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1 PROMISSORY NOTE
(965 Weeks Street Project)
$7,214,000 East Palo Alto, California
____ [insert date]___
FOR VALUE RECEIVED, the undersigned MP 965 Weeks Street Associates, L.P., a California limited partnership ("Borrower"), promises to pay to the City of East Palo Alto, a California municipal corporation ("Holder") the principal sum of up to Seven Million Two Hundred Fourteen Thousand Dollars ($7,214,000), plus interest thereon pursuant to Section 2 below.
1. Borrower's Obligation. This Note evidences Borrower's obligation to pay the Holder the total principal amount of Seven Million Two Hundred Fourteen Thousand Dollars ($7,214,000) which consist of a loan in the amount of Seven Hundred Fourteen Thousand Dollars ($714,000) (“Housing Fund Loan”) and a loan in the amount of Six Million Five Hundred Thousand Dollars ($6,500,000) (“State Funds Loan”, and collectively with the Housing Fund Loan, the “City Loan”) with interest as set forth herein . The Housing Fund Loan and the State Funds Loan are made to finance the construction of the Improvements pursuant to that certain Disposition, Development and Loan Agreement between Borrower and Holder dated December 15, 2020 as amended by the First Amendment to the Disposition, Development and Loan Agreement dated _____, 2023 ("Loan Agreement"). All capitalized terms used but not defined in this Note have the meanings set forth in the Loan Agreement.
2. Interest. Funds disbursed under this Note for the Housing Fund Loan bear simple interest at the rate of ____ percent (_%) per annum, calculated on a 365-day per year basis, from the date of disbursement. Funds disbursed under this Note for the State Fund Loan shall not bear interest. If a Default occurs, interest on the principal balance of the City Loan will begin to accrue as of the date of Default (following expiration of applicable notice and cure periods) and continuing until such time as the City Loan funds are repaid in full or the Default is cured, at the Default Rate.
3. Term and Repayment Requirements. Principal and interest under this Note, are due and payable in accordance with this Note and as set forth in Sections 4.5 and 4.6 of the Loan Agreement. In any event, the unpaid principal balance, together with any accrued interest, is due and payable not later than the date that is the fifty-seventh (57th) anniversary of the Ground Lease; provided, however, if a record of the commencement of the Ground Lease cannot be located or established, the City Loan is due and payable on the fifty-seventh (57th) anniversary of the date of this Note.
4. No Assumption. This Note is not assumable by the successors and assigns of Borrower without the prior written consent of Holder, except as may be otherwise set forth in the Loan Agreement.
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2 5. Security. This Note is secured by the City Deed of Trust wherein Borrower is the trustor and Holder is the beneficiary.
6. Terms of Payment.
(a) Borrower shall make all payments due under this Note in currency of the United States of America to Holder at the City of East Palo Alto, 2415 University Avenue, East Palo Alto, California 94303, Attention: City Manager, or such other place as Holder may from time to time designate.
(b) All payments on this Note are without expense to Holder. Borrower shall pay all costs and expenses, including reconveyance fees and reasonable attorney's fees of Holder, incurred in connection with the enforcement of this Note and the release of any security hereof. (c) Notwithstanding any other provision of this Note, or any instrument securing the obligations of Borrower under this Note, if, for any reason whatsoever, the payment of any sums by Borrower pursuant to the terms of this Note would result in the payment of interest that exceeds the amount that Holder may legally charge under the laws of the State of California, then the amount by which payments exceed the lawful interest rate will automatically be deducted from the principal balance owing on this Note, so that in no event is Borrower obligated under the terms of this Note to pay any interest that would exceed the lawful rate. (d) The obligations of Borrower under this Note are absolute and Borrower waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reason whatsoever.
(e) This Note shall be nonrecourse to Borrower and its partners, pursuant to and except as provided in Section 4.7 of the Loan Agreement, which Section 4.7 is hereby incorporated into this Note.
7. Default.
(a) Upon the occurrence of a Default, the entire unpaid principal balance, together with all interest thereon, and together with all other sums then payable under this Note and the Deed of Trust, will at the option of Holder, become immediately due and payable without further demand.
(b) Holder's failure to exercise the remedy set forth in Subsection 7(a) above or any other remedy provided by law upon the occurrence of a Default does not constitute a waiver of the right to exercise any remedy at any subsequent time in respect to the same or any other Default. The acceptance by Holder of any payment that is less than the total of all amounts due and payable at the time of such payment does not constitute a waiver of the right to exercise any of the foregoing remedies or options at that time or at any subsequent time, or nullify any prior exercise of any such remedy or option, without the express consent of Holder, except as and to the extent otherwise provided by law.
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3 8. Waivers.
(a) Borrower waives: (i) demand, presentment, protest, notice of demand, notice of non-payment, notice of dishonor, notice of protest, and all other demands and notices in connection with the delivery, acceptance, performance, and enforcement of this Note; and (ii) any and all lack of diligence or delays by Holder in collection or enforcement hereof. Borrower expressly agrees that this Note or any payment hereunder may be extended from time to time, and that Holder may accept further security or release any security for this Note, all without in any way affecting the liability of Borrower.
(b) Any extension of time for payment of this Note or any installment hereof made by agreement of Holder with any person now or hereafter liable for payment of this Note must not operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part.
9. Miscellaneous Provisions.
(a) All notices to Holder or Borrower are to be given in the manner and at the addresses set forth in the Loan Agreement, or to such addresses as Holder and Borrower may therein designate.
(b) Borrower promises to pay all costs and expenses, including reasonable attorney's fees, incurred by Holder in the enforcement of the provisions of this Note, regardless of whether suit is filed to seek enforcement.
(c) This Note may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.
(d) This Note is governed by and construed in accordance with the laws of the State of California.
(e) The times for the performance of any obligations hereunder are to be strictly construed, time being of the essence.
(f) The City Documents, of which this Note is a part, contain the entire agreement between the parties as to the City Loan and the provisions of the City Documents are incorporated herein by reference. This Note may not be modified except upon the written consent of the parties.
[Signature on following page.]
S-1
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IN WITNESS WHEREOF, this Promissory Note is executed by Borrower as of the day and year first written above.
BORROWER
MP 965 Weeks Street Associates, L.P.,
a California limited partnership
By: MP CANDO Weeks Street, LLC,
a California limited liability company,
its general partner
By: MidPen Housing Corporation,
a California nonprofit public benefit corporation,
its manager
By: ____________________________
Name: __________________________
Its: _____________________________
By: East Palo Alto Community Alliance and
Neighborhood Development Organization,
a California nonprofit public benefit corporation,
its member
By: ____________________________
Name: __________________________
Its: _____________________________