DEVELOPMENT FINANCING AGREEMENT
THIS AGREEMENT, made and entered into effective as of
this 25th day of November, 1998, by and between Tumbleweed ,
LLC (hereinafter referred to as "Lessee"), whose address is
0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, and AEI Income
& Growth Fund XXII Limited Partnership, whose principal
business address is 1300 Minnesota World Trade Center, 00
Xxxx Xxxxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000 (hereinafter
referred to as "Lessor") .
W I T N E S S E T H, that:
WHEREAS, Lessee is contemplating building the following
Improvements on the premises described in Exhibit "A"
attached hereto :
Construction of an approximately square foot building
and improvements to be used as a Tumbleweed Restaurant.
WHEREAS, Lessee has made application to Lessor for
development financing to defray the costs of constructing
such Improvements;
WHEREAS, Lessor's Assignor has issued to Lessee its
Development Financing and Leasing Commitment to advance
funds in the amount hereinafter specified, subject to
compliance with the terms and conditions of this Development
Financing Agreement and the Net Lease Agreement (the
"Lease") of even date herewith;
NOW, THEREFORE, in consideration of entering into the
Lease and other good and valuable consideration, the receipt
of which is hereby acknowledged by the parties hereto, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall
have the following meanings:
1. "Application" shall mean Lessee's application to
the Lessor for the Development Financing the terms and
conditions of which are incorporated herein by reference.
2. "Architect's Contract" shall mean Lessee's contract
with the Project Architect.
3. "Commitment" shall mean Lessor's Commitment to
Lessee agreeing to provide the Development Financing.
(The "Development Financing and Leasing Commitment"
dated of even date herewith.)
4. "Completion Date" shall mean midnight, May 31, 1999,
subject to Force Majeure, as defined herein.
5. "Construction Costs" shall mean land costs, all
costs paid to construct and complete the Improvements,
as specified on Exhibit "B" attached hereto and made a
part hereof.
6. "Construction Contracts" shall mean the contracts
between Lessee and Contractors for the furnishing of
labor, services or materials to the Leased Premises in
connection with the construction of the Improvements.
7. "Contractors" shall mean those firms directly engaged
by Lessee to construct the Improvements, whether one
or more.
8. "Contract Documents" shall mean the Project Architect's
Contract, Plans and Specifications and the contract with the
Contractor.
9. "Development Financing" shall mean the funds to be made
available pursuant to the Commitment and not to exceed the
lesser of the Construction Costs or the maximum loan amount
of One Million Three Hundred Twenty Five Thousand Dollars
($1,325,000) as specified in the Commitment.
10. "Development Financing and Carrying Charges" shall
mean all fees, taxes and charges incurred under the
Development Financing and in the construction of the
Improvements including, but not limited to, non-refundable
commitment fees; interest charges, service and inspection
fees, attorney's fees, title insurance fees and charges,
recording fees and insurance premiums.
11. "Development Financing Documents" shall mean this
Agreement,the Lease,Assignment of Architects and Construction
Contracts, Guarantees, and such other documents given to the
Lessor as security for the Development Financing.
12. "CLTIC-CDD" shall mean Commonwealth Land Title
Insurance Corporation, Construction Disbursement Department,
the nationally recognized title insurer, to be CLTIC-CDD
under the Development Financing Disbursement Agreement
executed by and between the parties of even date herewith.
13. "Final Disbursement Date" shall mean the date of the
final disbursement of the Development Financing provided
hereunder.
14. "Improvements" shall mean the structures and other
improvements to be constructed on the Leased Premises in
accordance with the Plans and Specifications.
15. "Initial Disbursed Funds" shall mean those funds
disbursed on the Closing Date for land acquisition and
related soft costs upon Lessor's acquisition of the Leased
Premises.
16. "Inspecting Architect" shall mean the architect, if any,
hired by Lessor to perform inspections of the premises.
An Inspecting Architect may only be engaged by Lessor in the
event of a default relating to construction of the Improvements
under the Development Financing Documents.
17. "Leased Premises" shall mean the real property described
in the Exhibit "A" attached to this Agreement, together with all
Improvements, equipment and fixtures thereon.
18. "Lessee Equity" shall mean the final Construction Costs
less the amount of the Development Financing.
19. "Plans and Specifications" shall mean the plans and
specifications prepared by the Project Architect who shall be
licensed in the jurisdiction of the Leased Premises and selected
by Lessee.
20. "Project" shall mean the construction of the Improvements
on the Leased Premises.
21. "Project Architect" shall mean the architect retained by
Lessee to design and supervise construction of the Improvements.
22. "Rental Modification Date" shall mean a date one hundred and
twenty days (120) from the date hereof.
23. "Sub-Contractors" shall mean those persons furnishing labor
or materials for the Project pursuant to the Sub-Contracts.
24. "Sub-Contracts" shall mean the contracts between the
Contractor and its materialmen and mechanics in the furnishing
of labor or materials for the Project.
25. "Title" shall mean Lawyers Title Insurance Corporation
issuing the Lessor's fee owner's title insurance policy.
ARTICLE II
THE DEVELOPMENT FINANCING
Subject to compliance with the provisions of this Agreement,
Lessor agrees to advance to Lessee, and Lessee agrees to
request from Lessor, the Development Financing. The
Development Financing shall be advanced in stages by Lessor
to CLTIC-CDD and disbursed by CLTIC-CDD pursuant to the
provisions of Article VIII hereof. The Development
Financing, or so much thereof as has been advanced
hereunder, shall bear interest at the rate and shall be
repaid in accordance with the terms hereof and the Lease.
The proceeds of the Development Financing shall be used
exclusively for the purposes of defraying Construction
Costs.
ARTICLE III
N/A
ARTICLE IV
CONSTRUCTION OF IMPROVEMENTS
Lessee agrees to commence construction of the Improvements
within thirty (30) days from the date of this Agreement.
After commencement of construction of any Improvements,
Lessee agrees to diligently pursue said construction to
completion, and to supply such moneys and to perform such
duties as may be necessary to complete the construction of
said Improvements pursuant to the Plans and Specifications
and in full compliance with all terms and conditions of this
Agreement and the Development Financing Documents, all of
which shall be accomplished on or before the Completion
Date, subject to Force Majeure and without liens, claims or
assessments (actual or contingent) asserted against the
Leased Premises for any material, labor or other items
furnished in connection therewith, subject to Lessee's right
to contest such liens, claims, or assessments provided the
same are removed as a lien upon the Leased Premises prior to
foreclosure of such lien, and all in full compliance with
all construction, use, building, zoning and other similar
requirements of any pertinent governmental jurisdiction.
Lessee will provide to Lessor, upon request, evidence of
satisfactory compliance with all the above requirements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE LESSEE
Lessee hereby represents and warrants to the Lessor, which
representations and warranties shall be deemed to be
restated by Lessee each time Lessor makes an advance of the
Development Financing, that:
1. VALIDITY OF DEVELOPMENT FINANCING DOCUMENTS - The
Development Financing Documents are in all respects legal,
valid and binding according to their terms.
2. NO PRIOR LIEN ON FIXTURES - No mortgage, xxxx of sale,
security agreement, financing statement, or other title
retention agreement (except those executed in favor of
Lessor) has been, or will be, executed with respect to any
fixture (except Lessee's trade fixtures not financed with
this Development Financing) used in conjunction with the
construction, operation or maintenance of the improvements.
3. CONFLICTING TRANSACTION OF LESSEE - The consummation of the
transactions hereby contemplated and the performance of the
obligations of Lessee under and by virtue of the Development
Financing Documents will not result in any breach of, or
constitute a default under, any mortgage, lease, bank loan
or credit agreement, corporate charter, by-laws, partnership
agreement, or other instrument to which Lessee is a party or
by which it may be bound or affected, the breach of which
would materially affect Lessee's ability to perform its
obligations hereunder.
4. PENDING LITIGATION - There are no actions, suits or
proceedings pending, or to the knowledge of Lessee
threatened, against or affecting it or the Leased Premises,
or involving the validity or enforceability of any of the
Development Financing Documents, at law or in equity, or
before or by any governmental authority, except actions,
suits and proceedings that are fully covered by insurance or
which, if adversely determined would not substantially
impair the ability of Lessee to perform each and every one
of its obligations under and by virtue of the Development
Financing Documents; and to the Lessee's knowledge it is not
in default with respect to any order, writ, injunction,
decree or demand of any court or any governmental authority.
