SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter Ended: March 31, 1998
Commission file number: 0-18289
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1622463
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(612) 227-7333
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.
Yes [X] No
Transitional Small Business Disclosure Format:
Yes No [X]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of March 31, 1998 and December 31, 1997
Statements for the Periods ended March 31, 1998 and 1997:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
BALANCE SHEET
MARCH 31, 1998 AND DECEMBER 31, 1997
(Unaudited)
ASSETS
1998 1997
CURRENT ASSETS:
Cash and Cash Equivalents $ 4,381,195 $ 4,213,283
Receivables 10,856 20,547
----------- -----------
Total Current Assets 4,392,051 4,233,830
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 3,970,611 3,970,611
Buildings and Equipment 8,160,729 8,160,729
Construction in Progress 116,617 43,208
Property Acquisition Costs 117,527 97,181
Accumulated Depreciation (1,926,622) (1,853,954)
----------- -----------
10,438,862 10,417,775
Real Estate Held for Sale 372,980 372,980
----------- -----------
Net Investments in Real Estate 10,811,842 10,790,755
----------- -----------
Total Assets $15,203,893 $15,024,585
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 28,677 $ 23,780
Distributions Payable 323,262 131,154
Unearned Rent 68,454 5,000
----------- -----------
Total Current Liabilities 420,393 159,934
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (47,630) (46,818)
Limited Partners, $1,000 Unit Value;
30,000 Units authorized; 22,783 Issued;
21,487 outstanding 14,831,130 14,911,469
----------- -----------
Total Partners' Capital 14,783,500 14,864,651
----------- -----------
Total Liabilities and Partners' Capital $15,203,893 $15,024,585
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED MARCH 31
(Unaudited)
1998 1997
INCOME:
Rent $ 345,488 $ 363,249
Investment Income 60,061 34,665
----------- -----------
Total Income 405,549 397,914
----------- -----------
EXPENSES:
Partnership Administration - Affiliates 63,803 62,697
Partnership Administration and Property
Management - Unrelated Parties 16,997 25,621
Depreciation 72,668 81,546
----------- -----------
Total Expenses 153,468 169,864
----------- -----------
OPERATING INCOME 252,081 228,050
GAIN ON SALE OF REAL ESTATE 0 376,462
----------- -----------
NET INCOME $ 252,081 $ 604,512
=========== ===========
NET INCOME ALLOCATED:
General Partners $ 2,520 $ 6,045
Limited Partners 249,561 598,467
----------- -----------
$ 252,081 $ 604,512
=========== ===========
NET INCOME PER LIMITED PARTNERSHIP UNIT
(21,487 and 21,764 weighted average Units
outstanding in 1998 and 1997, respectively) $ 11.61 $ 27.50
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED MARCH 31
(Unaudited)
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 252,081 $ 604,512
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 72,668 81,546
Gain on Sale of Real Estate 0 (376,462)
(Increase) Decrease in Receivables 9,691 (14,604)
Increase in Payable to
AEI Fund Management, Inc. 4,897 72,833
Decrease in Security Deposit 0 (665)
Increase in Unearned Rent 63,454 54,256
----------- -----------
Total Adjustments 150,710 (183,096)
----------- -----------
Net Cash Provided By
Operating Activities 402,791 421,416
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (93,755) 0
Proceeds from Sale of Real Estate 0 1,553,191
----------- -----------
Net Cash Provided By (Used For)
Investing Activities (93,755) 1,553,191
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Distributions Payable 192,108 51
Distributions to Partners (333,232) (333,691)
----------- -----------
Net Cash Used For
Financing Activities (141,124) (333,640)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 167,912 1,640,967
CASH AND CASH EQUIVALENTS, beginning of period 4,213,283 2,359,926
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 4,381,195 $ 4,000,893
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED MARCH 31
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1996 $ (49,658) $14,630,232 $14,580,574 21,764.38
Distributions (3,337) (330,354) (333,691)
Net Income 6,045 598,467 604,512
--------- ----------- ----------- -----------
BALANCE, March 31, 1997 $ (46,950) $14,898,345 $14,851,395 21,764.38
========= =========== =========== ===========
BALANCE, December 31, 1997 $ (46,818) $14,911,469 $14,864,651 21,487.28
Distributions (3,332) (329,900) (333,232)
Net Income 2,520 249,561 252,081
--------- ----------- ----------- -----------
BALANCE, March 31, 1998 $ (47,630) $14,831,130 $14,783,500 21,487.28
========= =========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Partnership, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and
reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of
operations for the interim period, on a basis consistent with
the annual audited statements. The adjustments made to these
condensed statements consist only of normal recurring
adjustments. Certain information, accounting policies, and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Partnership
believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and the summary of significant
accounting policies and notes thereto included in the
Partnership's latest annual report on Form 10-KSB.
(2) Organization -
AEI Real Estate Fund XVIII Limited Partnership (Partnership)
was formed to acquire and lease commercial properties to
operating tenants. The Partnership's operations are managed
by AEI Fund Management XVIII, Inc. (AFM), the Managing
General Partner of the Partnership. Robert P. Johnson, the
President and sole shareholder of AFM, serves as the
Individual General Partner of the Partnership. An affiliate
of AFM, AEI Fund Management, Inc., performs the
administrative and operating functions for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on February 15, 1989 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. The Partnership's offering
terminated December 4, 1990 when the extended offering
period expired. The Partnership received subscriptions for
22,783.05 Limited Partnership Units ($22,783,050).
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$22,783,050, and $1,000, respectively. During the operation
of the Partnership, any Net Cash Flow, as defined, which the
General Partners determine to distribute will be distributed
90% to the Limited Partners and 10% to the General Partners;
provided, however, that such distributions to the General
Partners will be subordinated to the Limited Partners first
receiving an annual, noncumulative distribution of Net Cash
Flow equal to 10% of their Adjusted Capital Contribution, as
defined, and, provided further, that in no event will the
General Partners receive less than 1% of such Net Cash Flow
per annum. Distributions to Limited Partners will be made
pro rata by Units.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of the Partnership's properties which the General
Partners determine to distribute will, after provisions for
debts and reserves, be paid in the following manner: (i)
first, 99% to the Limited Partners and 1% to the General
Partners until the Limited Partners receive an amount equal
to: (a) their Adjusted Capital Contribution plus (b) an
amount equal to 6% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) next, 99% to
the Limited Partners and 1% to the General Partners until
the Limited Partners receive an amount equal to 14% of their
Adjusted Capital Contribution per annum, cumulative but not
compounded, to the extent not previously distributed; (iii)
next, to the General Partners until cumulative distributions
to the General Partners under Items (ii) and (iii) equal 15%
of cumulative distributions to all Partners under Items (ii)
and (iii). Any remaining balance will be distributed 85% to
the Limited Partners and 15% to the General Partners.
Distributions to the Limited Partners will be made pro rata
by Units.
For tax purposes, profits from operations, other than
profits attributable to the sale, exchange, financing,
refinancing or other disposition of the Partnership's
property, will be allocated first in the same ratio in
which, and to the extent, Net Cash Flow is distributed to
the Partners for such year. Any additional profits will be
allocated 90% to the Limited Partners and 10% to the General
Partners. In the event no Net Cash Flow is distributed to
the Limited Partners, 90% of each item of Partnership
income, gain or credit for each respective year shall be
allocated to the Limited Partners, and 10% of each such item
shall be allocated to the General Partners. Net losses from
operations will be allocated 98% to the Limited Partners and
2% to the General Partners.
For tax purposes, profits arising from the sale, financing,
or other disposition of the Partnership's property will be
allocated in accordance with the Partnership Agreement as
follows: (i) first, to those Partners with deficit balances
in their capital accounts in an amount equal to the sum of
such deficit balances; (ii) second, 99% to the Limited
Partners and 1% to the General Partners until the aggregate
balance in the Limited Partners' capital accounts equals the
sum of the Limited Partners' Adjusted Capital Contributions
plus an amount equal to 14% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, to the
General Partners until cumulative allocations to the General
Partners equal 15% of cumulative allocations. Any remaining
balance will be allocated 85% to the Limited Partners and
15% to the General Partners. Losses will be allocated 98%
to the Limited Partners and 2% to the General Partners.
The General Partners are not required to currently fund a
deficit capital balance. Upon liquidation of the
Partnership or withdrawal by a General Partner, the General
Partners will contribute to the Partnership an amount equal
to the lesser of the deficit balances in their capital
accounts or 1% of total Limited Partners' and General
Partners' capital contributions.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate -
The Partnership owns a 4.1022% interest in a Sizzler
restaurant in Cincinnati, Ohio, a 93.2478% interest in a
Sizzler restaurant in Springboro, Ohio, and a 100% interest
in a Sizzler restaurant in Fairfield, Ohio. In November,
1993, after reviewing the lessee's operating results, the
Partnership determined that the lessee would be unable to
operate the restaurants in a manner capable of maximizing
the restaurants' sales. Consequently, at the direction of
the Partnership, a multi-unit restaurant operator assumed
operation of the restaurants while the Partnership reviewed
the available options. In January, 1994 and June, 1994, the
Partnership closed the restaurants in Cincinnati and
Springboro, respectively, and listed them for sale or lease.
While the properties are vacant, the Partnership is
responsible for the real estate taxes and other costs
required to maintain the properties.
On July 15, 1994, the Partnership re-leased the Sizzler in
Fairfield to Fairfield Foods, Inc. (Fairfield) under a Lease
Agreement with a primary term of 20 years and annual rental
payments based on a percentage of sales. Fairfield was not
able to profitably operate the restaurant and closed the
restaurant.
No rents were collected from the Sizzler restaurants in the
first three months of 1998 and 1997. The total amount of
rent not collected in 1998 and 1997 was $45,920 and $98,695,
respectively, for the three properties. These amounts were
not accrued for financial reporting purposes.
On January 23, 1997, the Partnership sold its interest in
the Cincinnati restaurant to an unrelated third party. The
Partnership received net sales proceeds of $19,867, which
resulted in a net loss of $31,700, which was recognized as a
real estate impairment in 1996.
In December, 1996, the Partnership, in order to avoid
additional property management expenses, decided to sell the
Sizzler properties in Springboro and Fairfield rather than
to continue to attempt to re-lease the properties. As a
result, the properties were reclassified on the balance
sheet to Real Estate Held for Sale. In addition, based on
an analysis of market conditions in the area, it was
determined that a sale of the properties would result in net
proceeds of approximately $800,000. The Partnership's share
of the proceeds would be approximately $773,000. A charge
to operations for real estate impairment of $1,654,600
($693,500 for the Springboro Sizzler, and $961,100 for the
Fairfield Sizzler) was recognized in the fourth quarter of
1996, which is the difference between book value at December
31, 1996 of $2,427,600 ($1,066,500 for the Springboro
Sizzler and $1,361,100 for the Fairfield Sizzler) and the
estimated market value of $773,000 ($373,000 for the
Springboro Sizzler and $400,000 for the Fairfield Sizzler).
The charge was recorded against the cost of the land,
building and equipment.
On September 22, 1997, the Partnership sold the Sizzler
restaurant in Fairfield, Ohio to an unrelated third party.
The Partnership received net sale proceeds of $528,476,
which is in excess of the book value of the property after
the recognition of the real estate impairment. As a result,
the Partnership recognized a net gain of $128,498.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In August, 1995, the lessee of the two Rally's properties
filed for reorganization. After reviewing the operating
results of the lessee, the Partnership agreed to amend the
Leases of the two properties. Effective December 1, 1995,
the Partnership amended the Leases to reduce the annual base
rent from $47,498 and $48,392 to $15,000 for each property.
The Partnership could receive additional rent in the future
equal to 6.75% of the amount by which gross receipts exceed
$275,000. In 1997, the Leases, as amended, were confirmed
as part of the reorganization plan. The lessee has agreed
to pay all pre-petition and post-petition rents due of
$75,775 and the Partnership's related administrative and
legal expenses. However, due to the uncertainty of
collection, the Partnership has not accrued any of these
amounts for financial reporting purposes.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of
the Rally's properties was approximately $270,000. In the
fourth quarter of 1997, a charge to operations for real
estate impairment of $220,500 was recognized, which is the
difference between the book value at December 31, 1997 of
$490,500 and the estimated fair value of $270,000. The
charge was recorded against the cost of the building and
equipment.
In February, 1996, the Partnership called a letter of credit
for $109,393 related to the Taco Cabana restaurant in
Brownsville, Texas. The Partnership applied the funds to
satisfy 1996 rent income and real estate taxes due and a
portion of the real estate taxes due in 1997. In 1997, the
Partnership took possession of the property and listed it
for sale or re-lease. The Partnership was scheduled to
receive, but did not collect, $29,580 and $28,442 in rent in
the first three months of 1998 and 1997, respectively.
These amounts were not accrued for financial reporting
purposes. While the property is being sold or re-leased,
the Partnership is responsible for real estate taxes and
other costs required to maintain the property.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of
the Brownsville property was approximately $466,600. In the
fourth quarter of 1997, a charge to operations for real
estate impairment of $239,600 was recognized, which is the
difference between the book value at December 31, 1997 of
$706,200 and the estimated fair value of $466,600. The
charge was recorded against the cost of the land and
building.
Through December 31, 1997, the Partnership sold 94.1709% of
the Applebee's restaurant in Destin, Florida in seven
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,413,627
which resulted in a total net gain of $481,379. The total
cost and related accumulated depreciation of the interests
sold was $1,053,565 and $121,317, respectively. For the
three months ended March 31, 1997, the net gain was
$153,716.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
Through December 31, 1997, the Partnership sold 90.6301% of
a Taco Cabana restaurant in San Antonio, Texas in seven
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,520,182
which resulted in a total net gain of $562,654. The total
cost and related accumulated depreciation of the interests
sold was $1,043,983 and $86,455, respectively. For the
three months ended March 31, 1997, the net gain was $69,649.
Through December 31, 1997, the Partnership sold 77.4842% of
its interest in the Tractor Supply Company in Bristol,
Virginia in seven separate transactions to unrelated third
parties. The Partnership received total net sale proceeds
of $1,189,572 which resulted in a total net gain of
$217,301. The total cost and related accumulated
depreciation of the interests sold was $997,602 and $25,331,
respectively. For the three months ended March 31, 1997,
the net gain was $72,607.
Through December 31, 1997, the Partnership sold 26.0312% of
its interest in the Champps Americana restaurant in
Columbus, Ohio in three separate transactions to unrelated
third parties. The Partnership received total net sale
proceeds of $807,777 which resulted in a total net gain of
$151,139. The total cost and related accumulated
depreciation of the interests sold was $667,813 and $11,175,
respectively. For the three months ended March 31, 1997,
the net gain was $80,490.
During the first three months of 1997, the Partnership
distributed $24,095 of the net sale proceeds to the Limited
and General Partners as part of their regular quarterly
distributions, which represented a return of capital of
$1.10 per Limited Partnership Unit.
On July 30, 1997, the Partnership purchased a Fuddrucker's
restaurant in Thornton, Colorado for $1,405,771. The
property is leased to Fuddrucker's, Inc. under a Lease
Agreement with a primary term of 20 years and annual rental
payments of $148,387.
On December 23, 1997, the Partnership purchased a 23.95%
interest in a parcel of land in Troy, Michigan for $361,889.
The land is leased to Champps Entertainment, Inc. (Champps)
under a Lease Agreement with a primary term of 20 years and
annual rental payments of $25,332. Simultaneously with the
purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
will advance funds to Champps for the construction of a
Champps Americana restaurant on the site. Through March 31,
1998, the Partnership had advanced $116,617 for the
construction of the property and was charging interest on
the advances at a rate of 7%. The Partnership's share of
the total purchase price, including the cost of the land,
will be approximately $1,077,750. After the construction is
complete, the Lease Agreement will be amended to require
annual rental payments of approximately $113,000. The
remaining interests in the property are owned by AEI Real
Estate Fund XV Limited Partnership, AEI Real Estate Fund
XVII Limited Partnership, and AEI Net Lease Income & Growth
Fund XIX Limited Partnership, affiliates of the Partnership.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In January, 1998, the Partnership entered into an agreement
to purchase a 45% interest in a Tumbleweed restaurant in
Chillicothe, Ohio. On April 13, 1998, the Partnership
purchased its share of the land for $216,915. The land is
leased to Tumbleweed, LLC (TLLC) under a Lease Agreement
with a primary term of 15 years and annual rental payments
of $18,438. Simultaneously with the purchase of the land,
the Partnership entered into a Development Financing
Agreement under which the Partnership will advance funds to
TLLC for the construction of a Tumbleweed restaurant on the
site. The Partnership's share of the total purchase price,
including the cost of the land, will be approximately
$610,650. After the construction is complete, the Lease
Agreement will be amended to require annual rental payments
of approximately $62,600. The remaining interests in the
property are owned by the Individual General Partner and AEI
Net Lease Income & Growth Fund XIX Limited Partnership,
affiliates of the Partnership.
In April, 1998, the Partnership entered into an agreement to
purchase a Tumbleweed restaurant in Columbus, Ohio. On May
1, 1998, the Partnership purchased the land for $503,832.
The land is leased to TLLC under a Lease Agreement with a
primary term of 15 years and annual rental payments of
$42,826. Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement
under which the Partnership will advance funds to TLLC for
the construction of a Tumbleweed restaurant on the site.
The total purchase price, including the cost of the land,
will be approximately $1,490,000. After the construction is
complete, the Lease Agreement will be amended to require
annual rental payments of approximately $153,000.
In April, 1998, the Partnership entered into an Agreement to
purchase an Old Country Buffet restaurant in Northlake,
Illinois. The purchase price will be approximately
$1,300,000. The property will be leased to Alpha Group, LLC
under a Lease Agreement with a primary term of 20 years and
annual rental payments of approximately $130,000.
During 1997 and the first three months of 1998, the
Partnership incurred net costs of $142,956 related to the
review of potential property acquisitions. Of these costs,
$25,429 have been capitalized and allocated to land,
building and equipment. The remaining costs of $117,527
have been capitalized and will be allocated to property
acquisitions in future periods.
(4) Payable to AEI Fund Management -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Partnership. The payable to AEI
Fund Management represents the balance due for those
services. This balance is non-interest bearing and
unsecured and is to be paid in the normal course of
business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the three months ended March 31, 1998 and 1997, the
Partnership recognized rental income of $345,488 and $363,249,
respectively. During the same periods, the Partnership earned
investment income of $60,061 and $34,665, respectively. In 1998,
rental income decreased as a result of the property sales
discussed below. The decrease in rental income was offset by
additional rent received from two property acquisitions in 1997,
rent increases on ten properties, and additional investment
income earned on the net proceeds from the property sales.
The Partnership owns a 4.1022% interest in a Sizzler
restaurant in Cincinnati, Ohio, a 93.2478% interest in a Sizzler
restaurant in Springboro, Ohio, and a 100% interest in a Sizzler
restaurant in Fairfield, Ohio. In November, 1993, after
reviewing the lessee's operating results, the Partnership
determined that the lessee would be unable to operate the
restaurants in a manner capable of maximizing the restaurants'
sales. Consequently, at the direction of the Partnership, a
multi-unit restaurant operator assumed operation of the
restaurants while the Partnership reviewed the available options.
In January, 1994 and June, 1994, the Partnership closed the
restaurants in Cincinnati and Springboro, respectively, and
listed them for sale or lease. While the properties are vacant,
the Partnership is responsible for the real estate taxes and
other costs required to maintain the properties.
On July 15, 1994, the Partnership re-leased the Sizzler in
Fairfield to Fairfield Foods, Inc. (Fairfield) under a Lease
Agreement with a primary term of 20 years and annual rental
payments based on a percentage of sales. Fairfield was not able
to profitably operate the restaurant and closed the restaurant.
No rents were collected from the Sizzler restaurants in
the first three months of 1998 and 1997. The total amount of
rent not collected in 1998 and 1997 was $45,920 and $98,695,
respectively, for the three properties. These amounts were not
accrued for financial reporting purposes.
