Agenda - Council - 09/27/2011 - Special

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2695614v12 ARTICLE VIII LOAN NO. 2 Section 8.1 Loan No. 2. To further assist Developer with the construction of the Housing Development Project, the HRA proposes to make a loan to Developer in an original principal amount equal to the sum of (i) $6,825,000.00 and (ii) the Costs of Issuance pursuant to the terms of the Loan Agreement and the Note No. 2. The HRA will fund Loan No. 2 with the proceeds of the Temporary TIF Bonds Immediately prior to the HRA's conveyance of the Development Property to Developer and the HRA's and Developer's execution of the Loan Agreement and Note No. 2 pursuant to Section 8.2 below, the City will provide the HRA and Developer with the City's reasonable estimate of the Costs of Issuance and the HRA will complete the Loan Agreement, Note No. 2 and the Personal Guaranty with the original principal amount of Loan No. 2. Section 8.2 Loan Agreement, Note No. 2, and Personal Guaranty. Contemporaneous with the HRA's conveyance of the Development Property to Developer: the HRA and Developer must each execute the Loan Agreement and must each deliver an original, executed Loan Agreement to the other party; Developer must execute Note No. 2 and deliver Note No. 2 to the HRA; and Developer must cause the Personal Guarantor to execute the Personal Guaranty and deliver the Personal Guaranty to the HRA. In the event of a conflict between the terms of Note No. 2 and the terms of this Development Agreement, the terms of Note No. 2 control. In the event of a conflict between the terms of this Agreement and the terms of the Loan Agreement, the terms of the Loan Agreement control. Section 8.3 Initial Interest Rate, Interest Rate Increase and Default Interest Rate. Simple interest will accrue on the unpaid principal balance of Note No. 2 from the date funds are advanced until Note No. 2 is paid in full at the rate of 6.27% per annum unless the rate is increased pursuant to this Section 8.3. If the Developer prepays a total of $3,000,000.00 or more of the outstanding balance of Loan No. 2 on or before the date 18 months after the date of the first disbursement of proceeds of Loan No. 2, the interest rate remains at 6.27% per annum until the maturity date as established pursuant to Section 8.4. If Developer does not prepay a total of $3,000,000.00 or more on or before the date 18 months after the date of the first disbursement of proceeds of Loan No. 2, the interest rate increases on the date 18 months from the date of the first disbursement of proceeds of Loan No. 2 to 8.27% per annum and remains at 8.27% per annum until the earlier of the date Developer prepays a total of $3,000,000.00 or more or the maturity date. If after the date 18 months after the date of the first disbursement of proceeds of Loan No. 2 and prior to the maturity date of Note No. 2, Developer prepays a total of $3,000,000.00, the interest rate will be reduced to 6.27% per annum from and after the date Developer has prepaid a total of $3,000,000.00 If an Event of Default occurs under the Loan Agreement, the HRA gives Developer notice of the Event of Default and Developer does not cure the default within the cure period, if any, provided for in the Loan Agreement the interest rate then in affect is increased by 5% per annum. Section 8.4 Repayment Terms. The entire outstanding principal balance and all accrued, unpaid interest under Note No. 2 is due and payable in full upon the earlier of (i) June 1, 2015 or (ii) a Sale of the Development Property. Upon the occurrence of an Event of Default, 14