MULTI-SITE AGREEMENT
FOR
TIMBER LODGE STEAKHOUSE INC.
AEI FUND MANAGEMENT, INC.
1300 Minnesota World Trade Center
00 Xxxx Xxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
MULTI-SITE
SALE LEASEBACK
FINANCING AGREEMENT
FOR
TIMBER LODGE STEAKHOUSE, INC.
(the "Agreement")
This Agreement, made and entered into this 23rd day of September, 1997,
by and between Timber Lodge Steakhouse, Inc. (the "Seller/Lessee") and AEI Fund
Management, Inc. or its assigns ("AEI").
WITNESSETH THAT:
Whereas, Seller/Lessee, or its affiliates (those parties in which 10%
or more of the capital stock is owned or controlled by Seller/Lessee) or
controlling persons or entities (those parties owning or controlling 10% or more
of Seller/Lessee's capital stock), (collectively, also known as "Seller/Lessee"
or "Principals") intends to develop certain parcels of real estate for use as
Timber Lodge Steakhouse restaurants and desires to have AEI purchase such
parcels and the improvements thereon (collectively, the "Parcels", and
individually a "Parcel"), and simultaneously lease such Parcels back to
Seller/Lessee; and
Whereas, AEI desires to consider such Parcels for purchase and if
purchased, to lease such Parcels back to Seller/Lessee, under terms and
conditions hereinafter provided;
NOW, THEREFORE, for Ten Dollars ($10.00) paid by Seller/Lessee to AEI,
and other good and valuable consideration, receipt of which is hereby
acknowledged, it is agreed by and between the parties that:
ARTICLE 1. SCOPE OF AGREEMENT.
1.1 AEI agrees to purchase, by sale/leaseback transactions, from
Seller/Lessee up to four (4) Parcels within the next eighteen (18) months, the
purchase of each Parcel being subject to AEI's standard credit site, and other
due diligence review and conditions precedent. Each
Lessee Initial: /s/ WJB
Commitment For: (Timber Lodge Steakhouse, Inc.)
sale/leaseback transaction shall be upon the same terms and conditions as agreed
to by the parties for the first sale/leaseback transaction between AEI and
Seller/Lessee under this Agreement, except as to the purchase price for a
Parcel, which amount may differ, and such other facts and circumstances as shall
be reflected in the documents particular to a specific Parcel, including matters
of local law. Seller/Lessee shall be obligated to provide up to four (4) Parcels
to AEI to the extent Seller/Lessee finances the development of such Parcels
through sale/leaseback transactions. Parcels developed for Seller/Lessee as
build-to-suits by independent developers who owned fee title to the Parcel
before Seller/Lessee identified the Parcel, ground lease Parcels, and any Parcel
which Seller/Lessee retains fee title, are excluded from this agreement.
1.2 Seller/Lessee shall give AEI not less than sixty (60) days notice
as to the availability of a Parcel prior to the date Seller/Lessee desires to
sell and leaseback such Parcel from AEI. Such notice shall include:
1. a site development plan;
2. the estimated development budget; (including the purchase
price for the land, the improvements on the Parcel and
Seller's overhead allocation equal to $5,000.00 per Parcel for
up to four (4) Parcels);
3. a copy of the purchase agreement for the land, including the
purchase date and cost of the land to Seller/Lessee;
4. the anticipated opening date of the business which will occupy
the leased premises;
5. demographic and site information;
6. color photographs of the site and the surrounding properties;
7. a profit/loss pro forma for the proposed business to be
conducted on the Parcel;
8. financial statements of Seller/Lessee and all guarantors as
outlined on Exhibit "A" attached hereto; and
9. a list of competing businesses and a location map showing each
competitor located within three miles of the Parcel, including
the estimated sales from those competitors, if available.
1.3 AEI reserves the right to perform a site inspection of each Parcel
prior to or after issuing a purchase commitment. Within five (5) business days
of receipt of an invoice from AEI, Seller/Lessee shall reimburse AEI for its
actual out of pocket costs of performing such site
Lessee Initial: /s/ WJB
Commitment For: (Timber Lodge Steakhouse, Inc.)
inspection, not to exceed $1,500.00 per Parcel. Such costs may, at
Seller/Lessee's option, be included as a funded project cost and reimbursed by
AEI.
1.4 AEI shall have fifteen (15) business days from receipt of notice of
availability of a Parcel, and receipt of those items specified in Article 1.2
hereof, to issue a purchase commitment or a development financing and leasing
commitment. If AEI rejects a Parcel, AEI shall advise Seller/Lessee of such
decision in writing.
