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ATTACHMENT 1 to Four Hundred Thousand Dollars ($400,000); to eliminate the requirement to fund an Operating/Management Reserve; and to make other changes to help clarify the distribution of Surplus Cash, including deleting the requirement to pay the Three Hundred Thousand ($300,000) Developer Contribution from Surplus Cash as such payment has already been made. C. The Borrower and the City desire to amend the Ground Lease to no longer require that Bay Area Senior Services, a California nonprofit public benefit corporation invest Twenty-Four Thousand Dollars ($24,000) per year for ten (10) years. D. The Borrower and the City desire to make these amendments to the Loan Agreement and the Ground Lease retroactive to September 1, 2005. NOW THEREFORE, in consideration of the mutual promises of the parties hereto, the City and the Borrower amend the Loan Agreement and the Ground Lease as follows: Section 1. Recitals. The City and the Borrower agree that the above recitals are true and correct and are hereby incorporated herein as though set forth in full. Section 2. Amendment to Loan Agreement: The City and the Borrower desire to amend and restate Section 2.3 of the Loan Agreement in its entirety so that it reads as follows: "2.3 Repayment of the Loan. The Loan shall be repaid as set forth in the definition of the City Loan Payment in Section 2.3 (a) below and the description of the waterfall payments set forth in Section 2.3 (b) below. (a) Definitions. The following definitions shall apply for the purposes of this Section 2. Any capitalized terms not otherwise defined below shall have the meaning set forth in Section 1.1. (i) "Affordability Reserve" shall mean the affordability reserve described in Section 2.4 of the Regulatory Agreement. (ii) "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 City on the Loan and debt service owed to the City on the HELP Loan); annual fees charged in connection with any Approved Financing, the 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; deposits of up to Ninety-Five Thousand Dollars ($95,000) into a replacement reserve account; 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, other ordinary and reasonable operating expenses included in the Borrower's annual budget; other ordinary and reasonable 144\105\1089664.2