On January 23, 1997, the Partnership sold its interest in
the Cincinnati restaurant to an unrelated third party. The
Partnership received net sales proceeds of $19,867, which
resulted in a net loss of $31,700, which was recognized as a real
estate impairment in 1996.
In December, 1996, the Partnership, in order to avoid
additional property management expenses, decided to sell the
Sizzler properties in Springboro and Fairfield rather than to
continue to attempt to re-lease the properties. As a result, the
properties were reclassified on the balance sheet to Real Estate
Held for Sale. In addition, based on an analysis of market
conditions in the area, it was determined that a sale of the
properties would result in net proceeds of approximately
$800,000. The Partnership's share of the proceeds would be
approximately $773,000. A charge to operations for real estate
impairment of $1,654,600 ($693,500 for the Springboro Sizzler,
and $961,100 for the Fairfield Sizzler) was recognized in the
fourth quarter of 1996, which is the difference between book
value at December 31, 1996 of $2,427,600 ($1,066,500 for the
Springboro Sizzler and $1,361,100 for the Fairfield Sizzler) and
the estimated market value of $773,000 ($373,000 for the
Springboro Sizzler and $400,000 for the Fairfield Sizzler). The
charge was recorded against the cost of the land, building and
equipment.
On September 22, 1997, the Partnership sold the Sizzler
restaurant in Fairfield, Ohio to an unrelated third party. The
Partnership received net sale proceeds of $528,476, which is in
excess of the book value of the property after the recognition of
the real estate impairment. As a result, the Partnership
recognized a net gain of $128,498.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
In August, 1995, the lessee of the two Rally's properties
filed for reorganization. After reviewing the operating results
of the lessee, the Partnership agreed to amend the Leases of the
two properties. Effective December 1, 1995, the Partnership
amended the Leases to reduce the annual base rent from $47,498
and $48,392 to $15,000 for each property. The Partnership could
receive additional rent in the future equal to 6.75% of the
amount by which gross receipts exceed $275,000. In 1997, the
Leases, as amended, were confirmed as part of the reorganization
plan. The lessee has agreed to pay all pre-petition and post-
petition rents due of $75,775 and the Partnership's related
administrative and legal expenses. However, due to the
uncertainty of collection, the Partnership has not accrued any of
these amounts for financial reporting purposes.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of the
Rally's properties was approximately $270,000. In the fourth
quarter of 1997, a charge to operations for real estate
impairment of $220,500 was recognized, which is the difference
between the book value at December 31, 1997 of $490,500 and the
estimated fair value of $270,000. The charge was recorded
against the cost of the building and equipment.
In February, 1996, the Partnership called a letter of
credit for $109,393 related to the Taco Cabana restaurant in
Brownsville, Texas. The Partnership applied the funds to satisfy
1996 rent income and real estate taxes due and a portion of the
real estate taxes due in 1997. In 1997, the Partnership took
possession of the property and listed it for sale or re-lease.
The Partnership was scheduled to receive, but did not collect,
$29,580 and $28,442 in rent in the first three months of 1998 and
1997, respectively. These amounts were not accrued for financial
reporting purposes. While the property is being sold or re-
leased, the Partnership is responsible for real estate taxes and
other costs required to maintain the property.
As of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of the
Brownsville property was approximately $466,600. In the fourth
quarter of 1997, a charge to operations for real estate
impairment of $239,600 was recognized, which is the difference
between the book value at December 31, 1997 of $706,200 and the
estimated fair value of $466,600. The charge was recorded
against the cost of the land and building.
During the three months ended March 31, 1998 and 1997, the
Partnership paid Partnership administration expenses to
affiliated parties of $63,803 and $62,697, respectively. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Partners. During
the same periods, the Partnership incurred Partnership
administration and property management expenses from unrelated
parties of $16,997 and $25,621, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, taxes, insurance and other property costs. The decrease
in these expenses in 1998, when compared to 1997, is the result
of expenses incurred in 1997 related to the Sizzler and Rally's
situations discussed above.
As of March 31, 1998, the Partnership's annualized cash
distribution rate was 6.1%, based on the Adjusted Capital
Contribution. Distributions of Net Cash Flow to the General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement. As a result, 99% of distributions and
income were allocated to Limited Partners and 1% to the General
Partners.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Inflation has had a minimal effect on income from
operations. It is expected that increases in sales volumes of
the tenants due to inflation and real sales growth, will result
in an increase in rental income over the term of the Leases.
Inflation also may cause the Partnership's real estate to
appreciate in value. However, inflation and changing prices may
also have an adverse impact on the operating margins of the
properties' tenants which could impair their ability to pay rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.
AEI Fund Management, Inc. (AEI) performs all management
services for the Partnership. AEI is currently analyzing its
computer hardware and software systems to determine what, if any,
resources need to be dedicated regarding Year 2000 issues. The
Partnership does not anticipate any significant operational
impact or incurring material costs as a result of AEI becoming
Year 2000 compliant.
Liquidity and Capital Resources
During the three months ended March 31, 1998, the
Partnership's cash balances increased $167,912 as the Partnership
distributed less cash to the Partners than it generated from
operating activities. Net cash provided by operating activities
decreased from $421,416 in 1997 to $402,791 in 1998. The
decrease was mainly due to net timing differences in the
collection of payments from the lessees and the payment of
expenses.
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. During the three months ended
March 31, 1997, the Partnership generated cash flow from the sale
of real estate of $1,553,191. During the three months ended
March 31, 1998, the Partnership expended $93,755 to invest in
real properties (inclusive of acquisition expenses) as the
Partnership reinvested cash generated from property sales.
Through December 31, 1997, the Partnership sold 94.1709%
of the Applebee's restaurant in Destin, Florida in seven separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of $1,413,627 which resulted in
a total net gain of $481,379. The total cost and related
accumulated depreciation of the interests sold was $1,053,565 and
$121,317, respectively. For the three months ended March 31,
1997, the net gain was $153,716.
Through December 31, 1997, the Partnership sold 90.6301%
of a Taco Cabana restaurant in San Antonio, Texas in seven
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,520,182 which
resulted in a total net gain of $562,654. The total cost and
related accumulated depreciation of the interests sold was
$1,043,983 and $86,455, respectively. For the three months ended
March 31, 1997, the net gain was $69,649.
Through December 31, 1997, the Partnership sold 77.4842%
of its interest in the Tractor Supply Company in Bristol,
Virginia in seven separate transactions to unrelated third
parties. The Partnership received total net sale proceeds of
$1,189,572 which resulted in a total net gain of $217,301. The
total cost and related accumulated depreciation of the interests
sold was $997,602 and $25,331, respectively. For the three
months ended March 31, 1997, the net gain was $72,607.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Through December 31, 1997, the Partnership sold 26.0312%
of its interest in the Champps Americana restaurant in Columbus,
Ohio in three separate transactions to unrelated third parties.
The Partnership received total net sale proceeds of $807,777
which resulted in a total net gain of $151,139. The total cost
and related accumulated depreciation of the interests sold was
$667,813 and $11,175, respectively. For the three months ended
March 31, 1997, the net gain was $80,490.
During the first three months of 1997, the Partnership
distributed $24,095 of the net sale proceeds to the Limited and
General Partners as part of their regular quarterly
distributions, which represented a return of capital of $1.10 per
Limited Partnership Unit.
On July 30, 1997, the Partnership purchased a Fuddrucker's
restaurant in Thornton, Colorado for $1,405,771. The property is
leased to Fuddrucker's, Inc. under a Lease Agreement with a
primary term of 20 years and annual rental payments of $148,387.
On December 23, 1997, the Partnership purchased a 23.95%
interest in a parcel of land in Troy, Michigan for $361,889. The
land is leased to Champps Entertainment, Inc. (Champps) under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $25,332. Simultaneously with the purchase of the
land, the Partnership entered into a Development Financing
Agreement under which the Partnership will advance funds to
Champps for the construction of a Champps Americana restaurant on
the site. Through March 31, 1998, the Partnership had advanced
$116,617 for the construction of the property and was charging
interest on the advances at a rate of 7%. The Partnership's
share of the total purchase price, including the cost of the
land, will be approximately $1,077,750. After the construction
is complete, the Lease Agreement will be amended to require
annual rental payments of approximately $113,000. The remaining
interests in the property are owned by AEI Real Estate Fund XV
Limited Partnership, AEI Real Estate Fund XVII Limited
Partnership, and AEI Net Lease Income & Growth Fund XIX Limited
Partnership, affiliates of the Partnership.
In January, 1998, the Partnership entered into an
agreement to purchase a 45% interest in a Tumbleweed restaurant
in Chillicothe, Ohio. On April 13, 1998, the Partnership
purchased its share of the land for $216,915. The land is leased
to Tumbleweed, LLC (TLLC) under a Lease Agreement with a primary
term of 15 years and annual rental payments of $18,438.
Simultaneously with the purchase of the land, the Partnership
entered into a Development Financing Agreement under which the
Partnership will advance funds to TLLC for the construction of a
Tumbleweed restaurant on the site. The Partnership's share of
the total purchase price, including the cost of the land, will be
approximately $610,650. After the construction is complete, the
Lease Agreement will be amended to require annual rental payments
of approximately $62,600. The remaining interests in the
property are owned by the Individual General Partner and AEI Net
Lease Income & Growth Fund XIX Limited Partnership, affiliates of
the Partnership.
In April, 1998, the Partnership entered into an agreement
to purchase a Tumbleweed restaurant in Columbus, Ohio. On May 1,
1998, the Partnership purchased the land for $503,832. The land
is leased to TLLC under a Lease Agreement with a primary term of
15 years and annual rental payments of $42,826. Simultaneously
with the purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership will
advance funds to TLLC for the construction of a Tumbleweed
restaurant on the site. The total purchase price, including the
cost of the land, will be approximately $1,490,000. After the
construction is complete, the Lease Agreement will be amended to
require annual rental payments of approximately $153,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
In April, 1998, the Partnership entered into an Agreement
to purchase an Old Country Buffet restaurant in Northlake,
Illinois. The purchase price will be approximately $1,300,000.
The property will be leased to Alpha Group, LLC under a Lease
Agreement with a primary term of 20 years and annual rental
payments of approximately $130,000.
The Partnership's primary use of cash flow is distribution
and redemption payments to Partners. The Partnership declares
its regular quarterly distributions before the end of each
quarter and pays the distribution in the first week after the end
of each quarter. The Partnership attempts to maintain a stable
distribution rate from quarter to quarter. Prior to 1998,
redemption payments were paid to redeeming Partners in the fourth
quarter of each year. Beginning in 1998, redemption payments
will be paid to redeeming Partners on a quarterly basis. The
redemption payments generally are funded with cash that would
normally be paid as part of the regular quarterly distributions.
As a result, total distributions and distributions payable have
fluctuated from year to year due to cash used to fund redemption
payments.
The Partnership may acquire Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the number of Units
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
On April 1, 1998, six Limited Partners redeemed a total of
161.0 Partnership Units for $128,961 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, a total of
sixty-eight Limited Partners redeemed 1,295.52 Partnership Units
for $1,028,771. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
The continuing rent payments from the properties, together
with cash generated from the property sales, should be adequate
to fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995
The foregoing Management's Discussion and Analysis
contains various "forward looking statements" within the meaning
of federal securities laws which represent management's
expectations or beliefs concerning future events, including
statements regarding anticipated application of cash, expected
returns from rental income, growth in revenue, taxation levels,
the sufficiency of cash to meet operating expenses, rates of
distribution, and other matters. These, and other forward
looking statements made by the Partnership, must be evaluated in
the context of a number of factors that may affect the
Partnership's financial condition and results of operations,
including the following:
<bullet> Market and economic conditions which affect the value
of the properties the Partnership owns and the cash
from rental income such properties generate;
<bullet> the federal income tax consequences of rental income,
deductions, gain on sales and other items and the
affects of these consequences for investors;
<bullet> resolution by the General Partners of conflicts with
which they may be confronted;
<bullet> the success of the General Partners of locating
properties with favorable risk return characteristics;
<bullet> the effect of tenant defaults; and
<bullet> the condition of the industries in which the tenants of
properties owned by the Partnership operate.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's
property is subject.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
PART II - OTHER INFORMATION
(Continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
10.1 Development Financing Agreement
dated April 13, 1998 between the
Partnerhip, AEI Net Lease Income & Growth
Fund XIX Limited Partnership, Robert P.
Johnson, and Tumbleweed, LLC relating to
the property at 1150 North Bridge Street,
Chillicothe, Ohio.
10.2 Net Lease Agreement dated April 13,
1998 between the Partnerhip, AEI Net
Lease Income & Growth Fund XIX Limited
Partnership, Robert P. Johnson, and
Tumbleweed, LLC relating to the property
at 1150 North Bridge Street, Chillicothe,
Ohio.
10.3 Purchase Agreement dated April 17,
1998 between the Partnership and the
Alpha Group, LLC relating to the property
at North Avenue & Wolf Road, Northlake,
Illinois.
10.4 Development Financing and Leasing
Commitment dated April 24, 1998 between
the Partnership and Tumbleweed, LLC
relating to the property at 6959 East
Broad Street, Columbus, Ohio.
10.5 Development Financing Agreement
dated May 1, 1998 between the Partnership
and Tumbleweed, LLC relating to the
property at 6959 East Broad Street,
Columbus, Ohio.
10.6 Net Lease Agreement dated May 1,
1998 between the Partnership and
Tumbleweed, LLC relating to the property
at 6959 East Broad Street, Columbus,
Ohio.
27 Financial Data Schedule for period
ended March 31, 1998.
b. Reports filed on Form 8-K - None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: May 8, 1998 AEI Real Estate Fund XVIII
Limited Partnership
By: AEI Fund Management XVIII, Inc.
Its: Managing General Partner
By: /s/ Robert P Johnson
Robert P. Johnson
President
(Principal Executive Officer)
By: /s/ Mark E Larson
Mark E. Larson
Chief Financial Officer
(Principal Accounting Officer)
DEVELOPMENT FINANCING AGREEMENT
THIS AGREEMENT, made and entered into effective as of this
13th day of April, 1998, by and between Tumbleweed , LLC
(hereinafter referred to as "Lessee"), whose address is 1900
Mellwood Avenue, Louisville, Kentucky, and AEI Real Estate Fund
XVIII Limited Partnership; AEI Net Lease Income & Growth Fund XIX
Limited Partnership; and Robert P. Johnson, all of whose
principal business address is 1300 Minnesota World Trade Center,
30 East Seventh Street, St. Paul, Minnesota 55101 (hereinafter
collectively referred to as "Lessor") .
W I T N E S S E T H, that:
WHEREAS, Lessee is contemplating building the following
Improvements on the premises described in Exhibit "A" attached
hereto :
Construction of an approximately 3,500 square foot building
and improvements to be used as a Tumbleweed Restaurant.
WHEREAS, Lessee has made application to Lessor for development
financing to defray the costs of constructing such Improvements;
WHEREAS, Lessor's Assignor has issued to Lessee its
Development Financing and Leasing Commitment to advance funds in
the amount hereinafter specified, subject to compliance with the
terms and conditions of this Development Financing Agreement and
the Net Lease Agreement (the "Lease") of even date herewith;
NOW, THEREFORE, in consideration of entering into the Lease
and other good and valuable consideration, the receipt of which
is hereby acknowledged by the parties hereto, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have
the following meanings:
1. "Application" shall mean Lessee's application to the
Lessor for the Development Financing the terms and conditions
of which are incorporated herein by reference.
2. "Architect's Contract" shall mean Lessee's contract
with the Project Architect.
3. "Commitment" shall mean Lessor's Commitment to Lessee
agreeing to provide the Development Financing. (The
"Development Financing and Leasing Commitment" dated of even
date herewith.)
4. "Completion Date" shall mean midnight, October 15,
1998, subject to Force Majeure, as defined herein.
5. "Construction Costs" shall mean land costs, all costs
paid to construct and complete the Improvements, as specified
on Exhibit "B" attached hereto and made a part hereof.
6. "Construction Contracts" shall mean the contracts
between Lessee and Contractors for the furnishing of labor,
services or materials to the Leased Premises in connection
with the construction of the Improvements.
7. "Contractors" shall mean those firms directly engaged
by Lessee to construct the Improvements, whether one or more.
8. "Contract Documents" shall mean the Project
Architect's Contract, Plans and Specifications and the
contract with the Contractor.
9. "Development Financing" shall mean the funds to be
made available pursuant to the Commitment and not to exceed
the lesser of the Construction Costs or the maximum loan
amount of One Million Three Hundred Fifty Seven Thousand
Dollars ($1,357,000) as specified in the Commitment.
10. "Development Financing and Carrying Charges" shall
mean all fees, taxes and charges incurred under the
Development Financing and in the construction of the
Improvements including, but not limited to, non-refundable
commitment fees; interest charges, service and inspection
fees, attorney's fees, title insurance fees and charges,
recording fees and insurance premiums.
11. "Development Financing Documents" shall mean this
Agreement, the Lease, Assignment of Architects and
Construction Contracts, Guarantees, and such other documents
given to the Lessor as security for the Development
Financing.
12. "LTIC-CDD" shall mean Lawyers Title Insurance
Corporation, Construction Disbursement Department, the
nationally recognized title insurer, or Lessor's in-house
designee, 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 design and supervise construction of the
Improvements.
22. "Rental Modification Date" shall mean a date one
hundred and twenty days (120) from the date hereof.
23. "Sub-Contractors" shall mean those persons furnishing
labor or materials for the Project pursuant to the Sub-
Contracts.
24. "Sub-Contracts" shall mean the contracts between the
Contractor and its materialmen and mechanics in the
furnishing of labor or materials for the Project.
25. "Title" shall mean Lawyers Title Insurance
Corporation issuing the Lessor's fee owner's title insurance
policy.
ARTICLE II
THE DEVELOPMENT FINANCING
Subject to compliance with the provisions of this Agreement,
Lessor agrees to advance to Lessee, and Lessee agrees to request
from Lessor, the Development Financing. The Development
Financing shall be advanced in stages by Lessor to 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
Lessee agrees to commence construction of the Improvements
within thirty (30) days from the date of this Agreement. After
commencement of construction of any Improvements, Lessee agrees
to diligently pursue said construction to completion, and to
supply such moneys and to perform such duties as may be necessary
to complete the construction of said Improvements pursuant to the
Plans and Specifications and in full compliance with all terms
and conditions of this Agreement and the Development Financing
Documents, all of which shall be accomplished on or before the
Completion Date, subject to Force Majeure and without liens,
claims or assessments (actual or contingent) asserted against the
Leased Premises for any material, labor or other items furnished
in connection therewith, subject to Lessee's right to contest
such liens, claims, or assessments provided the same are removed
as a lien upon the Leased Premises prior to foreclosure of such
lien, and all in full compliance with all construction, use,
building, zoning and other similar requirements of any pertinent
governmental jurisdiction. Lessee will provide to Lessor, upon
request, evidence of satisfactory compliance with all the above
requirements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE LESSEE
Lessee hereby represents and warrants to the Lessor, which
representations and warranties shall be deemed to be restated by
Lessee each time Lessor makes an advance of the Development
Financing, that:
1. VALIDITY OF DEVELOPMENT FINANCING DOCUMENTS - The Development
Financing Documents are in all respects legal, valid and binding
according to their terms.
2. NO PRIOR LIEN ON FIXTURES - No mortgage, bill of sale,
security agreement, financing statement, or other title retention
agreement (except those executed in favor of Lessor) has been, or
will be, executed with respect to any fixture (except Lessee's
trade fixtures not financed with this Development Financing) used
in conjunction with the construction, operation or maintenance of
the improvements.
3. CONFLICTING TRANSACTION OF LESSEE - The consummation of the
transactions hereby contemplated and the performance of the
obligations of Lessee under and by virtue of the Development
Financing Documents will not result in any breach of, or
constitute a default under, any mortgage, lease, bank loan or
credit agreement, corporate charter, by-laws, partnership
agreement, or other instrument to which Lessee is a party or by
which it may be bound or affected, the breach of which would
materially affect Lessee's ability to perform its obligations
hereunder.