1. If AEI issues a purchase commitment, it shall contain the
terms upon which AEI will purchase the specific Parcel (including but not
limited to the terms of Article 2 hereof), which Seller/Lessee shall then
execute and return to AEI within ten (10) business days. Seller/Lessee shall,
upon returning such purchase commitment to AEI, remit a commitment fee of one
percent (1.0%) of the estimated amount for which AEI will be expected to pay for
the purchase of the Parcel not including the amount funded by AEI for Seller's
overhead allocation, such fee to be adjusted at the closing of the transaction
to accurately reflect total project costs not including the amount funded by AEI
for Seller's overhead allocation funded by AEI. At Seller/Lessee's option, such
fee may be reimbursed to Seller/Lessee as a funded project cost upon AEI's
acquisition of the Parcel.
2. If AEI issues a development financing and leasing
commitment, it shall contain the terms upon which AEI will purchase the specific
Parcel and provide development financing (including but not limited to the terms
of Article 2 hereof), which Seller/Lessee shall then execute and return to AEI
within ten (10) business days. Seller/Lessee shall, upon returning such
development financing and leasing commitment to AEI, remit a commitment fee of
one and one-half percent (1.5%) of the estimated amount for which AEI will be
expected to pay for the purchase of the Parcel and the anticipated improvements
thereon not including the amount funded by AEI for Seller/Lessee's overhead
allocation, such fee to be adjusted at the upon the final disbursement of the
transaction to accurately reflect total project costs not including the amount
funded by AEI for Seller/Lessee's overhead allocation funded by AEI. At
Seller/Lessee's option, such fee may be reimbursed to Seller/Lessee as a funded
project cost upon the final disbursement of the transaction.
Lessee Initial: /s/ WJB
Commitment For: (Timber Lodge Steakhouse, Inc.)
1.5 If AEI does not elect to issue a purchase commitment or development
financing and leasing commitment for any Parcel for which it receives proper
notice hereunder, Seller/Lessee shall be released from all further obligations
to AEI hereunder with respect to such single Parcel only.
ARTICLE 2. PURCHASE PRICE AND TERMS OF PURCHASE
2.1 The purchase price for each Parcel shall be equal to the actual
total project cost of the Parcel, to include those costs described on Exhibit
"B" attached hereto and approved by AEI, not to exceed the AEI approved MAI
appraised value (the "Purchase Price").
2.2. Each lease shall be an absolute triple net lease.
2.3 The initial annual rent for the first two (2) lease years for the
Northern, IL Parcel purchased hereunder shall be ten and three quarters percent
(10.75%), for the St. Cloud Parcel purchased hereunder shall be ten and sixty
six hundredths percent (10.66%), and for the third and fourth Parcels purchased
hereunder shall be ten and five hundred thirty-five thousandths percent
(10.535%) of the total of the Parcels' Purchase Price less the amount funded by
AEI for Seller's overhead allocation. Beginning in the third (3rd) lease year
and every lease year thereafter for each of the four (4) Parcels, including any
renewal terms, such annual rent will increase by an amount equal to one and nine
hundred twenty-five thousandths percent (1.925%) of the prior period's scheduled
annual rent.
2.4 The term of the lease shall be twenty (20) years, with two (2)
five-year options to renew.
2.5 For each Parcel which AEI issues a purchase commitment, AEI may
agree to provide Seller/Lessee, upon Seller/Lessee's' request with:
1. land acquisition and construction loan financing, subject
to AEI's then standard credit, site, and other due diligence review and approval
standards and procedures, up to the amount of the Purchase Price, at an
annualized interest rate of seven and one quarter percent (7.25%) or one percent
(1.0%) under the prime rate on the date AEI issues the construction loan
commitment, whichever is greater, commencing from the date of disbursement. Upon
approval by AEI to provide construction loan financing, Seller/Lessee shall,
upon returning the signed
Lessee Initial: /s/ WJB
Commitment For: (Timber Lodge Steakhouse, Inc.)
purchase commitment to AEI, also execute a construction loan commitment and
remit a nonrefundable out-of-pocket construction loan commitment fee in an
amount equal to one percent (1.0%) of the amount of the construction financing
requested. At Seller/Lessee's option, such fee may be reimbursed to
Seller/Lessee as a funded project cost upon AEI's acquisition of the Parcel, or
2. development financing, subject to AEI's then standard
credit, site, and other due diligence review and approval standards and
procedures, up to the amount of the Purchase Price, at an annualized rental rate
and interest rate of seven and one quarter percent (7.25%) or one percent (1.0%)
under the prime rate on the date AEI issues the development financing and
leasing commitment, whichever is greater, commencing from the date of
disbursement. Such rate shall be adjusted to the applicable rental rate one
hundred and twenty days (120) after AEI's acquisition of the Parcel. Upon
approval by AEI to provide development financing, Seller/Lessee shall, upon
returning the signed development financing and leasing commitment to AEI, remit
a non-refundable out-of-pocket commitment fee in an amount equal to one and
one-half percent (1.5%) of the amount of the development financing requested. At
Seller/Lessee's option, such fee may be reimbursed to Seller/Lessee as a funded
project cost upon AEI's acquisition of the Parcel.
