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HomeMy WebLinkAbout02A Unite Palm Desert Hospitality Program Repurpose FundsSTAFF REPORT CITY OF PALM DESERT ECONOMIC DEVELOPMENT DEPARTMENT MEETING DATE: December 22, 2020 PREPARED BY: Martin Alvarez, Director of Economic Development REQUEST: Request to repurpose uncommitted funds from the Unite Palm Desert Hospitality Program to the Unite Palm Desert Emergency Business Relief Program to assist businesses adversely impacted by the COVID-19 public health emergency. ________________________________________________________________________ Recommendation 1. Authorize the repurposing of $500,000 of uncommitted funds from the Unite Palm Desert Hospitality Incentive Program to the Unite Palm Desert Emergency Business Relief Program to assist businesses adversely impacted by the COVID-19 public health emergency. 2. Authorize the Interim City Manager to execute any and all documents associated with the above activities, and allow the City Attorney to make non-substantive changes. Funds are available in the Economic Development Fund. Strategic Plan Objective The approval of the proposed use of funds aligns with the City’s Envision Palm Desert Strategic Plan and Economic Development Strategic Plan in the following areas: • Envision Palm Desert Strategic Plan, Economic Development Priority 1: Expand job and business creation opportunities. • Economic Development Strategic Plan (2018), High Priority (HPI) 2: Business Retention and Expansion Program, (HPI) 3: Revitalization of Key Commercial Districts Executive Summary In May of 2020, the City Council approved the re-allocation of the funds associated with the Invest Palm Desert Economic Development Incentive Program to the Unite Palm Desert Economic Relief Program. This approval allocated $2 million in five (5) Focus Areas to assist the Palm Desert community and its businesses during the COVID-19 health crisis. If approved, this item would re-allocate $500,000 from the Unite Palm Desert Hospitality Incentive Program to the Unite Palm Desert Emergency Business Relief Program, granting additional forgivable loans to businesses recently impacted by the State of California’s Regional Stay at Home Order issued on December 7, 2020. December 22, 2020 – Staff Report Unite Palm Desert Economic Business Relief Page 2 of 3 W:\Staff Reports - Shared 2\Staff Reports 12-22-2020\EBR Loans\01 12-22-20 UPD BusRelief Loans.docx Background On December 7, 2020, the California Governor issued a Regional Stay at Home Order to address the spread of the Coronavirus known as COVID-19. COVID-19 has created significant challenges to all of the City’s residents and businesses. The Unite Palm Desert Economic Relief Program approved by the City Council earlier this year set aside $2.0M to assist the City’s residents and businesses affected by the current economic challenges caused by the COVID-19 pandemic. Under this program, significant relief has been provided to residents, local businesses, and community partners. The Unite Palm Desert Economic Relief Program allocated the following funds: $1.0M – Forgivable Small Business Loans $900,000 – Hospitality Incentive Program (Buy 2, Get 1 Free Night Stay) $100,000 – Community Partners (Priority One CV, Chamber of Commerce, Outdoor Dining) Discussion The December 7, 2020 Regional Stay at Home Order has once again added significant economic stress to the City’s business community. Under this current order, the following businesses have been ordered to close or modify their operations: • Restaurants (no indoor/outdoor dining) take-out only • Animal grooming facilities • Body piercing shops • Car washes • Massage therapy • Museums • Personal care services (hair/nail salons, electrologists, estheticians, skin care) • Tattoo shops Staff is recommending that the City Council re-allocate a portion of the funds from the Hospitality Incentive Program to assist the businesses listed above affected by the State Regional Stay at Home Order. The Hospitality Incentive Program committed $900,000 to Palm Desert hoteliers to support a promotion offering a Buy 2 Nights, Get One Free Night Stay. To date, seven hotels have signed up for the program and under Phase 1 (September to December 31, 2020) the City has committed up to $400,000 based on the approved allocations for each hotel. If these funds are not all utilized by the hotels in Phase 1, staff will roll over the unused funds to Phase 2, starting January 1, 2021. Staff recommends that the remaining $500,000 from this program be re-allocated to the Unite Palm Desert Emergency Business Relief Program allowing