5. VIOLATIONS OF GOVERNMENTAL LAW, ORDINANCES OR REGULATIONS -
To the best knowledge of Lessee, there are no violations or
notices of violations of any federal or state law or
municipal ordinance or order or requirement of the State in
which the Leased Premises are located or any municipal
department or other governmental authority having
jurisdiction affecting the Leased Premises, which violations
in any way have a material adverse affect on the Leased
Premises and which remain uncured after notice by such
governmental authority or department (if notice is required)
and the expiration of the time within which Lessee may cure
such violation, or if no time limitation is specified,
within a reasonable time after notice to cure such violation
.
6. COMPLIANCE WITH ZONING ORDINANCES AND SIMILAR LAWS - To the
best knowledge of Lessee, the Plans and Specifications and
construction pursuant thereto and the use of the Leased
Premises contemplated thereby comply and will comply with
all present governmental laws and regulations and
requirements, zoning ordinances, standards, and regulations
of all governmental bodies exercising jurisdiction over the
Leased Premises. Lessee agrees to provide the Project
Architect's certification to such effect prior to the
funding of the first disbursement under the Development
Financing.
7. LESSEE'S STATUS AND AUTHORITY - If the Lessee be a
corporation, limited liability company, trust or a
partnership, Lessee warrants and represents that (i) it is
duly organized, existing and in good standing under the laws
of the state in which it is incorporated or created; (ii) it
is duly qualified to do business and is in good standing in
the state in which the Leased Premises are located; (iii) it
has the corporate or other power, authority and legal right
to carry on the business now being conducted by it and to
engage in the transactions contemplated by this Agreement
and the Development Financing Documents; and (iv) the
execution and delivery of this Agreement and the Development
Financing Documents and the performance and observance of
the provisions hereof and thereof have been (or future acts
will be) duly authorized by all necessary trust,
partnership, or corporate actions of Lessee. Lessee will
furnish such resolutions, affidavits and opinions of counsel
to such effect as Lessor may reasonably require.
8. AVAILABILITY OF UTILITIES - All utility services necessary
for the construction of the Improvements will be available
prior to the commencement of construction, and all utility
services necessary for the proper operation of the
Improvements for their intended purposes are available at
the Leased Premises or will be available at the Leased
Premises prior to the Final Disbursement Date, at
commercially comparable utility rates and hook-up charges
for the vicinity, including water supply, storm and sanitary
sewer facilities, gas, electricity and telephone facilities.
Lessee shall furnish evidence of such availability of
utilities from time to time at Lessor's request.
9. BUILDING PERMITS - All building permits required for the
construction of the Improvements have been obtained prior to
the commencement of the construction of the Improvements and
copies of same will be delivered to Lessor.
10.CONDITION OF LEASED PREMISES - The Leased Premises are not
now damaged or injured as a result of any fire, explosion,
accident, flood or other casualty, nor to the best of
Lessee's knowledge, subject to any action in eminent domain.
11.APPROVAL OF PLANS AND SPECIFICATIONS - To the best knowledge
of Lessee in reliance upon the Project Architect's
certification to such effect, the Plans and Specifications
conform to the requirements and conditions set out by
applicable law or any effective restrictive covenant, to all
governmental authorities which exercise jurisdiction over
the Leased Premises or the construction thereon, and no
construction will be commenced upon the Leased Premises
until said Plans and Specifications shall have been approved
by Lessor, which consent shall not be unreasonably withheld
or delayed and shall be given or withheld within ten
business days after written request therefor. Subject to
Article VI, paragraph 14, no material changes are to be made
in the Plans and Specifications as approved without Lessor's
prior consent, which consent shall not be unreasonably
withheld or delayed and shall be given or withheld within
ten business days after written request therefor; except,
after prior written notice to Lessor, provided the
Development Financing shall remain in balance as set forth
in Article VII, paragraph 3 herein, Lessor shall consent to
reallocation among line items or use of the Construction
Contingency in the aggregate of not more than the amount
budgeted as set forth on Exhibit B for Construction
Contingency, unless Lessee shall deposit Owner Equity with
CLTIC-CDD in the amount of such excess over the budgeted
amount.
00.XXXXXXXXXXXX CONTRACTS - Lessee has entered into contracts
with the Contractors or separate contracts with materialmen
and laborers providing for the construction of the
Improvements. Lessee will cause the Contractors to promptly
furnish Lessor with the complete list of all Sub-contractors
or entities as and when under contract, which Contractors
propose to engage to furnish labor and/or materials in
constructing the Improvements (such list containing the
names, addresses, and amounts of such sub-contracts as
written in excess individually of $5,000, and prior to
disbursement of funds to or for the benefit of such
Subcontractors, affidavits of authorized signatory and other
documents commercially reasonably required by Title to
insure that the Leased Premises remain lien free) and will
from time to time furnish Lessor or Title with true copies
of all Contracts entered into by Lessee and with the terms
of all verbal agreements therefor, if any, and as to
subcontractors, letters signed by sub-contractors whose
contracts are in excess of $5,000 setting forth the present
amount of their contract and the amounts remaining to be
paid under that contract, if the same information is not
stated on a lien waiver reflecting the most currently
requested payment to such subcontractor.
13.BROKERAGE COMMISSIONS - No brokerage commissions are due in
connection with the transaction contemplated hereby or if
there are commissions due or payable the same will be paid
by Lessee. Lessee agrees to and shall indemnify Lessor from
any liability, claims or losses arising by reason of any
such brokerage commissions. This provision shall survive
the repayment of the Development Financing and shall
continue in full force and effect so long as the possibility
of such liability, claims or losses exists.
00.XX PRIOR WORK - Except as may have been permitted by Lessor,
no work or construction has been commenced or will be
commenced by or on behalf of Lessee on the Leased Premises,
nor has Lessee entered into any contracts or agreements for
such work or construction which could result in the
imposition of a mechanic's or materialmen's lien on the
Leased Premises or the Improvements prior to or on parity
with the interest of Lessor.
15.ENVIRONMENTAL IMPACT STATEMENT - All required environmental
impact statements as required by any governmental authority
having jurisdiction over the Leased Premises or the
construction of the Improvements have been duly filed and
approved.
16.ACCESS - The Leased Premises front on a publicly maintained
road or street or have access to such a road or street under
an easement or private way, which is not subject to a
reversion in favor of any party.
00.XXXXXXXXX INFORMATION - Any financial statements heretofore
delivered to Lessor are true and correct in all respects,
have been prepared in accordance with generally accepted
accounting practice, and fairly present the respective
financial conditions of the subject thereof as of the
respective dates thereof and no materially adverse change
has occurred in the financial conditions reflected therein
since the respective dates thereof.
ARTICLE VI
COVENANTS OF LESSEE
Lessee hereby covenants and agrees with Lessor as follows:
1. SURVEYS - Prior to execution of any Development Financing
Documents and prior to the initial request for a
Disbursement (as defined in Article VIII hereof), Lessee has
furnished to Lessor three copies of a current perimeter land
survey, in form and substance satisfactory to Lessor,
certified to Lessor, giving a description of the Leased
Premises and showing all encroachments onto or from the
Leased Premises, currently certified by a registered
surveyor and bearing his registry number and showing access
rights, easements, or utilities, rights of way, all setback
requirements upon the Leased Premises, improvements, matters
affecting title and such other items as Lessor may
reasonably request.
2. TITLE INSURANCE - Prior to the initial request for
Disbursement the Lessee has furnished Lessor with an ALTA
policy of title insurance, and prior to any subsequent
request for Disbursement such ALTA policy of title insurance
shall be brought down to the date of Disbursement by
endorsement, all in form and substance satisfactory to
Lessor issued at the Lessee's expense and written by Title
insuring the Leased Premises to be marketable, free from
exceptions for mechanic's and materialmen's liens and free
from other exceptions not previously approved by the Lessor,
naming Lessor as fee owner insured to the extent of advances
made hereunder subject only to such exceptions as may be
reasonably approved by Lessor.
3. RESTRICTIONS ON CONVEYANCE OR SECONDARY FINANCING - Lessee
will not transfer, sell, convey or encumber the Leased
Premises or subject the Leased Premises to any secondary
financing in any way without the written consent of the
Lessor, except as permitted in Article V, paragraph 2
relating to trade fixture financing sources or suppliers.
