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HomeMy WebLinkAboutNew Village Arts, Inc.; 2025-07-17;Attachment A LOAN AGREEMENT THIS LOAN AGREEMENT {"Agreement") is made and entered into as of .J ~\~ \3:: , 2025 {"Effective Date"), by and between the CITY OF CARLSBAD {"City"), and NEW VILLAGE ARTS, IC., a California nonprofit corporation ("New Village Arts"). RECITALS The following recitals are a substantive part of this Agreement: WHEREAS, the City is the owner of that real property situated at 2787 State Street, City of Carlsbad, County of San Diego, California, consisting of approximately 9,400 square feet of commercial building space, designated as Assessor Parcel Number 203-295-01 and 02 ("Premises"); and WHEREAS, City and New Village Arts are parties to that certain Lease Agreement dated as of July 27, 2021, for the Premises authorized by Resolution No. 2021-182 ("Lease Agreement"); and WHEREAS, on Oct. 30, 2024, New Village Arts submitted a request to the City initially seeking a $893,259 loan to retire its building renovation loan with Endeavor Bank related to its tenant improvement project; and WHEREAS, New Village Arts informed the City that it was awarded a Prebys Foundation ("Foundation") $1 :$1 matching grant for every dollar raised to meet the Foundation's target fundraising goals from October 2024 through December 2025, up to a total of $625,000, which would allow New Village Arts to raise a total of $1.25M; and WHEREAS, the Foundation also awarded New Village Arts an additional $125,000 in resources to help guide their capital fundraising campaign over the term of the matching grant through December 2025; and WHEREAS, on Jan. 28, 2025, the City Council adopted Resolution No. 2025-028 thereby appointing the City Manager, or designee, as the city's real estate negotiator to negotiate a loan agreement with modified lease terms with New Village Arts; and WHEREAS, through negotiations, New Village Arts reduced its loan request to $500,000; and WHEREAS, New Village Arts shall pay $393,259 towards the Endeavor Bank loan by July 31, 2025, using its fundraising and matching grant funds, thereby reducing the Endeavor Bank loan balance to $500,000; and WHEREAS, New Village Arts shall use the Foundation's matching grant fundraising opportunity to repay any loan obligations due to the City; and WHEREAS, the City desires to loan New Village Arts the principal amount of five hundred thousand dollars and zero cents ($500,000) through January 31, 2026 {"Loan"), to pay off New Village Arts' loan with Endeavor Bank; and WHEREAS, concurrent with this Agreement, the parties executed the First Amendment dated "'-L:=~,........1,---4--_ _, 2025 to the Lease Agreement ("Lease Amendment"), which among other lease modifications, convert any remaining loan balance due to City as of January 31, 2026, into a lease payment obligation; and WHEREAS, this Agreement shall be interpreted in conjunction the Lease Agreement, as amended by the Lease Amendment. 1 NOW, THEREFORE, the City and the New Village Arts in consideration of the mutual covenants, conditions and promises herein below contained hereby agree as follows: AGREEMENT 1. New Village Arts Loan. Subject to New Village Arts's performance of all of the terms, covenants and conditions set forth herein, the City hereby agrees to loan to New Village Arts, and New Village Arts agrees to borrow from the City, Five Hundred Thousand Dollars ($500,000) (the "Loan") to pay off the Endeavor Bank loan used to complete the tenant improvement project for the Premises. The City shall make the Loan to New Village Arts from available funds in the City's General Fund, which shall be disbursed directly to Endeavor Bank as provided herein. 1.1 Loan Terms. a. Interest Rate. Upon the Effective Date of this Agreement, the Loan shall accrue interest at the rate of three percent (3%) simple interest per annum. b. Payment Terms. New Village Arts shall make interest-only payments in the amount of $1,250 per month on the Loan from the Effective Date through January 31, 2026. c. Maturity Date. The entire principal balance, together with any unpaid interest, shall be due and payable in full on or before January 31, 2026 ("Maturity Date"). d. Financial Reporting. New Village Arts shall provide the City with monthly financial reports during the 2025 calendar year, due within fifteen (15) days of the end of each corresponding month. These reports shall include Profit and Loss Statements, Balance Sheets, and detailed capital fundraising updates reflecting both fundraising contributions and matching grant funds . The City may request additional clarification or detail as reasonably necessary to evaluate financial performance and fundraising progress. 1.2 Security for Loan. The Promissory Note, in the form of Exhibit "A" (the "Promissory Note") attached hereto and incorporated herein, shall be secured by the recordation of a UCC-1 fixture filing, subject to priority creditor claims, against New Village Arts's personal property (defined as personal property owned by New Village Arts and not on loan to the New Village Arts by third parties), including but not limited to, Tenant's Property as defined in Section 2.5 and 13.1 of the Lease Agreement, and if applicable, any fixtures installed in the Premises or improvements to the Premises owed by New Village Arts under the Lease Agreement. 