for additional forgivable business loans. The Unite Palm Desert Emergency Business Relief Program guidelines have been drafted and are attached for your consideration. Below is a summary of the program guidelines: • Unite Palm Desert Emergency Business Relief Program Fund Allocation - $500,000 December 22, 2020 — Staff Report Unite Palm Desert Economic Business Relief Page 3 of 3 Eligibility: o Palm Desert Business affected by December 7, 2020 State managed Regional Stay at Home Order o $5,000 Forgivable Loan o Used for COVID related Impacts (Rent/Utilities/Payroll/Equipment/Supplies, Operation Impacts, Etc.) o Must be in compliance with the State Regional Stay at Home Order by Dec. 27, 2020 o Must be in compliance with all State, County and City Laws and Ordinances o First come, first served until funds are depleted The forgivable loan will be memorialized with the attached promissory note, similar to the previous business relief loans issued by the City in July and August of 2020. If approved, the Emergency Business Relief Program is expected to assist up to 100 businesses that have been impacted by the recent State Regional Stay at Home Order due to the COVID-19 pandemic. Staff recommends approval. Fiscal Analvsis A total of $500,000 of un-committed funds from the Unite Palm Desert Hospitality Program is currently available in the Economic Development Fund. Staff recommends utilizing these funds to assist Palm Desert businesses currently impacted by the Regional Stay at Home Order. LEGAL REVIEW N/A Robert W. Hargreaves City Attorney DEPT. REVIEW M arti,w A (.va-r�z Martin Alvarez Director of Economic Development FINANCIAL REVIEW �A.».e�?'�?. ?'�?oou Janet M. Moore Director of Finance ASSISTANT CITY MANAGER N/A Interim City Manager: �aKd� �y.�de� Andy Firestine Assistant City Manager Attachment: Unite Palm Desert Economic Business Relief Program Guidelines Loan AgreemenUPromissory Note CITY COUNCIL ACTION AYPROVF,D ✓ i)TNTi?D RCCEIVED OTFIER Mrr�rqNG DATF, 12 - 22-2oZ0 AYI:g:� IK AfiiPe.�.NC3Ti�Ni�l.%.QuWTANILI�rILFu.7 �rors: NerJc' ����r�iT: iJot�E 'j` ^' L W\Staff RepoAs - Shared 2\StaN Reports 12-22-2020\EBR Loans\01 12-22-20 UPD BusReli�o�rl� do� ��r �' V�� �'i:i'cE!''i�:D i3�':�r�1l.�.IMM (�ii;;ii�.�i on Fi�c wit}i Ci1}� � i�;�;:'s O1�tice City of Palm Desert/Economic Development Department Unite Palm Desert Emergency Business Relief (EBR) Voluntary Loan Guidelines 73-510 Fred Waring Drive • Palm Desert • California • 92260 • (760) 776-6362 Overview • $500,000 available for businesses were required to close under the State and County Regional Stay at Home Order issued on December 7, 2020 • Application available at www.cityofpalmdesert.org/Emergency-Business-Relief • Electronic submissions to bizsupport@cityofpalmdesert.org • Questions can be directed to the Business Support Hotline at (760) 776-6362 • Application window opens on December 24, 2020 at 8:00 a.m. and closes at 12:00 p.m. Monday, January 11, 2021 • The first 100 completed, eligible applications will be funded • Funding within approximately 30 days of finalized loan documents Loan Summary • Zero-interest loans of $5,000 per business • No repayment unless violation of loan agreement • Funds shall be used to assist businesses closed by State and County Stay at Home Order issued on December 7, 2020 • Loan is forgivable if the business remains closed from December 27, 2020 and through the Reopening Date to be established by State and County health order • Funds may be used for COVID-19 impacts/expenses such as rent/utilities/payroll, equipment/ supplies and other operational impacts caused the COVID-19 pandemic • Execute a loan document and promissory note • Comply with the City’s non-discrimination policy • Meet State, County and City requirements for re-opening Eligibility & Criteria • Existing for-profit, privately held businesses • Be in good standing with the Secretary of State • Good standing with the City of Palm Desert as of December 27, 2020 • Only businesses subject to closure under the December 7, 2020 State issued Regional Stay at Home Order are eligible • Physical establishment within the City of Palm Desert • Current City of Palm Desert Business License current as of December 27, 2020 Unite Palm Desert Program Guidelines 2 | Page W:\Staff Reports - Shared 2\Staff Reports 12-22-2020\EBR Loans\02 EBR Guidelines Final.docx • One-time loan per business (regardless of number of owners, locations, or business names within a location) • No businesses with more than four locations outside of Palm Desert may qualify • No employees, elected officials, agents, nor businesses that have