4. PENDING LITIGATION - There are no actions, suits or
proceedings pending, or to the knowledge of Lessee threatened,
against or affecting it or the Leased Premises, or involving the
validity or enforceability of any of the Development Financing
Documents, at law or in equity, or before or by any governmental
authority, except actions, suits and proceedings that are fully
covered by insurance or which, if adversely determined would not
substantially impair the ability of Lessee to perform each and
every one of its obligations under and by virtue of the
Development Financing Documents; and to the Lessee's knowledge it
is not in default with respect to any order, writ, injunction,
decree or demand of any court or any governmental authority.
5. VIOLATIONS OF GOVERNMENTAL LAW, ORDINANCES OR REGULATIONS -
To the best knowledge of Lessee, there are no violations or
notices of violations of any federal or state law or municipal
ordinance or order or requirement of the State in which the
Leased Premises are located or any municipal department or other
governmental authority having jurisdiction affecting the Leased
Premises, which violations in any way have a material adverse
affect on the Leased Premises and which remain uncured after
notice by such governmental authority or department (if notice is
required) and the expiration of the time within which Lessee may
cure such violation, or if no time limitation is specified,
within a reasonable time after notice to cure such violation .
6. COMPLIANCE WITH ZONING ORDINANCES AND SIMILAR LAWS - To the
best knowledge of Lessee, the Plans and Specifications and
construction pursuant thereto and the use of the Leased Premises
contemplated thereby comply and will comply with all present
governmental laws and regulations and requirements, zoning
ordinances, standards, and regulations of all governmental bodies
exercising jurisdiction over the Leased Premises. Lessee agrees
to provide the Project Architect's certification to such effect
prior to the funding of the first disbursement under the
Development Financing.
7. LESSEE'S STATUS AND AUTHORITY - If the Lessee be a
corporation, limited liability company, trust or a partnership,
Lessee warrants and represents that (i) it is duly organized,
existing and in good standing under the laws of the state in
which it is incorporated or created; (ii) it is duly qualified to
do business and is in good standing in the state in which the
Leased Premises are located; (iii) it has the corporate or other
power, authority and legal right to carry on the business now
being conducted by it and to engage in the transactions
contemplated by this Agreement and the Development Financing
Documents; and (iv) the execution and delivery of this Agreement
and the Development Financing Documents and the performance and
observance of the provisions hereof and thereof have been (or
future acts will be) duly authorized by all necessary trust,
partnership, or corporate actions of Lessee. Lessee will furnish
such resolutions, affidavits and opinions of counsel to such
effect as Lessor may reasonably require.
8. AVAILABILITY OF UTILITIES - All utility services necessary for
the construction of the Improvements will be available prior to
the commencement of construction, and all utility services
necessary for the proper operation of the Improvements for their
intended purposes are available at the Leased Premises or will be
available at the Leased Premises prior to the Final Disbursement
Date, at commercially comparable utility rates and hook-up
charges for the vicinity, including water supply, storm and
sanitary sewer facilities, gas, electricity and telephone
facilities. Lessee shall furnish evidence of such availability
of utilities from time to time at Lessor's request.
9. BUILDING PERMITS - All building permits required for the
construction of the Improvements have been obtained prior to the
commencement of the construction of the Improvements and copies
of same will be delivered to Lessor.
10. CONDITION OF LEASED PREMISES - The Leased Premises are
not now damaged or injured as a result of any fire, explosion,
accident, flood or other casualty, nor to the best of Lessee's
knowledge, subject to any action in eminent domain.
11. APPROVAL OF PLANS AND SPECIFICATIONS - To the best
knowledge of Lessee in reliance upon the Project Architect's
certification to such effect, the Plans and Specifications
conform to the requirements and conditions set out by applicable
law or any effective restrictive covenant, to all governmental
authorities which exercise jurisdiction over the Leased Premises
or the construction thereon, and no construction will be
commenced upon the Leased Premises until said Plans and
Specifications shall have been approved by Lessor, which consent
shall not be unreasonably withheld or delayed and shall be given
or withheld within ten business days after written request
therefor. Subject to Article VI, paragraph 14, no material
changes are to be made in the Plans and Specifications as
approved without Lessor's prior consent, which consent shall not
be unreasonably withheld or delayed and shall be given or
withheld within ten business days after written request therefor;
except, after prior written notice to Lessor, provided the
Development Financing shall remain in balance as set forth in
Article VII, paragraph 3 herein, Lessor shall consent to
reallocation among line items or use of the Construction
Contingency in the aggregate of not more than the amount budgeted
as set forth on Exhibit B for Construction Contingency, unless
Lessee shall deposit Owner Equity with LTIC-CDD 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. Lessee will cause the Contractors to promptly
furnish Lessor with the complete list of all Sub-contractors or
entities as and when under contract, which Contractors propose to
engage to furnish labor and/or materials in constructing the
Improvements (such list containing the names, addresses, and
amounts of such sub-contracts as written in excess individually
of $5,000, and prior to disbursement of funds to or for the
benefit of such Subcontractors, affidavits of authorized
signatory and other documents commercially reasonably required by
Title to insure that the Leased Premises remain lien free) and
will from time to time furnish Lessor or Title with true copies
of all Contracts entered into by Lessee and with the terms of all
verbal agreements therefor, if any, and as to subcontractors,
letters signed by sub-contractors whose contracts are in excess
of $5,000 setting forth the present amount of their contract and
the amounts remaining to be paid under that contract, if the same
information is not stated on a lien waiver reflecting the most
currently requested payment to such subcontractor.
13. BROKERAGE COMMISSIONS - No brokerage commissions are due
in connection with the transaction contemplated hereby or if
there are commissions due or payable the same will be paid by
Lessee. Lessee agrees to and shall indemnify Lessor from any
liability, claims or losses arising by reason of any such
brokerage commissions. This provision shall survive the
repayment of the Development Financing and shall continue in full
force and effect so long as the possibility of such liability,
claims or losses exists.
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.
18. NOTICE OF COMMENCMENT\FURNISHING - To provided Lessor prior
to the initial request for a Disbursement, with a copy of the
Notice of Commencement and any amendments thereto prepared in
accordance with Ohio Revised Code Section 1311.04 and to be
recorded with the Franklin County Recorder's Office. Lessee
represents and warrants that a Notice of Commencement has not
been and will not be recorded prior to the recording of the Deed
transferring title to the Leased Premises to Lessor. Lessee
shall post and keep posted the Notice of Commencement and all
amendments thereto in a conspicious place on the Premises during
the course of construction of the Project. Lessee further
represents and warrants to timely comply with all provisions of
Ohio Revised Code Section 1311.04 and failure to do so shall be
deemed an Event of Default as defined under the Lease. Lessee
shall provide Lessor with a copy of each Notice of Furnishing (as
defined in Ohio Revised Code Section 1311.05) recieved by Lessee
during the course of construction of any Improvements on the
Leased Premises.
ARTICLE VI
COVENANTS OF LESSEE
Lessee hereby covenants and agrees with Lessor as follows:
1. SURVEYS - Prior to execution of any Development Financing
Documents and prior to the initial request for a Disbursement (as
defined in Article VIII hereof), Lessee has furnished to Lessor
three copies of a current perimeter land survey, in form and
substance satisfactory to Lessor, certified to Lessor, giving a
description of the Leased Premises and showing all encroachments
onto or from the Leased Premises, currently certified by a
registered surveyor and bearing his registry number and showing
access rights, easements, or utilities, rights of way, all
setback requirements upon the Leased Premises, improvements,
matters affecting title and such other items as Lessor may
reasonably request.
2. TITLE INSURANCE - Prior to the initial request for
Disbursement the Lessee has furnished Lessor with an ALTA policy
of title insurance, and prior to any subsequent request for
Disbursement such ALTA policy of title insurance shall be brought
down to the date of Disbursement by endorsement, all in form and
substance satisfactory to Lessor issued at the Lessee's expense
and written by Title insuring the Leased Premises to be
marketable, free from exceptions for mechanic's and materialmen's
liens and free from other exceptions not previously approved by
the Lessor, naming Lessor as fee owner insured to the extent of
advances made hereunder subject only to such exceptions as may be
reasonably approved by Lessor.
3. RESTRICTIONS ON CONVEYANCE OR SECONDARY FINANCING - Lessee
will not transfer, sell, convey or encumber the Leased Premises
or subject the Leased Premises to any secondary financing in any
way without the written consent of the Lessor, except as
permitted in Article V, paragraph 2 relating to trade fixture
financing sources or suppliers.
4. INSURANCE - To obtain or cause Contractor to obtain and
maintain such insurance or evidence of insurance as Lessor may
reasonably require, including but not limited to the following:
(a) BUILDER'S RISK INSURANCE - Builder's Risk Insurance
written on the so-called "Builder's Risk-Completed Value
Basis" in an amount equal to the full replacement cost of the
Improvements at the date of completion with coverage
available on the so-called multiple peril form of policy,
including coverage against collapse and water damage, naming
Lessor as additional named insured, such insurance to be in
such amounts and form and written by such companies as shall
be reasonably approved by Lessor, and the originals of such
policies (together with appropriate endorsement thereto,
evidence of payment of premiums thereon and written
agreements by the insurer or insurers therein to give Lessor
ten (10) days' prior written notice of any intention to
cancel) shall be promptly delivered to Lessor, said insurance
coverage to be kept in full force and effect at all times
until the completion of construction of the Improvements.
(b) HAZARD INSURANCE - Fire and Extended Coverage
Insurance, and such other hazard insurance as Lessor may
require and as called for in the Lease in an amount equal to
the full replacement cost of the Improvements naming Lessor
as an additional named insured, such insurance to be in such
amounts and form and written by such companies as shall be
reasonably approved by Lessor, and the originals of such
policies (together with appropriate endorsements thereto,
evidence of payment of premiums thereon and written agreement
by the insurer or insurers therein to give Lessor ten (10)
days' prior written notice of any intention to cancel) shall
be promptly obtained and delivered to Lessor immediately upon
completion of the construction of the Improvements and before
any portion is occupied by Lessee or any tenant of Lessee
with such insurance to be kept in full force and effect at
all times thereafter.
(c) PUBLIC LIABILITY - Comprehensive public liability
insurance (including operations, contingent liability
operations, operations of sub- contractors, completed
operations and contractual liability insurance) in limits of
coverage as set forth in the Lease.
(d) WORKMEN'S COMPENSATION INSURANCE - Evidence of
compliance with the required coverage under statutory
workmen's compensation requirements.
5. COLLECTION OF INSURANCE PROCEEDS - To cooperate with Lessor in
obtaining for Lessor the benefits of any insurance or other
proceeds lawfully or equitably payable to it in connection with
the transaction contemplated hereby and the collection of any
indebtedness or obligation of the Lessee to Lessor incurred
hereunder (including the payment by Lessee of the expense of an
independent appraisal on behalf of Lessor in case of a fire or
other casualty affecting the Leased Premises).
6. APPLICATION OF DEVELOPMENT FINANCING PROCEEDS - To use the
proceeds of the Development Financing solely for the purpose of
paying for Construction Costs and such incidental costs relative
to the construction as may be reasonably approved from time to
time in writing by Lessor, and in no event to use any of the
Development Financing proceeds for personal, corporate or other
purposes.
7. EXPENSES - To pay all costs of closing the Development
Financing and all expenses of Lessor with respect thereto,
including, but not limited to, legal fees by Lessor's counsel and
all other reasonable attorney's fees (limited as set forth in the
Commitment), costs of title insurance, transfer taxes, license
and permit fees, recording expenses, surveys, intangible taxes,
appraisal fees, Inspecting Architect fees, expenses of retaking
possession upon default by Lessee hereunder or other costs of
enforcement (including reasonable attorney's fees) and similar
items.
8. LAWS, ORDINANCES AND ETC. - To comply promptly with any law,
ordinance, order, rule or regulation of all authorities
exercising jurisdiction over the Leased Premises or the
construction thereon, including appropriate supervising boards of
fire underwriters and similar agencies and the requirements of
any insurer issuing coverage on the Project.
9. RIGHT OF LESSOR TO INSPECT LEASED PREMISES - Upon 48 hours
notice, except in cases which Lessor reasonably deems to be an
emergency, in which event upon reasonable notice under the
circumstances, to permit Lessor and Title and their
representatives and agents to enter upon the Leased Premises and
to inspect the Improvements and all materials to be used in
construction thereof and to cooperate and cause Contractor to
cooperate with Lessor or Title and their representatives and
agents during such inspections, provided that such is
accomplished without interrupting the construction process.
Provided, further, however, that this provision shall not be
deemed to impose upon Lessor or Title any duty or obligation
whatsoever to undertake such inspections, to correct any defects
in the Improvements or to notify any person with respect thereto.
10. BOOKS AND RECORDS - To set up and maintain accurate and
complete books, accounts and records pertaining to the Project
including the working drawings in a manner reasonably acceptable
to Lessor. The Lessor, Title and Inspecting Architect shall have
the right at all reasonable times and upon reasonable prior
notice to inspect, examine and copy all books and records of
Lessee relating to the Project, and to enter and have free access
to the Leased Premises and Improvements and to inspect all work
done, labor performed and material furnished in or about the
Project, provided that such is accomplished without interrupting
the construction process. Notwithstanding the foregoing, Lessee
shall be responsible for making inspections as to the
Improvements during the course of construction and shall
determine to its own satisfaction that the work done or materials
supplied by the Contractors and all Subcontractors has been
properly supplied or done in accordance with the applicable
contracts. Lessee will hold Lessor and Title harmless from and
Lessor and Title shall have and have no liability or obligation
of any kind to Lessee or creditors of Lessee in connection with
any defective, improper or inadequate workmanship or materials
brought in or related to the Improvements or the Leased Premises,
or any mechanic's liens arising as a result of such workmanship
or materials. Upon Lessor's request, Lessee shall replace or
cause to be replaced any such work or material found to be
materially deficient by the Project Architect or Independent
Architect. Lessor shall cooperate with Lessee in obtaining any
rights under any applicable warranties to accomplish such work.
Any inspections made by Inspecting Architect, Title or Lessor are
for the sole benefit of Lessor and neither Lessee nor any
creditor, tenant or vendee of Lessee shall be entitled to rely on
such inspection. Lessee shall obtain for Lessor coincident
rights to rely upon any warranties obtain by Lessee from its
Contractors or subcontractors.
11. CORRECTION OF DEFECTS - To promptly correct any
structural defects in the Improvements or any material departure
from the Plans and Specifications not previously approved by
Lessor. The advance of any Development Financing proceeds shall
not constitute a waiver of Lessor's right to require compliance
with this covenant.
12. SIGN REGARDING DEVELOPMENT FINANCING - To allow Lessor to
erect and maintain at a suitable site on the Leased Premises, at
a location to be chosen by Lessee in its reasonable discretion, a
sign indicating that Development Financing is being provided by
Lessor, to the extent permitted by law or private covenant,
condition, or agreement affecting the Project.
13. ADDITIONAL DOCUMENTS - To furnish to Lessor all
instruments, documents, initial surveys, footing or foundation
surveys, if conducted, certificates, plans and specifications,
appraisals, financial statements, title and other insurance
reports and agreements and each and every other document and
instrument required to be furnished by the terms hereof, all at
Lessee's expense; to assign and deliver to Lessor such documents,
instruments, assignments and other writings, and to do such other
acts necessary or desirable to preserve and protect the Leased
Premises, as Lessor may require; and to do and execute all and
such further lawful and reasonable acts, conveyances and
assurances for the carrying out of the intents and purposes of
this Agreement, the Lease, or the Commitment, as Lessor shall
reasonably require from time to time.
14. ARCHITECTS AND CONSTRUCTION CONTRACTS - To commit no
default nor knowingly permit a default under the terms of the
Architects or Construction Contracts; To waive none nor knowingly
permit a waiver of the obligations of the parties thereunder; To
do no act which would relieve such parties from their obligations
thereunder; To make no amendments to such contracts, without the
prior written consent of Lessor; To enter into no change orders
or extras that cause a reallocation among budgeted line items, or
that in the aggregate or singularly result in a net increase in
excess of 10% of the original contract amount without Lessor's
prior written consent, which consent shall not be unreasonably
withheld or delayed; provided, however, Lessor shall be given
written notice and copies of all change orders; provided,
further, however, with written notice to Lessor prior to any
request for funds subsequent to any such change order or
reallocation, the Lessee shall be allowed to enter into any
change order or extra which is accounted for by use of any
reallocation among line items or any remaining budgeted
Contingency line item, or if the same has been exhausted, Lessee
shall be allowed increases in the original contract amount
without Lessor's consent if Lessee has, upon the execution of
said change order, deposited with Lessor the amount by which such
change order increases the total Construction Cost; To allow all
such contracts to be subject to the approval of Lessor for its
loan purposes; To allow Lessor to take advantage of all the
rights and benefits of the contracts upon any default by Lessee;
and to submit evidence to Lessor that both the Architect and the
Contractors will permit Lessor to acquire Lessee's interest under
their respective contracts and the Contract Documents without
additional charge or fee should an event of default occur
hereunder, which default is not cured within applicable notice
and cure periods.
15. ENFORCE PERFORMANCE OF SUB-CONTRACTS - To enforce, or
cause to be enforced, the prompt performance of the Sub-Contracts
in accordance with their terms and not to approve any changes in
the same that in the aggregate or singularly result in a net
increase in excess of 10% of the original General Contractor's
contract amount without Lessor's prior written consent, which
consent shall not be unreasonably withheld or delayed, provided
Lessee's right to enter into any such change order shall be on
the same terms set forth in Section 14 above.
16. COMPLIANCE WITH RULES - To comply with, and to require
the Contractors to comply with, all rules, regulations,
ordinances and laws bearing on the conduct of the work on the
Improvements, including the requirements of any insurer issuing
coverage on the Project and the requirements of any applicable
supervising boards of fire underwriters.
17. OPINIONS OF COUNSEL - To furnish such opinions of counsel
as may be reasonably requested of the Lessee in connection with
the matters contemplated by this Agreement.
18. SOIL TESTS - To provide the Lessor with a soil report
prepared by an acceptable engineer certifying as to the status of
the soil conditions on the Leased Premises, the need or lack of
need for special pilings and foundations and that either any
pilings and foundation necessary to support the Improvements have
been placed in a manner and quantity sufficient to provide the
required support or that no such pilings and foundations are
necessary for the support and construction of the Improvements.
19. MARKETABLE TITLE - To execute and deliver or cause to be
executed and delivered such instruments as may be required by the
Lessor and Title to provide Lessor with a marketable, valid title
to the Leased Premises subject only to such exceptions to title
as may be reasonably approved by Lessor.
20. VIOLATIONS OF GOVERNMENTAL LAW, ORDINANCES OR REGULATIONS
- - Lessee will permit no violations nor commit the same, of any
federal or state law or municipal ordinance or order or
requirement of the State in which the Leased Premises are located
or any municipal department or other governmental authority
having jurisdiction affecting the Leased Premises, which
violations in any way have a material adverse affect on the
Leased Premises and which remain uncured after notice by such
governmental authority or department (if notice is required) and
the expiration of the time within which Lessee may cure such
violation, or if no time limitation is specified, within a
reasonable time after notice to cure such violation .
21. COMPLIANCE WITH ZONING ORDINANCES AND SIMILAR LAWS - The
Plans and Specifications and construction pursuant thereto and
the use of the Leased Premises contemplated thereby will comply
with all governmental laws and regulations and requirements,
zoning ordinances, standards, and regulations of all governmental
bodies exercising jurisdiction over the Leased Premises,
including environmental protection and equal employment
regulations, and appropriate supervising boards of fire
underwriters and similar agencies.
22. APPROVAL OF PLANS AND SPECIFICATIONS - The Plans and
Specifications will conform to the requirements and conditions
set out by applicable law or any effective restrictive covenant,
and to all governmental authorities which exercise jurisdiction
over the Leased Premises or the construction thereon.