1.3 Disbursement of Loan. The proceeds of the Loan shall be disbursed directly to Endeavor Bank by the City pursuant to the conditions set forth below, any of which conditions may be waived by the City in its sole and absolute discretion: a. Proof of Payment. To ensure the City's Loan proceeds fully satisfy the outstanding Endeavor Bank loan balance, City shall not disburse the Loan proceeds until New Village Arts furnishes proof of payment in the amount of $393,259 to Endeavor Bank, which is due by July 31, 2025. b. Execution of Documents. New Village Arts shall have executed and delivered to the City the Loan Agreement, Promissory Note, Lease Amendment, and any other documents required hereunder. c. Proof of Insurance. New Village Arts shall have provided to the City a certificate of insurance that satisfies -the requirements of Article 9 "INSURANCE" of the Lease Agreement, as may have been amended from time to time, including the Lease Amendment. 2 d. No Default, Representations and Warranties. New Village Arts shall not be in default or breach in any of its obligations under the terms of this Agreement and/or the Lease Agreement and Lease Amendment. All representations and warranties of New Village Arts contained herein shall be true and correct in all material respects on and as of the date of any disbursement of the Loan as though made at that time, and all covenants of New Village Arts which are required to be performed prior to the disbursement of the Loan shall have been performed by such date. 1.4 Assumption. The Promissory Note shall not be assumable by successors and assigns of New Village Arts without the prior written consent of the City. 1.5 Repayment of Loan. New Village Arts's obligation to repay the Loan shall be set forth in t he Promissory Note. The Promissory Note shall be for a term of approximately six-months from the date of the execution of this Agreement, expiring on January 31, 2026. 1.6 Conversion to Lease Obligation. If any portion of the Loan remains unpaid as of January 31, 2026, such amount shall be deemed converted to a lease payment obligation pursuant to Section 1.4(b) of the Lease Amendment, the terms of which are incorporated herein by this reference. 2. Operating Requirements. 2.1 Lease Compliance. New Village Arts shall comply with all obligations under the Lease Agreement and Lease Amendment, and otherwise shall not be in breach or default, of any term or condition contained therein. 2.2 Insurance. During the term of the Promissory Note and any security interest thereof, New Village Arts shall comply with all requisite insurance policies to be maintained pursuant to Article 9 of the Lease Agreement, including the Lease Amendment, and incorporated herein by this reference. All requisite policies shall include coverage for this Agreement. 2.3 Indemnification and Hold Harmless. Without limiting any indemnification obligations under the Lease Agreement, New Village Arts shall indemnify, hold harmless and defend, with attorney(s) reasonably acceptable to the City, the City and its officers, elected and appointed boards and officials, employees, representatives and agents, from and against any and all liability, damages, costs, losses, claims and expenses, suits, actions, proceedings, judgments, settlement payments, including attorney's fees, however caused, resulting directly or indirectly from or connected with the Premises and/or the performance of this Agreement. 2.4 Compliance with Laws. The New Village Arts shall use, maintain and operate the Premises in conformity with all applicable federal, state, and local laws and regulations, including but not limited to, the zoning and development standards of the City of Carlsbad, building, plumbing, mechanical and electrical codes, and all other provisions of the City of Carlsbad Municipal Code, all applicable environmental laws, and all applicable disabled and handicapped access requirements, including without limitation the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq. 2.5 Nondiscrimination. New Village Arts for itself and its successors and assigns, agrees that there shall be no discrimination against or segregation of any person or group of persons, on account of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, marital status, sex, age, or sexual orientation in the use, occupancy, tenure, or enjoyment of the Premises nor shall the New Village Arts or any person claiming under or through the New Village Arts establish or permit any such 3 practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy, of, contractors or vendees in the Premises. 