4. INSURANCE - To obtain or cause Contractor to obtain and
maintain such insurance or evidence of insurance as Lessor
may reasonably require, including but not limited to the
following:
(a) BUILDER'S RISK INSURANCE -
Builder's Risk Insurance written on the so-called "Builder's
Risk-Completed Value Basis" in an amount equal to the full
replacement cost of the Improvements at the date of
completion with coverage available on the so-called multiple
peril form of policy, including coverage against collapse
and water damage, naming Lessor as additional named insured,
such insurance to be in such amounts and form and written by
such companies as shall be reasonably approved by Lessor,
and the originals of such policies (together with
appropriate endorsement thereto, evidence of payment of
premiums thereon and written agreements by the insurer or
insurers therein to give Lessor ten (10) days' prior written
notice of any intention to cancel) shall be promptly
delivered to Lessor, said insurance coverage to be kept in
full force and effect at all times until the completion of
construction of the Improvements.
(b) HAZARD INSURANCE - Fire and
Extended Coverage Insurance, and such other hazard insurance
as Lessor may require and as called for in the Lease in an
amount equal to the full replacement cost of the
Improvements naming Lessor as an additional named insured,
such insurance to be in such amounts and form and written by
such companies as shall be reasonably approved by Lessor,
and the originals of such policies (together with
appropriate endorsements thereto, evidence of payment of
premiums thereon and written agreement by the insurer or
insurers therein to give Lessor ten (10) days' prior written
notice of any intention to cancel) shall be promptly
obtained and delivered to Lessor immediately upon completion
of the construction of the Improvements and before any
portion is occupied by Lessee or any tenant of Lessee with
such insurance to be kept in full force and effect at all
times thereafter.
(c) PUBLIC LIABILITY - Comprehensive
public liability insurance (including operations, contingent
liability operations, operations of sub- contractors,
completed operations and contractual liability insurance) in
limits of coverage as set forth in the Lease.
(d) WORKMEN'S COMPENSATION INSURANCE -
Evidence of compliance with the required coverage under
statutory workmen's compensation requirements.
5. COLLECTION OF INSURANCE PROCEEDS - To cooperate with Lessor
in obtaining for Lessor the benefits of any insurance or
other proceeds lawfully or equitably payable to it in
connection with the transaction contemplated hereby and the
collection of any indebtedness or obligation of the Lessee
to Lessor incurred hereunder (including the payment by
Lessee of the expense of an independent appraisal on behalf
of Lessor in case of a fire or other casualty affecting the
Leased Premises).
6. APPLICATION OF DEVELOPMENT FINANCING PROCEEDS - To use the
proceeds of the Development Financing solely for the purpose
of paying for Construction Costs and such incidental costs
relative to the construction as may be reasonably approved
from time to time in writing by Lessor, and in no event to
use any of the Development Financing proceeds for personal,
corporate or other purposes.
7. EXPENSES - To pay all costs of closing the Development
Financing and all expenses of Lessor with respect thereto,
including, but not limited to, legal fees by Lessor's
counsel and all other reasonable attorney's fees (limited as
set forth in the Commitment), costs of title insurance,
transfer taxes, license and permit fees, recording expenses,
surveys, intangible taxes, appraisal fees, Inspecting
Architect fees, expenses of retaking possession upon default
by Lessee hereunder or other costs of enforcement (including
reasonable attorney's fees) and similar items.
8. LAWS, ORDINANCES AND ETC. - To comply promptly with any law,
ordinance, order, rule or regulation of all authorities
exercising jurisdiction over the Leased Premises or the
construction thereon, including appropriate supervising
boards of fire underwriters and similar agencies and the
requirements of any insurer issuing coverage on the Project.
9. RIGHT OF LESSOR TO INSPECT LEASED PREMISES - Upon 48 hours
notice, except in cases which Lessor reasonably deems to be
an emergency, in which event upon reasonable notice under
the circumstances, to permit Lessor and Title and their
representatives and agents to enter upon the Leased Premises
and to inspect the Improvements and all materials to be used
in construction thereof and to cooperate and cause
Contractor to cooperate with Lessor or Title and their
representatives and agents during such inspections, provided
that such is accomplished without interrupting the
construction process. Provided, further, however, that this
provision shall not be deemed to impose upon Lessor or Title
any duty or obligation whatsoever to undertake such
inspections, to correct any defects in the Improvements or
to notify any person with respect thereto.
10. BOOKS AND RECORDS - To set up and maintain accurate and
complete books, accounts and records pertaining to the
Project including the working drawings in a manner
reasonably acceptable to Lessor. The Lessor, Title and
Inspecting Architect shall have the right at all reasonable
times and upon reasonable prior notice to inspect, examine
and copy all books and records of Lessee relating to the
Project, and to enter and have free access to the Leased
Premises and Improvements and to inspect all work done,
labor performed and material furnished in or about the
Project, provided that such is accomplished without
interrupting the construction process. Notwithstanding the
foregoing, Lessee shall be responsible for making
inspections as to the Improvements during the course of
construction and shall determine to its own satisfaction
that the work done or materials supplied by the Contractors
and all Subcontractors has been properly supplied or done in
accordance with the applicable contracts. Lessee will hold
Lessor and Title harmless from and Lessor and Title shall
have and have no liability or obligation of any kind to
Lessee or creditors of Lessee in connection with any
defective, improper or inadequate workmanship or materials
brought in or related to the Improvements or the Leased
Premises, or any mechanic's liens arising as a result of
such workmanship or materials. Upon Lessor's request,
Lessee shall replace or cause to be replaced any such work
or material found to be materially deficient by the Project
Architect or Independent Architect. Lessor shall cooperate
with Lessee in obtaining any rights under any applicable
warranties to accomplish such work. Any inspections made by
Inspecting Architect, Title or Lessor are for the sole
benefit of Lessor and neither Lessee nor any creditor,
tenant or vendee of Lessee shall be entitled to rely on such
inspection. Lessee shall obtain for Lessor coincident
rights to rely upon any warranties obtain by Lessee from its
Contractors or subcontractors.
11.CORRECTION OF DEFECTS - To promptly correct any structural
defects in the Improvements or any material departure from
the Plans and Specifications not previously approved by
Lessor. The advance of any Development Financing proceeds
shall not constitute a waiver of Lessor's right to require
compliance with this covenant.
12.SIGN REGARDING DEVELOPMENT FINANCING - To allow Lessor to
erect and maintain at a suitable site on the Leased
Premises, at a location to be chosen by Lessee in its
reasonable discretion, a sign indicating that Development
Financing is being provided by Lessor, to the extent
permitted by law or private covenant, condition, or
agreement affecting the Project.
13.ADDITIONAL DOCUMENTS - To furnish to Lessor all instruments,
documents, initial surveys, footing or foundation surveys,
if conducted, certificates, plans and specifications,
appraisals, financial statements, title and other insurance
reports and agreements and each and every other document and
instrument required to be furnished by the terms hereof, all
at Lessee's expense; to assign and deliver to Lessor such
documents, instruments, assignments and other writings, and
to do such other acts necessary or desirable to preserve and
protect the Leased Premises, as Lessor may require; and to
do and execute all and such further lawful and reasonable
acts, conveyances and assurances for the carrying out of the
intents and purposes of this Agreement, the Lease, or the
Commitment, as Lessor shall reasonably require from time to
time.
14.ARCHITECTS AND CONSTRUCTION CONTRACTS - To commit no default
nor knowingly permit a default under the terms of the
Architects or Construction Contracts; To waive none nor
knowingly permit a waiver of the obligations of the parties
thereunder; To do no act which would relieve such parties
from their obligations thereunder; To make no amendments to
such contracts, without the prior written consent of Lessor;
To enter into no change orders or extras that cause a
reallocation among budgeted line items, or that in the
aggregate or singularly result in a net increase in excess
of 10% of the original contract amount without Lessor's
prior written consent, which consent shall not be
unreasonably withheld or delayed; provided, however, Lessor
shall be given written notice and copies of all change
orders; provided, further, however, with written notice to
Lessor prior to any request for funds subsequent to any such
change order or reallocation, the Lessee shall be allowed to
enter into any change order or extra which is accounted for
by use of any reallocation among line items or any remaining
budgeted Contingency line item, or if the same has been
exhausted, Lessee shall be allowed increases in the original
contract amount without Lessor's consent if Lessee has, upon
the execution of said change order, deposited with Lessor
the amount by which such change order increases the total
Construction Cost; To allow all such contracts to be subject
to the approval of Lessor for its loan purposes; To allow
Lessor to take advantage of all the rights and benefits of
the contracts upon any default by Lessee; and to submit
evidence to Lessor that both the Architect and the
Contractors will permit Lessor to acquire Lessee's interest
under their respective contracts and the Contract Documents
without additional charge or fee should an event of default
occur hereunder, which default is not cured within
applicable notice and cure periods.