23. NOTICE OF COMMENCMENT\FURNISHING - To provide Lessor prior to
the initial request for a Disbursement, with a copy of the Notice
of Commencement and any amendments thereto prepared in accordance
with Ohio Statute and to be recorded with the County Recorder's
Office where the Leased Premises are situate immediately
following the recording of the Memorandum of Lease between the
parties hereto. Lessee shall post and keep posted the Notice of
Commencement and all amendments thereto in a conspicuous place on
the Leased Premises during the course of construction of the
Project. Lessee further represents and warrants to timely comply
with all provisions of Ohio Statute respecting keeping the Leased
Premises free of mechanic's liens and failure to do so shall be
deemed an Event of Default as defined under the Net Lease
Agreement and this Agreement. Lessee shall provide Lessor with a
copy of each Notice of Furnishing (as defined in Ohio Statute)
received by Lessee during the course of construction of any
Improvements on the Leased Premises.
ARTICLE VII
CONDITIONS PRECEDENT TO A DISBURSEMENT
It shall be a condition precedent to each Disbursement under this
Development Financing Agreement that:
1. DEVELOPMENT FINANCING DOCUMENTS - The Development Financing
Documents shall have been duly executed and delivered to Lessor
and shall be in full force and effect.
2. LESSEE EQUITY - Lessee shall have paid all of the Lessee
Equity funds into the Project before the first Disbursement (or
any subsequent Disbursement if additional Lessee Equity should be
required) and Lessee shall deliver evidence of such payment
reasonably satisfactory to Lessor.
3. DEVELOPMENT FINANCING BALANCE - As of the date immediately
prior to any Disbursement, the total amount of unadvanced
proceeds of the Development Financing shall be sufficient, in the
commercially reasonable opinion of Lessor (the opinion of Lessor
being based upon affidavit of the General Contractor, the Project
Architect, the Inspecting Architect, or other reliable licensed
third party contractor) to complete the Improvements free of
liens. To the extent the total of the unadvanced proceeds of the
Development Financing shall be insufficient, at any time, in
Lessor's reasonable opinion, (based upon the affidavit as set
forth above) to complete the Improvements, or be less than the
total Construction Costs not yet paid for or not yet incurred
(including interest accruing for the remainder of the term or
extensions thereof, if any), the Lessee shall immediately deposit
with the Lessor or with Title, as additional Lessee Equity funds,
an amount equal to such deficiency and such additional Lessee
Equity funds shall be disbursed by LTIC-CDD prior to the
Disbursement of any further advance or advances under this
Agreement.
4. NO DEFAULT - No event of default, which remains uncured after
the expiration of applicable cure periods, shall exist under this
Agreement or the Development Financing Documents.
5. REPRESENTATIONS AND WARRANTIES - The representations and
warranties in Article V hereof shall be true and correct on and
as of the date of each Disbursement.
6. COVENANTS - Lessee shall have complied with all of the
covenants made by it in Article VI hereof.
7. SWORN CONSTRUCTION STATEMENT - Prior to the initial
disbursement hereunder, the Lessee shall have submitted to Lessor
and Title a Construction Cost Statement or the Construction
Contract (if such information is contained therein) sworn to by
Lessee and Contractors reflecting all major Sub-Contractors or
materialmen who shall then be engaged in furnishing labor,
materials or supplies for the Improvements. The list should show
the name of each and every Contractor, Sub-Contractor and
materialman (or at least such entities or individuals whose
contract is in excess of $5,000), its address and an estimate of
the dollar value of the work, labor and materials to be done or
supplied and a general statement of the nature of the work to be
done or materials to be supplied by each Contractor. Thereafter,
if such list should change or new subcontractors shall execute
contracts not reflected on the above list, the Lessee shall
furnish to the Lessor any amendments or additions to the original
statement as so submitted.
8. APPLICATION FOR PAYMENT - Lessor shall have received an
Application for Payment pursuant to Article VIII hereof.
9. TITLE - Title shall issue its endorsement to the title policy
insuring the Lessor as fee owner under the policy in the
aggregate amounts of all prior Disbursements and the requested
Disbursement.
10. WORK IN PLACE - All work or materials for which a
Disbursement is requested shall be in place and incorporated into
the Improvements.
11. AMENDED NOTICE OF COMMENCEMENT - Lessee shall provide Lessor
with any amended Notice of Commencement filed in accordance with
Ohio Statue, and any Notice of Furnishing (as defined in Ohio
Statute) received by Lessee during the course of construction of
any Improvements on the Leased Premises.
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 Project
Architect, Lessee, Contractor, and if required by Lessor, by the
Inspecting Architect. 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 abate
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. A Draw Request Certificate in the form attached
hereto as Exhibit "D" certifying that each contractor or
materialman for which payment is requested in the relevant
Application for Payment has satisfactorily completed the work
or furnished the materials for which payment is requested in
accordance with the applicable contract; that all work for
which an Application for Payment is made substantially
conforms to the Contract Documents and any approved changes,
and is in place; and that sufficient funds remain of the
undisbursed Development Financing proceeds to complete the
Project and that all funds previously disbursed have been
applied as per the previous Application for Payment.
b. Waivers of Mechanics' Liens and Materialmen's Liens
executed by all Contractors for all work done and all
materials furnished to the Leased Premises and included in
such current Application for Payment, or evidence reasonably
required by Title to insure over the same by special specific
endorsement, or such other releases of lien pursuant to
bonding or otherwise to prevent such liens from attaching to
the Leased Premises.
c. Waivers of Mechanics' Liens and Materialmen's Liens
executed by all Sub-Contractors and workmen and materialmen
for all work done and all materials furnished to the Leased
Premises and included in the immediately preceding
Application for Payment, or evidence reasonably required by
Title to insure over the same by special specific
endorsement, or such other releases or lien pursuant to
bonding or otherwise to prevent such liens from attaching to
the Leased Premises.
d. Such other supporting evidence, including invoices
and receipts as may be requested by Lessor or 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.
2. INTEREST ADVANCE - If interest has accrued on the Development
Financing and is unpaid or fees are payable to the Lessor
hereunder, Lessor shall be, and hereby is, authorized at any time
to advance to itself from the proceeds of the Development
Financing the total amount of such accrued interest and fees,
whether or not an Application for Payment has been submitted by
the Lessee and the same shall be deemed to be an advance of the
proceeds of the Development Financing under this Agreement in the
same manner and with the same effect as if advanced under the
provisions above. It is understood Lessor may establish an
automatic interest reserve whereby Lessor may withdraw from the
Development Financing account on a regular basis the accrued
interest on the Development Financing and credit the Development
Financing balance with the same.
3. ASSESSMENT AND TAX ADVANCE - As taxes and assessments become
due on the Leased Premises, Lessor shall be, and hereby is,
authorized to advance to itself automatically from the proceeds
of the Development Financing, the total amount of such taxes and
assessments and the same shall be deemed to be an advance of the
proceeds of the Development Financing under this Agreement in the
same manner and with the same effect as if advances under the
provisions above, if not previously paid before due pursuant to
Lessee's obligations under the Lease.
4. DISBURSE UNDER DEVELOPMENT FINANCING DOCUMENT - All sums
advanced and disbursed hereunder shall be disbursed under and
shall be secured by the Development Financing Documents.
5. PAYMENTS TO SUBCONTRACTORS - In its reasonable discretion LTIC-
CDD may make payments directly to any subcontractor or
materialman.
6. RETAINAGE - Each Disbursement shall be limited to an amount
equal to ninety percent (90%) of the value, exclusive of
Contractor's profit and overhead, of the materials and labor
furnished to the Leased Premises and the balance (herein called
the Retainage) shall be retained by Lessor, provided that thirty
(30) days after completion by each subcontractor or materialman
of his subcontract Lessor will disburse to such party, or to the
Contractor on behalf of such party the Retainage withheld from
said party, provided that as a condition to such disbursement the
Lessee and Project Architect and the Inspecting Architect shall
certify to Lessor the date that such Party's subcontract has been
fully and satisfactorily completed and the subcontractor or
materialmen shall have supplied Title with satisfactory final
lien waivers, including final lien waivers for any of its
submaterialmen or sub- contractors and the requirements of any
bonding company issuing the Bonds shall have been fulfilled. Any
Retainage due the Contractor for work performed or materials
furnished by the Contractor and the final balance of Contractor's
profit and overhead shall be disbursed on the Final Disbursement
Date pursuant to Article IX hereof. Contractor's profit and
overhead shall be disbursed based upon and in proportion to the
percentage of completion of the Project, or amounts payable under
the Construction Contract for work actually performed, whichever
is less, as certified by the Project Architect.
ARTICLE IX
FINAL DEVELOPMENT FINANCING BALANCE
Unless and until Lessor and Lessee have entered into a mutually
satisfactory escrow holdback and undertaking agreement to, inter
alia, complete the Improvements and otherwise satisfy the
requirements of this Article IX, at no time and in no event shall
Lessor be obligated to disburse the balance of the proceeds of
the Development Financing, including any Retainage until the date
the following have been satisfied (the "Final Disbursement
Date"):
1. Lessor shall have received reasonably satisfactory evidence of
the final completion of the Improvements in substantial
accordance with the Contract Documents and the Certificate of
Final Completion from the Project Architect accepted by the
Contractor and Lessee.
2. Lessor shall have received satisfactory as-built surveys
reflecting the final location of the Improvements as fully
completed on the Leased Premises in accordance with the Contract
Documents, said survey to be prepared by a registered or licensed
surveyor bearing his registry number, certifying to Lessor as to
the legal description of the Leased Premises and showing all
Improvements located on the Leased Premises and indicating the
street address of the Improvements, absence of any encroachments
on the Leased Premises or from the Leased Premises onto adjacent
land, showing all access points, and showing conformance to all
set back requirements and delineating all utility easements that
are specifically legally described, rights of way and other
matters affecting the Leased Premises, and certifying as to the
total acreage of the land, the exterior dimensions of the
Improvements, and the number of parking spaces, if any, and such
other matters as Lessor may reasonably request.
3. Lessor shall have received a requisite affidavit of the
Lessee, Contractor and Project Architect, and approved by the
Inspecting Architect certifying as to the final cost of the
Improvements.
4. Title shall have been furnished with such final lien waivers
sufficient in the opinion of Title to dissolve any possible
Mechanic's and Materialman's Liens affecting title to the Leased
Premises or Lessee shall have provided a bond or other security
sufficient to remove the lien as an encumbrance upon title to the
Leased Premises and Title shall have issued its endorsements to
the title policy increasing the insured coverage to the full
amount of all sums disbursed under this Development Financing
Agreement.
5. Lessor shall have received evidence that all of the terms,
provisions and conditions on the part of the Lessee to be
performed or caused to be performed hereunder and under the
Lease, including but not limited to obtaining casualty insurance
for the full insurable value of the Improvements, have been
fulfilled to the satisfaction of Lessor.
6. Lessor shall have received a Final Certificate of Occupancy
issued by the appropriate governmental authority covering the
Improvements and a Certificate of Substantial Completion from the
Project Architect indicating that the Improvements as built
comply with all building codes and zoning ordinances, including
any plat requirements or requirements of recorded operating
covenants or agreements affecting the Leased Premises.
7. All remaining uncompleted "punch list" items shall have been
satisfactorily completed.
8. The requirements of all bonding companies, if any, with
respect to release of retainage shall have been met.
9. An amendment to the Lease shall be executed by Lessee and
Lessor setting forth the date the first Lease Year shall end and
the Rent for the balance of the first Lease Year, and evidencing
the satisfaction and termination of this Agreement.
ARTICLE X
EVENTS OF DEFAULT
An "event of default" shall be deemed to have occurred hereunder
and under the Lease, if:
1. DEFAULT UNDER DEVELOPMENT FINANCING DOCUMENTS - Any default or
event of default occurs (which remains uncured after the
expiration of any applicable cure period as may be set forth in
any Development Financing Document) under any of the Development
Financing Documents as defined therein; or
2. FAILURE TO COMPLETE CONSTRUCTION - Lessee shall fail for any
reason, except Lessor's wrongful refusal to fund the Development
Financing pursuant to the terms hereof, to substantially complete
the construction of the Improvements by the Completion Date; or
3. BREACH OF AGREEMENT - Lessee breaches or fails to perform,
observe or meet any covenant or condition of this Agreement,
provided, however, with respect to non-monetary defaults
hereunder, Lessee shall have twenty days after notice from Lessor
to cure such non-monetary default, or if such default (but for
the payment of monies) cannot be cured within twenty days, such
longer time as may be reasonably necessary to effect a cure if
Lessee is diligently pursuing a course of conduct reasonably
designed to cure the default.; or
4. BREACH OF WARRANTY - Any warranties made or agreed to be made
in any of the Development Financing Documents or this Agreement
shall be breached by Lessee or shall prove to be false or
misleading, and the same shall not be cured or made to be true
and correct within the applicable cure periods; or
5. FILING OF LIENS AGAINST THE LEASED PREMISES - Any lien for
labor, material, taxes or otherwise shall be filed against the
Leased Premises and such lien shall not be promptly paid,
released, contested in an appropriate forum, or bonded over to
Lessor's reasonable satisfaction before the lien shall materially
adversely affect Lessor's interest in the Premises; or
6. LITIGATION AGAINST LESSEE - Any suit shall be filed against
Lessee, and is not resolved within 120 days and, which if
adversely determined, could substantially impair the ability of
Lessee to perform each and every one of its obligations under and
by virtue of the Development Financing Documents; or
7. LEVY UPON THE LEASED PREMISES - A levy be made under any
process on the Leased Premises and such levy shall not be
promptly Bonded over prior to the execution of such levy; or
8. TRANSFER OF LEASED PREMISES - Lessee shall without the prior
written consent of Lessor, voluntarily or by operation of law,
sell, transfer, convey or encumber all or any part of its
interest in the Leased Premises or in any of the personalty
located thereon, or used or intended to be used in connection
therewith; or
9. ABANDONMENT - Lessee abandons the project or delays or ceases
work thereon for a period of fifteen consecutive (l5) days, or
delays construction or suffers construction to be delayed for any
period of time for any reason whatsoever so that completion of
Improvements cannot be accomplished in the judgment of Lessor on
or before the Completion Date, subject to force majeure; or
10. BANKRUPTCY - Lessee shall make an assignment for the
benefit of its creditors or shall admit in writing its inability
to pay its debts as they become due or shall file a petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent or
shall file a petition seeking any reorganization, dissolution,
liquidation, arrangement, composition, readjustment, or similar
relief under any present or future bankruptcy or insolvency
statute, law or regulation, or shall file an answer admitting to
or not contesting the material allegations of a petition filed
against it in any such proceedings, or shall not have the same
dismissed or vacated, or shall seek or consent or acquiesce in
the appointment of any trustee, receiver or liquidator of a
material part of its properties, or shall not after the
appointment without the consent or acquiescence of it of a
trustee, receiver, or liquidator of any material part of its
properties have such receiver, liquidator or appointment vacated;
or
11. EXECUTION LEVY - Execution shall have been levied against
the Leased Premises or any lien creditors commence suit to
enforce a judgment lien against the Leased Premises or such
action or suit shall have been brought and shall not be
immediately bonded over and shall continue unstayed and in effect
for a period of more than 120 consecutive days; or
12. ATTACHMENT - Any part of the Lessor's commitment to make
the advances hereunder shall at any time be subject or liable to
attachment or levy at the suit of any creditor of the Lessee or
at the suit of any subcontractor or creditor of the Contractor
and shall remain unstayed prior to the time Lessor shall be
obligated to comply with the same.
ARTICLE XI
REMEDIES OF LESSOR
Lessee hereby agrees that the occurrence of any one or more of
the events of default set out in Article X hereof, shall also
constitute an event of default under each of the Development
Financing documents, thereby entitling Lessor, after the
expiration of any applicable cure period, at its option, to
proceed to exercise any or all of the following remedies:
1. EXERCISE OF REMEDIES - To exercise any of the various remedies
provided in any of the Development Financing Documents, including
the acceleration of the Put described in Articles XIV hereof;
2. CUMULATIVE RIGHTS - Cumulatively to exercise all other rights,
options and privileges provided by law;
3. CEASE MAKING ADVANCES - To refrain from making any advances
under this Agreement but Lessor may make advances after the
happening of any such event without thereby waiving the right to
refrain from making other further advances or to exercise any of
the other rights Lessor may have.
4. RIGHTS TO ENTER - To require Lessee to vacate the Leased
Premises and permit Lessor (whether prior to the exercise of the
Put or during any period prior to the closing of the sale
pursuant to the Put;
(a) To enter into possession;
(b) To perform or cause to be performed any and all work
and labor necessary to complete the Improvements in
accordance with the Plans and Specifications;
(c) To employ security watchmen to protect the Leased
Premises; and
(d) To disburse that portion of the Development Financing
Proceeds not previously disbursed (including any Retainage)
to the extent necessary to complete the construction of the
Improvements in accordance with the Contract Documents and if
the completion requires a larger sum than the remaining
undisbursed portion of the Development Financing, to disburse
such additional funds, all of which funds so disbursed by
Lessor shall be deemed to have been disbursed to Lessee. For
this purpose, Lessee hereby consents upon an uncured default
by Lessee after the expiration of any applicable notice and
cure period, to the Lessor taking the following actions, or
not, in Lessor's reasonable discretion: to complete the
construction of the Improvements in the name of the Lessee,
and hereby empowers Lessor to take all actions necessary in
connection therewith including but not limited to using any
funds of Lessee including any balance which may be held in
escrow and any funds which may remain unadvanced hereunder
for the purpose of completing the said portion of the
Improvements in the manner called for by the Contract
Documents; to make such additions and changes and corrections
in the Contract Documents which shall be necessary or
desirable to complete the said portion of the Improvements in
substantially the manner contemplated by the Contract
Documents; to employ such contractors, subcontractors,
agents, architects, and inspectors as shall be required for
said purposes; to pay, settle or compromise all existing or
future bills and claims which are or may be liens against
said Leased Premises, or may be necessary or desirable for
the completion of the said portion of the Improvements or the
clearance of title to the Leased Premises; to execute all
applications and certificates in the name of Lessee which may
be required by any construction contract and to do any and
every act with respect to the construction of the said
portion of the Improvements which Lessee may do in its own
behalf. Lessor shall also have power to prosecute and defend
all actions and proceedings in connection with the
construction of the said portion of the Improvements and to
take such action and require such performance as it deems
necessary. In accordance therewith, Lessee hereby assigns
and quitclaims unto Lessor all sums to be advanced hereunder
including Retainage. Any funds so disbursed or fees or
charges so incurred shall be included in any amount necessary
for the Lessee to pay pursuant to the Put.
(e) To discontinue making advances hereunder to the
Lessee and to terminate Lessor's obligations under this
Agreement.
5. RIGHTS NON CUMULATIVE - No right or remedy by this Agreement
or by any Development Financing Document or instrument delivered
by the Lessee pursuant hereto, conferred upon or reserved to the
Lessor shall be or is intended to be exclusive of any other right
or remedy and each and every right and remedy shall be cumulative
and in addition to any other right or remedy or now or hereafter
arising at a law or in equity or by statute. Except as Lessor
may hereafter otherwise agree in writing, no waiver by Lessor or
any breach by or default of Lessee of any of its obligations,
agreements, or covenants under this Agreement shall be deemed to
be a waiver of any subsequent breach of the same or any other
obligation, agreement or covenant, nor shall any forbearance by
Lessor to seek a remedy for such breach be deemed a waiver of its
rights and remedies with respect to such a breach, nor shall
Lessor be deemed to have waived any of its rights and remedies
unless it be in writing and executed with the same formality as
this Agreement.
6. EXPENSES - The Development Financing and this Agreement and
the performance by the Lessor or Lessee of their obligations
hereunder shall be without cost and expense to the Lessor, all of
which costs and expenses the Lessee agrees to pay and hold Lessor
harmless of and payment of which shall be secured by the
Development Financing Documents. Specifically, Lessee agrees to
pay all title charges, surveyor's fees, appraisals, loan fees and
attorney's fees and costs and the like incurred in connection
with this Agreement.
