Item 1 - Poway Emergency Assistance Recovery Loans (PEARL)April 16, 2020, Item #1~ AGENDA REPORT DATE: TO: FROM: CONTACT: SUBJECT: Summary: April 16, 2020 Honorable Mayor and Members of the City Council Chris Hazeltine, City Manager Craig Ruiz, Economic Development Administrator 858-668-4509 or cruiz@poway.org. Poway Emergency Assistance Recovery Loans (PEARL) City of Poway CITY COUNCIL On April 7, 2020, the City Council provided direction to staff for the development of the Poway Emergency Assistance Recovery Loan (PEARL) Program. Based upon Council direction, staff refined the program overview and developed all application materials necessary for program implementation following Council approval of the attached resolution and the corresponding appropriation to fund the program. Recommended Action: It is recommended that the City Council adopt a Resolution implementing the Poway Emergency Assistance Recovery Loan (PEARL) Program and appropriate a total amount not to exceed $2,000,000 using the General Fund's Extreme Events/Public Safety reserve to fund the program. Discussion: At the April 7, 2020 City Council meeting, Mayor Vaus proposed the establishment of the Poway Emergency Assistance Recovery Loan (PEARL) Program. The purpose of PEARL is to offer city financial assistance to small businesses located in Poway by complementing existing state and federal loan programs and to provide a financial bridge to businesses to survive the current emergency. During the April 7 meeting, the City Council provided direction to staff on the parameters of the program. An overview of the PEARL Program is contained in Attachment B to this report and discussed in further detail below. Based upon direction from the City Council, the PEARL Program will utilize up to $2,000,000 from the General Fund Extreme Events/Public Safety reserve for small business loans. The loans will be for independently owned Poway businesses that have been in business for at least one year prior to the City of Poway Local Emergency declaration (3/13/20) with SO or fewer employees that can demonstrate a loss of business resulting from the COVID-19 public health crisis. The maximum loan amount would be $50,000 and the term of the loan would be for three years at 3% annual interest. Monthly loan payments and interest accrual would not begin until 90 days after the City of Poway rescinds the local state of emergency declaration, at which time the three-year payback period would begin. Loans repaid within 90 days after the City of Poway rescinds the local emergency declaration 1 of 16
April 16, 2020, Item #1will pay 0% interest. The loans will be secured by a promissory note and a personal guaranty. Loans may be used for payroll, lease or mortgage payments, utilities and accounts payable for business premises located in Poway. To apply for a loan, a business owner will submit an application and all necessary documentation through the City's secure website (www.poway.org). Staff will review applications on a first come, first serve basis. Applicants must submit a complete application that includes all required financial records and a demonstrated ability to repay the loan based upon the historical operation of the business prior to the COVI D-19 emergency. All decisions made by the City Manager shall be considered final, and there is no appeal process. Illegal, home-based, non-profit and chain or franchise businesses are not eligible for program funding. Further, owners who work or have a spouse or member of the household who works for the City of Poway are also not eligible to participate in the program. Staff is in the process of developing the secure online application portal which is anticipated to be ready to launch within a week following City Council approval. Prior to opening the portal to receive applications staff will promote the program extensively via social media and through the Chamber of Commerce. The City's Economic Development Administrator will also be conducting direct outreach to businesses. Once complete applications are submitted, it is anticipated that it will take approximately 3-5 business days for review. Following tentative approval of a loan, it is anticipated it will be another 5-7 business days for the promissory note and loan guaranty to be fully executed and for a check to be cut. All loans are approved by the City Manager and all decisions are final. Once the total amount of approved loans reaches $2,000,000 the online application portal will be closed and information will be posted that the City is no longer accepting new applications. In addition to the City's proposed PEARL Program, there are several state and federal loan programs available to local businesses. The U.S. Small Business Administration is offering the Economic Injury Disaster Loan (EIDL) of up to $2,000,000 and the EIDL Emergency Advance of up to $10,000. Through the CARES Act, the Paycheck Protection Program offers partially forgivable loans of up to $10,000,000 for the retention of employees. Details on these programs, as well as state and local assistance programs can be found on the Economic Development section of the City's website (https://poway.org/864/Tools-For-Business). General Fund Reserve The General Fund Reserve Policy (Policy) established three reserves: the Extreme Events/Public