15.ENFORCE PERFORMANCE OF SUB-CONTRACTS - To enforce, or cause
to be enforced, the prompt performance of the Sub-Contracts
in accordance with their terms and not to approve any
changes in the same that in the aggregate or singularly
result in a net increase in excess of 10% of the original
General Contractor's contract amount without Lessor's prior
written consent, which consent shall not be unreasonably
withheld or delayed, provided Lessee's right to enter into
any such change order shall be on the same terms set forth
in Section 14 above.
16.COMPLIANCE WITH RULES - To comply with, and to require the
Contractors to comply with, all rules, regulations,
ordinances and laws bearing on the conduct of the work on
the Improvements, including the requirements of any insurer
issuing coverage on the Project and the requirements of any
applicable supervising boards of fire underwriters.
17.OPINIONS OF COUNSEL - To furnish such opinions of counsel as
may be reasonably requested of the Lessee in connection with
the matters contemplated by this Agreement.
18.SOIL TESTS - To provide the Lessor with a soil report
prepared by an acceptable engineer certifying as to the
status of the soil conditions on the Leased Premises, the
need or lack of need for special pilings and foundations and
that either any pilings and foundation necessary to support
the Improvements have been placed in a manner and quantity
sufficient to provide the required support or that no such
pilings and foundations are necessary for the support and
construction of the Improvements.
19.MARKETABLE TITLE - To execute and deliver or cause to be
executed and delivered such instruments as may be required
by the Lessor and Title to provide Lessor with a marketable,
valid title to the Leased Premises subject only to such
exceptions to title as may be reasonably approved by Lessor.
20.VIOLATIONS OF GOVERNMENTAL LAW, ORDINANCES OR REGULATIONS -
Lessee will permit no violations nor commit the same, of any
federal or state law or municipal ordinance or order or
requirement of the State in which the Leased Premises are
located or any municipal department or other governmental
authority having jurisdiction affecting the Leased Premises,
which violations in any way have a material adverse affect
on the Leased Premises and which remain uncured after notice
by such governmental authority or department (if notice is
required) and the expiration of the time within which Lessee
may cure such violation, or if no time limitation is
specified, within a reasonable time after notice to cure
such violation .
21.COMPLIANCE WITH ZONING ORDINANCES AND SIMILAR LAWS - The
Plans and Specifications and construction pursuant thereto
and the use of the Leased Premises contemplated thereby will
comply with all governmental laws and regulations and
requirements, zoning ordinances, standards, and regulations
of all governmental bodies exercising jurisdiction over the
Leased Premises, including environmental protection and
equal employment regulations, and appropriate supervising
boards of fire underwriters and similar agencies.
22.APPROVAL OF PLANS AND SPECIFICATIONS - The Plans and
Specifications will conform to the requirements and
conditions set out by applicable law or any effective
restrictive covenant, and to all governmental authorities
which exercise jurisdiction over the Leased Premises or the
construction thereon.
ARTICLE VII
CONDITIONS PRECEDENT TO A DISBURSEMENT
It shall be a condition precedent to each Disbursement under
this Development Financing Agreement that:
1. DEVELOPMENT FINANCING DOCUMENTS - The Development Financing
Documents shall have been duly executed and delivered to
Lessor and shall be in full force and effect.
2. LESSEE EQUITY - Lessee shall have paid all of the Lessee
Equity funds into the Project before the first Disbursement
(or any subsequent Disbursement if additional Lessee Equity
should be required) and Lessee shall deliver evidence of
such payment reasonably satisfactory to Lessor.
3. DEVELOPMENT FINANCING BALANCE - As of the date immediately
prior to any Disbursement, the total amount of unadvanced
proceeds of the Development Financing shall be sufficient,
in the commercially reasonable opinion of Lessor (the
opinion of Lessor being based upon affidavit of the General
Contractor, the Project Architect, the Inspecting Architect,
or other reliable licensed third party contractor) to
complete the Improvements free of liens. To the extent the
total of the unadvanced proceeds of the Development
Financing shall be insufficient, at any time, in Lessor's
reasonable opinion, (based upon the affidavit as set forth
above) to complete the Improvements, or be less than the
total Construction Costs not yet paid for or not yet
incurred (including interest accruing for the remainder of
the term or extensions thereof, if any), the Lessee shall
immediately deposit with the Lessor or with Title, as
additional Lessee Equity funds, an amount equal to such
deficiency and such additional Lessee Equity funds shall be
disbursed by CLTIC-CDD prior to the Disbursement of any
further advance or advances under this Agreement.
4. NO DEFAULT - No event of default, which remains uncured
after the expiration of applicable cure periods, shall exist
under this Agreement or the Development Financing Documents.
5. REPRESENTATIONS AND WARRANTIES - The representations and
warranties in Article V hereof shall be true and correct on
and as of the date of each Disbursement.
6. COVENANTS - Lessee shall have complied with all of the
covenants made by it in Article VI hereof.
7. SWORN CONSTRUCTION STATEMENT - Prior to the initial
disbursement hereunder, the Lessee shall have submitted to
Lessor and Title a Construction Cost Statement or the
Construction Contract (if such information is contained
therein) sworn to by Lessee and Contractors reflecting all
major Sub-Contractors or materialmen who shall then be
engaged in furnishing labor, materials or supplies for the
Improvements. The list should show the name of each and
every Contractor, Sub-Contractor and materialman (or at
least such entities or individuals whose contract is in
excess of $5,000), its address and an estimate of the dollar
value of the work, labor and materials to be done or
supplied and a general statement of the nature of the work
to be done or materials to be supplied by each Contractor.
Thereafter, if such list should change or new subcontractors
shall execute contracts not reflected on the above list, the
Lessee shall furnish to the Lessor any amendments or
additions to the original statement as so submitted.
8. APPLICATION FOR PAYMENT - Lessor shall have received an
Application for Payment pursuant to Article VIII hereof.
9. TITLE - Title shall issue its endorsement to the title
policy insuring the Lessor as fee owner under the policy in
the aggregate amounts of all prior Disbursements and the
requested Disbursement.
00.XXXX IN PLACE - All work or materials for which a
Disbursement is requested shall be in place and incorporated
into the Improvements.
ARTICLE VIII
METHODS OF DISBURSEMENTS OF DEVELOPMENT FINANCING PROCEEDS
The Development Financing shall be disbursed (a "Disbursement")
as follows:
1. PROCEDURE - Not more often than monthly, Lessee may submit
an Application for Payment in the form attached hereto as
Exhibit "C" requesting the Disbursement of proceeds under
the Development Financing, which request shall be submitted
to Lessor and to CLTIC-CDD at least five (5) business days
prior to the date on which a Disbursement is requested.
Provided the conditions of this Development Financing
Agreement are met on the date requested for such advance,
Lessor shall advance to CLTIC-CDD amounts certified to be
currently payable by Lessee (excluding the retainage
hereinafter specified) for the then incurred portion of
Total Construction Costs pursuant to the Application for
Payment. All costs shall have been approved in writing by
the Project Architect, Lessee, Contractor, and if required
by Lessor, by the Inspecting Architect. All interest
accruing need not be disbursed to CLTIC-CDD, but may be
immediately and automatically credited by Lessor to the
Development Financing account. CLTIC-CDD shall disburse all
funds advanced to it by Lessor in accordance with the terms
and provisions of this Agreement and any special escrow
requirements imposed by CLTIC-CDD as a condition to its
acting as the disbursing agent hereunder. The disbursed
proceeds of the Development Financing shall bear interest
from and including the date of disbursement to CLTIC-CDD or
the date of credit by Lessor provided that in the event
CLTIC-CDD shall fail to disburse any advances within five
(5) business days after the date set for an advance, CLTIC-
CDD shall return said advance to Lessor and interest on such
advance shall xxxxx from and after the date of such return.
