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CONTRUCTION LOAN AGREEMENT CITY OF CLEARWATER CONSTRUCTION LOAN AGREEMENT This construction loan agreement (the "Agreement") is entered into this \4-lJ...day of rY\o.rc..V\ , 2006 by and between the CITY OF CLEARWATER (herein, "Lender" or "CITY"), a municipal corporation, whose address is Post Office Box 4748, Clearwater, Florida 33758 and the MT. CARMEL COMMUNITY DEVELOPMENT CORPORATION OF CLEARWATER, INC., a Not for Profit Florida Corporation, ("Borrower"), whose address is 1014 Pennsylvania Avenue, Clearwater, Florida 33755 and is made in reference to the following facts: (A) Simultaneously with the execution and delivery of this Agreement, the City has made a loan to the Borrower in the principal amount of ONE EIGHTY FIVE THOUSAND and NO/OO--------------DOLLARS. ($185.000.00), or as much thereof as may from time to time be advanced by the City to the Borrower, evidenced by a Note (the "Note") in favor of the City and second Mortgage (the "Mortgage") encumbering real property located in Pinellas County, Florida, more particularly described as follows (the "Property"): South ~ of Lot 6, Lots 7 & 8 Greenwood Manor, according to the map or plat thereof as recorded in the Plat Book 21, Page 65, of the Public Records of Pinellas County, Florida. (B) Borrower desires to make improvements on the Property in accordance with plans and specifications submitted to the City, and requires advances from the City from time to time during the period of construction, in order to construct said improvements. (C) The City is agreeable to making the advances set forth in (B) above as long as such advances are in strict compliance with the terms and conditions of this Agreement and secured by the lien of the Mortgage, and that construction is completed no later than 180 days from the date hereof (the "Construction Date"). NOW THEREFORE, in consideration of the statements as set for the above and the agreements herein made, the agreements and covenants contained in the Note and Mortgage, the Borrower and the City do hereby make the agreements set forth herein. ARTICLE 1. REPRESENTATIONS AND WARRANTIES OF BORROWER Borrower represents and warrants to the City as follows: (a) Existence, Borrower, as a Public Body Corporate in Politic, is duly authorized, validly existing and in good standing under the laws of the state of its incorporation and the laws of the state in which the Property is located, and its Chairman executing this Agreement and the Note and Mortgage is duly authorized and has all necessary corporate power to enter into these agreements. (b) No Default, the Borrower is not in default and has not breached in any material respect any agreement or instrument to which it is a party or by which it may be bound, and the execution and delivery of this Agreement, the Note and Mortgage, and the consummation of the other transactions contemplated herein do not conflict with or result in, (i) a violation of any regulation, order, writ, judgment, injunction or decree of any court or governmental or municipal instrumentality or (ii) the breach of or default under any agreement or instrument to which the Borrower is a party or by which it may be bound. (c) Non-Commencement of Work. There has been no commencement of operation on the Property incident to the Improvements and no activities have occurred prior to the date hereof which could result in any mechanic's lien or similar lien being filed against the Property which would be superior to the lien of the Mortgage. No Notice of Commencement has been filed in the public records of the county in which the Property is located. (d) Compliance With Laws. The Borrower has obtained all necessary governmental approvals necessary to commence construction of the Improvements. (e) Utilities, Land Use and Zoning. Sewer, water and all other necessary utilities are available to serve the Property and the Improvements in sufficient quality for their intended use, and the current land use and zoning classifications of the Property and any covenants and restrictions affecting the Property permit the construction and intended use of the Improvements without the necessity of obtaining further approvals, authorizations, waivers, consents, exceptions or variances. (f) Absence of Proceedings and Actions. there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or the Property, or any Guarantors of the Loans, if any. (g) Financial Statements. All fmancial statements of the Borrower and the Guarantors, if any, of the Loan submitted the City are true and correct as of the date of this Agreement. ARTICLE II. COVENANTS OF BORROWER The Borrower covenants to the City that: (a) Plans and Specifications. The Borrower shall cause to be constructed certain Improvements on the Property in accordance with the plans and specifications, and any amendments thereto previously submitted by the Borrower to the City and which have been approved by the City. The plans and specifications, and any amendments thereto, as so approved by the City, shall remain the property of the City. (b) Development Work Criteria. Development of the Property and construction of the Improvements shall be in accordance with the plans and specifications, all engineering reports and studies, soil reports and other similar matters which have heretofore been submitted by the Borrower to the City for the basis of the Loan, and in compliance with all restrictions, conditions, ordinances, codes, regulations and laws of governmental departments, including, if applicable HOME, SHIP and CDBG, and agencies having control over or jurisdiction over or an interest in the Property and the Improvements. No deviation shall be made in the plans and specifications without the prior written consent of the City and, to the extent applicable, no change shall be made in any contracts the Borrower has entered into with respect to construction of the improvements without the prior written consent of the City of Clearwater. (c) Commencement and Continuity of Work. Development of the Property and construction of the Improvements shall commence with 15 days from the date of this agreement 2 and shall be carried on diligently and without interruption or delay until completed and the same shall be constructed in a good and workmanlike manner, and in accordance with the plans and specifications referred to above. Immediately after the recordation of the Mortgage, the Borrower shall file a Notice of Commencement and post a certified copy thereof on the Property in accordance with Florida law. (d) Use of Proceeds and Deficiency in Loan Amount. The Borrower will use the proceeds of the Loan only for the payment of costs directly associated with the construction of the Improvements and shall not divert such funds for any other purpose. If it appears the construction cost of the Improvements will exceed the net amount available from the Loan, the City, at its option, require the Borrower to deposit, and the Borrower shall deposit with the City within 10 days after receipt of notice of sufficient sums, which together with a net amount remaining available for disbursement will be sufficient to pay all construction cost and related costs of completing the Improvements in accordance with the plans and specifications. The judgment and determination of the City as to any such deficiency shall be final and conclusive. (e) Liens. The Borrower will have any mechanics' liens or other encumbrances which may be filed against the Property released or bonded off within 10 days of the date the Borrower receives notice thereof. (f) Access to Books and Records. The Borrower will permit the City or its agents to have at all reasonable times unrestricted access to its records, accounting books, contracts, subcontracts, bills and statements, including any supporting or related vouchers or other instruments, as relate in any manner to the development and construction of the Improvements, and the City or its agents shall have the right to copy the same. (g) Financial Statements. During the time period encompassing development of the Property and construction of the Improvements, or until the Completion Date, whichever occurs first, the City reserves the right at any time to require updated financial statements from the Borrower and any Guarantor, if any. The Borrower will permit the City, through any means deemed appropriate by the City, to verify the correctness of any such updated financial statements. (h) Delivery of Materials to Property. The Borrower will cause all materials, supplies and goods to be incorporated as part of the Improvements to be delivered to the Property free and clear of all liens and encumbrances so that no other party shall have an interest therein, whether superior or inferior to the lien of the Mortgage. (I) Compliance with Mechanics' Lien Law. The Borrower and its general contractor and Agent will comply in all respects whatsoever with the Florida mechanics Lien Law as the same may from time to time exist, and the City shall not be obligated to disburse any funds to the Borrower if, in the opinion of the City or its counsel, such disbursement would result in a violation of such law. G) Access to the Property. The borrower will permit the City and its agents at all reasonable times to have the right of entry and free access to the Property and the right to inspect the