Safety reserve, Economic Volatility (Revenue) reserve, and Economic Volatility (Expenditure) reserve. Pursuant to the Policy, the General Fund Extreme Events/Public Safety reserve was established as a hedge against natural disasters, other public safety emergencies, and unexpected infrastructure repair and replacement. As of June 30, 2019, the balance in the Extreme Events/Public Safety Reserve was $13,974,863. Pursuant to the Policy, in the event City Council authorizes use of the General Fund reserve, the City Manager shall propose a plan for the replenishment of the reserves to the City Council within 60 days or as soon as practicable. Further, the Policy states the City will strive to replenish the General Fund reserve within one year of use but will fully replenish the reserve within five years of use. As stated above, the PEARL Program will utilize up to $2,000,000 from the General Fund Extreme Events/Public Safety reserve to make loans of up to $50,000 to small businesses in Poway. The loans will be for a maximum period of three years and will accrue 3% annual interest (both the payback period and interest accrual commence 90 days after the City of Poway rescinds the local state of 2 of 16
April 16, 2020, Item #1emergency declaration). Loan applicants will be required to sign a Promissory Note and a Personal Guaranty (Attachment C). The terms and conditions of the PEARL documentation shall serve as the plan to replenish the reserves. Environmental Review: This action is not subject to review under the California Environmental Quality Act (CEQA). Fiscal Impact: The PEARL Program will provide loans of up to $50,000 to eligible businesses. A maximum amount of $2,000,000 in funding for the loans will come from the General Fund Extreme Events/Public Safety reserve. The $2,000,000 represents approximately 14% of the current Extreme Events/Public Safety reserve balance of $13,974,863. When all loan funds are expended, a balance of $11,974,863 will remain in the reserve account. The reserve fund shall be replenished from the repayment of the PEARL loans over a three-year period following the end of the local COVID-19 emergency. This period falls within the General Fund Reserve Policy's direction to fully replenish reserves within five years of use. Public Notification: None Attachments: A. Resolution B. Program Overview C. Promissory Note and Personal Guaranty Reviewed/Approved By: Wen~serman Assistant City Manager 3 of 16 Reviewed By: Approved By: (!b;nster~ Chftjkfl City Attorney City Manager
April 16, 2020, Item #1RESOLUTION NO. 20-A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA, ESTABLISHING THE POWAY EMERGENCY ASSISTANCE RECOVERY LOAN (PEARL) PROGRAM WHEREAS, on January 31, 2020, the United States Department of Public Health and Human Services Secretary declared a public emergency for the novel coronavirus (COVID-19); and WHEREAS, on February 14, 2020, San Diego County declared a local health emergency and proclaimed a local emergency regarding COVID-19 which was ratified and extended by the San Diego County Board of Directors on February 19, 2020; and WHEREAS, on March 4, 2020, Governor Gavin Newsom declared a state of emergency in the State of California due to COVID-19; and WHEREAS, on March 13, 2020, the City Manager, acting in his capacity as Director of Emergency Services, proclaimed the existence of a local emergency due to COVI D-19; and WHEREAS, on March 18, 2020, the City Council ratified the Director of Emergency Services' proclamation of a local emergency; and WHEREAS, the City Council of the City of Poway recognizes the significant negative impact the COVID-19 emergency situation is having and will continue to have, for the duration of the emergency and beyond, on the city's local business environment, particular locally-owned-and-operated independent businesses; and WHEREAS, the City maintains sufficient reserve funds to be utilized in the event of emergency situations and has also approved a General Fund Reserve Policy that directs the manner in which those funds can be utilized as well as replenished; and WHEREAS, the City Council, is fully cognizant of the benefits that a viable, sustainable and prosperous business provides to the City both as a corporate entity as well as a community of residents, businesses, students, workers and travelers; and WHEREAS, viable, sustainable and prosperous businesses provide the City with sales tax revenue and other indirect economic activity that is critical for the City to provide services to all City residents; and WHEREAS, the City Council, desiring to try to find useful tools to assist our local business community weather the storm of the COVID-19 emergency, believes that the use of a portion of the City's general fund reserves to establish a short-term, low-interest business loan program is a proper use of those funds and promotes and protects a vital public interest in helping our business community remain viable for the duration of the COVID-19 emergency situation and secure continued long term revenue sources for the City. 4 of 16 Attachment A
