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PROMISSORY NOTE
$445,000 ARROYO GRANDE, CALIFORNIA
August 13 . 1996 , 1996
1. For value received, the undersigned, Oak Forest Associates Limited Partnership
("Maker") hereby promises to pay to the order of City of Arroyo Grande, a municipal corporation
(the"City"), the principal sum of Four Hundred Forty-Five Thousand Dollars ($445,000) pursuant
to the terms of this note (the "Note").
2. The principal due under this Note shall not bear interest.
3. This Note shall have a term of thirty (30) years (the "Term").
4 This Note is secured by a Deed of Trust and Assignment of Rents (hereinafter
"Deed of Trust") executed by Maker of even date herewith, for the benefit and security of City
and encumbering certain real property more particularly described therein (the "Property"). As
used herein, the term "Loan Documents" shall mean this Note, the Deed of Trust and any other
loan document or instrument executed in connection with or as security for the loan evidenced
hereby
5. Payments in full shall be due at the end of the Term.
6. This Note shall be nonrecourse; provided, however, City shall not in any way be
prohibited from naming Maker or any of its successors and assigns or any person holding under
or through them as parties to any actions, suit or other proceedings initiated by City to foreclose
or otherwise realize upon any other lien or security interest created in the Property or in any other
collateral given to secure the performance of the obligations of Maker pursuant to this Note, and
further provided ,however, that nothing in this paragraph shall be deemed to prejudice the rights
of City to recover any rents, condemnation or insurance proceeds, tenant security deposits or
other similar funds or payments attributable to the Property which were misappropriated by
Maker.
7. Maker waives presentment, demand, notice of dishonor, notice of default (except
as provided in the Loan Documents) or delinquency, notice of acceleration, notice of protest and
nonpayment, notice of costs, expenses or losses and interest thereon, and diligence in taking any ,
action to collect any sums owing under this Note or in proceeding against any of the rights and
interests in and to properties securing payment of this Note.
8. The occurrence of any one of the following events, and the continuation thereof
after the expiration of all applicable notice and cure periods, shall constitute an "Event of
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Default" under this Note and the other Loan Documents:
a. the failure to pay when due any monies under this Note or the other Loan
Documents which is not cured within ten(10) days of written notice to
Maker of such failure.
b. a breach by Maker of any covenant contained in this Note or the other
Loan Documents,which is not cured within forty-five(45) days of written
notice to Maker of such default plus such additional time as is reasonably
necessary to cure the default provided Maker has commenced the cure
within such 45-day period and is diligently prosecuting the cure.
9 Upon the occurrence of an Event of Default, at the option of the City,the entire
principal sum will at once become due and payable without notice. Failure to exercise such
option shall not constitute a waiver of the right to exercise it in the event of any subsequent
Event of Default.
10. Notwithstanding anything to the contrary contained in the Loan Documents, the
limited partner of Maker(the "Limited Partner") shall have the right,but not the obligation,to
cure any defaults of Maker thereunder, and City agrees to accept cures tendered by Limited
Partner on behalf of Maker. In addition to the cure periods provided in the Loan Documents,
Limited Partner shall have the right to cure all monetary defaults within thirty (30) days after
receipt of notice thereof and all non-monetary defaults within sixty (60) days after receipt of
notice thereof. However, if a default is non-monetary and is not reasonably capable of being
cured within sixty (60) days, Limited Partner shall have such additional time as is reasonably
necessary to cure such default provided Limited Partner has commenced and is diligently
proceeding to cure such default, as applicable(taking into account the effect of injunction,
bankruptcy or similar proceedings).
11 City shall give Limited Partner written notice of any default under the Loan
Documents, and the cure periods contained in Paragraph 10 above shall commence on the
effective date of any such notice. All notices required or desired to be given to the Limited
Partner under the Loan Documents shall be in writing and given in the manner providing in the
Loan Documents.
12. In the event of litigation arising from the enforcement of this Note, the non-
prevailing party promises to pay all reasonable costs and expenses, including reasonable
attorney's fees incurred by the prevailing party in such litigation.
13. Time is of the essence with respect to every provision hereof.
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14 This Note shall be construed and enforced in accordance with the laws of the State
of California.
MAKER:
Oak Forest Associates Limited Partnership
By Peoples' Self-Help Housing Corporation,
its General Partner
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Its: AS. dkC�
AGREEMENT AND CONSENT OF HOLDER:
City of Arroyo Grande, a municipal corporation
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CITY MANAGER
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