Agmt25 SEC-Lenders Documents 2 - Loan Agreement

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405. Replacement Reserve Account. Borrower shall make annual deposits to a replacement reserve account in an amount equal to Five Hundred Dollars ($500) per unit, increasing by the applicable Consumer Price Index (CPI) for the San Francisco -Oakland -Hayward area every five (5) years based on the 12 -month CPI available in the month this Agreement was executed and approved by the City. The annual deposits into the replacement reserve account shall be funded out of Gross Revenues from the Development, prior to use of any cash flow to pay deferred developer Fee, partnership management or similar fees. 406. Operating Reserve Account. Borrower shall establish an operating reserve account or sub -account within the Development's general operating account concurrently with Close of Escrow. Developer shall. fund the operating reserve account with an initial deposit in an amount as specified in the Project Budget, and shall maintain an amount in the operating reserve account equal to a minimum of three months' expenses for the Development, including but not limited to required monthly debt service payments, monitoring fees and required deposits into the replacement reserve account. Borrower shall fully replace any withdrawals from the operating reserve account using out of Gross Revenues from the Development, prior to use of any cash flow to pay deferred developer fee, partnership management or similar fees. 407. City Monitoring Fee. Borrower shall pay to City an annual Monitoring Fee in an amount established in the City's regularly adopted fee schedule, as it may be adjusted from time to time, to fund City costs of monitoring the Development and fulfilling City's responsibilities pursuant to the Loan Documents. The City Monitoring Fee shall be funded out of Gross Revenues from the Development, prior to use of any cash flow to pay deferred developer fee, partnership management or similar fees. 408. Notices to City. Borrower shall promptly notify City in writing of: a. Any litigation affecting Borrower, where the amount claimed is One Hundred Thousand Dollars ($100,000.00) or more; b. Any communication, whether written or oral, that Borrower may receive from any governmental, judicial or legal authority, giving notice of any claim or assertion that any portion of the Property or the Development fail in any respect to comply with any Governmental Requirement; C. Any default by any contractor, design professional, subcontractor, material supplier or surety in the performance of its or their obligations with respect to the construction, or any material adverse change in the financial condition or operations of any of them; d. Any material adverse change in the physical condition of the Property (including any damage suffered as a result of earthquakes or floods), or in Borrower's business condition (financial or otherwise), operations, properties or prospects, or Borrower's ability to repay the Loan; or e. The institution of any litigation, arbitration or governmental proceeding, or the rendering of a judgment or decision in such litigation or proceeding, which may cause a material adverse effect to Borrower, the Property or the completion of the construction. REV: 05-21-25 LF ATTY/AGR.2025.100/HE:ART-SV (417 Stambaugh St.) (Page 18 of 85)