April 16, 2020, Item #1Resolution No. 20-Page 2 NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Poway as follows: SECTION 1: The City Council of the City of Poway does hereby establish the Poway Emergency Assistance Recovery Loan (PEARL) Program as described Poway Emergency Assistance Recovery Loan (PEARL) Program Description attached hereto as "Exhibit A" and authorizes and directs the City Manager to develop the necessary forms, documents and processes to establish and operate the program in substantial conformance with the major provisions outlined therein, and to implement the same. SECTION 2: The City Council reserves the right to amend the program as well as authorizes the City Manager the flexibility to negotiate the loan terms in terms of repayment schedules on a case by case basis, supported with appropriate findings, but not the maximum loan amount or the not to exceed amount of the total approved program. SECTION 3: The City Council hereby vests the City Manager with the ultimate discretion to determine the eligibility of any business that applies for a loan under the PEARL program, including the amount of the loan any applicant is eligible to receive, if any. All decisions made by the City Manager with respect to an application for a loan under the PEARL program are final and shall not be appealable to the City Council. SECTION 4: The City Council hereby authorizes and directs the Finance Director to appropriate $2,000,000 from the General Fund's Extreme Events/Public Safety reserve and transfer it to a separate general ledger account, in compliance with accounting guidelines, for the sole use towards the PEARL program. PASSED, ADOPTED AND APPROVED at a Regular Meeting of the City Council of the City of Poway, California on the 16th day of April, 2020 by the following vote, to wit: AYES: NOES: ABSENT: DISQUALIFIED: Steve Vaus, Mayor ATTEST: Faviola Medina, CMC, City Clerk 5 of 16
April 16, 2020, Item #1Exhibit A to Resolution Poway Emergency Assistance Recovery Loan Program (PEARL) Overview & Objectives To mitigate the impact of COVID-19 on Poway small businesses and their employees, the City of Poway has committed up to $2 million in one-time funds from the City's General Fund's Extreme Events/Public Safety reserve to create a Poway Emergency Assistance Recovery Loan (PEARL) Program. The objective of this Program is to quickly offer financial assistance to independently owned and operated small businesses with the City of Poway to aid in maintaining their business and workforce. Program Overview 1. $2 million in total funding. 2. Loan amount ranges between $5,000 and $50,000. 3. Business must be independently owned and operated small businesses located in the City of Poway with no more than 50 full-time employees as of the City's emergency declaration dated March 18, 2020. 4. Loan funds may only be used to cover the following items: payroll, lease or mortgage payments, utilities and accounts payable for business premises located in Poway. 5. No interest shall be due for 90 days following the date on which the City Council of the City of Poway declares the ongoing state of local emergency relating to the COVID-19 pandemic no longer required and the emergency has ended. Interest shall accrue 3% interest annually thereafter; all loans due within 3 years of the end of the declared local emergency. 6. Loans will be awarded on a first-come, first-served basis for qualified applicants. All loans are approved by the City Manager, and all decisions are final. Eligibility Criteria 6 of 16 1. The business' primary location and operation must be within the City of Poway. 2. The business was in operation and had a City of Poway Business Certificate as of March 18, 2019. 3. The business is independently owned (no chain or franchise businesses). 4. The business has at least one and no more than 50 full-time employees as of March 18, 2020. 5. The business is not in arrears with rent or mortgage payments as of March 1, 2020. 6. The business is in good standing with the City of Poway. 7. The business shall provide proof of economic hardship as a result of the COVID-19 pandemic. 8. The business does not have any code violations or outstanding judgements with the City of Poway. 9. The business has no outstanding judgments or tax liens. The business owners have not been convicted of a criminal offense. 10. The business or owner has no delinquency on federal taxes or a federally guaranteed loan. 11. There has been no suspension or debarment from contracting with the federal government or receiving federal funds. Attachment B
April 16, 2020, Item #1Ineligible Businesses 1. Illegal businesses 2. Home-based businesses 3. Non-profit businesses 4. Chain or franchise businesses (more than 3 locations) 5. Business or owner that has filed for bankruptcy, insolvency proceedings within the past 5 years 6. Owners who work or have a spouse or member of the household who works for the City of Poway Other Government Assistance Should a loan recipient apply and receive other government assistance (not including the Federal Paycheck Protection Program), their application should include the outstanding balance of their City loan so that the City can be repaid upon receipt of additional financial assistance. Use of Funds Declaration Loan recipients will be required to affirmatively declare that any loan funds received from the City will be used to the benefit of the business physically located in Poway (some Poway based businesses have satellite locations in other jurisdictions). Additional Resources Please check out the Economic Development page on the City's website. Application and Funding Process: Applications will be available April 23, 2020 at 12:00 p.m. at www.poway.org. Application Requirements 7 of 16 1. Loan application 2. Business and personal tax returns - 2 years if applicable, 1 year if not 3. Interim business financial statement 4. Personal financial statement 5. Bank statements - 3 months 6. Itemized budget for funds requested 7. There is no credit minimum, however the principal business owner(s) must have reasonable and responsible personal credit history and an acceptable explanation for any derogatory marks. 