ARTICLE XII
GENERAL CONDITIONS AND MISCELLANEOUS
The following conditions shall be applicable throughout the term
of this Agreement:
1. RIGHTS OF THIRD PARTIES - All conditions of the obligations of
Lessor hereunder, including the obligation to make disbursements
are imposed solely and exclusively for the benefit of Lessee, and
no other person shall have standing to require satisfaction of
such conditions in accordance with their terms or be entitled to
assume that Lessor will refuse to make advances in the absence of
strict compliance with any or all thereof, and no other person
shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any and all of which may be freely waived in
whole or in part by Lessor at any time if in its sole discretion
it deems it desirable to do so. In particular, Lessor makes no
representations and assumes no duties or obligations as to third
parties concerning the quality of the construction of the
Improvements or the absence therefrom of defects. In this
connection, Lessee agrees to and shall indemnify Lessor from any
liability, claims or losses resulting from the disbursement of
the Development Financing proceeds or from the condition of the
Leased Premises whether related to the quality of construction or
otherwise and whether arising during or after the term of the
Development Financing made by Lessor to Lessee in connection
therewith, except for Lessor's gross negligence or willful
misconduct. This provision shall survive the termination of this
Agreement and shall continue in full force and effect so long as
the possibility of any such liability, claims or losses exists.
2. EVIDENCE OF SATISFACTION OF CONDITIONS - Any condition of this
Agreement which requires the submission of evidence of the
existence or non- existence of a specified fact or facts implies
as a condition the existence or non- existence, as the case may
be, of such fact or facts, and Lessor shall, at all times, be
free independently to establish to its reasonable satisfaction
such existence or non-existence.
3. ASSIGNMENT - Lessee may not assign this Development Financing
Agreement or any of its rights or obligations hereunder without
the prior written consent of Lessor.
4. SUCCESSORS AND ASSIGNS - Whenever in this Agreement one of the
parties hereto is named or referred to, the heirs, legal
representatives, successors and assigns of such parties shall be
included and all covenants and agreements contained in this
Agreement by or on behalf of the Lessee or by or on behalf of the
Lessor shall bind and inure to the benefit of their respective
heirs, legal representatives, successors and assigns, whether so
expressed or not.
5. HEADINGS - The headings of the sections, paragraphs and
subdivisions of this Agreement are for the convenience of
reference only, and are not to be considered a part hereof and
shall not limit or otherwise affect any of the terms hereof.
6. INVALID PROVISIONS TO AFFECT NO OTHERS - If fulfillment of any
provision hereof, or any transaction related thereto at the time
performance of any such provision shall be due, shall involve
transcending the limit of validity prescribed by law, then, ipso
facto, the obligation to be fulfilled shall be reduced to the
limit of such validity; and such clause or provision shall be
deemed invalid as though not herein contained, and the remainder
of this Agreement shall remain operative in full force and
effect.
7. NUMBER AND GENDER - Whenever the singular or plural number,
masculine or feminine or neuter gender is used herein, it shall
equally include the other.
8. AMENDMENTS - Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought.
9. NOTICES - Any notice which any party hereto may desire or may
be required to give to any of the parties shall be in writing and
the mailing thereof by certified mail, or equivalent, to the
respective parties' addresses set forth hereinabove or to such
other place such party may by notice in writing designate as its
address shall constitute service of notice hereunder.
10. GOVERNING LAW - This Development Financing Agreement is
made and executed pursuant to and is intended to be governed by
the laws of the State where the Leased Premises are located.
11. FORCE MAJEURE - Anything in this Agreement to the contrary
notwithstanding, Lessee shall not be deemed in default with
respect to the performance of any of the terms, provisions,
covenants, and conditions of this Agreement (except for the
payment of all other monetary sums payable hereunder, to which
the provisions of this Section shall not apply), if the same
shall be due to any strike, lockout, civil commotion, warlike
operations, invasion, rebellion, hostilities, sabotage,
governmental regulations or controls, impracticability of
obtaining any materials or labor (except due to the payment of
monies), shortage or unavailability of a source of energy or
utility service, Act of God, casualty, adverse weather
conditions, or any cause beyond the reasonable control of Lessee
(except due to the payment of monies). Provided, however, in
order to invoke the extension of the Completion Date afforded by
this section, Lessee shall notify Lessor in writing within five
days of the occurrence of such force majeure, and in any event
the Completion Date shall be extended as a result of such
occurrence no more than reasonably necessary and in no event no
more than 90 days.
ARTICLE XIII
DAMAGE, DESTRUCTION, CONDEMNATION, USE OF INSURANCE PROCEEDS
1. DAMAGE OR DESTRUCTION OF THE LEASED PREMISES. Lessee will
give the Lessor prompt notice of any damage to or destruction of
the Leased Premises and in case of loss covered by policies of
insurance the Lessor (whether before or after the exercise of the
Put if Lessee be in default hereof) is hereby authorized at its
option to settle and adjust any claim arising out of such
policies and collect and receipt for the proceeds payable
therefrom, provided, that the Lessee may itself adjust and
collect for any losses arising out of a single occurrence
aggregating not in excess of $50,000.00. Any expense incurred by
the Lessor in the adjustment and collection of insurance proceeds
(including the cost of any independent appraisal of the loss or
damage on behalf of Lessor) shall be reimbursed to the Lessor
first out of any proceeds. The proceeds or any part thereof
shall be applied to reduction of the Put Price, which Put may
then be exercised by Lessor, without the application of any
prepayment premium, or to the restoration or repair of the Leased
Premises, the choice of application to be solely at the
discretion of Lessor.
2. CONDEMNATION. Lessee will give the Lessor prompt notice
of any action, actual or threatened, in condemnation or eminent
domain affecting the Leased Premises and hereby assigns,
transfers, and sets over to the Lessor the entire proceeds of any
award or claim for damages for all or any part of the Leased
Premises taken or damaged under the power of eminent domain or
condemnation, the Lessor being hereby authorized to intervene in
any such action and to collect and receive from the condemning
authorities and give proper receipts and acquittances for such
proceeds. Lessee will not enter into any agreements with the
condemning authority permitting or consenting to the taking of
the Leased Premises unless prior written consent of Lessor is
obtained. Any expenses incurred by the Lessor in intervening in
such action or collecting such proceeds shall be reimbursed to
the Lessor first out of the proceeds. The proceeds or any part
thereof shall be applied to reduction of the Put Price, which Put
may then be exercised by Lessor, without the application of any
prepayment premium, or to the restoration or repair of the Leased
Premises, the choice of application to be solely at the
discretion of Lessor.
3. DISBURSEMENT OF INSURANCE AND CONDEMNATION PROCEEDS. Any
restoration or repair shall be done under the supervision of an
architect acceptable to Lessor and pursuant to plans and
specifications approved by the Lessor. Subject to paragraph 4
below, in any case where Lessor may elect to apply the proceeds
to repair or restoration or permit the Lessee to so apply the
proceeds they shall be held by Lessor for such purposes and will
from time to time be disbursed by Lessor to defray the costs of
such restoration or repair under such safeguards and controls as
Lessor may reasonably require to assure completion in accordance
with the approved plans and specifications and free of liens or
claims. Lessee shall on demand deposit with Lessor any sums
necessary to make up any deficits between the actual cost of the
work and the proceeds and provide such lien waivers and
completion bonds as Lessor may reasonably require. Any surplus
which may remain after payment of all costs of restoration or
repair shall be applied against the rent then most remotely to be
paid, whether due or not, without application of any prepayment
premium or credit.
4. LESSOR TO MAKE PROCEEDS AVAILABLE. In the event of
insured damage to the improvements or in the event of a taking by
condemnation of only a portion of the improvements or land area
of the Leased Premises, and provided, the portion remaining can
with restoration or repair continue to be operated for the
purposes utilized immediately prior to such damage or taking, and
if the appraised value of the Leased Premises after such
restoration or repair shall not have been reduced, and provided
further, no event of default exists under this Agreement after
the expiration of any applicable cure periods and Lessee is
diligently pursuing a course of conduct reasonably designed to
cure such default, and the Lessee certified to Lessor their
intention to remain in possession of the Leased Premises without
any abatement or adjustment of rental payments, the Lessor agrees
to make the proceeds available to the restoration or repair of
the improvements on the Leased Premises in accordance with the
provisions of paragraph 3 hereof.
ARTICLE XIV
MANDATORY PUT UPON DEFAULT
Should Lessee commit an event of Default under this Agreement
or any Development Financing Document (after the expiration of
any applicable notice and cure period) ("Uncured Default"),
Lessor shall have the following rights:
Upon an Uncured Default, or damage or destruction or
condemnation of the Leased Premises not addressed by paragraph
XIII (4), if Lessor elects to exercise the following option,
Lessee shall purchase the Leased Premises from Lessor subject to
the following terms and conditions:
A. The purchase price at which Lessor shall sell the
Leased Premises to Lessee, shall be the total amount of
Initial Disbursed Funds disbursed by Lessor to acquire
the Leased Premises at the Closing Date (as defined in
the Commitment), plus the total amount of funds
disbursed pursuant to this Agreement, plus all accrued
interest and incurred expenses of Lessor fundable
pursuant to this Agreement, plus all reasonable costs of
collection and enforcement of the terms hereof.
B. At such time as Lessor shall elect to sell the
Leased Premises, Lessor shall give Lessee written notice
of its intent to exercise its option to sell the Leased
Premises to Lessee, including in such notice Lessor's
calculation of the Purchase Price through the actual
closing of the sale of the Leased Premises to Lessee
pursuant to the terms hereof (the "Sale Date"), which
shall be sixty days from such notice by Lessor. Lessee
shall on or before the Sale Date deliver the purchase
price as set forth in subparagraph (A) of this Article
to Lessor. Upon such delivery, which shall be preceded
by ten (10) days notice to Lessor, Lessor shall deliver
to Lessee a warranty deed and appropriate affidavits
evidencing that Lessor transfers the Leased Premises to
Lessee subject to restrictions, easements or other
encumbrances upon title existing as of the date of
delivery, if any, except to the extent, if any, placed
of record or caused by Lessor. The purchase price to be
paid to Lessor shall be a net amount. All expenses in
connection with the transfer of the Leased Premises,
including, but not limited to appraisal fees, title
insurance, recording fees, documentary stamps,
conveyance tax, title evidence, and all other closing
costs, shall be paid by the Lessee. The purchase price
shall be paid by Lessee in cash to Lessor concurrently
with the conveyance of the Leased Premises by the Lessor
to the Lessee. If Lessor elects to sell the Leased
Premises to Lessee pursuant to the terms hereof, the
Leased Premises shall be conveyed by the Lessor to the
Lessee "As Is".
If Lessee shall fail to pay the Purchase Price on or before
the Sale Date, Lessor may terminate the Lease, and sell the
Leased Premises to any third party purchaser. Lessor may then
send Lessee notice of the shortfall (the "Deficiency"), if any,
between the amount of the net proceeds received by Lessor in such
sale, and the total amount of Initial Disbursed Funds disbursed
by Lessor to acquire the Parcel at the Closing Date (as defined
in the Commitment), plus the total amount of funds disbursed
pursuant to this Agreement, plus all accrued interest and
incurred expenses of Lessor fundable pursuant to this Agreement,
plus all reasonable costs of collection and enforcement of the
terms hereof. Lessee shall immediately upon receipt of such
notice of Deficiency remit the amount of the Deficiency in good
funds to Lessor.
Lessor's rights under this Mandatory Put shall expire on the
Final Disbursement Date when the amendment to the Lease has been
executed by all parties as set forth in Article IX hereof.
ARTICLE XV
RENT, INTEREST, AND RENTAL MODIFICATION DATE
1. Rent shall be payable by Lessee and calculated as follows, on
the funds advanced by Lessor on the Closing Date for the purchase
of the land and related closing costs (the "Initial Disbursed
Funds"): Rent shall accrue in the amount of $3,414.40 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 the Rental Modification Date, if not otherwise in default
hereunder, Lessee shall begin paying Rent by the first of each
month (prorata for the balance of any partial month in which the
Rental Modification Date occurs, payable with the first such
adjusted Rent payable on the first day of the first full month
following the Rental Modification Date) in the amount of $
4,117.37 per month out of pocket. On the Final Disbursement
Date, absent an Uncured Default, Rent shall be adjusted and
documented by the lease amendment contemplated in ARTICLE IX
hereof and paid to Lessor as described in ARTICLE F. of the
Commitment.
2. Disbursed proceeds of the Development Financing shall
accrue interest at a rate of Eight and one-half percent (8.5%)
per annum, which interest shall accrue unpaid unless advanced by
Lessor to itself, or Lessee shall default hereunder, which
default shall remain uncured after the expiration of any
applicable notice and cure period. However, one hundred and
twenty days (120) from the date hereof, (the "Rental Modification
Date"), Lessee shall begin making monthly payments of
subsequently accruing interest at the rate of 10.25% per annum
out of pocket ("Out of Pocket Invoiced Interest") within 5 days
after invoice from Lessor.
3. Upon the occurrence of an event of default which remains
uncured after the expiration of applicable notice and cure
periods, disbursed proceeds of the Development Financing shall
accrue interest at a rate of Fifteen Percent (15.0%) per annum,
or the highest rate allowed by law, whichever is less, and the
rental rate on the Initial Disbursed funds shall increase to
Fifteen Percent (15.0%) per annum, or the highest rental rate
allowed by law, whichever is less.
ARTICLE XVI
COUNTERPART EXECUTION
Counterpart Execution. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Lessee and Lessor have hereunto caused
these presents to be executed on the date first above written.
Tumbleweed, LLC, a Kentucky Limited Liability Company
By: /s/ John Butorac
Its: President
By: /s/ James Mulrooney
Its: Executive VP
[Lessor's Signature appears on following page.]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
By: /s/ Robert P Johnson
Robert P. Johnson, President
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
By: AEI Fund Management XIX, Inc.
By: /s/ Robert P Johnson
Robert P. Johnson, President
ROBERT P. JOHNSON, INDIVIDUALLY
By: /s/ Robert P Johnson
Robert P. Johnson, Individually
Development Financing Disbursement Agreement, Tumbleweed,
Chillicothe, Ohio
Exhibit "A"
1150 North Bridge Street, Chillicothe, Ohio
Situate in the City of Chillicothe, county of Ross, State of
Ohio, being part of the 15.983 acre tract conveyed to The ABCO
Land Development Corp. and the The Beerman Corporation (Deed Vol.
534 Page 800 Ross County Deed Records), bounded and described as
follows:
Beginning at an iron pin set in the west R/W line of North Bridge
Street (aka State Route 159 and Business Loop U.S. Route 23),
said iron pin being the northeast corner of the 0.723 acre tract
leased to RTM Operating Company, a Delaware Corporation (O.R.
Vol. 77 Page 0691) (Arby's Restaurant);
thence with the north line of said 0.723 acre tract, N. 86 deg.
23' 40" W. 150.77 ft. to a Mag-Nail set;
thence with new lines through the tract of which this is a part
the following (2) courses,
1. N. 03 deg. 36' 20" E. 200.00 ft. to a Mag-Nail set and
2. S. 86 deg. 23' 40" E. 152.29 ft. to a Mag-Nail set;
thence with the west R/W line of North Bridge Street and with the
east line of the tract of which this is a part, S. 04 deg. 02'
25" W. 200.01 ft. to the point of beginning, containing 0.696
acres, subject to all easements and rights-of-way of record
pertinent to this tract.
EXHIBIT B
CONSTRUCTION COSTS
PROJECT COST BUDGET
TUMBLEWEED, LLC
CHILICOTHE, OH
PROJECT COST BUDGET
JANUARY 16, 1998
LAND AND HARD COSTS
Land Acquisition Cost $ 475,000.00
Building/General Construction 525,000.00
Owner Vendors:
Wains Coating/Trim 12,975.00
Electrical Panels 5,776.00
Air Balance 2,195.00
Lighting 13,994.00
HVAC 23,096.00
Site Improvements 75,000.00
Construction Contingency -10.0% 65,000.00
SOFT COSTS:
Surveys 2,500.00
Appraisal 4,000.00
Phase I Environmental 2,000.00
TAP Fees 5,000.00
Design Fee-Architect 2,500.00
Architect/Engineering 32,000.00
Liquor License 5,000.00
Title Insurance & Closing Costs (construction and S/L)
12,000.00
Development Interest 22,000.00
Attorney's Fees-Borrower (Construction Sale/Leaseback)
10,000.00
Attorney's Fees- AEI (Construction/Sale/Leaseback)
12,500.00
AEI Sale/Leaseback Commitment Fee 2* 27,140.00
AEI Credit Report Fees (Promesa) 420.00
AEI State Qualification Fees 1,500.00
AEI Site Inspection Fee 1,500.00
Tumbleweed Parcel Development Fee 13,713.00
Miscellaneous 5,191.00
TOTAL PROJECT COST $1,357,000.00
* Total project costs prior to AEI S/L fee is $1,357,000.00. The
S/L fee (rounded) is calculated on the total project cost prior
to the S/L Fee and adjusted, if necessary, at the time the final
disbursment of the Development Financing.
Exhibit C
APPLICATION FOR PAYMENT
Tumbleweed, LLC. ("Lessee") hereby requests a disbursement
in the amount of______________________ ($____________________)
pursuant to that certain Development Financing Agreement dated
effective as of April _____, 1998 by and between Lessee, AEI Real
Estate Fund XVIII Limited Partnership, AEI Net Lease Income &
Growth Fund XIX Limited Partnership, and Robert P. Johnson
(collectively "Lessor"). The amounts requested have been or will
be used to pay the items identified on Exhibit "A" attached
hereto and made a part hereof.
After payment of the amounts requested herein, the balance
of undisbursed Development Financing proceeds of
$_____________________ will be sufficient to complete
construction and pay all related project costs currently known
and approved by Lessor. In the event of cost overruns which
cannot be accounted for by re-allocation among line items, Lessee
agrees to contribute the necessary equity to complete
construction pursuant to Development Financing Agreement and
Development Financing Disbursement Agreement.
All representations and warranties made by the Lessee in the
Development Financing Documents (as defined in the Development
Financing Agreement) are true and correct as of the date hereof
and Lessee is not in default of any of the provisions thereof.
The total cost of the items for which Lessor is funding is
estimated to be $ . To date,
$______________(exclusive of this request) has been disbursed
pursuant to the Development Financing Disbursing Agreement.
Dated:______________________________
Lessee:
Tumbleweed, LLC., a Kentucky
Limited Liability Company
By:
Its:
Lessee
Exhibit D-1
DRAW REQUEST CERTIFICATE
This Certificate made by Tumbleweed, LLC.("Lessee").
RECITALS
WHEREAS, Lessee and AEI Real Estate Fund XVIII Limited
Partnership, AEI Net Lease Income & Growth Fund XIX Limited
Partnership, and Robert P. Johnson (together, "Lessor") have
entered into a Development Financing Agreement dated effective as
of April , 1998 (the "Development Financing
Agreement") pursuant to which Lessor agreed to loan $
to Lessee for the purpose of constructing a Tumbleweed Restaurant
on certain real property described on Exhibit "A" attached to the
Development Financing Agreement ("Project"); and
WHEREAS, Lessee and Contractor have entered into a contract
dated , 1998, ("Construction Contract"); and
WHEREAS, the Development Financing Agreement requires the
submission to Escrowee and Lessor of this Certificate prior to
the advancement of any loan proceeds under the Development
Financing Agreement.
NOW, THEREFORE, Lessee does hereby certify to Escrowee and
Lessor as follows:
1. This Draw Request for the period from
____________________________, 1998 to _____________________,
1998, showing work completed to date of $
and requesting a current payment of $________________________
relates to costs incurred pursuant to the Construction Contract,
and other line items, all as shown on the Development Financing
Budget attached to the Development Financing Agreement, and are
costs only pertaining to the Project and are included in the
Development Financing Agreement.