an interest held by any of the aforementioned, nor those businesses currently under contract with the City of Palm Desert, may qualify Approval & Submittal Process • Application must be submitted between December 24, 2020 at 8:00 a.m. and not later than 12:00 p.m. Monday, January 11, 2021 • No early applications will be accepted • All supporting documentation must be provided at time of application; applications that do not provide all of the information requested will be rejected • Only businesses that are subject to closure, and that remain closed during the specified dates, are permitted to apply • Applications and supporting material must be sent to bizsupport@cityofpalmdesert.org • Approval of funding is at the sole discretion of the City of Palm Desert Funding • Total of $500,000 • Funding will occur on a first-come-first-served basis of eligible recipients • Funding will occur until funds are depleted • Funding will occur within approximately 30 days of execution of a Loan Agreement Notice & Disclaimer • The City makes no representations as to the tax implications of the loan program • The businesses under the Program will receive an IRS Form 1099, if applicable, reporting the amount of payments as taxable income for federal and state income tax • The business must provide a completed IRS Form W -9 showing the business social security number or federal taxpayer identification number before the loan payments can be made • The City is unable to provide legal or tax advice to businesses and encourages you to seek appropriate professional advice on the federal and state tax implications of any funds received from the City under this program • Applications are subject to Public Records Act request • Incomplete applications will be rejected and will not qualify for funding 1 UNITE PALM DESERT ECONOMIC BUSINESS RELIEF PROGRAM FORGIVABLE LOAN AGREEMENT INFO PAGE 1. Date of Agreement ___________________________________ 2. Borrower Name ___________________________________ 3. Business (or DBA) ___________________________________ 4. Forgivable Loan Amount __________________$5,000____________ 5. Expenses ___________________________________ 6. Business Operations ___________________________________ 7. Re-opening Date County of Riverside Health Department order 8. Anniversary Dates ___________________________________ 10. Borrower’s Address ___________________________________ 2 LOAN DISCLOSURES/SUMMARY Total Amount of Funds Provided $5,000 Total Dollar Cost of Financing $0 Term or Estimated Term See Loan Agreement Method or Frequency and Amount of Payments One payment, $5,000, if failure to comply Description of Prepayment Policies Prepayment not available Total Cost of Financing (Expressed as Annualized Rate) $0 • The City makes no representations as to the tax implications of the loan program • The businesses under the Program will receive an IRS Form 1099, if applicable, reporting the amount of payments as taxable income for federal and state income tax • The business must provide a completed IRS Form W-9 showing the business social security number or federal taxpayer identification number before the loan payments can be made • The City is unable to provide legal or tax advice to businesses and encourages you to seek appropriate professional advice on the federal and state tax implications of any funds received from the City under this program 3 UNITE PALM DESERT ECONOMIC BUSINESS RELIEF PROGRAM FORGIVABLE LOAN AGREEMENT This Forgivable Loan Agreement (“Agreement”) is entered into as of the date listed on the Informational Page [See. No. 1], attached hereto and incorporated herein by this reference (the “Info Page”) among the City of Palm Desert (the “City”) and [See No. 2 Info Page] (the “Borrower”) who owns and operates [See No. 3 Info Page] (the “Business”). WHEREAS, the City, pursuant to and in compliance with all laws applicable to the City, and in particular the provisions of UNITE PALM DESERT ECONOMIC BUSINESS RELIEF PROGRAM FOR HEALTH PARTNERSHIP PROGRAM(the “Program”) approved on December 22, 2020 to help local businesses and economic sectors alleviate business interruption impacts resulting from the COVID-19 pandemic; and WHEREAS, the Program includes the funding of forgivable economic relief loans to private entities for the funding of the day-to-day operating expenses of the business and to recover from closures due to COVID-19; and WHEREAS, this Agreement has been prepared to facilitate the funding of a forgivable economic relief loan in the maximum amount of $5,000 (the “Forgivable Loan”) from the City to the Borrower in connection with certain