8. Businesses must show that historical profits would have been sufficient to service the requested debt and that they have been impacted by the COVID-19 outbreak Attachment B
April 16, 2020, Item #1PROMISSORY NOTE $ ____ .00 FOR VALUE RECEIVED, ______________ ("Borrower"), promises to pay to the City of Poway ("Lender"), or its order, at its office located at 13325 Civic Center Drive, Poway, CA 92064 or at such other place as the holder hereof may designate, in lawful money of the United States of America, the principal sum of _______________ Dollars ($ ________ .00), or so much thereof as shall have been advanced and is outstanding together with interest, on the outstanding principal balance, until paid in full in accordance with the terms, conditions and provisions as hereinafter set forth in this Promissory Note (this "Note"). 1. Interest Rate. Following the Maturity Date, interest on the outstanding principal balance of this Note shall be computed and calculated based upon a three hundred sixty (360)-day year and actual days elapsed and shall accrue at the per annum rate equal to three percent (3 %) per annum (the "Note Rate"). 2. Maturity Date. Ninety (90) days following the date on which the City Council of the City of Poway declares that the ongoing state of local emergency relating to the COVID-19 pandemic no longer required and the emergency has ended ("Maturity Date"), the entire unpaid principal balance, without interest shall be due and payable without demand or notice. In the event that Borrower does not pay this Note in full on the Maturity Date then interest shall be due as set forth in this Note. 3. Payments. Upon the Maturity Date, the entire unpaid obligation outstanding under this Note shall become due and payable in full, without interest. If the Borrower does not repay this Note in full on or before the Maturity Date, the Borrower shall make monthly payments to the Lender starting on the first day of the first month following the Maturity Date. Interest shall be due and payable monthly, in arrears, based upon the actual number of days elapsed for that monthly period, commencing on the Maturity Date and shall continue to be due and payable, in arrears, on the same day of each and every calendar month thereafter until the Maturity Date ( as hereinafter defined). Accordingly, the monthly payments under this Note shall be __ payments at$ __ per month, assuming timely payment and no late fees or other costs are added as permitted under this Note, and the Default Rate is not applied. All payments due hereunder, including payments of principal and interest, shall be made to Lender in United States Dollars and shall be in the form of immediately available funds acceptable to the holder of this Note. 4. Application of Payments. All payments received by Lender from, or for the account of Borrower, due hereunder shall be applied by Lender, in its sole and absolute discretion, in the following manner, or in any other order or manner as Lender chooses: (a) First. To pay any and all interest due, owing and accrued; 8 of 16 Attachment C
April 16, 2020, Item #1(b) Second. To pay any and all costs, advances, expenses or fees due, owing and payable to Lender, or paid or incurred by Lender, arising from or out of this Note; and ( c) Third. To pay the outstanding principal balance on this Note. All records of payments received by Lender shall be maintained at Lender's office, and the records of Lender shall, absent manifest error, be binding and conclusive upon Borrower. The failure of Lender to record any payment or expense shall not limit or otherwise affect the obligations of Borrower under this Note. 5. Unpaid Interest, Charges and Costs. Interest, late charges, costs or expenses that are not received by Lender within ten (10) calendar days from the date such interest, late charges, costs, or expenses become due, shall, at the sole discretion of Lender, be added to the principal balance and shall from the date due bear interest at the Default Rate. 6. Holiday. Whenever any payment to be made under this Note shall be due on a day other than a business day, including Saturdays, Sundays and legal holidays generally recognized by banks doing business in California, then the due date for such payment shall be automatically extended to the next succeeding business day, and such extension of time shall in such cases be included in the computation of the interest portion of any payment due hereunder. 