2. As of the date of this Draw Request, the balance
remaining due for all costs under the Construction Contract,
including retainage and approved change orders, to complete the
Project after receipt of payments requested herein will be
$________________.
3. As of the date of this Draw Request, the remaining
balance due on the Development Financing Agreement as set forth
above is sufficient to complete the Project in accordance with
the Plans and Specifications (as defined in the Development
Financing Agreement) to the degree set forth by the Development
Financing Agreement.
4. That all work covered by this Draw Request has been
completed in accordance with the Construction Contract, Plans and
Specifications, and any amendments thereto approved by Lessor.
5. That all work completed to date conforms to the
Construction Contract, Plans and Specifications, and any
amendments thereto approved by Lessor.
6. That all funds previously disbursed for costs incurred
pursuant to the Construction Contract under the Development
Financing Agreement have been applied as provided in all previous
Draw Request Certificates.
7. That as of the date hereof, to the best of Lessee's
knowledge after due inquiry, the Project complies with the
requirements of all zoning and building laws, ordinances,
regulations and permits; the requirements of all governmental
agencies having jurisdiction over the Project; and there is no
action or proceeding pending before any court or administrative
agency with respect to such laws, ordinances, regulations and/or
any certifications or permits issued thereunder.
Dated this ______ day of ____________________, 1998.
Lessee: Tumbleweed,
LLC.
By:______________________________
Its________________________
STATE OF )
)ss.
COUNTY OF )
I, _______________________________________________, a Notary
public of the said State and County do hereby certify that
_________________________________________ personally appeared
before me this day and he is the ____________________________ of
Tumbleweed, LLC., and that by authority duly given and as the act
of the corporation, the foregoing instrument was signed in its
name by its _______________________________, on behalf of said
limited liability company.
Witness my hand and official stamp or seal, this ______ day of
_________________, 1998.
_____________________________
____________
My commission expires:________ Notary Public
NET LEASE AGREEMENT
THIS LEASE, made and entered into effective as of the 15th
day of April, 1998, by and among AEI Real Estate Fund XVIII
Limited Partnership, a Minnesota limited partnership whose
corporate general partner is AEI Fund Management XVIII, Inc., a
Minnesota corporation ("Fund XVIII"); AEI Net Lease Income &
Growth Fund XIX Limited Partnership, a Minnesota limited
partnership whose corporate general partner is AEI Fund
Management XIX, Inc., a Minnesota corporation ("Fund XIX"); and
Robert P. Johnson ("Johnson"), all of whose principal business
address is 1300 Minnesota World Trade Center, 30 East Seventh
Street, St. Paul, Minnesota 55101 (hereinafter collectively
referred to as "Lessor"), and Tumbleweed, LLC., a Kentucky
limited liability company (hereinafter referred to as "Lessee"),
whose principal business address is 1900 Mellwood Avenue,
Louisville, Kentucky;
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at North Bridge Street,
Chillicothe, Ohio, and legally described in Exhibit "A", which is
attached hereto and incorporated herein by reference; and
WHEREAS, Lessee will be constructing the building and
improvements (together the "Building") on the real property
described in Exhibit "A", which Building is described in the
plans and specifications heretofore submitted to Lessor; and
WHEREAS, Lessee desires to lease said real property and
Building (said real property and Building hereinafter referred to
as the "Leased Premises"), from Lessor upon the terms and
conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described to be
paid, kept, and performed by Lessee, Lessor does hereby grant,
demise, lease, and let unto Lessee, and Lessee does hereby take
and hire from Lessor and does hereby covenant, promise, and agree
as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and takes
from Lessor, the Leased Premises subject to the conditions of
this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Fifteen (15)
consecutive "Lease Years", as hereinafter defined, commencing on
April 13th, 1998 ("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a
period of twelve (l2) consecutive calendar months from the
Occupancy Date. If the Occupancy Date shall be other than the
first day of a calendar month, the first "Lease Year" shall be
the period from the Occupancy Date to the end of the calendar
month of the Occupancy Date, plus the following twelve (l2)
calendar months. Each Lease Year after the first Lease Year
shall be a successive period of twelve (l2) calendar months.
(C) The parties agree that once the Occupancy Date has been
established, upon the request of either party, a short form or
memorandum of this Lease will be executed for recording purposes.
That short form or memorandum of this Lease will set forth the
actual occupancy and termination dates of the Term and optional
Renewal Terms, as defined in Article 28 hereof, and the existence
of any right of renewal, and that said right shall terminate when
the Lessee shall lose right to possession or this Lease is
terminated, whichever occurs first.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that the Building will be
constructed on the Leased Premises, and all other improvements to
the land, including the parking lot, approaches, and service
areas, will be constructed in all material respects by Lessee
substantially in accordance with the plot, plans, and
specifications heretofore submitted to Lessor.
(B) Lessee warrants that the Building and all other
improvements to the land contemplated do comply with the laws,
ordinances, rules, and regulations of all state and local
governments.
(C) Lessee agrees to pay, if not already paid in full, for
all architectural fees and actual construction costs relating to
the Building and other related improvements on the Leased
Premises, in the past, present or future, which shall include,
but not be limited to, plans and specifications, general
construction, carpentry, electrical, plumbing, heating,
ventilating, air conditioning, decorating, equipment
installation, outside lighting, curbing, landscaping,
blacktopping, electrical sign hookup, conduit and wiring from
building, fencing, and parking curbs, builder's risk insurance
(naming Lessor, Lessee, and contractor as co-insured), and all
construction bonds for improvements made by or at the direction
of Lessee.
(D) Opening for business in the Leased Premises by Lessee
shall constitute an acceptance of the Leased Premises and an
acknowledgment by Lessee that the premises are in the condition
described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first Lease Year:
Lessee shall pay to Lessor an annual Base Rent of
$40,972.85, which amount shall be payable in advance on
the first day of each month in equal monthly
installments of $1,536.48 to Lessor Fund XVIII,
$1,365.76 to Lessor Fund XIX, and $512.16 to Lessor
Johnson. If the first day of the Lease Term is not the
first day of a calendar month, then the monthly Rent
payable for that partial month shall be a prorated
portion of the equal monthly installment of Base Rent.
(B) Annual Rent Payable beginning in the second and
each Lease Year thereafter:
1. In the second and each Lease Year
thereafter, the annual Base Rent due and payable
shall increase by an amount equal to the lesser
of: a) Two Percent (2%) of the Base Rent payable
for the immediately prior Lease Year, or b) A
percentage equal to two times the "CPI-U
Percentage Increase" of the Base Rent payable for
the prior Lease Year.
"CPI-U" shall mean the Consumer Price
Index for All Urban Consumers, (all items),
published by the United States Department of
Labor, Bureau of Labor Statistics (BLS) (1982-84
equal 100), U.S. Cities Average, or, in the event
said index ceases to be published, by any
successor index recommended as a substitute
therefor by the United States Government or a
comparable, nonpartisan substitute reasonably
designated by Lessor. If the BLS changes the base
reference period for the Price Index from 1982-
84=100, the CPI-U Percentage Increase shall be
determined with the use of such conversion formula
or table as may be published by the BLS.
The term "CPI-U Percentage Increase"
shall mean the percentage increase in the CPI-U
determined by reference to the increase, if any,
in the latest monthly CPI-U issued prior to the
first day of the Lease Year for which Base Rent is
being increased, over the CPI-U issued for the
same month in the year prior (e.g., the January
CPI-U for the year 2000 over the January CPI-U for
the year 1999.) Said month's CPI-U shall be used
even though that CPI-U will not be for the month
in which the renewal term commences. In no event
shall the CPI-U Percentage Increase be less than
zero.
(C) Overdue Payments.
Lessee shall pay interest on all overdue payments of Rent or
other monetary amounts due hereunder at the rate of fifteen
percent (15%) per annum or the highest rate allowed by law,
whichever is less, accruing from the date such Rent or other
monetary amounts were properly due and payable.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal Terms, if
any, of this Lease, at its own cost and expense, procure and
maintain insurance which covers the Leased Premises and
improvements against fire, wind, and storm damage (including
flood insurance if the Leased Premises is in a federally
designated flood prone area) and such other risks (including
earthquake insurance, if the Leased Premises is located in a
federally designated earthquake zone or in an ISO high risk
earthquake zone) as may be included in the broadest form of all
risk, extended coverage insurance as may, from time to time, be
available in amounts sufficient to prevent Lessor or Lessee from
becoming a co-insurer within the terms of the applicable
policies. In any event, the insurance shall not be less than one
hundred percent (100%) of the then insurable value, with such
commercially reasonable deductibles as Lessor may reasonably
require from time to time. Additionally, replacement cost
endorsements, vandalism endorsement, malicious mischief
endorsement, waiver of subrogation endorsement, waiver of co-
insurance or agreed amount endorsement (if available), and
Building Ordinance Compliance endorsement and Rent loss
endorsements (for a period of twelve months) must be obtained.
(B) Lessee agrees to place and maintain throughout the Term
or Renewal Terms, if any, of this Lease, at Lessee's own expense,
public liability insurance with respect to Lessee's use and
occupancy of said premises, including "Dram Shop" or liquor
liability insurance, if the same shall be or become available in
the State of Ohio, with initial limits of at least $2,000,000 per
occurrence/$5,000,000 general aggregate (inclusive of umbrella
coverage), or such additional amounts as Lessor shall reasonably
require from time to time.
(C) Lessee agrees to notify Lessor in writing if Lessee is
unable to procure all or some part of the aforesaid insurance.
In the event Lessee fails to provide all insurance required under
this Lease, Lessor shall have the right, but not the obligation,
to procure such insurance on Lessee's behalf, following five (5)
business days written notice to Lessee of Lessor's intent to do
so (unless insurance then in place would during such period, or
already has, lapsed, in which case no notice need be given) and
Lessee may obtain such insurance during said five day period and
not then be in default hereunder. If Lessor shall obtain such
insurance, Lessee will then, within five (5) business days from
receiving written notice, pay Lessor the amount of the premiums
due or paid, together with interest thereon at the lesser of 15%
per annum or the highest rate allowable by law, which amount
shall be considered Rent payable by Lessee in addition to the
Rent defined at Article 4 hereof.
(D) All policies of insurance provided for or contemplated
by this Article can be under Lessee's blanket insurance coverage
and shall name Lessor, Lessor's corporate general partners, and
Robert P. Johnson, and Lessee as additional insured and loss
payee, as their respective interests (as landlord and lessee,
respectively) may appear, and shall provide that the policies
cannot be canceled, terminated, changed, or modified without
thirty (30) days written notice to the parties. In addition, all
of such policies shall be in place on or before the Occupancy
Date and contain endorsements by the respective insurance
companies waiving all rights of subrogation, if any, against
Lessor. All insurance companies providing coverages must be
rated "A" or better by Best's Key Rating Guide (the most current
edition), or similar quality under a successor guide if Best's
Key Rating shall cease to be published. Lessee shall maintain
legible copies of any and all policies and endorsements required
herein, to be made available for Lessor's review and photocopy
upon Lessor's reasonable request from time to time. On the
Occupancy Date and no less than fifteen (15) business days prior
to expiration of such policies, Lessee shall provide Lessor with
legible copies of any and all renewal Certificates of Insurance
reflecting the above terms of the Policies (including
endorsements). Lessee agrees that it will not settle any
property insurance claims affecting the Leased Premises in excess
of $25,000 without Lessor's prior written consent, such consent
not to be unreasonably withheld or delayed. Lessor shall consent
to any settlement of an insurance claim wherein Lessee shall
confirm in writing with evidence reasonably satisfactory to
Lessor that Lessee has sufficient funds available to complete the
rebuilding of the Premises.
(E) Lessee shall defend, indemnify, and hold Lessor
harmless against any and all claims, damages, and lawsuits
arising after the Occupancy Date of this Lease and any orders,
decrees or judgments which may be entered therein, brought for
damages or alleged damages resulting from any injury to person or
property or from loss of life sustained in or about the Leased
Premises, unless such damage or injury results from the
intentional misconduct or the gross negligence of Lessor and
Lessee agrees to save Lessor harmless from, and indemnify Lessor
against, any and all injury, loss, or damage, of whatever nature,
to any person or property caused by, or resulting from any act,
omission, or negligence of Lessee or any employee or agent of
Lessee. In addition, Lessee hereby releases Lessor from any and
all liability for any loss or damage caused by fire or any of the
extended coverage casualties, unless such fire or other casualty
shall be brought about by the intentional misconduct or
negligence of Lessor. In the event of any loss, damage, or
injury caused by the joint negligence or willful misconduct of
Lessor and Lessee, they shall be liable therefor in accordance
with their respective degrees of fault.
(F) Lessor hereby waives any and all rights that it may
have to recover from Lessee damages for any loss occurring to the
Leased Premises by reason of any act or omission of Lessee;
provided, however, that this waiver is limited to those losses
for which Lessor is compensated by its insurers, if the insurance
required by this Lease is maintained. Lessee hereby waives any
and all right that it may have to recover from Lessor damages for
any loss occurring to the Leased Premises by reason of any act or
omission of Lessor; provided, however, that this waiver is
limited to those losses for which Lessee is, or should be if the
insurance required herein is maintained, compensated by its
insurers.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay the charges
for all public utility services rendered or furnished to the
Leased Premises, including heat, water, gas, electricity, sewer,
sewage treatment facilities and the like, all personal property
taxes, real estate taxes, special assessments, and municipal or
government charges, general, ordinary and extraordinary, of every
kind and nature whatsoever, which may be levied, imposed, or
assessed against the Leased Premises, or upon any improvements
thereon, at any time after the Occupancy Date of this Lease for
the period prior to the expiration of the term hereof, or any
Renewal Term, if exercised.
(B) Lessee shall pay all real estate taxes, assessments for
public improvements or benefits, and other governmental
impositions, duties, and charges of every kind and nature
whatsoever which shall or may, during the term of this Lease, be
charged, laid, levied, assessed, or imposed upon, or become a
lien or liens upon the Leased Premises or any part thereof. Such
payments shall be considered as Rent paid by Lessee in addition
to the Rent defined at Article 4 hereof. If due to a change in
the method of taxation, a franchise tax, Rent tax, or income or
profit tax shall be levied against Lessor in substitution for or
in lieu of any tax which would otherwise constitute a real estate
tax, such tax shall be deemed a real estate tax for the purposes
herein and shall be paid by Lessee; otherwise Lessee shall not be
liable for any such tax levied against Lessor.
(C) All real estate taxes, assessments for public
improvements or benefits, water rates and charges, sewer rents,
and other governmental impositions, duties, and charges which
shall become payable for the first and last tax years of the term
hereof shall be apportioned pro rata between Lessor and Lessee in
accordance with the respective number of months during which each
party shall be in possession of the Leased Premises (or through
the expiration of the term hereof, if longer) in said respective
tax years. Lessee shall pay within 60 days of the expiration of
the term hereof Lessor's reasonable estimate of Lessee's pro-rata
share of real estate taxes for the last tax year of the term
hereof, based upon the last available tax bill. Lessor shall
give Lessee notice of such estimated pro-rata real estate taxes
no later than 75 days from the end of the term hereof. Upon
receipt of the actual statement of real estate taxes for such
prorated period, Lessor shall either refund to Lessee any over
payment of the pro-rata Lessee obligation, or shall assess and
Lessee shall pay promptly upon notice any remaining portion of
the Lessee's pro-rata obligation for such real estate taxes.
(D) Lessee shall have the right to contest or review by
legal proceedings or in such other manner as may be legal (which,
if instituted, shall be conducted solely at Lessee's own expense)
any tax, assessment for public improvements or benefits, or other
governmental imposition aforementioned, upon condition that,
before instituting such proceeding Lessee shall pay (under
protest) such tax or assessments for public improvements or
benefits, or other governmental imposition, duties and charges
aforementioned, unless such payment would act as a bar to such
contest or interfere materially with the prosecution thereof and
in such event Lessee shall post with Lessor alternative security
reasonably satisfactory to Lessor. All such proceedings shall be
begun as soon as reasonably possible after the imposition or
assessment of any contested items and shall be prosecuted to
final adjudication with reasonable dispatch. In the event of any
reduction, cancellation, or discharge, Lessee shall pay the
amount that shall be finally levied or assessed against the
Leased Premises or adjudicated to be due and payable, and, if
there shall be any refund payable by the governmental authority
with respect thereto, if Lessee has paid the expense of Lessor in
such proceedings, Lessee shall be entitled to receive and retain
the refund, subject, however, to apportionment as provided during
the first and last years of the term of this Lease.
(E) Lessor, within sixty (60) days after notice to Lessee
if Lessee fails to commence such proceedings, may, but shall not
be obligated to, contest or review by legal proceedings, or in
such other manner as may be legal, and at Lessor's own expense,
any tax, assessments for public improvements and benefits, or
other governmental imposition aforementioned, which shall not be
contested or reviewed, as aforesaid, by Lessee, and unless Lessee
shall promptly join with Lessor in such contest or review, Lessor
shall be entitled to receive and retain any refund payable by the
governmental authority with respect thereto.
(F) Lessor shall not be required to join in any proceeding
referred to in this Article, unless in Lessee's reasonable
opinion, the provisions of any law, rule, or regulation at the
time in effect shall require that such a proceeding be brought by
and/or in the name of Lessor, in which event Lessor shall upon
written request, join in such proceedings or permit the same to
be brought in its name, all at no cost or expense to Lessor.
(G) Within thirty (30) days after Lessor notifies Lessee in
writing that Lessor has paid such amount, Lessee shall also pay
to Lessor, as additional Rent, the amount of any sales tax,
franchise tax, excise tax, on Rents imposed by the State where
the Leased Premises are located. At Lessor's option, Lessee
shall deposit with Lessor on the first day of each and every
month during the term hereof, an amount equal to one-twelfth
(1/12) of any estimated sales tax payable to the State in which
the property is situated for Rent received by Lessor hereunder
("Deposit"). From time to time out of such Deposit Lessor will
pay the sales tax to the State in which the property is situated
as required by law. In the event the Deposit on hand shall not
be sufficient to pay said tax when the same shall become due from
time to time, or the prior payments shall be less than the
current estimated monthly amounts, then Lessee shall pay to
Lessor on demand any amount necessary to make up the deficiency.
The excess of any such Deposit shall be credited to subsequent
payments to be made for such items. If a default or an event of
default shall occur under the terms of this Lease, Lessor may, at
its option, without being required so to do, apply any Deposit on
hand to cure such default, in such order and manner as Lessor may
elect.
ARTICLE 7. PROHIBITION ON ASSIGNMENTS AND SUBLETTING; TAKE-BACK
RIGHTS
(A) Except as otherwise expressly provided in this Article,
Lessee shall not, without obtaining the prior written consent of
Lessor, in each instance:
1. assign or otherwise transfer this Lease,
or any part of Lessee's right, title or interest
therein, except in the event the Lease is assigned
by Tumbleweed to its successor entity in the event
of either an Initial Public Offering or Direct
Public Offering of Lessee; or
2. sublet all or any part of the Leased
Premises or allow all or any part of the Leased
Premises to be used or occupied by any other
Persons (herein defined as a Party other than
Lessee, be it a corporation, a partnership, an
individual or other entity); or
3. mortgage, pledge or otherwise encumber
this Lease, or the Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control of any
class of capital stock of any corporate Lessee or
sublessee, or the transfer voting control of the
total interest in any other person which is a
Lessee or sublessee, however accomplished, whether
in a single transaction or in a series of related
or unrelated transactions, shall be deemed an
assignment of this Lease, or of such sublease, as
the case may be;
2. an agreement by any other Person,
directly or indirectly, to assume Lessee's
obligations under this Lease shall be deemed an
assignment;
3. any Person to whom Lessee's interest
under this Lease passes by operation of law, or
otherwise, shall be bound by the provisions of
this Article;
4. each material modification, amendment or
extension or any sublease to which Lessor has
previously consented shall be deemed a new
sublease; and
Lessee agrees to furnish to Lessor within five (5) business
days following demand at any time such information and assurances
as Lessor may reasonably request that neither Lessee, nor any
previously permitted sublessee or assignee, has violated the
provisions of this Article.