Any amounts disbursed to CLTIC-CDD and returned by CLTIC-CDD
to the Lessor shall not be deemed to be advanced under the
Development Financing Documents. Each Application for
Payment shall clearly set forth the amounts due to Lessee
and to each Contractor out of the requested Development
Financing and shall be accompanied by the following:
a. A Draw Request Certificate in the
form attached hereto as Exhibit "D" certifying that each
contractor or materialman for which payment is requested in
the relevant Application for Payment has satisfactorily
completed the work or furnished the materials for which
payment is requested in accordance with the applicable
contract; that all work for which an Application for Payment
is made substantially conforms to the Contract Documents and
any approved changes, and is in place; and that sufficient
funds remain of the undisbursed Development Financing
proceeds to complete the Project and that all funds
previously disbursed have been applied as per the previous
Application for Payment.
b. Waivers of Mechanics' Liens and
Materialmen's Liens executed by all Contractors for all work
done and all materials furnished to the Leased Premises and
included in such current Application for Payment, or
evidence reasonably required by Title to insure over the
same by special specific endorsement, or such other releases
of lien pursuant to bonding or otherwise to prevent such
liens from attaching to the Leased Premises.
c. Waivers of Mechanics' Liens and
Materialmen's Liens executed by all Sub-Contractors and
workmen and materialmen for all work done and all materials
furnished to the Leased Premises and included in the
immediately preceding Application for Payment, or evidence
reasonably required by Title to insure over the same by
special specific endorsement, or such other releases or lien
pursuant to bonding or otherwise to prevent such liens from
attaching to the Leased Premises.
d. Such other supporting evidence,
including invoices and receipts as may be requested by
Lessor or CLTIC-CDD to substantiate all payments which are
to be made out of the Disbursement or to substantiate all
payments then made in respect to the Project.
2. INTEREST ADVANCE - If interest has accrued on the
Development Financing and is unpaid or fees are payable to
the Lessor hereunder, Lessor shall be, and hereby is,
authorized at any time to advance to itself from the
proceeds of the Development Financing the total amount of
such accrued interest and fees, whether or not an
Application for Payment has been submitted by the Lessee and
the same shall be deemed to be an advance of the proceeds of
the Development Financing under this Agreement in the same
manner and with the same effect as if advanced under the
provisions above. It is understood Lessor may establish an
automatic interest reserve whereby Lessor may withdraw from
the Development Financing account on a regular basis the
accrued interest on the Development Financing and credit the
Development Financing balance with the same.
3. ASSESSMENT AND TAX ADVANCE - As taxes and assessments become
due on the Leased Premises, Lessor shall be, and hereby is,
authorized to advance to itself automatically from the
proceeds of the Development Financing, the total amount of
such taxes and assessments and the same shall be deemed to
be an advance of the proceeds of the Development Financing
under this Agreement in the same manner and with the same
effect as if advances under the provisions above, if not
previously paid before due pursuant to Lessee's obligations
under the Lease.
4. DISBURSE UNDER DEVELOPMENT FINANCING DOCUMENT - All sums
advanced and disbursed hereunder shall be disbursed under
and shall be secured by the Development Financing Documents.
5. PAYMENTS TO SUBCONTRACTORS - In its reasonable discretion
CLTIC-CDD may make payments directly to any subcontractor or
materialman.
6. RETAINAGE - Each Disbursement shall be limited to an amount
equal to ninety percent (90%) of the value, exclusive of
Contractor's profit and overhead, of the materials and labor
furnished to the Leased Premises and the balance (herein
called the Retainage) shall be retained by Lessor, provided
that thirty (30) days after completion by each subcontractor
or materialman of his subcontract Lessor will disburse to
such party, or to the Contractor on behalf of such party the
Retainage withheld from said party, provided that as a
condition to such disbursement the Lessee and Project
Architect and the Inspecting Architect shall certify to
Lessor the date that such Party's subcontract has been fully
and satisfactorily completed and the subcontractor or
materialmen shall have supplied Title with satisfactory
final lien waivers, including final lien waivers for any of
its submaterialmen or sub- contractors and the requirements
of any bonding company issuing the Bonds shall have been
fulfilled. Any Retainage due the Contractor for work
performed or materials furnished by the Contractor and the
final balance of Contractor's profit and overhead shall be
disbursed on the Final Disbursement Date pursuant to Article
IX hereof. Contractor's profit and overhead shall be
disbursed based upon and in proportion to the percentage of
completion of the Project, or amounts payable under the
Construction Contract for work actually performed, whichever
is less, as certified by the Project Architect.
ARTICLE IX
FINAL DEVELOPMENT FINANCING BALANCE
Unless and until Lessor and Lessee have entered into a mutually
satisfactory escrow holdback and undertaking agreement to,
inter alia, complete the Improvements and otherwise satisfy
the requirements of this Article IX, at no time and in no
event shall Lessor be obligated to disburse the balance of
the proceeds of the Development Financing, including any
Retainage until the date the following have been satisfied
(the "Final Disbursement Date"):
1. Lessor shall have received reasonably satisfactory evidence
of the final completion of the Improvements in substantial
accordance with the Contract Documents and the Certificate
of Final Completion from the Project Architect accepted by
the Contractor and Lessee.
2. Lessor shall have received satisfactory as-built surveys
reflecting the final location of the Improvements as fully
completed on the Leased Premises in accordance with the
Contract Documents, said survey to be prepared by a
registered or licensed surveyor bearing his registry number,
certifying to Lessor as to the legal description of the
Leased Premises and showing all Improvements located on the
Leased Premises and indicating the street address of the
Improvements, absence of any encroachments on the Leased
Premises or from the Leased Premises onto adjacent land,
showing all access points, and showing conformance to all
set back requirements and delineating all utility easements
that are specifically legally described, rights of way and
other matters affecting the Leased Premises, and certifying
as to the total acreage of the land, the exterior dimensions
of the Improvements, and the number of parking spaces, if
any, and such other matters as Lessor may reasonably
request.
3. Lessor shall have received a requisite affidavit of the
Lessee, Contractor and Project Architect, and approved by
the Inspecting Architect certifying as to the final cost of
the Improvements.
4. Title shall have been furnished with such final lien waivers
sufficient in the opinion of Title to dissolve any possible
Mechanic's and Materialman's Liens affecting title to the
Leased Premises or Lessee shall have provided a bond or
other security sufficient to remove the lien as an
encumbrance upon title to the Leased Premises and Title
shall have issued its endorsements to the title policy
increasing the insured coverage to the full amount of all
sums disbursed under this Development Financing Agreement.
5. Lessor shall have received evidence that all of the terms,
provisions and conditions on the part of the Lessee to be
performed or caused to be performed hereunder and under the
Lease, including but not limited to obtaining casualty
insurance for the full insurable value of the Improvements,
have been fulfilled to the satisfaction of Lessor.
6. Lessor shall have received a Final Certificate of Occupancy
issued by the appropriate governmental authority covering
the Improvements and a Certificate of Substantial Completion
from the Project Architect indicating that the Improvements
as built comply with all building codes and zoning
ordinances, including any plat requirements or requirements
of recorded operating covenants or agreements affecting the
Leased Premises.
7. All remaining uncompleted "punch list" items shall have been
satisfactorily completed.
8. The requirements of all bonding companies, if any, with
respect to release of retainage shall have been met.
9. An amendment to the Lease shall be executed by Lessee and
Lessor setting forth the date the first Lease Year shall end
and the Rent for the balance of the first Lease Year, and
evidencing the satisfaction and termination of this
Agreement.