2.6 Seller/Lessee shall pay for all expenses incident to the closing of
each transaction contemplated hereunder, including AEI's outside attorney's
fees. AEI's attorney fees shall be capped at twelve thousand five hundred
dollars ($12,500.00) per Parcel, unless Seller/Lessee shall default under the
purchase agreement, construction loan commitment, loan or lease documents,
development financing documents, or extraordinary events occur. If such
extraordinary events occur the cap for legal fees shall cease and Seller/Lessee
shall pay all actual legal expenses. All other actual closing costs shall be
paid in full by Seller/Lessee. Such costs may, at Seller/Lessee's option, be
included as project costs and funded by AEI in the Purchase Price.
ARTICLE 3. CLOSING DATE.
Seller/Lessee shall provide AEI not less than sixty (60) days notice
prior to: (a) its intended date to close on the construction financing for the
Parcel, or (b) in the event AEI does not provide the construction financing for
the Parcel, the anticipated completion date of the sale of the Parcel to AEI and
leaseback by Seller/Lessee (the "Closing Date"). It is contemplated that
Lessee Initial: /s/ WJB
Commitment For: (Timber Lodge Steakhouse, Inc.)
the Closing Date shall be as close as is reasonably practical to the opening of
the business at the Parcel, but not to exceed thirty (30) days from the actual
opening date.
ARTICLE 4. CONTINGENCY.
The issuance of a purchase commitment for a specific Parcel is subject
to AEI's review and approval of the financial statements of Seller/Lessee, and
all due diligence required by Article 1.2 and Article 1.3 hereof.
ARTICLE 5. REMEDIES.
If Seller/Lessee shall fail to offer to AEI a Parcel which
Seller/Lessee sells as a sale/leaseback transaction to another party, then AEI
shall be entitled to recover from Seller/Lessee, as liquidated damages, the sum
of 7.0% of the Seller's gross proceeds from the sale of such Parcel and any
capital improvements or fixtures (not trade fixtures) placed thereon by Seller
or for Seller's use.
ARTICLE 6. NOTICE.
All notices provided for herein shall be in writing and shall be deemed
to have been given when delivered personally, or by registered or certified
mail, or nationally recognized overnight carrier, return receipt requested,
postage prepared, addressed as follows:
If to Seller/Lessee, at: Timber Lodge Steakhouse, Inc.
0000 Xxxxxx Xxxxxx Xxxxx
Xx. Xxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
If to AEI, at: AEI Fund Management, Inc.
1300 Minnesota World Trade Center
00 Xxxx Xxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Lessee Initial: /s/ WJB
Commitment For: (Timber Lodge Steakhouse, Inc.)
or addressed to any such party at such address as such party shall hereinafter
furnish by notice to the other parties.
ARTICLE 7. MISCELLANEOUS.
7.1 This Agreement shall be construed according to the laws of the
State of Minnesota and the parties agree to be governed by the jurisdiction of,
and consent to venue of any action to enforce this agreement in, the State of
Minnesota.
7.2 AEI shall have the right, at any time, to assign its interest
herein with respect to this entire Agreement or any individual Parcel, in whole
or in part.
7.3 In the event it becomes necessary for either party to bring suit to
enforce the terms or conditions hereof, the prevailing party shall have the
right to recover reasonable attorney's fees and costs from the other party.
7.4 This Agreement shall expire upon the earlier of AEI's issuance of a
purchase commitment for the total number of Parcels contemplated under this
Agreement, or at the end of thirty-six (36) months from the date hereof.
7.5 In the event Seller/Lessee and AEI do not reach mutual agreement on
the documents contemplated to be executed by either party for the first
transaction contemplated hereunder, this Agreement may be terminated at the
option of either party. Once documents have been mutually agreed upon between
the two parties for the first transaction, then Seller/Lessee may object only to
those changes made to the documents since the most immediate prior transaction.
Seller/Lessee shall, in such event, reimburse AEI for its out-of-pocket expenses
incurred for the first transaction, including, but not limited to, attorney's
fees.