7. No Offsets or Deductions. All payments under this Note shall be made by Borrower without any offset, decrease, reduction or deduction of any kind or nature whatsoever, including, but not limited to, any decrease, reduction or deduction for, or on account of, any offset, present or future taxes, present or future reserves, imposts or duties of any kind or nature, that are imposed or levied by or on behalf of any government or taxing agency, body or authority by or for any municipality, state or country. If at any time, present or future, Lender shall be compelled, by any Law, rule, regulation or any other such requirement which on its face or by its application requires or establishes reserves, or payment, deduction or withholding of taxes, imposts or duties, to act such that it causes or results in a decrease, reduction or deduction ( as described above) in payment received by Lender, then Borrower shall pay to Lender such additional amounts, as Lender shall deem necessary and appropriate, such that every payment received under this Note, after such decrease, reserve, reduction, deduction, payment or required withholding, shall not be reduced in any manner whatsoever; provided, however, the provisions of this sentence shall only apply if the Law, rule, regulation or other requirement is imposed on all banking companies or holding companies similar to Lender and is not applicable only to Lender and Lender is asking for such additional amounts of similarly situated borrowers under other credit agreements. 8. Borrower Representations. The Borrower makes the following representations in connection with executing this Note. If any of the Borrower's representations prove to be untrue or otherwise inaccurate, that shall constitute a Default under the Note: (a) Borrower is a business operating in the City of Poway and is in good standing with all applicable laws and regulations of the United States, the State of California, and City of Poway. (b) Borrower holds a valid and active City of Poway Business Certificate and is not the subject of any pending City of Poway Code Compliance action. 2523/012782-0011 14951679.1 a04/15/20 9 of 16 -2-
April 16, 2020, Item #1(c) All statements made in the Borrower's application submitted to the Lender in connection with this Note are true and correct. 9. Default. Any one or more of the following events or occurrences shall constitute a default under this Note (hereinafter "Default"): (a) Lender does not receive a payment in the amount and when due as set forth herein; or (b) Borrower shall fail to comply with any of its other obligations as and when required under this Note. Upon the occurrence of a Default hereunder, Lender may, in its sole and absolute discretion, declare the entire unpaid principal balance, together with all accrued and unpaid interest thereon, and all other amounts and payments due hereunder, immediately due and payable, without notice or demand. 10. Default Rate. From and after the occurrence of any Default in this Note whether by non-payment, maturity, acceleration, non-performance or otherwise, and until such Default has been cured, all outstanding amounts under this Note (including, but not limited to, interest, costs and late charges) shall bear interest at a per annum rate ("Default Rate") equal to an additional five percent (5%) in excess of the Note Rate. 11. Prepayment. The principal amount of this Note may be prepaid in whole or in part at any time or from time to time without penalty. Any such prepayment shall not result in a reamortization, deferral, postponement, suspension, or waiver of any and all principal or other payments due under this Note. 12. Late Charges. Time is of the essence for all payments and other obligations due under this Note. Borrower acknowledges that if any payment required under this Note is not received by Lender within ten (10) days after the same becomes due and payable, Lender will incur extra administrative expenses (i.e., in addition to expenses incident to receipt of timely payment) and the loss of the use of funds in connection with the delinquency in payment. Because, from the nature of the case, the actual damages suffered by Lender by reason of such administrative expenses and loss of the use of funds would be impracticable or extremely difficult to ascertain, Borrower agrees that five percent ( 5%) of the amount of the delinquent payment, together with interest accruing on the entire principal balance of this Note at the Default Rate, as provided above, shall be the amount of damages which Lender is entitled to receive upon such breach, in compensation therefor. Therefore, Borrower shall, in such event, without further demand or notice, pay to Lender, as Lender's monetary recovery for such extra administrative expenses and loss of use of funds, liquidated damages in the amount of five percent (5%) of the amount of the delinquent payment (in addition to interest at the Default Rate). The provisions of this paragraph are intended to govern only the determination of damages in the event of a breach in the performance of Borrower to make timely payments hereunder. Nothing in this Note shall be construed as in any way giving Borrower the right, express or implied, to fail to make timely payments hereunder, whether upon payment of such damages or otherwise. The right of Lender to receive payment of such liquidated and actual damages, and receipt thereof, are without prejudice to the right of 2523/012782-0011 14951679.1 a04/!5/20 10 of 16 -3-