(C) If Lessee agrees to assign this Lease or to sublet all
or any portion of the Leased Premises, Lessee shall, prior to the
effective date thereof (the "Effective Date"), deliver to Lessor
executed counterparts of any such agreement and of all ancillary
agreements with the proposed assignee or sublessee, as
applicable. If Lessee shall fail to do so, and shall have
surrendered possession of the Leased Premises in violation of its
duty of prior notice and failed to obtain Lessor's prior consent
(if and where required herein), and, if in such event, Lessor in
its sole discretion (except as otherwise specifically limited
herein) shall not consent to a proposed sublease or assignment,
Lessor shall then have all of the following rights (in addition
to any rights Lessor may possess occasioned by Lessee's default
hereunder), any of which Lessor may exercise by written notice to
Lessee given within thirty (30) days after Lessor receives the
aforementioned documents:
1. with respect to a proposed assignment of
this Lease, the right to terminate this Lease on
the Effective Date as if it were the Expiration
Date of this Lease;
2. with respect to a proposed subletting of
the entire Leased Premises, the right to terminate
this Lease on the Effective Date as if it were the
Expiration Date; or
3. with respect to a proposed subletting of
less than the entire Leased Premises, the right to
terminate this Lease as to the portion of the
Leased Premises affected by such subletting on the
Effective Date, as if it were the Expiration Date,
in which case Lessee shall promptly execute and
deliver to Lessor an appropriate modification of
this Lease in form satisfactory to Lessor in all
respects.
4. with respect to a proposed subletting or
proposed assignment of this Lease, impose such
conditions upon Lessor's consent as Lessor shall
determine in its sole discretion.
(D) If Lessor exercises any of its options under Article
7(C) above, (and if Lessor shall impose conditions upon its
consent and Lessee shall fail to meet any conditions Lessor may
impose upon its consent), Lessor may then lease the Leased
Premises or any portion thereof to Lessee's proposed assignee or
sublessee, as the case may be, without liability whatsoever to
Lessee.
(E) Notwithstanding anything above to the contrary, Lessor
agrees to consent to any assignment or sublease all or any
portion of the Lessee's interests herein to a franchisee or
licensee in good standing of Tumbleweed, LLC, for the Tumbleweed
restaurant concept, provided Lessor is given prior written notice
of such sublease or assignment, accompanied by a copy of such
sublease or assignment, and the consents of Lessee (such consent
to be in form and substance satisfactory to Lessor) to such
assignment or sublet, affirming their continued liability
hereunder.
Lessor agrees that its consent to any other proposed
assignment or sublet shall not be unreasonably withheld or
delayed, provided Lessor is given prior written notice of such
sublease or assignment, accompanied by a copy of such sublease or
assignment, and the consents of Lessee (such consent to be in
form and substance satisfactory to Lessor) to such assignment or
sublet, affirming their continued liability hereunder.
(F) Notwithstanding anything above to the contrary, the
Lessee's interest herein shall not be assignable in any manner in
accordance with the terms hereof unless and until the termination
of the Development Financing Agreement as set forth in Article 35
hereof.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Lessee covenants and agrees to keep and maintain in
good order, condition and repair the interior and exterior of the
Leased Premises during the term of the Lease, or any renewal
terms, and further agrees that Lessor shall be under no
obligation to make any repairs or perform any maintenance to the
Leased Premises. Lessee covenants and agrees that it shall be
responsible for all repairs, alterations, replacements, or
maintenance of, including but without limitation to or of: The
interior and exterior portions of all doors; door checks and
operators; windows; plate glass; plumbing; water and sewage
facilities; fixtures; electrical equipment; interior walls;
ceilings; signs; roof; structure; interior building appliances
and similar equipment; heating and air conditioning equipment;
and any equipment owned by Lessor and leased to Lessee hereunder,
as itemized on Exhibit B attached hereto (if any) and
incorporated herein by reference; and further agrees to replace
any of said equipment when necessary. Lessee further agrees to
be responsible for, at its own expense, snow removal, lawn
maintenance, landscaping, maintenance of the parking lot
(including parking lines, seal coating, and blacktop surfacing),
and other similar items.
(B) If Lessee refuses or neglects to commence or complete
repairs promptly and adequately, after prior written notice as
required under Article 16(B) (except in cases of emergency to
prevent waste or preserve the safety and integrity of the Leased
Premises, in which case no notice need be given), Lessor may
cause such repairs to be made, but shall not be required to do
so, and Lessee shall pay the cost thereof to Lessor within five
(5) business days following demand. It is understood that Lessee
shall pay all expenses and maintenance and repair during the term
of this Lease. If Lessee is not then in default hereunder,
Lessee shall have the right to make repairs and improvements to
the Leased Premises without the consent of Lessor if such repairs
and improvements do not exceed Fifty Thousand Dollars
($50,000.00), provided such repairs or improvements do not affect
the structural integrity of the Leased Premises. Any repairs or
improvements in excess of Fifty Thousand Dollars ($50,000.00) or
affecting the structural integrity of the Leased Premises may be
done only with the prior written consent of Lessor, such consent
not to be unreasonably withheld or delayed. All alterations and
additions to the Leased Premises shall be made in accordance with
all applicable laws and shall remain for the benefit of Lessor,
except for Lessee's moveable trade fixtures. In the event of
making such alterations as herein provided, Lessee further agrees
to indemnify and save harmless Lessor from all expense, liens,
claims or damages to either persons or property or the Leased
Premises which may arise out of or result from the undertaking or
making of said repairs, improvements, alterations or additions,
or Lessee's failure to make said repairs, improvements,
alterations or additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances, rules,
orders, regulations and requirements of all federal, state, city
and local governments, and with all rules, orders and
regulations of the applicable Board of Fire Underwriters which
affect the use of the improvements. Lessee will comply with all
easements, restrictions, and covenants of record against or
affecting the Leased Premises and any franchise or license
agreements required for operation of the Leased Premises in
accordance with Article 14 hereof.
ARTICLE 10. SIGNS
Lessee shall have the right to install and maintain a sign
or signs advertising Lessee's business, provided that the signs
conform to law, and further provided that the sign or signs
conform specifically to the written requirements of the
appropriate governmental authorities.
ARTICLE 11. SUBORDINATION
(A) Lessor reserves the right and privilege to subject and
subordinate this Lease at all times to the lien of any mortgage
or mortgages now or hereafter placed upon Lessor's interest in
the Leased Premises and on the land and buildings of which said
premises are a part, or upon any buildings hereafter placed upon
the land of which the Leased Premises are a part, provided such
mortgagee shall execute its standard form, commercially
reasonable subordination, attornment and non-disturbance
agreement. Lessor also reserves the right and privilege to
subject and subordinate this Lease at all times to any and all
advances to be made under such mortgages, and all renewals,
modifications, extensions, consolidations, and replacements
thereof, provided such mortgagee shall execute its standard form,
commercially reasonable subordination, attornment and non-
disturbance agreement.
(B) Lessee covenants and agrees to execute and deliver,
upon demand, such further instrument or instruments subordinating
this Lease on the foregoing basis to the lien of any such
mortgage or mortgages as shall be desired by Lessor and any
proposed mortgagee or proposed mortgagees, provided such
mortgagee shall execute its standard form, commercially
reasonable subordination, attornment and non-disturbance
agreement.
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by any
public authority under the power of eminent domain, or by private
purchase in lieu thereof, then this Lease shall automatically
terminate upon the date possession is surrendered, and Rent shall
be paid up to that day. If any part of the Leased Premises shall
be so taken as to render the remainder thereof materially
unusable in the opinion of a licensed third party arbitrator
reasonably approved by Lessor and Lessee, for the purposes for
which the Leased Premises were leased, then Lessor and Lessee
shall each have the right to terminate this Lease on thirty (30)
days notice to the other given within ninety (90) days after the
date of such taking. In the event that this Lease shall
terminate or be terminated, the Rent shall, if and as necessary,
be paid up to the day that possession was surrendered.
(B) If any part of the Leased Premises shall be so taken
such that it does not materially interfere with the business of
Lessee, then Lessee shall, with the use of the condemnation
proceeds to be made available by Lessor, but otherwise at
Lessee's own cost and expense, restore the remaining portion of
the Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was leased.
Lessee shall make all repairs to the building in which the Leased
Premises is located to the extent necessary to constitute the
building a complete architectural unit. Provided, however, that
such work shall not exceed the scope of the work required to be
done by Lessee in originally constructing such building unless
Lessee shall demonstrate to Lessor's reasonable satisfaction the
availability of funds to complete such work. Provided, further,
the cost thereof to Lessor shall not exceed the proceeds of its
condemnation award, all to be done without any adjustments in
Rent to be paid by Lessee. This lease shall be deemed amended to
reflect the taking in the legal description of the Leased
Premises.
(C) All compensation awarded or paid upon such total or
partial taking of the Leased Premises shall belong to and be the
property of Lessor without any participation by Lessee, whether
such damages shall be awarded as compensation for diminution in
value to the leasehold or to the fee of the premises herein
leased. Nothing contained herein shall be construed to preclude
Lessee from prosecuting any claim directly against the condemning
authority in such proceedings for: Loss of business; damage to
or loss of value or cost of removal of inventory, trade fixtures,
furniture, and other personal property belonging to Lessee;
provided, however, that no such claim shall diminish or otherwise
adversely affect Lessor's award or the award of any fee
mortgagee.
ARTICLE 13. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and examine
the Leased Premises at any time during business hours, after
reasonable notice to Lessee, and Lessee agrees to allow Lessor
free access to the Leased Premises to show the premises. Upon
default by Lessee or at any time within ninety (90) days of the
expiration or termination of the Lease, Lessee agrees to allow
Lessor to then place "For Sale" or "For Rent" signs on the Leased
Premises. Lessor and Lessor's representatives shall at all times
while upon or about the Leased Premises observe and comply with
Lessee's reasonable health and safety rules, regulations,
policies and procedures. Lessor agrees to indemnify and hold
Lessee, its successors, assigns, agents and employees from and
against any liability, claims, demands, cause of action, suits
and other litigation or judgements of every kind and character,
including injury to or death of any person or persons, or
trespass to, or damage to, or loss or destruction of, any
property, whether real or personal, to the extent resulting from
the negligence or willful misconduct or Lessor or Lessor's
representatives while upon or about the Leased Premises.
ARTICLE 14. EXCLUSIVE USE
(A) After the Occupancy Date, Lessee expressly agrees and
warrants that the Leased Premises will be used exclusively as a
Tumbleweed Restaurant or other casual dining sit-down restaurant.
In any other such case, after obtaining Lessor's prior written
consent, such consent not to be unreasonably withheld or delayed,
Lessee may conduct any lawful business from the Leased Premises.
Lessee acknowledges and agrees that any other use without the
prior written consent of Lessor will constitute a default under
and a violation and breach of this Lease. Lessee agrees: To
open for business within a reasonable period of time after
completion of construction of the contemplated Improvements; to
operate all of the Leased Premises during the Term or Renewal
Terms during regular and customary hours for businesses similar
to the permitted exclusive use stated herein, unless prevented
from doing so by causes beyond Lessee's control or due to
remodeling; and to conduct its business in a professional and
reputable manner.
(B) If the Leased Premises are not operated as a Tumbleweed
Restaurant or other casual dining sit-down restaurant or other
permitted use hereunder, or remain closed for thirty (30)
consecutive days (unless such closure results from reasons beyond
Lessee's reasonable control) and in the event Lessee fails to pay
Rent when due or fulfill any other obligation hereunder, then
Lessee shall be in default hereunder and Lessor may, at its
option, cancel this Lease by giving written notice to Lessee or
exercise any other right or remedy that Lessor may have;
provided, however, that closings shall be reasonably permitted
for replacement of trade fixtures or during periods of repair
after destruction or due to remodeling.
ARTICLE 15. DESTRUCTION OF PREMISES
If, during the term of this Lease, the Leased Premises are
totally or partially destroyed by fire or other elements, within
a reasonable time (but in no event longer than one hundred eighty
(180) days and subject to the provisions herein below), Lessee
shall repair and restore the improvements so damaged or destroyed
as nearly as may be practical to their condition immediately
prior to such casualty. All rents payable by Lessee shall be
abated during the period of repair and restoration to the extent
that Lessor shall be compensated by the proceeds of the rent loss
insurance required to be maintained by Lessee hereunder.
Provided Lessee is not in default hereunder (and retains
according to the terms hereof the right to rebuild) with the
Lessor's prior written consent, which consent shall not be
unreasonably withheld or delayed, Lessee shall have the right to
promptly and in good faith settle and adjust any claim under such
insurance policies with the insurance company or companies on the
amounts to be paid upon the loss. The insurance proceeds shall
be used to reimburse Lessee for the cost of rebuilding or
restoration of the Leased Premises. Risk that the insurance
company shall be insolvent or shall refuse to make insurance
proceeds available shall be with Lessee. The Leased Premises
shall be so restored or rebuilt so as to be of at least equal
value and substantially the same character as prior to such
damage or destruction. If the insurance proceeds are less than
Fifty Thousand Dollars ($50,000), they shall be paid to Lessee
for such repair and restoration. If the insurance proceeds are
greater than or equal to Fifty Thousand Dollars ($50,000), they
shall be deposited by Lessee and Lessor into a customary
construction escrow at a nationally recognized title insurance
company, or at Lessee's option, with Lessor ("Escrowee") and
shall be made available from time to time to Lessee for such
repair and restoration. Such proceeds shall be disbursed in
conformity with the terms and conditions of a commercially
reasonable construction loan agreement. Lessee shall, in either
instance, deliver to Lessor or Escrowee (as the case may be)
satisfactory evidence of the estimated cost of completion
together with such architect's certificates, waivers of lien,
contractor's sworn statements and other evidence of cost and of
payments as the Lessor or Escrowee may reasonably require and
approve. If the estimated cost of the work exceeds One Hundred
Thousand Dollars ($100,000), all plans and specifications for
such rebuilding or restoration shall be subject to the reasonable
approval of Lessor.
Any insurance proceeds remaining with Escrowee after the
completion of the repair or restoration shall be paid to Lessor
to reduce the sum of monies expended by Lessor to acquire its
interest in the Lease Premises and rent hereunder shall be
reduced by 10.25% of such amount.
If the proceeds from the insurance are insufficient, after
review of the bids for completion of such improvements, or should
become insufficient during the course of construction, to pay for
the total cost of repair or restoration, Lessee shall, prior to
commencement of work, demonstrate to Escrowee and Lessor's
reasonable satisfaction, the availability of such funds necessary
to completion construction and Lessee shall deposit the same with
Escrowee for disbursement under the construction escrow
agreement.
Provided, further, that should the Leased Premises be
damaged or destroyed to the extent of fifty (50%) percent of its
value or such that Lessee cannot carry on business as a casual
dining restaurant without (in the opinion of a licensed third
party architect reasonably approved by Lessor and Lessee) being
closed for more than sixty (60) days (which duration of closure
may be established by Lessee by the affidavit of the approved
independent third party architect as to the estimated time of
repair) during the last two (2) years of the remaining term of
this Lease or any of the option terms of this Lease, if any
further options to renew remain, Lessee may elect within 30 days
of such damage, to then exercise at least one (1) option to renew
this Lease so that the remaining term of the Lease is not less
than five (5) years in order to be entitled to such insurance
proceeds for restoration or rebuilding. Absent such election,
this Lease shall terminate upon Lessor's receipt of funds at
least equal to the estimated cost of such repair or restoration.
ARTICLE 16. ACTS OF DEFAULT
Each of the following shall be deemed a default by Lessee
and a breach of this Lease:
(A) Failure to pay the Rent or any monetary
obligation herein reserved, or any part thereof
when the same shall be due and payable. Interest
and late charges for failure to pay Rent when due
shall accrue from the first date such Rent was due
and payable; provided, however, Lessee shall have
five (5) business days after written notice from
Lessor within which to cure the failure to pay the
Rent or any monetary obligation herein reserved.
(B) Failure to do, observe, keep and perform
any of the other terms, covenants, conditions,
agreements and provisions in this Lease to be
done, observed, kept and performed by Lessee;
provided, however, that Lessee shall have Thirty
(30) days after written notice from Lessor within
which to cure such default, or such longer time as
may be reasonably necessary if such default cannot
reasonably be cured within Thirty (30) days, if
Lessee is diligently pursuing a course of conduct
that in Lessor's reasonable opinion is capable of
curing such default, but in any event such longer
time shall not exceed 120 days after written
notice from Lessor of the default hereunder.
(C) The abandonment of the premises by
Lessee, the adjudication of Lessee as a bankrupt,
the making by Lessee of a general assignment for
the benefit of creditors, the taking by Lessee of
the benefit of any insolvency act or law, the
appointment of a permanent receiver or trustee in
bankruptcy for Lessee property, or the appointment
of a temporary receiver which is not vacated or
set aside within sixty (60) days from the date of
such appointment; provided, however, that the
foregoing shall not constitute events of default
so long as Lessee continues to otherwise satisfy
its obligations (including but not limited to the
payment of Rent) hereunder.
ARTICLE 17. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at any
time thereafter, Lessor may serve a written notice upon Lessee
that Lessor elects to terminate this Lease. This Lease shall
then terminate on the date so specified as if that date had been
originally fixed as the expiration date of the term herein
granted, provided, however, that Lessee shall have continuing
liability for future rents for the remainder of the original term
and any exercised renewal term as set forth in Article 19,
notwithstanding any earlier termination of the Lease hereunder
(except where Lessee has exercised a right to terminate where
granted herein), preserving unto Lessor the benefit of its
bargained-for rental payments.
ARTICLE 18. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or otherwise, or
in the event of an uncured default hereunder by Lessee, or in the
event that the premises or any part thereof, shall be abandoned
by Lessee and Rent shall not be paid or other obligations
(including but not limited to repair and maintenance obligations)
of Lessee hereunder shall not be met, then Lessor or its agents,
servants or representatives, may immediately or at any time
thereafter, re-enter and resume possession of the premises or any
part thereof, and remove all persons and property therefrom,
either by summary dispossess proceedings or by a suitable action
or proceeding at law, or by force or otherwise without being
liable for any damages therefor, except for damages resulting
from Lessor's negligence or willful misconduct. Notwithstanding
anything above to the contrary, if Lessee is still in possession
of the Leased Premises, Lessor agrees to use such legal
proceedings (summary or otherwise) prescribed by law to regain
possession of the Leased Premises.
ARTICLE 19. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in this
Lease or should it take possession pursuant to legal proceedings
or pursuant to any notice provided for by law, Lessor shall
undertake commercially reasonable efforts to mitigate Lessee's
continuing liability hereunder as such efforts may be prescribed
by law or statute (which shall include listing the Leased
Premises with a licensed commercial real estate broker and
securing the property against waste, but shall not otherwise
include the expenditure of Lessor's funds, unless the same be
required by law or statute and cannot be waived as provided for
herein), and in addition, Lessor may either (i) terminate this
Lease or (ii) it may from time to time, without terminating the
contractual obligation of Lessee to pay Rent under this Lease,
make such alterations and repairs as may be necessary to relet
the Leased Premises or any part thereof for the remainder of the
original Term or any exercised Renewal Terms, at such Rent or
Rents, and upon such other terms and conditions as Lessor in its
sole discretion may deem advisable. Termination of Lessee's
right to possession by Court Order shall be sufficient evidence
of the termination of Lessee's possessory rights under this
Lease, and the filing of such an Order shall be notice of the
termination of Lessee's renewal rights as set forth in any
Memorandum of Lease of record.
