HomeMy WebLinkAboutUDAG Promissory Note and Guaranty
Augusta Richmond GA
DOCUMENT NAME: oPAG PROJ'Y)I~&DR'i t\)oTe It!'!D GcJt4~ANT(
DOCUMENT TYPE: (4 9 r< E.. f::. yYJ E rJJ T
YEAR: , q~
BOX NUMBER: "'7
FILE NUMBER: ) q ? 10 :5
NUMBER OF PAGES: J 3
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UDAG PROMISSORY NOTE AND GUARANTY AGREEMENT
$ 7,562,454.00
June 15
, 1989
For value received, Augusta Riverfront Limited
partnership ("Makerll or "Oeveloperll), promises to pay to the order
of the City Council of Augusta, Georgia, a municipal corporation
under the laws of the state of Georgia, ("Holder" or I'cityll), the
principal sum of $7,562,454.00, (the "UOAG Loan") in legal tender
of the United States.
This UDAG Promissory Note is subj ect to the legal
operation and erfect of the UDAG City/Developer Agreement of even
date herewith between the parties, and said UDAG CitY/Developer
Agreement, by this reference thereto, is incorporated herein and
made a part hereof. The parties recognize and agree that this note
evidences and is given in consideration of Holder advancing to
Maker the UDAG Loan, to be used by Maker for the development and
construction of the Office Building and Hotel Components of the
Augusta Riverfront project, which project and components are more
particularly described in the UDAG CitY/Developer Agreement.
The loan obligation created herein (the UDAG Loan) shall
consist of an Interim UDAG Loan and a Permanent UOAG Loan.
Repayment of the UDAG Loan shall made in the manner set forth
below:
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1. Interim UDAG Loan (Construction Loan)
(a) PrinciDa1. The principal amount of the UDAG Interim
Loan shall be $7,562,454.00.
(0) Tenn. The term of the Interim UDAG Loan shall
commence upon the initial disbursement of grant funds, but in no
eVent later than July 1, 1989, and shall end upon the earlier of
September 30, 1991, or the completion of construction. '
(c) Interest and Payments. The interest will be zero
percent (0%) during the term of the Interim UDAG Loan. No pa}'1nents
of principal or interest will be required.
(d) Disbursements/Ratio. Disbursements of Interim UDAG
Loan funds shall be based upon vouchers submitted by Developer,
verified by City, and certified by the architect, construction
manager, or other certifying official acceptable to City. All
submissions by contractors of monthly requisitions shall be on AlA
forms 702 and 703, or their ~quivalent.
No disbursement of the Interim UDAG Loan shall be made
until: (i) Developer has furnished city with an ALTA loan policy
of title insurance in the amount of $7,562,454.00, insuring that
city is the holder of a lien on the project site, free of
encumbrances and other exceptions to title other than those
approved in advance by City, and not subordinated to any interest
except that Developer may obtain first mortgage financing, and
refinancing in accordance with the provisions of Paragraph numbered
5 hereof, and Paragraph III (a) (3) (ee) (5) of Exhibit E of the UDAG
Grant Agreement, in an amount not to exceed the total of
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$20,000,000.00 plus any further advances by the mortgagee(s) which
are invested in capital improvements in the Project and which are
approved by HOD and which are required for its completion (the
"First Mortgage"); provided however that the indebtednesses secured
by said First Mortgage shall lllature thirty (30) years from the
earlier of September 30, 1991, or the completion of construction
suoh that all such indebtednesses shall mature on or before
September 20, 2021; (ii) Developer has furnished City with a
builder's risk and fire insurance policy or pOlicies duly endorsed
to indicate that City is an insured secured party; (iii) All of
the requirements for draw down of UDAG funds set forth in the UDAG
Grant Agreement (the terms and provisions of Which, by this
reference thereto, are incorporated herein and made a part hereof)
and City/Developer Agreement are satisfied; (iv) Developer has
expended not less than $500,000.00 of cash equity %unds for
eligible costs of t.he project. Upon the completion of the
,foregoing requirements, UDAG Loan funds may be drawn down and
disbursed for use pursuant to the provisions of the UDAG Grant
Agreement, (the provisions of which, by this reference thereto, are
incorporated herein and made a part hereOf) in a ratio to Countable
Private Funds (as defined in said UDAG Grant Agreement) of not more
than $1.00 of UDAG Loan funds to $3.25 of Countable Private Funds
expended on the project including the funds above required to be
expended prior to disbursement of UDAG Loan funds.