April 16, 2020, Item #1Lender to collect such delinquent payments and any other amounts provided to be paid hereunder or under the Loan Agreement, or to declare a default hereunder or under the Loan Agreement. 13. Costs and Expenses. Borrower hereby agrees to pay any and all reasonable costs or expenses paid or incurred by Lender by reason of, as a result of, or in connection with the enforcement of this Note or the Loan Agreement, including, but not limited to, any and all reasonable attorneys' fees and related costs when such costs or expenses are paid or incurred in connection with the enforcement of this Note and the Loan Agreement, or any other rights, remedies or interests of Lender, whether or not suit is filed. Borrower's agreement to pay any and all such costs and expenses includes, but is not limited to, reasonable costs and expenses incurred in or in connection with any bankruptcy proceeding, in enforcing any judgment obtained by Lender and in connection with any and all appeals therefrom, and in connection with the monitoring of any bankruptcy proceeding and its effect on Lender's rights and claims for recovery of the amounts due hereunder, any proceeding concerning relief from the automatic stay, use of cash collateral, proofs of claim, approval of a disclosure statement or confirmation of, or objections to confirmation of, any plan of reorganization. All such costs and expenses are immediately due and payable to Lender by Borrower whether or not demand therefor is made by Lender. 14. No Subordination. This Note shall not be subordinate to any other loan secured by Borrower, including but not limited to any other loan provided by any other governmental agency in connection with the COVID-19 pandemic, including but not limited to loans from the following programs [CARES Act, the U.S. Small Business Administration's Economic Injury Disaster Loan (EIDL) Program] (collectively, "Other Loans"). Instead, this Note shall be placed in the first position over any Other Loan. Further, Borrower agrees that in the event an Other Loan is secured following the execution of this Note, those funds will shall first be used to pay this Note in full. 15. Waivers. Borrower hereby waives grace, diligence, presentment, demand, notice of demand, dishonor, notice of dishonor, protest, notice of protest, any and all exemption rights against the indebtedness evidenced by this Note and the right to plead any statute of limitations as a defense to the repayment of all or any portion of this Note, and interest thereon, to the fullest extent allowed by law, and all compensation of cross-demands pursuant to California Code of Civil Procedure Section 431. 70. No delay, omission or failure on the part of Lender in exercising any right or remedy hereunder shall operate as a waiver of such right or remedy or any other right or remedy of Lender. 16. Maximum Legal Rate. This Note is subject to the express condition that at no time shall Borrower be obligated, or required, to pay interest on the principal balance at a rate which could subject Lender to either civil or criminal liability as a result of such rate being in excess of the maximum rate which Lender is permitted to charge. If, by the terms of this Note, Borrower is, at any time, required or obligated to pay interest on the principal balance at a rate in excess of such maximum rate, then the rate of interest under this Note shall be deemed to be immediately reduced to such maximum rate and interest payable hereunder shall be computed at such maximum rate and any portion of all prior interest payments in excess of such maximum rate shall be applied, or shall retroactively be deemed to have been payments made, in reduction of the principal balance, as the case may be. 2523/012782-001 l 14951679.1 a04/15/20 11 of 16 -4-
April 16, 2020, Item #117. Amendment; Governing Law. This Note may be amended, changed, modified, terminated or canceled only by a written agreement signed by the party against whom enforcement is sought for any such action. This Note shall be governed by, and construed under, the Laws of the State of California. 18. Authority. Borrower hereby represents and warrants to Lender that, by his execution below, Borrower has the full power and legal right to execute and deliver this Note and that the indebtedness evidenced hereby constitutes a valid and binding obligation of Borrower without exception or limitation. In the event that this Note is executed by more than one borrower, the liability hereunder shall be joint and several. 19. Advice of Counsel. Borrower acknowledges that it has been represented by independent legal counsel of its own choice, and Borrower has duly executed this Agreement with the consent and approval of such independent legal counsel. 20. Venue. Venue for any action enforcing this note shall be in the Superior Court for the County of San Diego. Borrower hereby waives in rights it may otherwise have under Code of Civil Procedure section 394 to transfer venue. IN WITNESS WHEREOF, Borrower has executed this Note as of the day and year first above written. BORROWER: Print Borrower Name Print Borrow Title Borrower Signature 2523/012782-001 l 14951679.1 a04/15/20 12 of 16 -5-