3. New Village Arts's Representations and Warranties. New Village Arts represents and warrants to City as follows: 3.1 Authority. New Village Arts has full right, power and lawful authority to undertake all obligations as provided herein, and the execution, performance and delivery of this Agreement by New Village Arts has been fully authorized by all requisite actions on the part of the New Village Arts. The parties who have executed this Agreement on behalf of New Village Arts are authorized to bind New Village Arts by their signatures hereto. 3.2 Lien Waivers. If applicable, New Village Arts has received appropriate waivers of mechanics and materialmen's lien rights and stop notice rights executed by all contractors and other persons that have rendered services or delivered materials for and/or associated with the improvements to the Premises. 3.3 Litigation. To the best of New Village Arts's knowledge, there are no actions, suits, material claims, legal proceedings, or any other proceedings affecting the New Village Arts or any parties affiliated with New Village Arts, at law or in equity before any court or governmental agency, domestic or foreign, which if adversely determined, would materially impair the right or ability of New Village Arts to execute or perform its obligations under this Agreement or any documents required hereby to be executed by New Village Arts, or which would materially adversely affect the financial condition of New Village Arts or any parties affiliated with New Village Arts. 3.4 No Conflict. To the best of New Village Arts's knowledge, New Village Arts's execution, delivery, and performance of its obligations under this Agreement shall not constitute a default or a breach under any contract, agreement or order to which New Village Arts or any parties affiliated with New Village Arts is a party or by which it is bound. 3.5 No Bankruptcy. No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization, receivership or other proceedings have been filed or are pending or threatened against the New Village Arts or any parties affiliated with New Village Arts, nor are any of such proceedings contemplated by New Village Arts or any parties affiliated with New Village Arts. 3.6 Notice of Changed Conditions. New Village Arts shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 3 not to be true in any material respect, immediately give written notice of such fact or condition to City. Such exception(s) to a representation shall not be deemed a breach by New Village Arts hereunder but shall constitute an exception which City shall have a right to approve or disapprove if such exception would have a material adverse effect on the Premises and/or operation of at the Premises. If City elects to disburse the Loan to the New Village Arts following disclosure of such information, New Village Arts's representations and warranties contained herein shall be deemed to have been made as of the date of the disbursement of the Loan, subject to such exception(s). If following the disclosure of such information the New Village Arts fails to cure such matter within the time set forth in Section 5 hereof for the cure of defaults, City may elect in its sole and exclusive discretion to terminate this Agreement by written notice to the New Village Arts. 4. Remedies for Default. A failure by either party to perform any action or covenant required by this Agreement, the Promissory Note, any security interest thereof or the Lease Agreement, including the Lease Amendment, or any loan or deed of trust which is senior to the Loan, within the time periods provided herein following notice and failure to cure as described hereafter, constitutes a "Default" under this Agreement. A party 4 claiming a Default shall give written notice of Default to the other party specifying the Default complained of. Except as otherwise expressly provided in this Agreement, the claimant shall not institute any proceeding against any other party, and the other party shall not be in Default if such party cures such default within ten {10) days if the claimed Default is a failure to pay amounts due pursuant to the Promissory Note, or thirty (30) days from receipt of such notice for all other claimed Defaults hereunder, unless a longer cure period is provided in any security interest to the Promissory Note, the Lease Agreement, including the Lease Amendment, or other applicable document. However, in the event that such Default is other than a failure to pay money and is of such a nature that it cannot reasonably be cured within thirty {30) days from receipt of such notice, the claimant shall not institute any proceeding against the other party, and the other party shall not be in Default if such party immediately upon receipt of such notice, with due diligence, commences to cure, correct or remedy such failure or delay and completes such cure, correction or remedy with diligence as soon as reasonably possible thereafter. In the event that the New Village Arts is in default on any loan or deed of trust senior to the Loan, New Village Arts shall immediately deliver to the City a copy of such notice of default. Even if the holder of such loan or deed of trust has not exercised its rights or remedies with respect to such default, the City shall have the right terminate this Agreement by written notice to the New Village Arts. 4.1 Institution of Legal Actions. In addition to any other rights or remedies and subject to the restrictions otherwise set forth in this Agreement, either party may institute an action at law or equity to cure, correct or remedy any Default, to recover damages for any Default, or to obtain any other remedy consistent with the purpose of this Agreement. The City may also cause all indebtedness of the New Village Arts under this Agreement and the Promissory Note to become immediately due and payable, and may institute any applicable legal and/or equitable action. 