ARTICLE X
EVENTS OF DEFAULT
An "event of default" shall be deemed to have occurred
hereunder and under the Lease, if:
1. DEFAULT UNDER DEVELOPMENT FINANCING DOCUMENTS - Any default
or event of default occurs (which remains uncured after the
expiration of any applicable cure period as may be set forth
in any Development Financing Document) under any of the
Development Financing Documents as defined therein; or
2. FAILURE TO COMPLETE CONSTRUCTION - Lessee shall fail for any
reason, except Lessor's wrongful refusal to fund the
Development Financing pursuant to the terms hereof, to
substantially complete the construction of the Improvements
by the Completion Date; or
3. BREACH OF AGREEMENT - Lessee breaches or fails to perform,
observe or meet any covenant or condition of this Agreement,
provided, however, with respect to non-monetary defaults
hereunder, Lessee shall have twenty days after notice from
Lessor to cure such non-monetary default, or if such default
(but for the payment of monies) cannot be cured within
twenty days, such longer time as may be reasonably necessary
to effect a cure if Lessee is diligently pursuing a course
of conduct reasonably designed to cure the default.; or
4. BREACH OF WARRANTY - Any warranties made or agreed to be
made in any of the Development Financing Documents or this
Agreement shall be breached by Lessee or shall prove to be
false or misleading, and the same shall not be cured or made
to be true and correct within the applicable cure periods;
or
5. FILING OF LIENS AGAINST THE LEASED PREMISES - Any lien for
labor, material, taxes or otherwise shall be filed against
the Leased Premises and such lien shall not be promptly
paid, released, contested in an appropriate forum, or bonded
over to Lessor's reasonable satisfaction before the lien
shall materially adversely affect Lessor's interest in the
Premises; or
6. LITIGATION AGAINST LESSEE - Any suit shall be filed against
Lessee, and is not resolved within 120 days and, which if
adversely determined, could substantially impair the ability
of Lessee to perform each and every one of its obligations
under and by virtue of the Development Financing Documents;
or
7. LEVY UPON THE LEASED PREMISES - A levy be made under any
process on the Leased Premises and such levy shall not be
promptly Bonded over prior to the execution of such levy; or
8. TRANSFER OF LEASED PREMISES - Lessee shall without the prior
written consent of Lessor, voluntarily or by operation of
law, sell, transfer, convey or encumber all or any part of
its interest in the Leased Premises or in any of the
personalty located thereon, or used or intended to be used
in connection therewith; or
9. ABANDONMENT - Lessee abandons the project or delays or
ceases work thereon for a period of fifteen consecutive (l5)
days, or delays construction or suffers construction to be
delayed for any period of time for any reason whatsoever so
that completion of Improvements cannot be accomplished in
the judgment of Lessor on or before the Completion Date,
subject to force majeure; or
10.BANKRUPTCY - Lessee shall make an assignment for the benefit
of its creditors or shall admit in writing its inability to
pay its debts as they become due or shall file a petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent
or shall file a petition seeking any reorganization,
dissolution, liquidation, arrangement, composition,
readjustment, or similar relief under any present or future
bankruptcy or insolvency statute, law or regulation, or
shall file an answer admitting to or not contesting the
material allegations of a petition filed against it in any
such proceedings, or shall not have the same dismissed or
vacated, or shall seek or consent or acquiesce in the
appointment of any trustee, receiver or liquidator of a
material part of its properties, or shall not after the
appointment without the consent or acquiescence of it of a
trustee, receiver, or liquidator of any material part of its
properties have such receiver, liquidator or appointment
vacated; or
11.EXECUTION LEVY - Execution shall have been levied against
the Leased Premises or any lien creditors commence suit to
enforce a judgment lien against the Leased Premises or such
action or suit shall have been brought and shall not be
immediately bonded over and shall continue unstayed and in
effect for a period of more than 120 consecutive days; or
12.ATTACHMENT - Any part of the Lessor's commitment to make the
advances hereunder shall at any time be subject or liable to
attachment or levy at the suit of any creditor of the Lessee
or at the suit of any subcontractor or creditor of the
Contractor and shall remain unstayed prior to the time
Lessor shall be obligated to comply with the same.
ARTICLE XI
REMEDIES OF LESSOR
Lessee hereby agrees that the occurrence of any one or more of
the events of default set out in Article X hereof, shall
also constitute an event of default under each of the
Development Financing documents, thereby entitling Lessor,
after the expiration of any applicable cure period, at its
option, to proceed to exercise any or all of the following
remedies:
1. EXERCISE OF REMEDIES - To exercise any of the various
remedies provided in any of the Development Financing
Documents, including the acceleration of the Put described
in Articles XIV hereof;
2. CUMULATIVE RIGHTS - Cumulatively to exercise all other
rights, options and privileges provided by law;
3. CEASE MAKING ADVANCES - To refrain from making any advances
under this Agreement but Lessor may make advances after the
happening of any such event without thereby waiving the
right to refrain from making other further advances or to
exercise any of the other rights Lessor may have.
4. RIGHTS TO ENTER - To require Lessee to vacate the Leased
Premises and permit Lessor (whether prior to the exercise of
the Put or during any period prior to the closing of the
sale pursuant to the Put;
(a) To enter into possession;
(b) To perform or cause to be
performed any and all work and labor necessary to complete
the Improvements in accordance with the Plans and
Specifications;
(c) To employ security watchmen to protect the Leased
Premises; and
(d) To disburse that portion of the
Development Financing Proceeds not previously disbursed
(including any Retainage) to the extent necessary to
complete the construction of the Improvements in accordance
with the Contract Documents and if the completion requires a
larger sum than the remaining undisbursed portion of the
Development Financing, to disburse such additional funds,
all of which funds so disbursed by Lessor shall be deemed to
have been disbursed to Lessee. For this purpose, Lessee
hereby consents upon an uncured default by Lessee after the
expiration of any applicable notice and cure period, to the
Lessor taking the following actions, or not, in Lessor's
reasonable discretion: to complete the construction of the
Improvements in the name of the Lessee, and hereby empowers
Lessor to take all actions necessary in connection therewith
including but not limited to using any funds of Lessee
including any balance which may be held in escrow and any
funds which may remain unadvanced hereunder for the purpose
of completing the said portion of the Improvements in the
manner called for by the Contract Documents; to make such
additions and changes and corrections in the Contract
Documents which shall be necessary or desirable to complete
the said portion of the Improvements in substantially the
manner contemplated by the Contract Documents; to employ
such contractors, subcontractors, agents, architects, and
inspectors as shall be required for said purposes; to pay,
settle or compromise all existing or future bills and claims
which are or may be liens against said Leased Premises, or
may be necessary or desirable for the completion of the said
portion of the Improvements or the clearance of title to the
Leased Premises; to execute all applications and
certificates in the name of Lessee which may be required by
any construction contract and to do any and every act with
respect to the construction of the said portion of the
Improvements which Lessee may do in its own behalf. Lessor
shall also have power to prosecute and defend all actions
and proceedings in connection with the construction of the
said portion of the Improvements and to take such action and
require such performance as it deems necessary. In
accordance therewith, Lessee hereby assigns and quitclaims
unto Lessor all sums to be advanced hereunder including
Retainage. Any funds so disbursed or fees or charges so
incurred shall be included in any amount necessary for the
Lessee to pay pursuant to the Put.
(e) To discontinue making advances
hereunder to the Lessee and to terminate Lessor's
obligations under this Agreement.
5. RIGHTS NON CUMULATIVE - No right or remedy by this Agreement
or by any Development Financing Document or instrument
delivered by the Lessee pursuant hereto, conferred upon or
reserved to the Lessor shall be or is intended to be
exclusive of any other right or remedy and each and every
right and remedy shall be cumulative and in addition to any
other right or remedy or now or hereafter arising at a law
or in equity or by statute. Except as Lessor may hereafter
otherwise agree in writing, no waiver by Lessor or any
breach by or default of Lessee of any of its obligations,
agreements, or covenants under this Agreement shall be
deemed to be a waiver of any subsequent breach of the same
or any other obligation, agreement or covenant, nor shall
any forbearance by Lessor to seek a remedy for such breach
be deemed a waiver of its rights and remedies with respect
to such a breach, nor shall Lessor be deemed to have waived
any of its rights and remedies unless it be in writing and
executed with the same formality as this Agreement.
6. EXPENSES - The Development Financing and this Agreement and
the performance by the Lessor or Lessee of their obligations
hereunder shall be without cost and expense to the Lessor,
all of which costs and expenses the Lessee agrees to pay and
hold Lessor harmless of and payment of which shall be
secured by the Development Financing Documents.
Specifically, Lessee agrees to pay all title charges,
surveyor's fees, appraisals, loan fees and attorney's fees
and costs and the like incurred in connection with this
Agreement.
ARTICLE XII
GENERAL CONDITIONS AND MISCELLANEOUS
The following conditions shall be applicable throughout the
term of this Agreement:
1. RIGHTS OF THIRD PARTIES - All conditions of the obligations
of Lessor hereunder, including the obligation to make
disbursements are imposed solely and exclusively for the
benefit of Lessee, and no other person shall have standing
to require satisfaction of such conditions in accordance
with their terms or be entitled to assume that Lessor will
refuse to make advances in the absence of strict compliance
with any or all thereof, and no other person shall, under
any circumstances, be deemed to be a beneficiary of such
conditions, any and all of which may be freely waived in
whole or in part by Lessor at any time if in its sole
discretion it deems it desirable to do so. In particular,
Lessor makes no representations and assumes no duties or
obligations as to third parties concerning the quality of
the construction of the Improvements or the absence
therefrom of defects. In this connection, Lessee agrees to
and shall indemnify Lessor from any liability, claims or
losses resulting from the disbursement of the Development
Financing proceeds or from the condition of the Leased
Premises whether related to the quality of construction or
otherwise and whether arising during or after the term of
the Development Financing made by Lessor to Lessee in
connection therewith, except for Lessor's gross negligence
or willful misconduct. This provision shall survive the
termination of this Agreement and shall continue in full
force and effect so long as the possibility of any such
liability, claims or losses exists.