April 16, 2020, Item #1LOAN GUARANTY 1. Obligations Guaranteed. For consideration, the adequacy and sufficiency of which is acknowledged, the undersigned ("Guarantor") unconditionally guarantees and promises to pay to the City of Poway ("Lender") on demand, in lawful United States money, all principal, interest, attorneys' fees, expenses and other sums due or to become due pursuant to (a) that certain Promissory Note payable to Lender executed on or about the date of this Guaranty by __________________ ("Borrower") in the original principal amount of ($ _____ .00); and (b) all extensions, renewals and modifications of any of the foregoing (individually and collectively, the "Obligations"), whether due or not due, absolute or contingent, liquidated or unliquidated, legal or equitable, whether Borrower is liable individually or jointly or with others, whether incurred before, during or after any Insolvency Proceeding (as defined in Paragraph 2 below), and whether recovery thereof is or becomes barred by a statute of limitations or is or becomes otherwise unenforceable, together with all expenses of, for and incidental to collection, including reasonable attorneys' fees. 2. Reinstatement. All of Lender's rights pursuant to this Guaranty continue with respect to amounts previously paid to Lender on account of any Obligations which are thereafter restored or returned by Lender, whether in a bankruptcy, reorganization, insolvency, receivership or similar proceeding ("Insolvency Proceeding") of Borrower or for any other reason, all as though such amounts had not been paid to Lender, and Guarantor's liability under this Guaranty (and all its terms and provisions) shall be reinstated and revived, notwithstanding any surrender or cancellation of this Guaranty. Lender, in its sole discretion, may determine whether any amount paid to it must be restored or returned; provided, however, that if Lender elects to contest any claim for return or restoration, Guarantor agrees to indemnify and hold Lender harmless from and against all costs and expenses, including attorneys' fees, expended or incurred by Lender in connection with such contest. If any Insolvency Proceeding is commenced by or against Borrower or Guarantor, at Lender's election, Guarantor's obligations under this Guaranty shall immediately and without notice or demand become due and payable, whether or not then otherwise due and payable. 3. Authorization. Guarantor authorizes Lender, without notice and without affecting Guarantor's liability under this Guaranty, from time to time, whether before or after any revocation of this Guaranty, to (a) renew, compromise, extend, accelerate, release, subordinate, waive, amend and restate, or otherwise amend or change, the interest rate, time or place for payment or any other terms of all or any part of the Obligations; (b) accept delinquent or partial payments on the Obligations; ( c) take or not take security or other credit support for this Guaranty or for all or any part of the Obligations, and exchange, enforce, waive, release, subordinate, fail to enforce or perfect, sell, or otherwise dispose of any such security or credit support; ( d) apply proceeds of any such security or credit support and direct the order or manner of its sale or enforcement as Lender, in its sole discretion, may determine; and ( e) release or substitute Borrower or any guarantor or other person or entity liable in respect of all or any part of the Obligations. 4. Waivers. To the maximum extent permitted by law, Guarantor waives (a) all rights to require Lender to proceed against Borrower, or any other guarantor, or proceed against, enforce or exhaust any security for the Obligations or to marshal assets or to pursue any other remedy in -1-13 of 16
April 16, 2020, Item #1Lender's power whatsoever; (b) all defenses arising by reason of any disability or other defense of Borrower, the cessation for any reason of the liability of Borrower, any defense that any other indemnity, guaranty or security was to be obtained, any claim that Lender has made Guarantor's obligations more burdensome or more burdensome than Borrower's obligations, and the use of any proceeds of the Obligations other than as intended or understood by Lender or Guarantor; ( c) all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, notices of acceptance of this Guaranty, and all other notices or demands to which Guarantor might otherwise be entitled; ( d) all conditions precedent to the effectiveness of this Guaranty; ( e) all rights to file a claim in connection with the Obligations in an Insolvency Proceeding filed by or against Borrower; (f) all rights to require Lender to enforce any of its remedies; and (g) until the Obligations are satisfied or fully paid, with such payment not subject to return: (i) all rights of subrogation, contribution, indemnification or reimbursement, (ii) all rights of recourse to any assets or property of Borrower or to any collateral or credit support for the Obligations, (iii) all rights to participate in or benefit from any security or credit support Lender may have or acquire, and (iv) all rights, remedies and defenses Guarantor may have or acquire against Borrower. 