4.2 Acceptance of Service of Process. In the event that any legal action is commenced by the New Village Arts against City, service of process on City shall be made by personal service upon the City or in such other manner as may be provided by law. In the event that any legal action is commenced by the City against the New Village Arts, service of process shall be made in such manner as may be provided by law and shall be effective whether served inside or outside of California. 4.3 Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by the other party. 4.4 Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any Default shall not operate as a waiver of any Default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 4.5 Applicable Law and Venue. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. Any legal and/or equitable action(s) must be instituted in the Superior Court of the County of San Diego, State of California, in an appropriate municipal court in that county, or in the United States District Court for the Southern District of California. 5. General Provisions. 5.1 Notices, Demands and Communications Between the Parties. Any approval, disapproval, demand, document or other notice ("Notice") which either party may desire to give to the other party under this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by reputable document 5 delivery service such as Federal Express that provides a receipt showing date and time of delivery, or {iii) mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below or at any other address as that party may later designate by Notice: To New Village Arts: New Village Arts To City: 2787 State Street Carlsbad, CA 92008 Attention: Kristianne Kurner City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attention: Real Estate Manager With a copy to: City of Carlsbad 1200 Carlsbad Village Drive Carlsbad, CA 92008 Attention: City Attorney Any written notice, demand or communication shall be deemed received immediately upon receipt; provided, however, that refusal to accept delivery after reasonable attempts thereto shall constitute receipt. Any notices attempted to be delivered to an address from which the receiving party has moved without notice shall be effective on the third day from the date of the attempted delivery or deposit in the United States mail. 5.2 Non-Liability of Officials and Employees of City. No officer, elected or appointed public official, or employee of City shall be personally liable to the New Village Arts, or any successor in interest, in the event of any Default or breach by City or for any amount which may become due to the New Village Arts or its successors, or on any obligations under the terms of this Agreement. 5.3 Counterparts. This Agreement may be signed in multiple counterparts which, when signed by all parties, shall constitute a binding agreement. 5.4 Entire Agreement. This Agreement, together with the Lease Agreement, Lease Amendment, Promissory Note, any security interest thereof, as well as any other attachments or exhibits thereto, contains the entire Agreement and understanding between the parties relating to the transaction contemplated by this Agreement. All prior or contemporaneous understandings, representations and statements, oral or written, are superseded by this Agreement and shall be of no further force or effect. Any modification, amendment, or addendum to this Agreement must be in writing signed by both parties. Each party is entering this Agreement based solely upon the representations set forth herein and upon each party's own independent investigation of any and all facts such party deems material. 5.5 No Waiver. A waiver by either party of a breach of any of the covenants, conditions or agreements under this Agreement to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions of this Agreement. 5.6 Modifications. Any alteration, change, or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance signed on behalf of each party. 