expenses to be undertaken by the Borrower (the “Expenses”), which Expenses are described on [See No. 5 Info Page]; and WHEREAS, the Expenses are for the benefit of the Borrower’s Business, which Business and the regular operations thereof are described on [See No. 6 Info Page] (“Regular Operations”) NOW THEREFORE, the parties hereto agree as follows: A. Borrower’s Covenants 1. The Borrower agrees to close its Regular Operations by December 27, 2020 pursuant to City ordinance and to remain closed until directed by the County of Riverside Health Department that reopening is permitted [See No. 7 Info Page] (the “Reopening Date”), subject to any extensions granted to the Borrower by the City, and to use the proceeds of the Forgivable Loan solely in connection therewith. 2. The Borrower agrees that it will close the Regular Operations throughout the term of the public health closure order and restart Regular Operations only upon the Reopening Date ([See No. 7, Info Page]. 3. The Borrower agrees to repay all un-forgiven principal of the Forgivable Loan in full, in one payment of $5,000, unless the loan is otherwise forgiven in accordance with the conditions hereinafter set forth in Section B.2. The Borrower hereby acknowledges and agrees to the loan repayment forgiveness conditions set forth in Section B.2 of this Agreement. The Borrower reserves the right to prepay such principal 4 in any amount at any time without penalty. Payment of principal on the Forgivable Loan shall be made to the City of Palm Desert Finance Department 73-510 Fred Waring Drive, Palm Desert, CA 92260 (the “City Finance Office”) by 4:00 p.m. on June 1, 2021 or the Reopening Date, whichever occurs earlier, as set forth herein. The Borrower shall execute a promissory note in favor of the City to evidence its obligations with respect to the Forgivable Loan. The promissory note shall be in substantially the form as set forth on Exhibit A hereto. 4. To induce the City to enter into this Agreement and make the Forgivable Loan, Borrower represents that the following are true as of the effective date of this Agreement and will remain true until the Loan has been paid in full: i. Borrower does business from a physical location within the City limits of the City of Palm Desert. ii. Borrower has the power to execute, deliver, and perform the Forgivable Loan, and the promissory note identified in Section A.3 herein. iii. Borrower’s making and performance of the Forgivable Loan does not violate any provision of federal or state law, or city ordinance, or result in a breach of or constitute a default under any agreement, indenture, or other instrument to which Borrower is a party or by which Borrower may be bound, including the promissory note identified in Section A.3 herein. iv. Borrower, nor any of Borrower’s employees, affiliates, immediate family members, or agents are in any way an employee, member, officer or consultant that is subject to the disclosure requirements of the City’s Conflict of Interest Code, Chapter 2.56 et seq. Borrower may be a vendor to the City, so long as they are not covered under the City’s Conflict of Interest Code. 5. Before the closing of the Forgivable Loan, and as conditions of such closing: i. Borrower shall certify to City in a form acceptable to City that the statements made by Borrower in the application for the Forgivable Loan were correct as of the date of the application and are correct as of the closing of the Forgivable Loan. ii. Borrower shall certify to City in a form acceptable to City that closed Regular Operations on or before December 27, 2020 and prior to the closing of the Forgivable Loan. iii. Borrower shall provide evidence satisfactory to the City that the representations in Section 5 are true. iv. Borrower shall be free from code enforcement actions relating to Regular Operations of the Business prior to the closing of the Forgivable Loan. 5 6. Borrower shall pay when due all indebted obligations, assessments, taxes real and personal, including federal and state payroll and income taxes, except those that Borrower in good faith contests or as to which a bona fide dispute exists. For those obligations, assessments, or taxes that Borrower in good faith contests or as to which a bona fide dispute exists, Borrower must pay them if the federal or state government, or a court with jurisdiction, determines that they are an obligation of Borrower. 7. Borrower shall promptly notify the City of any litigation pending against Borrower in excess of $50,000. 