7.6 Each lease will provide an option for Seller/Lessee to repurchase
the Parcel as follows:
AEI would grant Seller/Lessee an option for Seller/Lessee to
repurchase each Parcel at any time during the eighth (8th)
lease year. The purchase price will be determined by
compounding AEI's acquisition cost as reported in its Form 10K
Financial Statement as filed with the Securities and Exchange
Commission (SEC)
Lessee Initial: /s/ WJB
Commitment For: (Timber Lodge Steakhouse, Inc.)
by five percent (5.0%) lease per year, prorated for the
partial lease year during lease year eight (8), plus all
transaction costs.
7.7 This Agreement is null and void unless executed and returned to AEI
by September 23, 1997.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
AEI FUND MANAGEMENT, INC.
("AEI")
By: /s/ Xxxxxx X. Xxxxxxx Dated: 9-23-97
--------------------------------- ---------------
Xxxxxx X. Xxxxxxx, President
TIMBER LODGE STEAKHOUSE, INC.
("Seller/Lessee")
By: /s/ Xxxxxxx X. Birmingham Dated: 23 Sept. 1997
--------------------------------- ---------------
Lessee Initial: /s/ WJB
Commitment For: (Timber Lodge Steakhouse, Inc.)
EXHIBIT "A"
FINANCIAL DOCUMENTATION REQUIREMENTS
Prior to Closing, the following must be received and approved by AEI, along with
those items specified more fully in the Sale and Leaseback Financing Commitment.
I. Lessee's prior three (3) fiscal years' Form 10-K reports as filed with
the Securities and Exchange Commission.
II. Lessee's prior three fiscal years' Annual Shareholder Reports.
III. Lessee's Form 10-Q reports filed with the Securities and Exchange
Commission during its current and prior two fiscal year periods.
IV. Lessee's internally generated per store annual financial statements for
the current and year-to-date periods. Said financial statements shall
include at a minimum, a balance sheet and statement of income. Cash
flow statements and statements of stockholder's equity should also be
provided if available.
V. Lessee's internally generated per store financial statements for each
of its prior two fiscal year periods. Said financial statements shall
include at a minimum, a balance sheet and statement of income. Cash
flow statements and statements of stockholder's equity should also be
provided if available.
VI. Pro forma of first year's operations for the property to be purchased.
VII. Itemized budget of total project cost for the property to be purchased.
--------------------------------------------------------------------------------
Lessee's financial statements, and any additional financial information
requested by AEI shall be prepared in accordance with current GAAP guidelines
and signed by an authorized officer who must certify to the accuracy thereof.
The certification language must read as follows:
"THE UNDERSIGNED HEREBY CERTIFIES AND WARRANTS THAT THE INFORMATION
CONTAINED IN THESE FINANCIAL STATEMENTS IS TRUE AND CORRECT,
UNDERSTANDS THAT AEI IS RELYING UPON SUCH INFORMATION AS AN INDUCEMENT
FOR ENTERING INTO A PURCHASE TRANSACTION WITH THE UNDERSIGNED, AND
EXPRESSLY REPRESENTS THAT AEI MAY HAVE RELIANCE UPON SUCH INFORMATION."
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Lessee Initial: /s/ WJB
Commitment For: (Timber Lodge Steakhouse, Inc.)
EXHIBIT "B"
(COSTS WHICH MAY BE INCLUDED IN THE PURCHASE.)
1. Land Costs or Site Acquisition Costs at Seller's or Lessee's actual
cost from unaffiliated parties.
2. Demolition Costs and Site Preparation Costs.
3. Architectural and Engineering Fees paid to non-affiliates.
4. Outside Labor Costs for construction of the improvements on the Parcel.
5. Material Costs.
6. Soil Report and Environmental Report Costs.
7. Surveying Costs paid to non-affiliates.
8. Building permits, use permits and other governmental charges.
9. Contractor Fees to non-affiliates.
10. Builders' Risk Insurance and Public Liability Insurance Premiums during
the construction period.
11. Utility Charges during construction.
12. Construction Interest.
13. AEI's Commitment Fee(s).
14. Title Insurance Fees and Charges.
15. Recording Fees and Registration or Conveyancing Taxes, Fees, or
Charges.
16. Any fees or costs incurred by AEI in qualifying to hold title in the
state where the Parcel is located.
17. Appraisal Fees paid to non-affiliates.
18. Attorneys' Fees of Lessee.
19. Attorneys' Fees of AEI.
20. AEI's Site Inspection Fees.
21. Attached, Permanent Equipment, not including signage, up to nine
percent (9.0%) of Purchase of the Price.
22. Seller's overhead allocation equal to $5,000 per Parcel.
Lessee Initial: /s/ WJB
Commitment For: (Timber Lodge Steakhouse, Inc.)