6 5.7 Severability. If any term, prov1s1on, condition, or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law. 5.8 Legal Advice. Each party represents and warrants to the other the following: they have carefully read this Agreement, and in signing this Agreement, they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth in this Agreement, or have knowingly chosen not to consult legal counsel as to the matters set forth in this Agreement; and, they have freely signed this Agreement without any reliance upon any agreement, promise, statement or representation by or on behalf of the other party, or their respective agents, employees, or attorneys, except as specifically set forth in this Agreement, and without duress or coercion, whether economic or otherwise. 5.9 Time of Essence. Time is expressly made of the essence with respect to the performance by the parties of each and every obligation and condition of this Agreement. 5.10 Cooperation. Each party shall cooperate with the other in this transaction and, in that regard, sign any and all documents which may be reasonably necessary, helpful, or appropriate to carry out the purposes and intent of this Agreement including, but not limited to, releases or additional agreements. 5.11 Definitions. Any terms used in this Agreement but not separately defined herein shall have the meaning given to such terms in the Promissory Note or any security interest thereto, as appropriate. [Signature Page to Follow] 7 5.12 Authority. The individuals executing this Agreement and the instruments referenced in it on behalf of New Village Arts each represent and warrant that they have the legal power, right and actual authority to bind New Village Arts to the terms and conditions of this Agreement. Executed by New Village Arts this 10th day of July, 2025. NEW VILLAGE ARTS, INC., a California non-profit public benefit corporation (sign here) ~1t fet, Sec~~ Board of Directors CITY OF CARLSBAD, a municipal corporation of the State of California By: City Manager ATTEST: SHERRY FREISINGER, City Clerk By: New Village Arts Signature(s) Must be Notarized APPROVED AS TO FORM : CINDIE K. McMAHON, City Attorney 8 CALJFORNlA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE§ 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which.this certificate is attached, and not the trutMulness, accuracy, or validity of that document. State of California ) County of SA"4 l>\EG,O ) On ] }ID /2.S-before me, _e_v~~c..._t~l$~~-'flc{.-~_o_t..l_,,f-, NQ_.,_,,~A~f..~'(_.__-=-f'i_u=&_L--'--IG __ Date Here Insert Name and Title of the Officer personally appeared _______ M_A_f._Y_~~~~J!L _____________ _ Name(s) of Signer(s) who proved· to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person{s), or the entity upon behalf of which the person(s) acted, executed the instrument. ············i CUR'm JACKSON ~ a· f'jotary Public. C.llfomll I j ? San 0lf10 County _ . Commtsston I 1517931 11,y Comm. E,q,tm lltly 10, 2029 Place Notary Seal Above I certify under PENAL 1Y OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. • ---------------OPTIONAL--------------- Though this section is optional, completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: ____________________________ _ Document Date: ___________________ Number. of Pages: _____ _ Signer(s} Other Than Named Abpve: _______________________ _ Capacity(ies) Claimed by Signer(s) Signer's Name: ____________ _ Signer's Name: ____________ _ D Corporate Officer -Title(s): ______ _ D Corporate Officer -Title(s): ______ _ D Partner -D Limited D General D Partner ~ D Limited D General D Individual O Attorney in Fact D lndividuai D Attorney in Fact D Trustee D Guardian or Conservator D Trustee D Guardian or Conservator 0 Other: ______________ _ 0 Other: ______________ _ Signer ls Representing: _________ _ Signer Is Representing: _________ _ ~:®!~~~~ ©2015 National Notary Association· www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827} Item #5907 Exhibit "A" PROMISSORY NOTE $500,000.00 .j u1 ~ 11:: ' 2025 Ca~ bad, California FOR VALUE RECEIVED, NEW VILLAGE ARTS, INC., a California nonprofit corporation ("New Village Arts"), promises to pay to the City of Carlsbad, (the "City"), at the City's office at 1635 Faraday Avenue, Carlsbad, California, 92008, or at such other place as the City may designate in writing, the sum of Five Hundred Thousand Dollars and no cents ($500,000), which represe_rJJ:s the "Loan Amount" pursuant to the Loan Agreement executed by the City and New Village Arts dated as of -:J ul'O 13:: , 2025 (the "Loan Agreement"). All capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Loan Agreement. Payments shall be made in currency of the United States of America which at the time of payment is lawful for the payment of public and private debts. 1. Agreement. This Promissory Note (the "Note") is given in accordance with the provisions of the Loan Agreement. The rights and obligations of New Village Arts and the City under this Note shall be governed by the Loan Agreement and by the additional terms set forth in this Note. In the event of any inconsistencies between the terms of this Note and the terms of the Loan Agreement or any other document related to the principal balance of this Note, the terms of this Note shall prevail. 