Property and all work done, labor performed and material furnished thereon or thereabouts. (k) SERVICES TO BENEFIT THE CITY. INSPECTIONS AND OTHER SERVICES RENDERED BY OR ON BEHALF OF THE CITY AND WHETHER OR NOT PAID FOR BY BORROWER SHALL BE RENDERED SOLELY FOR THE PROTECTION AND BENEFIT OF THE CITY, AND THE BORROWER SHALL NOT BE ENTITLED TO CLAIM ANY 3 LOSS OR DAMAGE AGAINST THE CITY OR ITS AGENTS OR EMPLOYEES FOR FAILURE TO PROPERL Y DISCHARGE THEIR DUTIES TO THE CITY. (1) The City's Right to Approve. The City shall have the right to approve all contracts, subcontracts, purchase orders, or other similar agreements to be entered into by the Borrower with respect to any portion of the construction of the Improvements or any materials, supplies or labor to be rendered in connection therewith. (m) Signage. The Borrower agrees that the City may erect a sign at the construction site in a conspicuous location indicating that the fmancing for the project is provided by the City of Clearwater. (n) Joiner by Contractor. If the Borrower is employing a General Contractor and/or Agent with respect to the construction of the Improvements, the Borrower will require such Contractor and/or Agent to join in the execution hereof, and, in the event of a conflict between the terms and conditions of any such contract and this Agreement, the terms and conditions of this Agreement shall govern and control. (0) Further Assurance. The Borrower will, at any time on the City's request, make, do, execute and deliver to the City and where appropriate shall cause to be recorded or filed at the Borrower's expense any and all further acts, Mortgages, documents and assurances as may be reasonably necessary to effectuate, complete and confirm the transactions sought to be consummated hereunder. (P) Compliance with Note and Mortgage. The Borrower will comply with and abide by all the terms, conditions, covenants, agreements, representations and warranties contained in the Note and Mortgage, each of which documents are incorporated herein by this reference thereto. In the event of a conflict between this Agreement and the Note or Mortgage, the terms and conditions of this Agreement shall govern and control. (q) Disputes Between Borrower and the City. In the event any dispute arises between the Borrower and the City with respect to the construction or meaning of the plans and specifications, the same shall, at the option of the City, be decided by a competent architect to be selected by the City but paid for by the Borrower or, if the Improvements are subject to HOME, SHIP or CDBG regulation, then, by a representative of the appropriate governmental agency. The decision of such architect or government representative, as the case may be, shall be conclusive and binding upon the parties hereto. (r) Disputes Between Borrower and Contractor and/or Agent. In the event a dispute arises between the Borrower and Contractor and/or Agent, and the Borrower desires that future disbursements to Contractor and/or Agent from the construction fund be suspended, the Borrower shall advise the City in writing of the facts giving rise to the dispute and shall request in writing that disbursements to the Contractor and/or Agent be suspended. The City shall withhold any disbursement due until the City receives written instructions signed by the Borrower and the Contractor and/or Agent. ARTICLE Ill. DISBURSEMENTS OF FUNDS (a) Disbursement Schedule. Upon satisfaction of all conditions required and specified in the Disbursement Schedule set forth by Borrower, the City shall disburse funds to the Borrower. 4 (b) Method of Disbursement. The City, at its option, disburse the Loan funds to or for the Borrower, the Contractor and/or Agent for the Borrower. Such election shall not prevent the City from making subsequent disbursements in a different manner or through a different party. (c) Disbursement Procedures. Requests for Loan disbursements shall be submitted to the City according to a Disbursement Authorization which by this reference is incorporated herein and made a part hereof (the "Disbursement Authorization"). Said authorization shall also serve as the Borrower's written authorization to the City of where and to whom the disbursements are to be made and the parties authorized to request such disbursements. (d) Disbursement Obligation of the City. Nothing contained in this Agreement, the Note or Mortgage shall impose upon the City any obligation to see to the proper application of any disbursements made pursuant to this Loan, and the sole obligation of the City shall be to disburse funds as set forth herein, provided there exists no default under this Agreement, the Note and Mortgage. ARTICLE