Interest Prepayment and Offset Clause Samples

Interest Prepayment and Offset. (i) On the First Disbursement Date and on each anniversary of the First Disbursement Date through the Original Maturity Date (or such later date, on exercise of the Extension Option), the Borrower shall prepay interest in the amount of One Hundred Thousand Dollars ($100,000) and the Lender shall use such prepaid amounts for general and administrative purposes as detailed in the applicable budget reasonably approved by the Borrower. Within thirty (30) days of the date of this Agreement, the Lender shall submit to the Borrower in writing, for the Borrower’s review and reasonable approval, a reasonably detailed statement setting forth any fees and expenses to be paid by the Lender with such prepaid interest. Not less than thirty (30) days prior to each anniversary of the First Disbursement Date, the Lender shall submit to the Borrower in writing, for the Borrower’s review and reasonable approval, a reasonably detailed line item budget and statement of proposed uses of such prepaid interest for the following twelve (12) months. Promptly following the First Disbursement Date and promptly following the end of each twelve (12)-month period, the Lender shall deliver to the Borrower an annual report on the actual uses of such prepaid interest, which report shall include a summary connecting each expenditure to the applicable line item in the budget, invoices, and evidence of payment. If the report shows actual total expenses for a given twelve (12)-month period are less than the amount of proceeds requested in the applicable budget for such year, such excess shall be reflected in the budget for the following (12)-month period and the Borrower shall have no obligation to advance the unused amount of prepaid interest in the next disbursement of prepaid interest. (ii) The Borrower shall be entitled to offset against interest accrued on the Loan and payable pursuant to Section 2.05(a) all payments of prepaid interest made pursuant to Section 2.05(d)(i) plus interest on such prepaid interest at a fixed rate of one-half of one percent (0.5%) per annum through the Original Maturity Date and at a fixed rate of three and one-half percent (3.5%) per annum thereafter if the Extension Option is exercised, from the date of disbursement of such prepaid interest. Interest shall be non-compounding and computed for the actual number of days which have elapsed on the basis of a 360-day year.