2. EVIDENCE OF SATISFACTION OF CONDITIONS - Any condition of
this Agreement which requires the submission of evidence of
the existence or non- existence of a specified fact or facts
implies as a condition the existence or non- existence, as
the case may be, of such fact or facts, and Lessor shall, at
all times, be free independently to establish to its
reasonable satisfaction such existence or non-existence.
3. ASSIGNMENT - Lessee may not assign this Development
Financing Agreement or any of its rights or obligations
hereunder without the prior written consent of Lessor.
4. SUCCESSORS AND ASSIGNS - Whenever in this Agreement one of
the parties hereto is named or referred to, the heirs, legal
representatives, successors and assigns of such parties
shall be included and all covenants and agreements contained
in this Agreement by or on behalf of the Lessee or by or on
behalf of the Lessor shall bind and inure to the benefit of
their respective heirs, legal representatives, successors
and assigns, whether so expressed or not.
5. HEADINGS - The headings of the sections, paragraphs and
subdivisions of this Agreement are for the convenience of
reference only, and are not to be considered a part hereof
and shall not limit or otherwise affect any of the terms
hereof.
6. INVALID PROVISIONS TO AFFECT NO OTHERS - If fulfillment of
any provision hereof, or any transaction related thereto at
the time performance of any such provision shall be due,
shall involve transcending the limit of validity prescribed
by law, then, ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity; and such
clause or provision shall be deemed invalid as though not
herein contained, and the remainder of this Agreement shall
remain operative in full force and effect.
7. NUMBER AND GENDER - Whenever the singular or plural number,
masculine or feminine or neuter gender is used herein, it
shall equally include the other.
8. AMENDMENTS - Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against
whom enforcement of the change, waiver, discharge or
termination is sought.
9. NOTICES - Any notice which any party hereto may desire or
may be required to give to any of the parties shall be in
writing and the mailing thereof by certified mail, or
equivalent, to the respective parties' addresses set forth
hereinabove or to such other place such party may by notice
in writing designate as its address shall constitute service
of notice hereunder.
10.GOVERNING LAW - This Development Financing Agreement is made
and executed pursuant to and is intended to be governed by
the laws of the State where the Leased Premises are located.
11. FORCE MAJEURE - Anything in this Agreement to the contrary
notwithstanding, Lessee shall not be deemed in default with
respect to the performance of any of the terms, provisions,
covenants, and conditions of this Agreement (except for the
payment of all other monetary sums payable hereunder, to
which the provisions of this Section shall not apply), if
the same shall be due to any strike, lockout, civil
commotion, warlike operations, invasion, rebellion,
hostilities, sabotage, governmental regulations or controls,
impracticability of obtaining any materials or labor (except
due to the payment of monies), shortage or unavailability of
a source of energy or utility service, Act of God, casualty,
adverse weather conditions, or any cause beyond the
reasonable control of Lessee (except due to the payment of
monies). Provided, however, in order to invoke the
extension of the Completion Date afforded by this section,
Lessee shall notify Lessor in writing within five days of
the occurrence of such force majeure, and in any event the
Completion Date shall be extended as a result of such
occurrence no more than reasonably necessary and in no event
no more than 90 days.
ARTICLE XIII
DAMAGE, DESTRUCTION, CONDEMNATION, USE OF INSURANCE PROCEEDS
1. DAMAGE OR DESTRUCTION OF THE LEASED PREMISES. Lessee
will give the Lessor prompt notice of any damage to or
destruction of the Leased Premises and in case of loss
covered by policies of insurance the Lessor (whether before
or after the exercise of the Put if Lessee be in default
hereof) is hereby authorized at its option to settle and
adjust any claim arising out of such policies and collect
and receipt for the proceeds payable therefrom, provided,
that the Lessee may itself adjust and collect for any losses
arising out of a single occurrence aggregating not in excess
of $50,000.00. Any expense incurred by the Lessor in the
adjustment and collection of insurance proceeds (including
the cost of any independent appraisal of the loss or damage
on behalf of Lessor) shall be reimbursed to the Lessor first
out of any proceeds. The proceeds or any part thereof shall
be applied to reduction of the Put Price, which Put may then
be exercised by Lessor, without the application of any
prepayment premium, or to the restoration or repair of the
Leased Premises, the choice of application to be solely at
the discretion of Lessor.
2. CONDEMNATION. Lessee will give the Lessor prompt notice
of any action, actual or threatened, in condemnation or
eminent domain affecting the Leased Premises and hereby
assigns, transfers, and sets over to the Lessor the entire
proceeds of any award or claim for damages for all or any
part of the Leased Premises taken or damaged under the power
of eminent domain or condemnation, the Lessor being hereby
authorized to intervene in any such action and to collect
and receive from the condemning authorities and give proper
receipts and acquittances for such proceeds. Lessee will
not enter into any agreements with the condemning authority
permitting or consenting to the taking of the Leased
Premises unless prior written consent of Lessor is obtained.
Any expenses incurred by the Lessor in intervening in such
action or collecting such proceeds shall be reimbursed to
the Lessor first out of the proceeds. The proceeds or any
part thereof shall be applied to reduction of the Put Price,
which Put may then be exercised by Lessor, without the
application of any prepayment premium, or to the restoration
or repair of the Leased Premises, the choice of application
to be solely at the discretion of Lessor.
3. DISBURSEMENT OF INSURANCE AND CONDEMNATION PROCEEDS.
Any restoration or repair shall be done under the
supervision of an architect acceptable to Lessor and
pursuant to plans and specifications approved by the Lessor.
Subject to paragraph 4 below, in any case where Lessor may
elect to apply the proceeds to repair or restoration or
permit the Lessee to so apply the proceeds they shall be
held by Lessor for such purposes and will from time to time
be disbursed by Lessor to defray the costs of such
restoration or repair under such safeguards and controls as
Lessor may reasonably require to assure completion in
accordance with the approved plans and specifications and
free of liens or claims. Lessee shall on demand deposit
with Lessor any sums necessary to make up any deficits
between the actual cost of the work and the proceeds and
provide such lien waivers and completion bonds as Lessor may
reasonably require. Any surplus which may remain after
payment of all costs of restoration or repair shall be
applied against the rent then most remotely to be paid,
whether due or not, without application of any prepayment
premium or credit.
4. LESSOR TO MAKE PROCEEDS AVAILABLE. In the event of
insured damage to the improvements or in the event of a
taking by condemnation of only a portion of the improvements
or land area of the Leased Premises, and provided, the
portion remaining can with restoration or repair continue to
be operated for the purposes utilized immediately prior to
such damage or taking, and if the appraised value of the
Leased Premises after such restoration or repair shall not
have been reduced, and provided further, no event of default
exists under this Agreement after the expiration of any
applicable cure periods and Lessee is diligently pursuing a
course of conduct reasonably designed to cure such default,
and the Lessee certified to Lessor their intention to remain
in possession of the Leased Premises without any abatement
or adjustment of rental payments, the Lessor agrees to make
the proceeds available to the restoration or repair of the
improvements on the Leased Premises in accordance with the
provisions of paragraph 3 hereof.
ARTICLE XIV
MANDATORY PUT UPON DEFAULT
Should Lessee commit an event of Default under this
Agreement or any Development Financing Document (after the
expiration of any applicable notice and cure period)
("Uncured Default"), Lessor shall have the following rights:
Upon an Uncured Default, or damage or destruction or
condemnation of the Leased Premises not addressed by
paragraph XIII (4), if Lessor elects to exercise the
following option, Lessee shall purchase the Leased Premises
from Lessor subject to the following terms and conditions:
A. The purchase price at which
Lessor shall sell the Leased Premises to Lessee, shall
be the total amount of Initial Disbursed Funds
disbursed by Lessor to acquire the Leased Premises at
the Closing Date (as defined in the Commitment), plus
the total amount of funds disbursed pursuant to this
Agreement, plus all accrued interest and incurred
expenses of Lessor fundable pursuant to this Agreement,
plus all reasonable costs of collection and enforcement
of the terms hereof.
