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Promissory Note
PROMISSORY NOTE
Development Impact Fee Deferral Program
Cotati Station Apartments Project
Cotati, California
September 13, 2022
FOR VALUE RECEIVED, the undersigned ______________________ (“Owner”) promises to pay to the City of Cotati (“City”) at 201 West Sierra Avenue, Cotati, CA 94931, or such other place as City may from time to time designate by written notice to Owner, in lawful money of the United States, the principal sum of One Million Five Hundred Thirty-Nine Thousand Six Hundred Fifty-Four and 00/100 Dollars ($1,539,654) , together with interest on the outstanding principal balance in accordance with the terms set forth in this Note. This Promissory Note (this “Note”) is secured by that certain Deed of Trust, Assignment of Rents, Fixture Filing and Security Agreement (the “Deed of Trust”) dated as of the date hereof, executed by Owner and recorded against the Property in the Official Records of Sonoma County.
In addition to securing Owner’s obligation to repay the sums payable pursuant to this Note, the Deed of Trust secures Owner’s obligations set forth in that certain Development Impact Fee Deferral Agreement (the “Deferral Agreement”) dated as of the date hereof, executed by Owner and City, and recorded against the Property. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Agreement.
1. Interest Rate; Maturity Date. Commencing on the Effective Date of the Deferral Agreement, through the date that all indebtedness and other amounts payable under this Note are paid in full, interest shall accrue on the outstanding principal balance of this Note at a rate equal to the average annual rate of interest earned by the City on its investment of pooled funds for the prior Fiscal Year (the “LAIF Rate”). The entire outstanding principal balance of this Note, together with accrued interest, and all other sums accrued hereunder shall be payable in full on the Due Date set forth in the Deferral Agreement (the “Maturity Date”). Notwithstanding the foregoing, the entire outstanding principal balance of this Note, together with accrued interest and all other sums due hereunder, shall be immediately due and payable upon the occurrence of an Event of Default (as defined in Section 6).
2. Prepayment. Owner may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding principal balance due under this Note provided that each such payment is accompanied by accrued interest on the amount of principal prepaid calculated to the date of such repayment. Payments shall be applied first to any unpaid late charges and other costs and fees then due, then to accrued but unpaid interest, and then to principal.
3. Due on Sale; Restrictions on Assignment and Assumption. The entire unpaid principal balance and all sums accrued hereunder shall be immediately due and payable upon the transfer or other event specified in Section 1(b) of the Deferral Agreement, absent City consent, of all or any part of the Property or the Project, or any interest therein, or upon the occurrence of 2 Development Impact Fee Deferral Program
Promissory Note
an Event of Default under this Note or the Deed of Trust, subject to the expiration of any applicable cure period. Without limiting the generality of the foregoing, this Note shall not be assumable without City’s prior written consent, which consent may be granted or denied in City’s sole discretion.
4. Manner of Payment. All payments on this Note shall be made to the City at 201 West Sierra Avenue, Cotati, CA 94931 or such other place as City shall designate to Owner in writing, or by wire transfer of immediately available funds to an account designated by the City in writing.
5. Events of Default; Acceleration of Payment. Each of the following events will constitute an event of default (each, an “Event of Default”) under this Note permitting City to declare all sums payable hereunder immediately due and payable, and to exercise all remedies available to City pursuant to the Agreement and the Deed of Trust:
(a) Failure to pay when due the principal payment or other sum due under the Deferral Agreement or the Deed of Trust;
(b) Any representation or warranty contained in the Application, the Agreement, this Note, the Deed of Trust or any document furnished in connection with the foregoing proves to have been false or misleading in any material adverse respect when made;
(c) A default has been declared by a lender under any loan secured by a deed of trust on the Project;
(d) Pursuant to or within the meaning of the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors (a “Bankruptcy Law”): (1) Owner (i) commences a voluntary case or proceeding, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) applies for or consents to the appointment of a trustee, receiver, assignee, liquidator or similar official, (iv) makes an assignment for the benefit of its creditors, or (v) admits in writing its inability to pay its debts as they become due; or (2) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against Owner in an involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or similar official for Owner or substantially all of Owner’s assets, (iii) orders the liquidation of Owner, or (iv) issues or levies a judgment, writ, warrant of attachment or similar process against the Property or any other property of Owner, and in each case the order or decree is not released, vacated, dismissed or fully bonded within sixty (60) days after its issuance;
(e) An Event of Default is declared under the Deferral Agreement or the Deed of Trust, subject to the expiration of any applicable cure period set forth in such documents;
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Promissory Note
(f) Owner defaults in the performance of any term, provision, covenant or agreement (other than an obligation enumerated in this Section 5) contained in this Agreement or unless a shorter cure period for such default is specified herein, the default continues for ten (10) days in the event of a monetary default or thirty (30) days in the event of a nonmonetary default after the date upon which the City shall have given written notice of the default to Owner (or such longer time as the City may agree upon in writing), provided that in each case Owner commences to cure the default within thirty (30) days and thereafter prosecutes the curing of such default with due diligence and in good faith; or (g) Owner allows or permits occupancy or resale for the purpose of occupancy without payment of the Deferred Fees.