2. Repayment of Note. The principal balance of the $500,000 loan hereof shall be paid by New Village Arts as follows: Loan Terms. a. interest per annum. Interest Rate. The Loan shall accrue interest at the rate of three percent (3%) simple b. Payment Terms. New Village Arts shall make interest-only payments in the amount of $1,250 per month on the Loan from the Effective Date through January 31, 2026. c. Maturity Date. The entire principal balance of the $500,000 loan, together with any unpaid interest, shall be due and payable in full on or before January 31, 2026 ("Maturity Date"). d. Proof of Payment. To ensure the City's Loan proceeds fully satisfy the outstanding Endeavor Bank loan balance, City shall not disburse the Loan proceeds until New Village Arts furnishes proof of payment in the amount of $393,259 to Endeavor Bank, which is due by July 31, 2025. e. Repayment from Capital Fundraising Campaign. Tenant is concurrently pursuing a capital fundraising goal of $250,000 between July 1, 2025, and December 31, 2025, which, if met, shall be matched by a $250,000 grant from the Prebys Foundation. The funds raised and matched shall be utilized to repay the $500,000 loan amount by January 31, 2026. 9 Fundraising Goal/Matching Grant Fundraising Period Fundraising Goal Prebys Match Total July 1, 2025 to December $250,000 $250,000 $500,000 31,2025 f. Conversion to Long-Term Lease Payments. Any remaining unpaid principal balance on the $500,000 Loan Agreement amount remaining as of January 31, 2026, shall convert into a lease payment obligation structured as an equivalent monthly rent payment and amortized over the applicable term according to the schedule below: Remaining Principal Balance Payment Term Interest Rate Estimated Monthly Rent Up to $25,0000 5 Years 4% Up to $4,604.13 $250,001 -$500,000 12 Years 5% Up to $4,624.45 All rent payments sha ll be due and payable monthly on the first (1st) day of each calendar month. If Tenant fa ils to pay rent within five (5) days of when rent becomes due and payable, Tenant shall pay Landlord a 2% late fee to compensate Landlord for its administrative expenses and/or losses. Tenant acknowledges that late payment by Tenant to Landlord shall cause Landlord to incur costs or losses not contemplated by this Lease, the exact amount of which would be extremely difficult to ascertain. The Parties agree that the 2% late fee represents a fair and reasonable estimate of the costs or losses that Landlord will incur by reason of late payment of rent by Tenant. Tenant may prepay all or part of the remaining principal loan balance at any time without penalty. Once Tenant has fulfilled its repayment obligations pursuant to the schedule above, the rent payment shall revert to the sum of one dollar ($1.00) per yea r. g. Payment Instructions. Rent shall be delivered to the Finance Department of the City of Carlsbad at 1635 Faraday Avenue, Carlsbad, California, 92008. The designated place of payment and filing may be changed at any time by Landlord upon ten (10) days written notice to Tenant. Tenant assumes all risk of loss if payments are made by mail. h. Security for Loan. The Promissory Note shall be secured by the recordation of a UCC-1 fixture filing, subject to priority creditor claims, against New Village Arts's personal property (defined as personal property owned by New Village Arts and not on loan to the New Village Arts by third parties), including but not limited to, Tenant's Property as defined in Section 2.5 and 13.1 of the Lease Agreement, and if applicable, any fixtures installed in the Premises or improvements to the Premises owed by New Village Arts under the Lease Agreement. 3. Waivers. a. No extension of time for payment of this Note made by agreement by the City with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of New Village Arts under this Note, either in whole or in part. b. Subject to the provisions of Section 14 of this Note, the obligations of New Village Arts under this Note shall be absolute and New Village Arts waives any and all rights to offset, deduct or withhold any payments or charges due under this Note for any reasons whatsoever. c. New Village Arts waives presentment, demand, notice of protest and nonpayment, notice of default or delinquency, notice of acceleration, notice of costs, expenses or leases or interest thereon, notice of 10 dishonor, diligence in collection or in proceeding against any of the rights of interests in or to property securing of this Note, and the benefit of any exemption under any homestead exemption laws, if applicable. d. No previous waiver and no failure or delay by City in acting with respect to the terms of this Note or any security interest shall constitute a waiver of any breach, default, or failure or condition under this Note, any security interest or the obligations secured thereby. A waiver of any term of this Note, any security interest or of any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver. 4. Attorneys' Fees and Costs. New Village Arts agrees that if any amounts due under this Note are not paid when due, to pay in addition, all costs and expenses of collection and reasonable attorneys' fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed. 5. Joint and Several Obligations. This Note is the joint and several obligations of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their heirs, successors and assigns. 