IV. PARTIAL RELEASES Provided there is no default under this Agreement, the Note and Mortgage, and provided further that the Loan Commitment contemplates partial releases of the Property from the lien of the Mortgage, partial releases shall be granted upon the terms and conditions set forth, if applicable. ARTICLE V. EVENTS OF DEFAULT The happening of anyone or more of the following events shall constitute a default under this agreement, the Note and Mortgage: (a) Breach of Condition. The Borrower's violation or breach of any term, condition, covenant, representation or warranty contained in this Agreement, Note or Mortgage, or other instruments executed in connection herewith, or if the Improvements are not completed on or before the Completion Date set forth in this Agreement, or the existence of a material misrepresentation of a fact contained in the documents submitted in support of the Loan, and the continuance of such condition for a period of fifteen (15) days after the City has given notice thereof to the Borrower. (b) Transfer of Property. The sale, assignment, pledge, transfer, hypothecation, or other disposition of any proprietary or beneficial interest in the Borrower or the Property by the Borrower without the prior written consent of the City. (c) Impairment of the Property. The occurrence of any condition or situation which, in the sole determination of the City, constitutes a danger to or impairment of the Property or repayment of the Loan, and such condition or situation is not remedied with ten (a) days after written notice to the Borrower of such condition or situation. ARTICLE VI. THE CITY'S REMEDIES Upon the occurrence of any event of default hereunder or under the Note or the Mortgage, the City shall have the absolute right to refuse to disburse any funds hereunder, and the City shall have the absolute right at its option and election and in its sole discretion to: 5 (a) Possession. Take immediate possession of the Property as well as all other security for the Loan as is necessary to fully complete the Improvements as required hereunder and to do everything in its sole judgment to fulfill the obligation of the Borrower hereunder. (b) Exercise. Exercise any of the rights, privileges or remedies available to the City under the Note or Mortgage, or as otherwise may be permitted by applicable law. (c) Power of Completion. In the event of the death of the Contractor and/or Agent, or in the event of the bankruptcy of the Contractor and/or Agent, or in the event of the general assignment to creditors by the Borrower or Contractor and/or Agent during the period of construction of said building and before completion thereof, or upon any other occasion which might result in cessation of work, the City shall have full poser to take charge of and complete the construction and make disbursements against the Loan and for the benefit of the Borrower, but shall not in any way be obligated to do so. (d) Acceleration. Accelerate the maturity of the Note and Mortgage and demand payment of the principal sums due thereunder, advances, costs and attorney's fees, whether incurred at the trial or appellate level, and enforce collection of such payment by foreclosure of the Mortgage or other appropriate action in a court of competent jurisdiction. The remedies and rights of the City hereunder and under the Note and Mortgage shall be cumulative and not mutually exclusive. The City may resort to anyone or more or all of the remedies but not to the exclusion of any other remedy. No party, whether, contractor, materialman, subcontractor, or supplier, shall have any interest in Loan funds withheld because of default, and shall have no right to garnish, require or compel payment thereof to be applied towards discharge or satisfaction of any claim of lien which such party may have for work performed or materials supplied for the construction of the Improvements. ARTICLE VII. THE CITY'S LIABILITIES (a) The escrow account. The Borrower approves the deposit of the construction funds in the escrow account of the City, and releases the City from all loss resulting from the handling of said funds by the City in the usual course of business. The Borrower agrees that the holding, application, and disbursement of said construction funds delivered by the Borrower to The City shall be for the account of the Borrower; however, it is expressly understood by the Parties that the holding, application and disbursement of said construction funds is for the protection of the City. (b) To Third Persons. This agreement shall not be construed to make the City liable to materialmen, contractors, craftsmen, laborers, or other for goods or services delivered by