6. Default Rate. Upon the occurrence of an Event of Default, interest shall automatically be increased without notice to the rate of ten percent (10%) per annum (the “Default Rate"); provided however, if any payment due hereunder is not paid when due, the Default Rate shall apply commencing upon the due date for such payment. When Owner is no longer in default, the Default Rate shall no longer apply, and the interest rate shall once again be the rate specified in Section 1 of this Note. Notwithstanding the foregoing provisions, if the interest rate charged exceeds the maximum legal rate of interest, the rate shall be the maximum rate permitted by law.
The imposition or acceptance of the Default Rate shall in no event constitute a waiver of a default under this Note or prevent the City from exercising any of its other rights or remedies.
7. Remedies. Upon the occurrence of any Event of Default, in addition to its other rights under this Note, at law or in equity, City may exercise any one or more of the following rights and remedies without prior demand:
a) Accelerate and declare the entire unpaid balance of this Note together with all accrued interest thereon, if any, and all other sums owed to the City immediately due and payable; and
b) Proceed at law or in equity to require Owner to perform its obligations and covenants under this Note; and
c) Foreclose on the Property pursuant to the Deed of Trust.
The remedies provided herein are cumulative and not exclusive of, and do not prejudice any other remedy provided by law.
8. Attorneys’ Fees. Owner agrees to pay all costs and expenses, including reasonable attorneys’ fees, which City may incur in the collection or enforcement of this Note and the exercise of any or all of its rights and remedies hereunder, whether or not suit is filed, and all such sums shall be a part of the indebtedness secured by the Deed of Trust. 4 Development Impact Fee Deferral Program
Promissory Note
9. No Offset; Owner’s Waivers. Owner hereby waives any rights of offset it now has or may hereafter have against City, its successors and assigns, and agrees to make the payments called for hereunder in accordance with the terms of this Note. Owner hereby waives diligence, presentment, protest, and demand, and notice of protest, notice of dishonor and notice of nonpayment of this Note, and expressly waives any rights to be released by reason of any extension of time or change in terms of payment, or change, alteration or release of any security given for the payments hereof, and expressly waives the right to plead any and all statutes of limitation as a defense to any demand on this Note.
10. Notices. Any notice required or permitted to be given hereunder shall be given in accordance with Section 12 of the Deferral Agreement.
11. Governing Law. This Note is construed in accordance with and is governed by the laws of the State of California without regard to principles of conflicts of laws.
12. Severability. If any provision of this Note is held by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof are not in any way affected or impaired thereby.
13. No Waiver by City; Remedies Cumulative. The rights and remedies of City under this Note shall be cumulative and not alternative. No waiver by City of any right or remedy under this Note shall be effective unless in writing signed by City. Neither the failure nor any delay in exercising any right, power or privilege under this Note will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege by City will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable law: (a) no claim or right of City arising out of this Note can be discharged by City, in whole or in part, by a waiver or renunciation of the claim or right unless in a writing, signed by City; (b) no waiver that may be given by City will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on Owner will be deemed to be a waiver of any obligation of Owner or of the right of City to take further action without notice or demand as provided in this Note.
Owner hereby waives presentment, demand, protest, notices of dishonor and of protest and all defenses and pleas on the grounds of any extension or extensions of the time of payment or of any due date under this Note, in whole or in part, whether before or after maturity and with or without notice.
14. Joint and Several Obligations. If this Note is executed by more than one person as Owner, the obligations of each Owner will be joint and several.
15. Entire Agreement; Amendments in Writing. This Note, together with the Deferral Agreement and the Deed of Trust, sets forth the entire understanding and agreement of Owner and City with respect to the subject matter hereof. Any amendment to this Note must be in writing signed by both City and Owner.
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Promissory Note
16. Relationship of the Parties. The relationship of the Parties under this Note is solely that of Owner and lender, and the deferral of fees evidenced by this Note and secured by the Deed of Trust will in no manner make City the partner or joint venturer of Owner.
17. Time. Time is of the essence in the performance of the terms and conditions of this Note.
18. Headings. The headings within this Note are for the purpose of reference only and do not limit or otherwise affect any of the terms of this Note.
Executed as of the date first written above:
__________________________
By: ____________________________
Its:____________________________
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