DEVELOPMENT FINANCING AGREEMENT
THIS AGREEMENT, made and entered into effective as of this
20th day of November, 1998, by and between RTM Alabama, Inc.
("Lessee"), whose address is 0000 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx
00000, and AEI Income & Growth Fund XXII Limited Partnership
(together, "Lessor"), whose address is Xxxxx 0000, Xxxxx Xxxxx
Xxxxxx, Xxxxx Xxxx, Xxxxxxxxx 00000.
W I T N E S E T H, that:
WHEREAS, Lessee is contemplating building on the premises
described in Exhibit "A" attached hereto the following
Improvements :
Construction of a building and improvements to be used as a
Arby's 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 for the modification of the prototype
Plans and Specifications to meet jurisdictional requirements, but
shall not include the requirement of interim inspections of the
Project by such Architect.
3. "Commitment" shall mean Lessor's Commitment to Lessee
agreeing to provide the Development Financing. (The "Development
Financing and Leasing Commitment" dated November 20th , 1998.)
4. "Completion Date" shall mean the earlier of 60 days
after the issuance of the Certificate of Occupancy for
contemplated Improvements on the Leased Premises or midnight, May
15, 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
the Budget shown 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 Four Hundred Forty Two Thousand Dollars ($1,442,000)
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, Lessee's 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. "LTIC-CDD" shall mean Lawyers Title Insurance
Corporation, Construction Disbursement Department, or other
nationally recognized title insurer approved by Lessor in its
reasonable discretion, to be LTIC-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 conform to applicable jurisdictional requirements the
prototype Plans and Specifications for the construction of the
Improvements.
22. "Sub-Contractors" shall mean those persons furnishing
labor or materials for the Project pursuant to the Sub-Contracts.
23. "Sub-Contracts" shall mean the contracts between the
Contractor and its materialmen and mechanics in the furnishing of
labor or materials for the Project.
24. "Title" shall mean the title company 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 LTIC-CDD and
disbursed by LTIC-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
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 enforce ability 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 will 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.
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. 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. Otherwise, Lessee shall demonstrate to Lessor's
reasonable satisfaction the application of or Lessee's reasonable
access to sufficient Owner Equity in the amount of such excess
over the budgeted amount.
12. CONSTRUCTION CONTRACTS - Lessee has entered into contracts
with the Contractors or separate contracts with materialmen and
laborers providing for the construction of the Improvements. If
Lessee shall be in default hereunder, after written notice from
Lessor, 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 if Lessee shall be in
default hereunder, upon written request by Lessor, 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.
14. NO 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.
17. FINANCIAL 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, (if Lessee shall default
hereunder, legal fees by Lessor's counsel and all other
reasonable attorney's fees incurred in connection with
enforcement of the terms hereof (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 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.
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, if any shall then be required or known to be
required prior to the First Disbursement, into the Project before
the first Disbursement (or any subsequent Disbursement if
additional Lessee Equity should be required) and Lessee shall
deliver evidence reasonably satisfactory to Lessor of the
availability of funds to make such payment.
3. DEVELOPMENT FINANCING BALANCE - As of the date immediately
prior to any Disbursement, Lessee's acceptance of such
Disbursement shall be deemed to be certification that the total
amount of unadvanced proceeds of the Development Financing shall
be sufficient 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 the commercially
reasonable opinion of Lessor (the opinion of Lessor being based
upon affidavit of the General Contractor, the Inspecting
Architect (if applicable), or other reliable licensed third party
contractor) 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 demonstrate to
Lessor's reasonable satisfaction the application of or Lessee's
reasonable access to sufficient Owner Equity in the amount of
such excess over the budgeted amount..
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, (and with respect to
further disbursements, if Lessee be in default hereunder, upon
written request by Lessor, Lessee shall provide a list of Sub-
Contractors 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
Contractors 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.
10. WORK 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 LTIC-
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 LTIC-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 Lessee,
Contractor, and if required by Lessor, by the Inspecting
Architect, if any. All interest accruing need not be disbursed
to LTIC-CDD, but may be immediately and automatically credited by
Lessor to the Development Financing account. LTIC-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 LTIC-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 LTIC-CDD or the date of credit by Lessor
provided that in the event LTIC-CDD shall fail to disburse any
advances within five (5) business days after the date set for an
advance, LTIC-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 LTIC-CDD and returned by
LTIC-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. An Application for Payment in the form attached hereto
as Exhibit "C" 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 or indemnification from
Lessee 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.
c. If Lessee shall be in default hereunder, upon written
request by Lessor, 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.
Such other supporting evidence, including invoices and receipts
as may be requested by Lessor or LTIC-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.
Title shall have issued an endorsement bringing the date of the
Policy forward to the date of such disbursement and increasing
the amount of coverage to acknowledge the Policy liability has
increased to the full amount disbursed to that date.