8. Borrower shall defend, hold harmless and indemnify the City, its officers and employees, and each and every one of them, from and against any and all actions, takings, damages, costs, liabilities, claims, demands, losses, judgments, penalties, costs and expenses of every type and description, including, but not limited to, any fees and/or costs reasonably incurred by the City’s staff attorneys or outside attorneys and any fees and expenses incurred in enforcing this provision (collectively, “Liabilities”), including but not limited to Liabilities arising from contractual or other economic damages, or regulatory penalties, arising out of or in any way connected with Borrower’s breach of this Agreement, Borrower’s use of the Forgivable Loan proceeds, or Borrower’s performance or failure to perform this Agreement, including, without limitation, against any claim for damages, compensation, fines, penalties or other amounts arising out of the failure or alleged failure of any person or entity (including Tenant, or its contractors or subcontractors) to pay prevailing wages as determined pursuant to Labor Code Sections 1720 et seq., to hire apprentices in accordance with Labor Code Sections 1777.5 et seq., or to comply with the other applicable provisions of Labor Code Sections 1720 et seq., 1725.5, 1771, 1771.1, 1771.4, 1776, 1777.5 et seq., 1810-1815 and the implementing regulations of the Department of Industrial Relations for all such Labor Code sections, whether or not (i) such Liabilities are caused in part by a party indemnified hereunder or (ii) such Liabilities are litigated, settled or reduced to judgment; provided that the foregoing indemnity does not apply to liability for any damage or expense for death or bodily injury to persons or damage to property to the extent arising from the sole negligence or willful misconduct of the City, its agents, servants, or independent contractors who are directly responsible to the City. B. City’s Obligations 1. The City hereby agrees to deliver to the Borrower proceeds of the Forgivable Loan within 30 days of the satisfaction of the closing conditions set forth in Section A.5. on the date hereof. 2. Subject to the adequate demonstration (as set forth in Section A.4 above) by the Borrower, the City agrees to forgive the full amount of Forgivable Loan so long as the Borrower is free from code enforcement actions and remains closed from December 27, 2020 to the Reopening Date. 6 3. Promptly following discharge of the Borrower’s obligations under the Forgivable Loan, whether by repayment as set forth in Section A.3. above, forgiveness as set forth in Section B.2. above, or a combination of repayment and forgiveness, the City agrees to cooperate with Borrower to return the promissory note. C. Events of Default, Remedies & Offset. 1. The occurrence of any of the following shall constitute an Event of Default: i. The Borrower shall fail to fund the Expenses as agreed upon. ii. The Borrower shall cause Regular Operations of the business to restart after December 27, 2020 or before the Reopening Date as covenanted in Section A.2 above. iii. The Borrower shall fail to make when due, whether by acceleration or otherwise, any payment the Forgivable Loan. iv. Borrower defaults under the terms of any agreement or instrument pursuant to which Borrower has borrowed money from any person or entity that results in the acceleration of the maturity of the indebtedness under the agreement or instrument. v. Borrower is adjudicated as bankrupt or insolvent, or consents to or applies for the appointment of a receiver, trustee, or liquidator of itself or any of its property, or admits in writing its inability to pay its debts generally as they become due, or makes a general assessment for the benefit of creditors, or files a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization or arrangement in a proceeding under any bankruptcy law, or borrower or its directors or majority stockholders take action looking into the dissolution, liquidation, or reorganization of Borrower. vi. Borrower fails to pay any federal, state, or local tax or other debt unless Borrower is contesting the same in good faith. vii. Borrower uses the proceeds of the Forgivable Loan to construct capital improvements or for any other purpose not authorized herein. viii. Borrower assigns the Forgivable Loan or this Agreement without City’s express written consent. 