(e) Guarantee. Developer unconditionally and
irrevocably guarantees the completion of the Non-Recipient
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activities pertaining to Developer pursuant to the schedule set
forth in "Exhibit F" of the UOAG Grant Agreement. Developer
unconditionally and irrevocably guarantees the repayment of the
UDAG Loan through completion of Project construction, at which time
the UDAG Loan shall become a non-recourse obligation to Developer.
Except as above-stated, neither the Developer, the general
partners, nor the limited partners or Developer, shall be
personally liable for the payment of the obligation evidenced
hereby, and the enforcement of the rights of the Holder hereof
shall be limited to the collateral given as security herefor.
2. UDAG Permanent Loan
(a) Principal. The principal amount of the UDAG
Permanent Loan shall be $7,562,454.00>
(b) ~. The term of the UDAG Permanent Loan shall be
30 years from the earlier of September 30, 1991, or completion of
construction, such that said term will end on or before September
30, 2021.
(c) Interest. The interest rate shall be zero percent
(0%) per annwn, ekcept conting-ent. interest described in
subparagraph (e) below.
(d) Repavment. There shall be no requirement for
payments of principal during the term of the loan. There shall be
a single payment of the entire principal amount at the end of the
loan terlll.
(e) Contina-ent Interest/Participation In Cash Flow.
Beginning in the fifth year of the loan term and annually
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thereafter throughout the remainder of the term of the permanent
UDAG Loan, Developer shall pay to City 20 percent of the Net Annual
Cash Flow of the Project. "Net Annual Cash Flow" means all
operating income and receipts of the Project less (1) debt service
on the First Mortgage, if any, (2) real estate taxes, (3)
reasonable operating expenses (including a management fee not to
exceed 5 percent of operating income) allowable for federal income
tax purposes, but excluding reserves for capital improvements I
depreciation, and other non-cash items, and (4) a 15 percent non-
cumulative return to Developer on Developer' s documented cash
equity funds investQd in the Project, including the value ascribed
by HUD to a portion of the Project Site of $525,000.00 and
certified cash equity invested for operating losses in years one
(1) through four (4) of operations. Participation payments shall
be due within 90 days of the end of each operating year of the
project.
3 . Secur i ty . The UDAG Loan sha 11 be secured by the UDAG
Security Deed and Security Agreement, of even date herewith, (the
provisions of Which are, by this reference thereto, incorporated
herein and made a part hereof) in favor of the city upon all land,
buildings, fixtures, equipment, and other assets of the Developer
comprising the project. The security position of City may be
subordinated only to the First Mortgage.
4. Partici'Dation in Sale or Refinancit)g. Developer
shall pay to City 20 percent of the net proceeds from any sale or
disposition in whole or in part of the Project or from any
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syndication or refinancing, except refinancing permitted pursuant
to a call or a takeout provision contained in the First Security
Deed. "Net proceeds" shall be defined as all proceeds received
less (1) repayment of the first priority financing, (2) repayment
o! the UDAG Loan, (3) Developer's documented reasonable costs of
sale or refinancinq, and (4) repayment of documented Developer's
cash equity funds invested in the Project including the value
ascribed by HOD to a portion of the Project site of $525,000.00.
5. Acceleration of tJDAG Loan. The entire prinCipal
balance of the UDAG Loan shall become immediately due and payable
upon the (1) bankruptcy or reorganization of Developer under the
Bankruptcy Code or the Internal Revenue Code of 1986, as amended,
(2) dissolution or liquidation of Developer, (3) syndication of
Developer, except a one-time syndication of Developer, pursuant to
paraqraph numbered 6, below, (4) change in ownership of more than
15 percent of the partnership interests in Developer, (5)
refinance, except that for the first seven years Developer may
refinance the First Mortgage as often as Developer deems necessary
provided that the First Mortgage financing does not exceed the
total of $20,000,000.00 plus any further advances by the
mortgagee (5) which are invested in capital improvements in the
Project, and which are approved by HUD, and which are required for
its completion, or (6) sale,. partial sale, exchange, tranSfer, sale
under foreClosure, or any other disposition of the Project Site,
improvements, or capital equipment situated thereon. No
improvements or capital equipment situated on the Project Site
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shall be removed, demolished, or materially ,altered, without ~rior
written consent of City, except that Developer shall have the
riqht, without such consent, to remove and dispose ot, free from
any lien of City, such equipment as from time to time may become
worn out or obsolete, provided that simultaneously with or prior
to such removal, any such equipment shall be replaced with other
equipment of value at least equal to that of the replaced equipment
and free from any title retention or other encumbrance unless
permitted under the UDAG Security Deed and Security Agreement, and
by such removal and replacement Developer shall be deemed to have
sUbjected such replacement equipment to the security interest of
City, as provided in the UDAG Security Deed and security Agreement.