6. Amendments and Modifications. This Note may not be changed orally, but only by an amendment in writing signed by New Village Arts and by the City. 7. New Village Arts Assignment Prohibited. In no event shall New Village Arts assign or transfer any portion of this Note without the prior express written consent of the City. 8. Terms. Any terms not separately defined herein shall have the same meanings as set forth in the Loan Agreement. 9. Acceleration and Other Remedies. Upon: (a} the occurrence of an event of Default as defined in the Loan Agreement, or (b} New Village Arts selling, contracting to sell, giving an option to purchase, conveying, leasing, further encumbering, mortgaging, assigning or alienating the New Village Arts's interest in the premises described in the Lease Agreement ("Premises"}, whether directly or indirectly, whether voluntarily or involuntarily or by operation of law, or any interest in the Premises, or suffering its title, or any interest in the Premises to be divested, whether voluntarily or involuntarily, without the consent of the City or as otherwise permitted under the Loan Agreement, City may, at City's option, declare the outstanding principal amount of this Note, together with other charges hereunder, and all other sums secured by any security interest, to be due and payable immediately, and upon such declaration, such principal and other sums shall immediately become and be due and payable without demand or notice. All costs of collection, including, but not limited to, reasonable attorneys' fees and all expenses incurred in connection with protection of, or realization on, the security for this Note, may be added to the principal hereunder, and shall accrue interest as provided herein. City shall at all times have the right to proceed against any portion of the security for this Note in such order and in such manner as City may consider appropriate, without waiving any rights with respect to any of the security. Any delay or omission on the part of the City in exercising any right hereunder, under the Loan Agreement shall not operate as a waiver of such right, or of any other right. No single or partial exercise of any right or remedy hereunder or under the Loan Agreement or any other document or agreement shall preclude other or further exercises thereof, or the exercise of any other right or remedy. The acceptance of payment of any sum payable hereunder, or part thereof, after the due date of such payment shall not be a waiver of the City's right to either require prompt payment when due of all other sums payable hereunder or to declare an event of Default for failure to make prompt or complete payment. 10. Consents. Pursuant to the terms and condition of the Loan Agreement and any changes thereto, New Village Arts hereby consents to: (a} any renewal, extension or modification (whether one or more} of the terms and/or time of payment under this Note, (b} the release or surrender or exchange or substitution of all or 11 any part of the security, whether real or personal, or direct or indirect, for the payment hereof, (c) the granting of any other indulgences to New Village Arts, and (d) the taking or releasing of other or additional parties primarily or contingently liable hereunder. Any such renewal, extension, modification, release, surrender, exchange or substitution may be made without notice to any endorser, guarantor or surety hereof, and without affecting the liability of said parties hereunder. 11. Successors and Assigns. Whenever "City" is referred to in this Note, such reference shall be deemed to include the City of Carlsbad and its successors and assigns, including, without limitation, any subsequent assignee or holder of this Note. All covenants, provisions and agreements by or on behalf of New Village Arts, and on behalf of any makers, endorsers, guarantors and sureties hereof which are contained herein shall inure to the benefit of the City and City's successors and assigns. 12. Usury. It is the intention of New Village Arts and City to conform strictly to the Interest Law, as defined below, applicable to this loan transaction. Accordingly, it is agreed that notwithstanding any provision to the contrary in this Note, or in any of the documents securing payment hereof or otherwise relating hereto, the aggregate of all interest and any other charges or consideration constituting interest under the applicable Interest Law that is taken, reserved, contracted for, charged or received under this Note, or under any of the other aforesaid agreements or otherwise in connection with this loan transaction, shall under no circumstances exceed the maximum amount of interest allowed by the Interest Law applicable to this loan transaction. If any excess of interest in such respect is provided for in this