2. If any Event of Default described in Section C.1 shall occur and be continuing for a period of five (5) days after notice of such Event of Default has been given to the Borrower, then the City may declare the outstanding unpaid principal balance of the Forgivable Loan to be forthwith due and payable, whereupon the Forgivable Loan shall immediately become due and payable, in each case without presentment, demand, 7 protest or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement to the contrary notwithstanding. D. Administrative Provisions 1. The City or its designated representative may inspect, audit, and copy Borrower’s records and books related to the Forgivable Loan at any time during normal business after providing Borrower with reasonable notice. 2. This Agreement may not be amended or assigned by either party without the written consent of the other party. 3. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. 4. This Agreement shall be deemed to be a contract made under the laws of the State of California and for all purposes shall be governed by and construed in accordance with laws of the State of California. 5. The City makes no representations as to the tax implications of the Program. The Borrower under the Program will receive an IRS Form 1099, if applicable, reporting the amount of payments as taxable income for federal and state income tax. The Borrower must provide a completed IRS Form W -9 showing the Borrower’s social security number or federal taxpayer identification number before the Forgivable Loan can be made. The City is unable to provide legal or tax advice to businesses and encourages you to seek appropriate professional advice on the federal and state tax implications of any funds received from the City under this Program. 6. Any notices to the City shall be to City of Palm Desert, Finance Department, 73-510 Fred Waring Drive, Palm Desert, CA 92260 and any notices to Borrower shall be to the Borrower’s Address listed in item 10 of the info page. 7. This Agreement has been negotiated at arm’s length and between Persons sophisticated and knowledgeable in the matters dealt with herein. In addition, each Party has been represented by, or had the chance to have reviewed by, experienced and knowledgeable legal counsel. Accordingly, any rule of law (including California Civil Code Section 1654) or legal decision that would require interpretation of any ambiguities in this Agreement against the Party that has drafted it, is not applicable and is waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the purposes of this Agreement. 8 IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the day and year first above written. CITY: CITY OF PALM DESERT, a California municipal corporation By: Randy Bynder, Interim City Manger ATTEST: APPROVED AS TO LEGAL FORM: BEST BEST & KRIEGER LLP Grace L. Rocha, Acting City Clerk Robert W. Hargreaves, City Attorney BORROWER: ______________________________ ______________________________ By: Its: 9 10 EXHIBIT A – FORM OF PROMISSORY NOTE PRINCIPAL AMOUNT: $5,000 Dated: ___________________ (the “Borrower”) for value received, promises to pay, to the City of Palm Desert, California (the “City”), its successors or assigns, the principal sum of five thousand dollars ($5,000), in lawful money of the United States of America, on or before June 1, 2021. 1. Loan. The City has made a loan to the Borrower in the principal amount of five thousand dollars ($5,000) (the “Loan”) under this Promissory Note (the “Note”) and under a certain Forgivable Loan Agreement (the “Loan Agreement”) between the City and the Borrower dated ___________, 20__, and reference is hereby made to the Agreement for a more complete description of the rights and obligations of the parties. 2. Loan Forgiveness. The Loan shall be forgiven by the City in accordance with the terms and schedule set forth in the Agreement if the Borrower meets the requirements of the Agreement. 3. Interest Rate. a. Except as provided in Subsection 3(b), below, this is a non- interest bearing Note. b. If Borrower fails to make payment, within five (5) days after the due date, then the unpaid principal balance will begin to accrue simple interest at a rate of five percent (5%) per annum calculated on a three hundred sixty-five (365) day basis until the principal balance is paid in full. 4. Payments. Payment of principal of the Loan shall be to the City of Palm Desert, Finance Department, 73-510 Fred Waring Drive, Palm Desert, CA 92260 at 4:00 p.m. on each of the years 2023 to 2027, unless sooner forgiven in accordance with the Agreement. Payments under this note shall be as follows: 11 5. Prepayment. The Borrower reserves the right to prepay principal of this Note, in whole or in part, without penalty, at any time prior to maturity. 