them in or upon said premises, or for debt or claims accruing to any such parties against the Borrower. (c) INSPECTION SERVICES. IT IS EXPRESSL Y AGREED THAT ALL INSPECTION AND OTHER SERVICES RENDERED BY THE CITY SHALL BE RENDERED SOLELY FOR THE PROTECTION AND BENEFIT OF THE CITY, AND THE BORROWER SHALL NOT BE ENTITLED TO CLAIM ANY LOSS OR DAMAGE AGAINST THE CITY. THE CITY SHALL NOT BE LIABLE FOR THE FAILURE OF ANY DEALER, CONTRACTOR, CRAFTSMAN OR LABORER TO DELIVER THE GOODS OR PERFORM THE SERVICES TO BE DELIVERED OR PERFORMED BY THEM. 6 (d) To the Borrower. The Borrower has accepted, and hereby accepts, the full responsibility for the selection of his own contractor and subcontractors and all materials, supplies and equipment to be used in the construction, and THE CITY ASSUMES NO RESPONSIBILITY FOR THE COMPLETION OF SAID BUILDING OR BUILDINGS, ACCORDING TO THE PLANS AND SPECIFICATIONS AND FOR THE CONTRACT PRICE. The Borrower has further accepted, and hereby accepts, full responsibility for compliance with the Florida Mechanics' Lien Law and hereby relieves the City from any and all liability thereunder of any nature whatsoever. Anything herein contained to the contrary notwithstanding, there shall be no obligation upon the City to make any additional disbursements hereunder, if at the time of the request for such disbursements the Borrower is in default or has failed to perform any provision of this Agreement or of the Note and Mortgage hereinabove referenced. ARTICLE VIII. MISCELLANEOUS (a) Notice. All notices provided for herein shall be sent by certified or registered return receipt requested mail, addressed to the appropriate party at the address designated for such party in the preamble to this Agreement, or such other address as the party who is to receive such notice may designate in writing. Notice shall be completed by depositing the same in a letterbox or other means provided for the posting of mail addressed to the party with the proper amount of postage affixed thereto. Actual receipt of notice shall not be required to effect notice hereunder. (b) Governing Law. This Agreement, the Note and the Mortgage shall be governed and construed in accordance with the laws of the State of Florida (c) Modification and Waiver. No provision of this Agreement, the Note or the Mortgage shall be amended, waived or modified except by an instrument in writing signed by the parties against whom such amendment, waiver or modification is sought to be enforced. (d) Severability. The inapplicability or unenforceability of any provision of this Agreement, the Note and Mortgage shall not limit or impair the operation or continued validity of any other provision of this Agreement, the Note and Mortgage. (e) Counterparts. This Agreement may be executed in any number of counterparts, each of which, when executed and delivered, shall be an original, and such counterparts together constitute one and the same instrument. (f) Assignability. The Borrower shall not assign this Agreement or any part of any advance to be made hereunder or convey, encumber, Mortgage, lease, in whole or in part, any portion of the Property without the prior written consent of the City. The rights of the City under this Agreement are assignable by the City in whole or in part without the consent of the Borrower. This Agreement is binding upon the representatives, successors and permitted assigns of the Borrower and the City. (g) Waiver of Defaults. Waiver by the City of any breach or default by the Borrower under the terms of the Note, Mortgage or this Agreement shall be deemed to, nor shall the same constitute a waiver of, any subsequent breach or default on the part of the Borrower. (h) Expenses. The Borrower shall pay all costs and expenses required to satisfy the condition of this Agreement or incidental to the Loan, including, without limitation, all taxes, insurance premiums, recording expenses, stamp taxes, all brokerage fees, appraisal fees, survey costs and title insurance costs. 7 (I) Beneficiaries. This Agreement is an agreement only by and between the Borrower and the City and for their benefit and the benefit of their successors and assigns permitted by this Agreement. No other person or party, including any contractor that assents hereto, shall be a beneficiary hereof or have any rights hereunder, and no rights are conferred by this Agreement upon any other person or party, whether or not their name may be used or otherwise identified in this Agreement or in the Assent of Contractor below. (j) Attorney's Fees. Should it become necessary for the City to engage the services of an attorney due to the failure on the part of the Borrower promptly and fully to perform or comply and abide by each and every stipulation, agreement, condition and covenant of this Agreement or any related loan document, the Borrower agrees to pay any and all of the City's attorney fees. The term "attorney fees" as used in this Agreement includes any and all legal fees of whatever nature, including, but not limited to, fees resulting from any appeal of any involuntary order or final judgment or any other appellate proceedings arising out of any litigation. 