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 - If Lessee shall be in default
hereunder, LTIC-CDD in its reasonable discretion 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 the Inspecting Architect (if applicable) 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 or LTIC-CDD shall have
received the indemnification of Lessee LTIC-CDD shall reasonably
require. 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 Lessor.
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 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 and Contractor, and approved by the Inspecting Architect
(if applicable) certifying as to the final cost of the
Improvements.
4. Title shall have been furnished with such final lien waivers
or with an indemnification agreement satisfactory to Title
sufficient in the opinion of the Title to either dissolve any
possible Mechanic's and Materialman's Liens affecting title to
the Leased Premises or sufficient to allow Title to afford Lessor
such coverages without such waivers 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 final bring down endorsement to the title policy
increasing the insured coverage to the full amount of all sums
disbursed under this Development Financing Agreement and bringing
the date of the Policy forward to the date of the Final
Disbursement..
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
Lessee and Contractor 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 (the "First Lease Amendment") to the Lease
shall be executed by Lessee and Lessor setting forth the date the
first Lease Year and the initial term of the Lease shall end and
the Rent for the balance of the first Lease Year, and evidencing
the satisfaction and termination of this Agreement. The Rent
shall be adjusted to Six and One-Half Percent of the Total
Project Costs for the First full Lease Year after the date of the
First Lease Amendment and to Nine Percent of the Total Project
Costs for the Second Lease Year, and increase thereafter as set
forth in the Lease.
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 monetary defaults hereunder
Lessee shall have five (5) days after notice from Lessor to cure
such monetary defaults, and 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 owned
by Lessor located thereon; 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, except
as otherwise set forth herein or in the Commitment, 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, and costs and the like
incurred in connection with this Agreement, and Lessor's
attorney's fees and costs incurred in connection with the
enforcement hereof, if necessary.
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.
12. BROKERAGE COMMISSIONS - Lessor represents to Lessee that on
account of or through Lessor no brokerage commissions are due in
connection with the transaction contemplated hereby or if there
are such commissions due or payable on account of or through
Lessor the same will be paid by Lessor. Lessor agrees to and
shall indemnify Lessee 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
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 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 FINAL DISBURSEMENT
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 $3,915 per
month absent an uncured Default by Lessee; absent an uncured
Default, accrued Rent during the period of construction of the
Improvements 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 March 15, 1999, if not otherwise in default hereunder, Lessee
shall begin paying Rent of $3,915 per month out of pocket ("Out
of Pocket Rent") on or before the first of each month (prorata
for the balance of March, payable with the first such Out of
Pocket Rent payable on the first day of April). On the Final
Disbursement Date, absent an Uncured Default, Rent shall be
adjusted and documented by the lease amendment contemplated in
ARTICLE IX hereof.
2. Disbursed proceeds of the Development Financing (excluding
the Initial Disbursed Funds) shall accrue interest at a rate of
Six and 75/100 percent (6.75%) per annum, which interest accruing
through March 15, 1999 shall accrue unpaid until the Final
Disbursement Date 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. Lessee
shall begin making monthly payments of interest accruing on and
after March 16, 1999 at the rate of 6.75% 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, or the Completion Date, 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.
4. On the Final Disbursement Date, Lessee shall be
entitled to receive the Parcel Development Fee of $12,615.
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.
RTM Alabama, Inc., an Alabama corporation
By:/s/ D. T Xxxxxxx
Its:Vice President
By:/s/ Xxxxxx X Xxxxxxxxx
Its:V.P. Asst. Secretary
[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
Development Financing Agreement
Homewood, Alabama Arby's
EXHIBIT A
Description of Leased Premises
Lot 1, Arby's Addition to Wildwood Centre, as recorded in Map
Book 193, Page 58, in the Probate Office of Jefferson County,
Alabama.
EXHIBIT B
RTM ALABAMA, INC.
BIRMINGHAM, AL
PROJECT COST BUDGET
OCTOBER 28, 1998
Land and Hard Costs:
Land Acquisition Cost $ 689,900.00
Building/General Construction 445,000.00
Fixtures 46,500.00
Owner Supplied Vendors 66,000.00
Construction Contingency 10.0% 55,000.00
Soft Costs:
Landscaping 20,000.00
Impact/Tap Fees 9,500.00
Permits 1,500.00
Site Engineering 5,000.00
Title Insurance & Closing Costs (Construction and S/L) 5,000.00
Survey 5,500.00
RTM Legal 7,000.00
RTM Builders Risk Insurance 500.00
Architect/Engineer 6,300.00
Geotechnical/Phase I 4,750.00
Construction Consultant 1,000.00
AEI Sale/Leaseback Commitment Fee 1.75% 24,500.00
Construction Interest 13,500.00
AEI Reimbursment 1.25% 17,500.00
RTM Parcel Development Fee 12,615.00
Miscellaneous 5,435.00
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TOTAL PROJECT COST $1,442,000.00
