reserve deposits, other ordinary and reasonable operating expenses included in the Borrower's annual budget; other ordinary and reasonable operating expenses approved in writing by the City and not listed above. Annual Operating Costs shall not include the following: depreciation, amortization, depletion or other non -cash expenses; and any amount expended from a reserve account. HELP Loan 4 144 \105\272256.4