8 IN WITNESS WHEREOF. the parties hereto have caused this Agreement to be executed by their duly authorized officials on the day and date first above indicated. MT. CARMEL COMMUNITY DEVELOPMENT CORPORATION OF CLEARW ATER,INC. (7 I ( t? B()Ju ) V PresIde . d - ~ "-~(t> Date Continued: ATTEST: s~ky 1.r :2. -:J() -0 ~ Date Countersigned: CITY OF CLEARWATER, FLORIDA ~tf{~ V. Hibbard ' Mayor-Councilmember ~~~ I liam B. Home, II City Manager -1L Continued: Attest: l.J~ 9 DEFFERED PAYMENT MORTGAGE NOTE CITY OF CLEARWATER ECONOMIC DEVELOPMENT AND HOUSING DEPARTMENT 112 South Osceola Avenue Clearwater, Florida 33756 Borrower(s): MT. CARMEL COMMUNITY DEVELOPMENT CORPORATION OF CLEARWATER, INC., a not-for-profit Florida corporation Address: 1014 Pennsylvania Avenue, Florida 33755 FOR VALUE RECEIVED, the undersigned, jointly and severally, promise to pay to the order of the CITY OF CLEAR WATER, at the above address (hereinafter called the "City"), its successors and assigns, the sum of ONE HUNDRED-EIGHTY FIVE THOUSAND and NO/100---- DOLLARS ($185,000.00). Payment of the principal and interest of this NOTE shall be as follows: This NOTE is deferred for six (6) months from the date of NOTE. On the first day of (the 7Th month) the note shall be due and payable. No extensions will be granted, unless authorized by the City. (This is a Balloon Note). Default of the tenns of the mortgage, note or the restrictive covenants shall cause this NOTE to become due and payable. Upon default, the City, at its option, may prepare an alternative promissory note requiring monthly payments of principal and interest. The interest rate shall be whatever the Prime Rate is at the time of default. All payments on the alternative note shall be applied first to interest to date of receipt, then to principal, then to late charges due. In the event of default of this note or alternative note, the mortgagee's remedy shall be limited to foreclosure on the land subject to the mortgage; and, mortgagee shall be entitled to collect any costs related to foreclosure. The undersigned shall reserve the right to reject the alternative note by paying the principal amount of this NOTE within 30 days of default. Failure of the undersigned to pay the principal amount of this NOTE or execute an alternative note within 30 days of notice will constitute failure on the part of the undersigned. Such failure will be subject to suit by the City to recover on this NOTE. If suit is instituted by the City to recover on this NOTE, the undersigned agree(s) to pay all costs of such collection including reasonable attorney's fees and court costs. Failure of the City to exercise any option to which it may be legally entitled to enforce the tenns of this NOTE shall not constitute a waiver of such default. During the deferred term this NOTE will not accrue interest. Upon default, this NOTE will accrue interest at the highest rate allowed by law per annum until the principal amount of this NOTE is paid. The undersigned reserve(s) the right to prepay the principal, in whole or in part, at any time, without payment of premiums or penalties. Any payment of this NOTE shall be applied to the principal due on the NOTE. The principal amount of this NOTE will be repaid with the proceeds from the sale of the property and released from the mortgage accordingly. Said proceeds may be in cash or in the form of a down payment assistance - deferred payment second mortgage note secured by the property sold. Said down payment assistance loan shall be to a homebuyer whose income does not exceed 80010 if area median income as determined annually. Upon payment of part of the outstanding principal, the City agrees to release from the mortgage and note, a part of the mortgaged real property as determined by the City. This NOTE is secured by a mortgage duly filed for record in Pinellas County, Florida. DEMAND, protest and notice of demand and protest are hereby waived and the undersigned hereby waives, to the extent authorized by law, any and all homestead and other exemption rights which otherwise would apply to the debt evidenced by this NOTE. IN WITNESS WHEREOF, this NOTE has been duly executed by the undersigned, as of its date. ;} -J. 0 rd- GKJ (;, Date