5. Guarantor to Keep Informed. Guarantor warrants having established with Borrower adequate means of obtaining, on an ongoing basis, such information as Guarantor may require concerning all matters bearing on the risk of nonpayment or nonperformance of the Obligations. Guarantor assumes sole, continuing responsibility for obtaining such information from sources other than from Lender. Lender has no duty to provide any information to Guarantor until Lender receives Guarantor's written request for specific information in Lender's possession and Borrower has authorized Lender to disclose such information to Guarantor. 6. Subordination. All liabilities of Borrower to Guarantor, which presently or in the future may exist ("Guarantor's Claims"), are hereby subordinated to the Obligations. At Lender's request, Guarantor's Claims will be enforced, and performance thereon received by Guarantor only as a trustee for Lender, and Guarantor will promptly pay over to Lender all proceeds recovered for application to the Obligations without reducing or affecting Guarantor's liability under other provisions of this Guaranty. 7. Authority. Where Borrower is a corporation, partnership or other entity, Lender need not inquire into or verify the powers or authority of those acting or purporting to act on behalf of Borrower, and this Guaranty shall be enforceable with respect to any Obligations Lender grants or creates in reliance on the purported exercise of such powers or authority. 8. Assignments. Without notice to Guarantor, Lender may assign the Obligations and this Guaranty, in whole or in part, and may disclose to any prospective or actual purchaser of all or part of the Obligations any and all information Lender has or acquires concerning Guarantor, this Guaranty and any security for this Guaranty. 9. Counsel Fees and Costs. The prevailing party shall be entitled to attorneys' fees, and all other costs and expenses which it may incur in connection with the enforcement or preservation of its rights under, or defense of, this Guaranty or in connection with any other dispute or proceeding relating to this Guaranty, whether or not incurred in any Insolvency Proceeding, -2-14 of 16
April 16, 2020, Item #1arbitration, litigation or other proceeding. 10. Married Guarantors. By executing this Guaranty, a Guarantor who is married agrees that recourse may be had against his or her separate and community property for all his or her obligations under this Guaranty. 11. Multiple Guarantors/Borrowers. When there is more than one Borrower named herein, or when this Guaranty is executed by more than one Guarantor, then the words, "Borrower" and "Guarantor", respectively, shall mean all and any one or more of them, and their respective successors and assigns, including debtors-in-possession and bankruptcy trustees, and words used herein in the singular shall be considered to have been used in the plural where the context and construction so requires in order to refer to more than one Borrower or Guarantor, as the case may be. 12. Integration/Severability/ Amendments. This Guaranty is intended by Guarantor and Lender as the complete, final expression of their agreement concerning its subject matter. It supersedes all prior understandings or agreements with respect thereto and may be changed only by a writing signed by Guarantor and Lender. No course of dealing, or parol or extrinsic evidence shall be used to modify or supplement the express terms of this Guaranty. If any provision of this Guaranty is found to be illegal, invalid or unenforceable, such provision shall be enforced to the maximum extent permitted, but if fully unenforceable, such provision shall be severable, and this Guaranty shall be construed as if such provision had never been a part of this Guaranty and the remaining provisions shall continue in full force and effect. 13. Joint and Several. If more than one Guarantor signs this Guaranty, the obligations of each under this Guaranty are joint and several, and independent of the Obligations and of the liabilities and commitments of any other person or entity. A separate action or actions may be brought and prosecuted against any one or more guarantors, whether action is brought against Borrower or other guarantors of the Obligations, and whether Borrower or others are joined in any such action. 14. Notice. Any notice given by any party under this Guaranty shall be effective only upon its receipt by the other party and only if (a) given in writing and (b) personally delivered or sent by United States mail, postage prepaid, and addressed to Lender or Guarantor at their respective addresses for notices indicated below. Guarantor and Lender may change the place to which notices, requests, and other communications are to be sent to them by giving written notice of such change to the other. 15. California Law; Venue. This Guaranty shall be governed by and construed according to the laws of California, and, except as provided in any alternative dispute resolution agreement executed between Guarantor and Lender, Guarantor submits to the jurisdiction of the state or federal courts in San Diego County, California. Guarantor hereby waives any right Guarantor may otherwise have to transfer venue pursuant to Code of Civil Procedure section 394. -3-15 of 16
April 16, 2020, Item #1Executed as of __________ , Guarantor acknowledges having received a copy of this Guaranty and having made each waiver contained in this Guaranty with full knowledge of its consequences. Print Borrower Name Print Borrower Title Borrower Signature -4-16 of 16