6. Events of Default. The occurrence of one or more of the following events is an “Event of Default” and, at the option of the City, makes this note immediately due and payable without notice, presentment, or demand, all of which Borrower hereby waives: a) The Borrower shall fail to fund the Expenses as agreed upon. b) The Borrower shall cause Regular Operations of the business to restart after December 27, 2020 or before the Reopening Date as covenanted in Section A.2 above. c) The Borrower shall fail to make when due, whether by acceleration or otherwise, any payment the Loan. d) Borrower defaults under the terms of any agreement or instrument pursuant to which Borrower has borrowed money from any person or entity that results in the acceleration of the maturity of the indebtedness under the agreement or instrument. e) Borrower is adjudicated as bankrupt or insolvent, or consents to or applies for the appointment of a receiver, trustee, or liquidator of itself or any of its property, or admits in writing its inability to pay its debts generally as they become due, or makes a general assessment for the benefit of creditors, or files a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization or arrangement in a proceeding under any bankruptcy law, or borrower or its directors or majority stockholders take action looking into the dissolution, liquidation, or reorganization of Borrower. f) Borrower fails to pay any federal, state, or local tax or other debt unless Borrower is contesting the same in good faith. g) Borrower uses the proceeds of the Loan to construct capital improvements or for any other purpose not authorized herein. h) Borrower assigns the Forgivable Loan or this Agreement without City’s express written consent. 7. Waiver. Borrower, every guarantor and endorser of this Note, and every person who assumes the obligations of this Note, waives presentment, demand, protest, and notice of dishonor, notice of protest, notice of nonpayment, and notice of any kind with respect to this Note or any guarantee of it. 8. Covenant to Perform. Borrower agrees to perform all of its obligations under the Loan Agreement. 9. Acceleration. If an event of default under the Loan Agreement occurs, Lender may, in its sole discretion, declare the entire unpaid principal balance of this Note, 12 together with all other amounts due under this Note, immediately due and payable without prior notice or demand. 10. Costs of Enforcement. If this Note is not paid when due, including a due date that is accelerated under this note, Borrower, and every guarantor and endorser of this Note, and every person who assumes the obligations of this Note, agrees to pay all costs of collection when incurred, including, without limitation, reasonable attorney’s fees, whether or not suit is filed. Additionally, the holder of this note will be entitled to reimbursement for all attorney’s fees and costs incurred in enforcing any judgment arising from or out of this Note. These fees and costs do not merge into the judgment and may be added to the judgment and substantiated by supplemental cost bill. 11. Amendment. This Note may not be changed or terminated orally, but only by an agreement in writing signed by the party against who enforcement of the change or termination is sought. No alteration, amendment or waiver of any provision of this Note, or the Loan Agreement made by agreement of the holder of this Note or any other person or party, shall constitute a waiver of any other term of this Note, or otherwise release or discharge the liability of Borrower under this Note. 12. Governing Law. The validity, construction and enforceability of this Note shall be governed by the internal laws of the State of California without giving effect to the conflict of laws principles thereof. 13. Electronic Signatures. The parties agree that this note may be electronically signed. The parties agree that the electronic signatures appearing on this Agreement are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility. 14. Interpretation. This Agreement has been negotiated at arm’s length and between Persons sophisticated and knowledgeable in the matters dealt with herein. In addition, each Party has been represented by, or had the chance to have reviewed by, experienced and knowledgeable legal counsel. Accordingly, any rule of law (including California Civil Code Section 1654) or legal decision that would require interpretation of any ambiguities in this Note against the Party that has drafted it, is not applicable and is waived. The provisions of this Note shall be interpreted in a reasonable manner to effect the purposes of this Note. ________________________________ BORROWER ________________________________ BORROWER