Note, or in any of the documents securing payment hereof or otherwise relating hereto, then, in such event: a. the provisions of this paragraph shall govern and control; b. neither New Village Arts nor New Village Arts' heirs, legal representatives, successors or assigns shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of interest allowed by the Interest Law applicable to this loan transaction; c. any excess shall be deemed canceled automatically and, if theretofore paid, shall be credited on this Note by City or, if this Note shall have been paid in full, refunded to New Village Arts; and d. the effective rate of interest shall be automatically subject to reduction to the Maximum Legal Rate of Interest (as defined below), allowed under such Interest Law, as now or hereafter construed by courts of appropriate jurisdiction. To the extent permitted by the Interest Law applicable to this loan transaction, all sums paid or agreed to be paid to City for the use, forbearance or detention of the indebtedness evidenced hereby shall be amortized, prorated, allocated and spread throughout the full term of this Note. For purposes of this Note, "Interest Law" shall mean any present or future law of the State of California, the United States of America, or any other jurisdiction which has application to the interest and other charges under this Note. The "Maximum Legal Rate of Interest" shall mean the maximum rate of interest that City may from time-to-time charge New Village Arts, and under which New Village Arts would have no claim or defense of usury under the Interest Law. 13. Miscellaneous. Time is of the essence hereof. This Note shall be governed by and construed under the laws of the State of California except to the extent Federal laws preempt the laws of the State of California. New Village Arts irrevocably and unconditionally submits to the jurisdiction of the Superior Court of the State of California for the County of San Diego or the United States District Court of the Southern District of California, as City hereof may deem appropriate in connection with any legal action or proceeding arising out of or relating to this Note. New Village Arts also waives any objection regarding personal or in rem jurisdiction or venue. 12 14. No Personal Liability. In the event of any default under the terms of this Note or any security interest, New Village Arts's officers, directors, agents and employees shall not be personally liable for the payment of this Note; provided, however, that the foregoing shall not in any way affect any rights the City may have under any state or federal laws, under this Promissory Note (as a secured party or otherwise), or under the Loan Agreement or any security interest to recover directly from New Village Arts any losses, damages, costs and expenses incurred by the City, or any funds, damages or costs (including without limitation reasonable attorneys' fees and costs) incurred by City as a result of fraud, misrepresentation or waste, and any costs and expenses incurred by the City in connection thereof (including without limitation reasonable attorneys' fees and costs). NEW VILLAGE ARTS: New Village Arts, Inc., a California nonprofit corporation 13 CALfFORNIA. A.LL-PURF>OSE ACKNOWLEDGMENT CIVIL CODE§ 1189 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the trut_hfulness, accuracy, or validity of that document. State of California ) County of SA.....i b\e(,{) ) On I f'aoJzs: before me, ------=C_\J_IZ,t-"-'J'--S----'~=Af-t:~~SO_t,..l __ , ~~-+-. __,_fZJ'-~....____,_i'_o-=P,-=L,=1-"'C.._____ Date· Here Insert Name and Title of the Officer personally appeared ------~M'--"-'Jr~(~'f--~~~-------------- Name(s) of Signer(s) who proved · to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within .instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted; executed the instrument. I certify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct." • ············i .. • CURTIS JACKSON j Moi.ry P\Jbllc • C.llfornt1 • 1 San Ditto County ! ·eommtsston 112517938 My Comm. [llptrts MIY 10, 2029 Place Notary Seal Above ----------------OPTIONAL---------------- Though this section is optional, completing this information can deter alteration of the document or • fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Document: ____________________________ _ Document Date: ___________________ Number. of Pages: _____ _ Signer(s) Other Than Named Abpve: ---------------:----------- Capacity(ies) Claimed by Signer(s) Signer's Name: ____________ _ Signer's Name: ____________ _ D Corporate Officer -Title(s): ______ _ D Corporate Officer -Title(s): ______ _ D Partner -D Limited D General D Partner :_ D Limited D General D Individual D Attorney in Fact D lndividuai D Attorney in Fact D Trustee D Guardian or Conservator D Trustee D Guardian or Conservator D Other: ______________ _ D Other: ______________ _ Signer Is Representing: _________ _ Signer Is Representing: _________ _ ~~~,w.,~~~~~ ©2015 National Notary Association· www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #5907