6. Excess Syndication Proceeds. City shall be entitled
to receive 60 percent of the Excess Syndication Proceeds from the
Project. "Excess syndication Proceeds" means the amount of net
syndication proceeds either owed to or received by the general
partner(s) from the limited partner investor(s) that results in a
surplus of receipts not required to complete the Project and in
excess of the $9,248,275.00 of cash equity invested in the Project
(plus any additional equity funds required to complete the Project)
including the value ascribed by HUD to a portion of the Project
Site of $525,000.00. "Net Syndication Proceeds" means all
syndication proceeds received less arm's length, third party costs
of the syndication such as legal, accountinq, closing, printing,
syndication, brokerage, and marketing fees.
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7. Annual Accounting. Developer shall deliver a
statement to City from an independent certified public accountant
within 90 days of the close of each operating year during the term
of the UDAG Permanent Loan, certifying:
(1) Operating income and repeipts of the Project;
(2) Operating expenses allowable for federal income tax
purposes;
(3) Net Annual Cash Flow;
(4) Developer equity invested in the project;
(5) Net proceeds;
(6) Gross Syndication Proceeds, if applicable;
(7) Net Syndication Proceeds, and a statement of
allowable deductions used to determine'said amount, in accordance
with paragraph numbered 6 above, if applicable;
(8) Excess Syndication Proceeds; and
(9) The amount of participation in Net Annual Cash Flo~,
Net Proceeds, and Excess Syndication Proceeds to City.
8. PreDavment. Maker shall have the privilege, before
maturity or default hereunder, of prepaYing the principal
indebtedness in Whole or in part at any time without prior written
approval of HOlder, and without penalty. Prepayment Shall be for
the full amount due or in multiples of Sl,ooo.oo.
9. Default. It is hereby expressly agreed that said
principal sum of the obligation or any unpaid part thereof, and any
other sums advanced by Holder under the security deed, shall, at
the option of Holder, and after notice and opportunity to cure,
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become immediately due and payable on the happening of any default
under the ter1nS of the UDAG city/Developer Agreement, the UOAG
Security Deed and Security Aqreement, the Construction, operating,
and Reciprocal Easement Agreement, and this UDAG Promissory Note
(together, the "UDAG Loan Documents").
Should any default be made under the terms of any of the
UDAG Loan Documents, or in the repayment of the UDAG Loan hereunder
when the same is due, or should there occur any event of default
which remains uncured under the First Security Deed or any
Obligation secured thereunder, or if any default be made, and the
same not be corrected ~ithin 30 days after receipt of Notice or
Declaration of Default, the entire unpaid balance of said principal
sum of this Obligation, shall at the option of Holder become
immediately due and payable; provided, however, that before Holder
may pursue any remedies in one event of default as set forth in
the UDAG Loan documents, or other legal remedies, Holder must send
to Maker, by registered or certified mail, return receipt
requested, written Notice or Declaration of Default. However,
Holder may immediately pursue any of the remedies hereunder, or
provided in the UDAG Loan documents, without sending Notice or
Declaration of Default and providinq opportunity to cure, upon the
bankruptcy or reorganization of Maker under the Bankruptcy Code or
the Internal Revenue Code of 1986, as amended, the dissolution or
liquidation of Maker, change in ownership of more than 15 percent
of the partnership interests in Developer, or refinance except as
provided in Paragraph numbered 5 hereof, sale, partial sale,
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exchange, transfer, sale under foreclosure, or any other
disposition of the Project Site, improvements, or capital equipment
situated thereon, except as provided in paragraph numbered 7 of the
UDAG Security Deed and Security Agreement.