B. At such time as Lessor shall
elect to sell the Leased Premises, Lessor shall give
Lessee written notice of its intent to exercise its
option to sell the Leased Premises to Lessee, including
in such notice Lessor's calculation of the Purchase
Price through the actual closing of the sale of the
Leased Premises to Lessee pursuant to the terms hereof
(the "Sale Date"), which shall be sixty days from such
notice by Lessor. Lessee shall on or before the Sale
Date deliver the purchase price as set forth in
subparagraph (A) of this Article to Lessor. Upon such
delivery, which shall be preceded by ten (10) days
notice to Lessor, Lessor shall deliver to Lessee a
warranty deed and appropriate affidavits evidencing
that Lessor transfers the Leased Premises to Lessee
subject to restrictions, easements or other
encumbrances upon title existing as of the date of
delivery, if any, except to the extent, if any, placed
of record or caused by Lessor. The purchase price to
be paid to Lessor shall be a net amount. All expenses
in connection with the transfer of the Leased Premises,
including, but not limited to appraisal fees, title
insurance, recording fees, documentary stamps,
conveyance tax, title evidence, and all other closing
costs, shall be paid by the Lessee. The purchase price
shall be paid by Lessee in cash to Lessor concurrently
with the conveyance of the Leased Premises by the
Lessor to the Lessee. If Lessor elects to sell the
Leased Premises to Lessee pursuant to the terms hereof,
the Leased Premises shall be conveyed by the Lessor to
the Lessee "As Is".
If Lessee shall fail to pay the Purchase Price on or before
the Sale Date, Lessor may terminate the Lease, and sell the
Leased Premises to any third party purchaser. Lessor may
then send Lessee notice of the shortfall (the "Deficiency"),
if any, between the amount of the net proceeds received by
Lessor in such sale, and the total amount of Initial
Disbursed Funds disbursed by Lessor to acquire the Parcel at
the Closing Date (as defined in the Commitment), plus the
total amount of funds disbursed pursuant to this Agreement,
plus all accrued interest and incurred expenses of Lessor
fundable pursuant to this Agreement, plus all reasonable
costs of collection and enforcement of the terms hereof.
Lessee shall immediately upon receipt of such notice of
Deficiency remit the amount of the Deficiency in good funds
to Lessor.
Lessor's rights under this Mandatory Put shall expire on the
Final Disbursement Date when the amendment to the Lease has
been executed by all parties as set forth in Article IX
hereof.
ARTICLE XV
RENT, INTEREST, AND RENTAL MODIFICATION DATE
1. Rent shall be payable by Lessee and calculated as follows,
on the funds advanced by Lessor on the Closing Date for the
purchase of the land and related closing costs (the "Initial
Disbursed Funds"): Rent shall accrue in the amount of
$3,329.17 per month absent an uncured Default by Lessee;
absent an uncured Default, accrued rent during the period of
construction of the Improvements prior to the Rental
Modification Date shall not be payable until the Final
Disbursement Date. Upon the occurrence of an uncured
Default, all accrued rent shall be immediately due and
payable.
On the Rental Modification Date, if not otherwise in default
hereunder, Lessee shall begin paying Rent by the first of
each month (prorata for the balance of any partial month in
which the Rental Modification Date occurs, payable with the
first such adjusted Rent payable on the first day of the
first full month following the Rental Modification Date) in
the amount of $ 4,014.58 per month out of pocket. On the
Final Disbursement Date, absent an Uncured Default, Rent
shall be adjusted and documented by the lease amendment
contemplated in Article IX hereof and paid to Lessor as
described in Article F. of the Commitment.
2. Disbursed proceeds of the Development Financing shall
accrue interest at a rate of Eight and one-half percent
(8.5%) per annum, which interest shall accrue unpaid unless
advanced by Lessor to itself, or Lessee shall default
hereunder, which default shall remain uncured after the
expiration of any applicable notice and cure period.
However, one hundred and twenty days (120) from the date
hereof, (the "Rental Modification Date"), Lessee shall begin
making monthly payments of subsequently accruing interest at
the rate of 10.25% per annum out of pocket ("Out of Pocket
Invoiced Interest") within 5 days after invoice from Lessor.
3. Upon the occurrence of an event of default which
remains uncured after the expiration of applicable notice
and cure periods, disbursed proceeds of the Development
Financing shall accrue interest at a rate of Fifteen Percent
(15.0%) per annum, or the highest rate allowed by law,
whichever is less, and the rental rate on the Initial
Disbursed funds shall increase to Fifteen Percent (15.0%)
per annum, or the highest rental rate allowed by law,
whichever is less.
ARTICLE XVI
COUNTERPART EXECUTION
Counterpart Execution. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same
instrument.
IN WITNESS WHEREOF, Lessee and Lessor have hereunto caused
these presents to be executed on the date first above
written.
Tumbleweed, LLC, a Kentucky
Limited Liability Company
By: /s/ Xxxxx Xxxxxxxxx
Its: Exec VP & CFO
By:
Its:
[Lessor's Signature appears on following page.]
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
By: AEI Fund Management XXI, Inc.
By: /s/ Xxxxxx X Xxxxxxx
Xxxxxx X. Xxxxxxx, President
EXHIBIT A -LEGAL DESCRIPTION
A tract of land located in the Southeast Quarter of Section 15,
Township 31 North, Range 12 East, in Xxxxx County, the State
of Indiana, more fully described as follows:
COMMENCING at an iron pipe situated in the Northeast corner of
Lot Number 86 in Xxxxxx Xxxx Addition as recorded in Xxxxx
County Plat Book 23, page 49; thence South 02 degrees 05
minutes 14 seconds East (assumed basis of bearings), a
distance of 187.33 feet along the East line of said Lot
Number 86 to a rebar stake with cap (Tazian) in the
Southeast corner thereof; thence North 88 degrees 54 minutes
40 seconds East, a distance of 4.44 feet along the South
line of said Xxxxxx Xxxx to rebar stake in the Northwest
corner of Lot Number 14 in Rodenbecks' 5th Addition; thence
South 01 degrees 43 minutes 38 seconds East, a distance of
306.89 feet along the West line of said Xxxxxxxxx'x Addition
to a rebar stake with cap (X.X. Xxxxx RLS #S0337), the True
Point of Beginning; thence south 01 degrees 43 minutes 38
seconds East, a distance of 218.58 feet along said West line
to a rebar stake with cap (X.X. Xxxxx RLS #S0337); thence
South 80 degrees 54 minutes 08 seconds West, a distance of
269.90 feet to a rebar stake with cap (X.X. Xxxxx RLS
#S0337); thence North 09 degrees 05 minutes 52 seconds West
a distance of 216.78 feet along the East right-of-way line
of State Road #3 to a rebar stake with cap (X.X. Xxxxx RLS
#S0337); thence North 80 degrees 54 minutes 08 seconds East,
a distance of 297.94 feet to the Point of Beginning; said
tract containing 1.41 acres, more or less.
END OF EXHIBIT A
Exhibit B
TUMBLEWEED, LLC
FT. XXXXX, IN
PROJECT COST BUDGET
October 15, 1998
LAND AND HARD COSTS:
Land Acquisition Cost $ 460,000.00
Building/General Construction 565,816.00
Owner Vendors:
Landscaping 15,000.00
Dimmer Panesl 4,375.00
Wains Coating/Trim 12,500.00
Electrical Panels 7,500.00
Air Balance 1,995.00
Lighting 10,800.00
HVAC 21,690.00
Joists 13,900.00
Construction Contingency-10.0% 65,000.00
SOFT COSTS:
Survey 3,000.00
Appraisal 4,000.00
Phase I Environmental 2,900.00
TAP Fees 6,750.00
Design Fee-Architect 2,500.00
Architect/Engineering 28,000.00
Title Insurance & Closing Costs (Construction and S/L) 10,000.00
Development Interest 20,600.00
Attorney's Fees-Borrower (ConstructionSale/Leaseback) 2,500.00
Attorney's Fees - AEI (Construction/Sale/Leaseback) 10,000.00
AEI Sale/Leaseback Commitment Fee 2% 25,500.00
AEI Credit Report Fees (Promesa) 300.00
AEI State Qualification Fees 1,500.00
AEI Site Inspection Fee 1,500.00
Tumbleweed Parcel Development Fee 9,695.00
AEI 1% Reimbursement 12,750.00
Miscellaneous 4,929.00
____________
TOTAL PROJECT COST
$1,325,000.00