Said Notice or Declaration of Default shall provide Maker
a 30 day period after receipt of said notice in which to cure any
default; provided, however, that if any such default (other than
one curable by the payment of money) may be cured, but not within
such 30 day period, and so long as any delay in curing such default
does not (i) result in the inability of the Maker to meet its
obligations under the UDAG Loan documents, or (ii) adversely effect
the availability of any remedies hereunder, Holder shall not
proceed to pursue its available remedies if Maker commences to cure
such failure promptly within sucb 30 day period and thereafter
diligently prosecutes such efforts to cure to completion; further
provided, however, that such cure period shall not extend beyond
90 days from the date of Maker's receipt of Notice or Declaration
of Default.
In case of default in the repayment of the principal
amount of the UDAG Loan, and in case Holder of this UDAG Promissory
Note should elect, on account of such default, or any other default
under the UDAG Loan Documents or obligations secured by the First
Security Deed, to declare the unpaid balance of the principal sum
due and payable, said principal sum or so much thereof as may
remain unpaid at the time of sucb default, shall bear interest at
the rate of 1~ percent per annum from the date of such default.
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In case this UDAG Promissory Note is collected by law,
as through an attorney at law, all costs of collection, including
15 percent of the principal and interest as attorney's fees, shall
be paid by Maker.
This Note shall be secured by the UDAG Security Deed and
security Agreement in favor of HOlder, executed simultaneOUSly
herewith by Maker on the land, buildings, fixtures, equipment and
other assets of Maker which comprise the Project.
10. M\scellaneous Provisions.
(a) All sums due under this UDAG Promissory Note are
payable in lawful currency of the United states, at such place as
Holder may designate in writing, from time to ti~e.
(b) The undersigned acknowledges that this UDAG
Promissory Note and the rights of the parties hereto shall be
governed by the Laws of the state of Georgia and interpreted and
construed in accordance with such laws.
(c) In case any provisions (or any part of any
provision) contained in this UOAG Promissory Note shall for any
reason be held to be invalid, illegal or unenfol:'ceable in any
respect, such invalidity, illegality or unenforceability shall not
affect any other provision (or remaining part of the affected
provision) of this UDAG Promissory Note.
(d) As used herein, the terms "MaKer" and "Holder" Shall
be deemed to include respective successors and assigns, Whether
voluntary by operation of the parties, or involuntary by operation
of law.
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(e) Maker stipulates and ~arrants that the debt
evidenced hereby is a comme~cial loan. Make~ warrants that all
loan proceeds will be used to acquire or carryon a business or
commercial enterprise.
(f) Nothing contained in this UDAG Promissory Note shall
he deemed by the pa~ties hereto, or by any third party, to create
the relationship of principal and agent, that of a joint venture,
or of any association between Maker and HOlder, it being expressly
understood and agreed that no provisions contained in this UDAC
Promissory Note nor any acts of the parties hereto shall be deemed
to create any relationship between Maker and Holder other than the
relationship of debtor 'and creditor.
(g) Any required notices shall be in writing and shall
be sent ~egistered or certified mail, return receipt requested to
the respective addresses as follows, or to such other address as
either Maker or Holder may designate by written notice, duly mailed
to the other party:
To City (Holder):
Mayor, City of Augusta
Augusta-Richmond County
Municipal Building
530 Greene Street
Augusta, Georgia 30911
Copy To:
Director, Office of Economic
Development, city of Augusta
Augusta-RiChmond County
Municipal Building
530 G~eene Street
Augusta, Georgia 30911
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Copy To:
Bailey & Associates
6190 Powers Ferry Road, N.E.
suite 100
Atlanta, Georgia 30339
11. Time of Essence. Time is of the essence in this
Agreement.
IN WITNESS WHEREOF, Maker has caused this UDAG Promissory
Note to be executed in its name and on its behalf with its seal
affixed thereto as of the day and year first above written.
AUGUSTA RIVERFRONT LIMITED
PARTNERSHIP, Developer
BY: B & A AUGUSTA LIMITED
PARTNERSHIP, Manaqing Partner
BY: Bailey Augusta, Inc.
~' As :J:.~s G~eneral i..~.r.
BY: ;~
AS ITS PRZSIDE~ ,~-;;...-.;:,~/
ATTEST:
AS ITS SECRETARY
BY: AZALEA DEVELOPMENT
CORPORATION,
BY:~~
AS I S PRESIOENT
ATTEST:
AS ITS SECRETARY
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