(B) Upon each such reletting, without termination of the
contractual obligation of Lessee to pay Rent under this Lease,
all Rents received by Lessor shall be applied as follows:
1. First, to the payment of any
indebtedness other than Rent due hereunder from
Lessee to Lessor;
2. Second, to the payment of any costs and
expenses of such reletting, including brokerage
fees and attorney's fees and of costs of such
alterations and repairs;
3. Third, to the payment of Rent and other
monetary obligations due and unpaid hereunder;
4. Finally, the residue, if any, shall be
held by Lessor and applied in payment of future
Rent as the same may become due and payable
hereunder.
If such Rents received from such reletting during any month are
less than that to be paid during that month by Lessee hereunder,
Lessee shall pay any such deficiency to Lessor. Such deficiency
shall be calculated and paid monthly. No such re-entry or taking
possession of such Leased Premises by Lessor shall be construed
as an election on its part to terminate Lessee's contractual
obligations under this Lease respecting the payment of rent and
obligations for the costs of repair and maintenance unless a
written notice of such intention be given to Lessee.
(C) Notwithstanding any such reletting without termination,
Lessor may at any time thereafter elect to terminate this Lease
for any uncured breach.
(D) In addition to any other remedies Lessor may have with
this Article 19, Lessor may recover from Lessee all damages it
may incur by reason of any uncured breach, including: The cost
of recovering and reletting the Leased Premises; reasonable
attorney's fees; and, the present value (discounted at a rate of
8% per annum) of the excess of the amount of Rent and charges
equivalent to Rent reserved in this Lease for the remainder of
the Term over the then reasonable Rent value of the Leased
Premises (or the actual Rents receivable by Lessor, if relet),
(the Lessee bearing the burden of proof to demonstrate the amount
of rental loss for the same period, that through reasonable
efforts to mitigate damages, could have been avoided) for the
remainder of the Term, all of which amounts shall be immediately
due and payable from Lessee to Lessor in full. In the event that
the Rent obtained from such alternative or substitute tenant is
more than the Rent which Lessee is obligated to pay under this
Lease, then such excess shall be paid to Lessor provided that
Lessor shall credit such excess against the outstanding
obligations of Lessee due pursuant hereto, if any.
(E) It is the object and purpose of this Article 19 that
Lessor shall be kept whole and shall suffer no damage by way of
non-payment of Rent or by way of diminution in Rent. Lessee
waives and will waive all rights to trial by jury in any summary
proceedings or in any action brought to recover Rent herein which
may hereafter be instituted by Lessor against Lessee in respect
to the Leased Premises. Lessee hereby waives any rights of re-
entry it may have or any rights of redemption or rights to redeem
this Lease upon a termination of this Lease.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and building
equipment used in connection with the operation of the Leased
Premises including, but not limited to, heating, electrical
wiring, lighting, ventilating, plumbing, walk-in
refrigerators/coolers, walk-in freezers, air conditioning
systems, and the equipment owned by Lessor and leased to Lessee
hereunder as specifically set forth on Exhibit B attached hereto,
if any, and incorporated herein by reference shall be the
property of Lessor. All other trade fixtures and all other
articles of personal property owned by Lessee shall remain the
property of Lessee.
(B) Lessee shall furnish and pay for any and all equipment,
furniture, trade fixtures, and signs, except for such items, if
any, described in Article 20(A) above, as owned by Lessor.
Lessee agrees that Lessor shall have a lien on all Lessee's
equipment, furniture, trade fixtures, furnishings, and signs as
security for the performance of and compliance with this Lease,
subject to the rights of any bona fide third party's security
interest in such property. Provided Lessee is not in default
hereunder, Lessor will agree that its interest in the personal
property of Lessee will be subordinated to financing which may
exist or which Lessee may cause to exist in the future on that
same personal property.
(C) At the end of the term of this Lease, the property
described at Article 20(B) above, after written notice to Lessor
given at least ten (10) business days prior to any proposed
removal, may be removed from the Leased Premises by Lessee
regardless of whether or not such property is attached to the
Leased Premises so as to constitute a "fixture" within the
meaning of the law; however, all damages and repairs to the
Leased Premises which may be caused by the removal of such
property shall be paid for by Lessee.
ARTICLE 21. LIENS
Lessee shall not do or cause anything to be done whereby the
Leased Premises may be encumbered by any mechanic's or other
liens. Whenever and as often as any mechanic's or other lien is
filed against said Leased Premises purporting to be for labor or
materials furnished or to be furnished to Lessee, Lessee shall
remove the lien of record by payment or by bonding with a surety
company authorized to do business in the state in which the
property is located, within forty-five (45) days from the date of
the filing of said mechanic's or other lien and delivery of
notice thereof to Lessee. Should Lessee fail to take the
foregoing steps within said forty-five (45) day period (or in any
event, prior to the expiration of the time within which Lessee
may bond over such lien to remove it as a lien upon the Leased
Premises), Lessor shall have the right, among other things, to
pay said lien without inquiring into the validity thereof, and
Lessee shall forthwith reimburse Lessor for the total expense
incurred by it in discharging said lien as additional Rent
hereunder.
ARTICLE 22. NO WAIVER BY LESSOR EXCEPT IN WRITING
No agreement to accept a surrender of the Leased Premises or
termination of this Lease shall be valid unless in writing signed
by Lessor. The delivery of keys to any employee of Lessor or
Lessor's agents shall not operate as a termination of the Lease
or a surrender of the premises. The failure of Lessor to seek
redress for violation of any rule or regulation, shall not
prevent a subsequent act, which would have originally constituted
a violation, from having all the force and effect of an original
violation. Neither payment by Lessee or receipt by Lessor of a
lesser amount than the Rent herein stipulated shall be deemed to
be other than on account of the earliest stipulated Rent. Nor
shall any endorsement or statement on any check nor any letter
accompanying any check or payment as Rent be deemed an accord and
satisfaction. Lessor may accept such check or payment without
prejudice to Lessor's right to recover the balance of such Rent
or pursue any other remedy provided in this Lease. This Lease
contains the entire agreement between the parties, and any
executory agreement hereafter made shall be ineffective to change
it, modify it or discharge it, in whole or in part, unless such
executory agreement is in writing and signed by the party against
whom enforcement of the change, modification or discharge is
sought.
ARTICLE 23. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set forth
in Article 4 and all other sums herein reserved as Rent and upon
the due performance of all the terms, covenants, conditions and
agreements herein contained on Lessee's part to be kept and
performed, shall have, hold and enjoy the Leased Premises free
from molestation, eviction, or disturbance by Lessor, or by any
other person or persons lawfully claiming the same, and that
Lessor has good right to make this Lease for the full term
granted, including renewal periods.
ARTICLE 24. BREACH - PAYMENT OF COSTS AND ATTORNEYS' FEES
Each party agrees to pay and discharge all reasonable costs,
and actual attorneys' fees, including but not limited to
attorney's fees incurred at the trial level and in any appellate
or bankruptcy proceeding, and expenses that shall be incurred by
the prevailing party in enforcing the covenants, conditions and
terms of this Lease or defending against an alleged breach,
including the costs of reletting. Such costs, attorneys fees,
and expenses if incurred by Lessor shall be considered as Rent as
due and owing in addition to any Rent defined in Article 4
hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not less
than ten (10) business days prior request by the other party,
execute, acknowledge and deliver to the requesting party a
statement in writing, executed by an executive officer of such
party, certifying that: (a) this Lease is unmodified (or if
modified then disclosure of such modification shall be made); (b)
this Lease is in full force and effect; (c) the date to which the
Rent and other charges have been paid; and (d) to the knowledge
of the signer of such certificate that the other party is not in
default in the performance of any covenant, agreement or
condition contained in this Lease, or if a default does exist,
specifying each such default of which the signer may have
knowledge. It is intended that any such statement delivered
pursuant to this Article may be relied upon by any prospective
purchaser or mortgagee of the Leased Premises or any assignee of
such mortgagee or a purchaser of the leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the term of this Lease, Lessee will, within ninety
(90) days after the end of Lessee's fiscal year, furnish Lessor
with Lessee's financial statements (in SEC Form 10-K, if
available). The financial statements shall be audited, at the
Lessee's expense, by a nationally recognized independent
certified public accounting firm reasonably acceptable to Lessor
and shall be prepared in conformity with generally accepted
accounting principles (GAAP). Lessee shall also provide Lessor
with financial statements for the Leased Premises within 90 days
after the end of each Lease Year. The financial statements for
the Leased Premises do not need to be prepared by an independent
certified public accountant, but shall be certified as true and
correct by the chief financial officer or other authorized
officer of Lessee. Additionally, during the term of the Lease,
Lessee will within forty-five (45) days from the end of each
quarter of each fiscal year, furnish Lessor with Lessee's
financial statements (in SEC Form 10-Q if available)and financial
statements of the Leased Premises for such quarter. Lessor shall
have the right to require such financial statements for the
Lessee and the Leased Premises on a monthly basis after the
occurrence of a default in any Lease Year. Provided, however, if
Lessee shall not commit a default for twelve consecutive months,
Lessor's right to require such monthly financial statements shall
terminate until Lessee shall again commit a default in any given
Lease Year. Said quarterly (or monthly, if required by Lessor)
financial statements do not need to be prepared by an independent
certified public accountant, but shall be certified as true and
correct by the chief financial officer or other authorized
officer of Lessee. The financial statements shall conform to
GAAP, and include a balance sheet and related statements of
operations, statement of cash flows, statement of changes in
shareholder's equity, and related notes to financial statements,
if any.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to make reasonable modifications of
this Lease requested by any Mortgagee of record from time to
time, provided such modifications are not substantial and do not
increase any of the Rents or obligations of Lessee under this
Lease or substantially modify any of the business elements of
this Lease.
ARTICLE 28. OPTION TO RENEW
If this Lease is not previously canceled or terminated and
if Lessee has materially complied with and performed all of the
covenants and conditions in this Lease after applicable cure
periods and is not currently in default, then Lessee shall have
the option to renew this Lease upon the same conditions and
covenants contained in this Lease for Two (2) consecutive
periods of Five (5) years each (singularly "Renewal Term"). Rent
during the Renewal Term shall increase each Lease Year by the
lesser of Two Percent (2%) of the Rent payable for the preceding
Lease Year, or the CPI-U Percentage Increase, as defined in
Article 4 hereof.
The first Renewal Term will commence on the day following
the date the original Term expires and successive Renewal Terms
would commence on the day following the last day of the then
expiring Renewal Term. Except as otherwise provided in Article
15 hereof, Lessee must give ninety (90) days written notice to
Lessor of its intent to exercise this option prior to the
expiration of the original Term of this Lease or any Renewal
Term, as the case may be.
ARTICLE 29. MISCELLANEOUS PROVISIONS
(A) All written notices shall be given to Lessor or Lessee
by certified mail or nationally recognized overnight mail.
Notices to either party shall be addressed to the person and
address given on the first page hereof. Lessor and Lessee may,
from time to time, change these addresses by notifying each other
of this change in writing. Notices of overdue Rent may be sent
to Lessee by regular, special delivery, or nationally recognized
overnight mail.
(B) The terms, conditions and covenants contained in this
Lease and any riders and plans attached hereto shall bind and
inure to the benefit of Lessor and Lessee and their respective
successors, heirs, legal representatives, and assigns.
(C) This Lease shall be governed by and construed under the
laws of the State where the Leased Premises are situate.
(D) In the event that any provision of this Lease shall be
held invalid or unenforceable, no other provisions of this Lease
shall be affected by such holding, and all of the remaining
provisions of this Lease shall continue in full force and effect
pursuant to the terms hereof.
(E) The Article captions are inserted only for convenience
and reference, and are not intended, in any way, to define,
limit, describe the scope, intent, and language of this Lease or
its provisions.
(F) In the event Lessee remains in possession of the
premises herein leased after the expiration of this Lease and
without the execution of a new lease and without Lessor's written
permission, Lessee shall be deemed to be occupying said premises
as a tenant from month-to-month, subject to all the conditions,
provisions, and obligations of this Lease insofar as the same can
be applicable to a month-to-month tenancy except that the monthly
installment of Rent shall be One Hundred Fifty percent (150%) the
amount due on the last month prior to such expiration.
(G) If any installment of Rent (whether lump sum, monthly
installments, or any other monetary amounts required by this
Lease to be paid by Lessee and deemed to constitute Rent
hereunder) shall not be paid when due, or non-monetary default
shall remain uncured after the expiration of any applicable cure
period, Lessor shall have the right to charge Lessee a late
charge of $250.00 per month for each month that any amount of
Rent installment remains unpaid or non-monetary default shall go
uncured after the first such occurrence in any 12 month period.
Said late charge shall commence after such installment is due or
non-monetary default goes uncured after the expiration of any
applicable cure period and continue until said installment,
interest and all accrued late charges are paid in full or such
non-monetary default is cured.
(H) Any part of the Leased Premises may be conveyed by
Lessor for private or public non-exclusive easement purposes at
any time, provided such easement does not interfere with the
access to the Leased Premises, visibility, or operations of the
business of Lessee. In such event Lessor shall, at its own cost
and expense, restore the remaining portion of the Leased Premises
to the extent necessary to render it reasonably suitable for the
purposes for which it was leased, all to be done without
adjustments in Rent to be paid by Lessee. All proceeds from any
conveyance of an easement shall belong solely to Lessor.
(I) For the purpose of this Lease, the term "Rent" shall be
defined as Rent under Article 4, and any other monetary amounts
required by this Lease to be paid by Lessee.
(J) Lessee agrees to cooperate with Lessor to allow Lessor
to obtain and use at Lessor's expense promotional photographs of
the Leased Premises, to the extent permitted by Lessee's
franchisor or licensor.
ARTICLE 30. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained herein
it is the intent of the parties that the rights and remedies
contained herein shall not be exclusive but rather shall be
cumulative along with all of the rights and remedies of the
parties which they may have at law or equity. In the event of a
breach by Lessor, Lessee shall be entitled to all remedies at law
or equity, to be cumulatively enforced.
ARTICLE 31. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor, its
successors and assigns, (i) that it has not used or permitted and
will not use or permit the Leased Premises to be used, whether
directly or through contractors, agents or tenants, and to the
best of Lessee's knowledge and except as disclosed to Lessor in
writing, the Leased Premises has not at any time been used for
the generating, transporting, treating, storage, manufacture,
emission of, or disposal of any dangerous, toxic or hazardous
pollutants, chemicals, wastes or substances as defined in the
Federal Comprehensive Environmental Response Compensation and
Liability Act of 1980 ("CERCLA"), the Federal Resource
Conservation and Recovery Act of 1976 ("RCRA"), or any other
federal, state or local environmental laws, statutes,
regulations, requirements and ordinances ("Hazardous Materials");
(ii) that there have been no investigations or reports involving
Lessee, or the Leased Premises by any governmental authority
which in any way pertain to Hazardous Materials (iii) that the
operation of the Leased Premises has not violated and is not
currently violating any federal, state or local law, regulation,
ordinance or requirement governing Hazardous Materials; (iv) that
the Leased Premises is not listed in the United States
Environmental Protection Agency's National Priorities List of
Hazardous Waste Sites nor any other list, schedule, log,
inventory or record of Hazardous Materials or hazardous waste
sites, whether maintained by the United States Government or any
state or local agency; and (v) that the Leased Premises will not
contain any formaldehyde, urea or asbestos, except as may have
been disclosed in writing to Lessor by Lessee at the time of
execution and delivery of this Lease. Lessee agrees to indemnify
and reimburse Lessor, its successors and assigns, for:
(a) any breach of these representations and warranties,
and
(b) any loss, damage, expense or cost arising out of
or incurred by Lessor which is the result of a breach
of, misstatement of or misrepresentation of the above
covenants, representations and warranties, and
(c) any and all liability of any kind whatsoever which
Lessor may, for any cause and at any time, sustain or
incur by reason of Hazardous Materials discovered on
the Leased Premises during the term hereof or placed or
released on the Leased Premises by Lessee;
together with all attorneys' fees, costs and disbursements
incurred in connection with the defense of any action against
Lessor arising out of the above. These covenants,
representations and warranties shall be deemed continuing
covenants, representations and warranties for the benefit of
Lessor, and any successors and assigns of Lessor and shall
survive expiration or sooner termination of this Lease. The
amount of all such indemnified loss, damage, expense or cost,
shall bear interest thereon at the lesser of 15% or the highest
rate of interest allowed by law and shall become immediately due
and payable in full on demand of Lessor, its successors and
assigns.
ARTICLE 32. ESCROWS
Upon a default by Lessee which is uncured after the
expiration of any applicable notice and cure period, or upon the
request of Lessor's Mortgagee, if any, Lessee shall deposit with
Lessor on the first day of each and every month, an amount equal
to one-twelfth (1/12th) of the estimated annual real estate
taxes, assessments and insurance (if the insurance is to be
purchased by Lessor) ("Charges") due on the Leased Premises, or
such higher amounts reasonably determined by Lessor as necessary
to accumulate such amounts to enable Lessor to pay all charges
due and owing at least thirty (30) days prior to the date such
amounts are due and payable. From time to time out of such
deposits Lessor will, upon the presentation to Lessor by Lessee
of the bills therefor, pay the Charges or at Lessee's option,
will upon presentation of receipted bills therefor, reimburse
Lessee for such payments made by Lessee. In the event the
deposits on hand shall not be sufficient to pay all of the
estimated Charges when the same shall become due from time to
time or the prior payments shall be less than the currently
estimated monthly amounts, then Lessee shall pay to Lessor on
demand any amount necessary to make up the deficiency. The
excess of any such deposits shall be credited to subsequent
payments to be made for such items. If a default or an event of
default shall occur under the terms of this Lease, Lessor may, at
its option, without being required so to do, apply any Deposit on
hand to cure the default, in such order and manner as Lessor may
elect.
ARTICLE 33. NET LEASE
Notwithstanding anything contained herein to the contrary it
is the intent of the parties hereto that this Lease shall be a
net lease and that the Rent defined pursuant to Article 4 should
be a net Rent paid to Lessor. Any and all other expenses
including but not limited to, maintenance, repair, insurance,
taxes, and assessments, shall be paid by Lessee.
ARTICLE 34. DEVELOPMENT FINANCING AGREEMENT
The parties hereto hereby acknowledge that the terms hereof
are subject to and shall in the event of conflicts be controlled
by that certain Development Financing Agreement of even date
herewith, until such Agreement is terminated in accordance with
its terms.
ARTICLE 35. 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, Lessor and Lessee have respectively
signed and sealed this Lease as of the day and year first above
written.
Exhibit "A"
1150 North Bridge Street, Chillicothe, Ohio
Situate in the City of Chillicothe, County of Ross, State of
Ohio, being part of the 15.983 acre tract conveyed to The ABCO
Land Development Corp. and the The Beerman Corporation (Deed Vol.
534 Page 800 Ross County Deed Records), bounded and described as
follows:
Beginning at an iron pin set in the west R/W line of North Bridge
Street (aka State Route 159 and Business Loop U.S. Route 23),
said iron pin being the northeast corner of the 0.723 acre tract
leased to RTM Operating Company, a Delaware Corporation (O.R.
Vol. 77 Page 0691) (Arby's Restaurant);
thence with the north line of said 0.723 acre tract, N. 86 deg.
23' 40" W. 150.77 ft. to a Mag-Nail set;
thence with new lines through the tract of which this is a part
the following (2) courses,
1. N. 03 deg. 36' 20" E. 200.00 ft. to a Mag-Nail set and
2. S. 86 deg. 23' 40" E. 152.29 ft. to a Mag-Nail set;
thence with the west R/W line of North Bridge Street and with the
east line of the tract of which this is a part, S. 04 deg. 02'
25" W. 200.01 ft. to the point of beginning, containing 0.696
acres, subject to all easements and rights-of-way of record
pertinent to this tract.
LESSEE: Tumbleweed, LLC.
Witness /s/ Pamela S Brown By: /s/ John A Butorac
Pamela S Brown Its: President
Print Name
Witness /s/ Donna K Edmonds
Donna K Edmonds
Print Name
Witness /s/ Pamela S Brown By: /s/ James M Mulrooney
Pamela S Brown Its: Executive VP
Print Name
Witness /s/ Donna K Edmonds
Donna K Edmonds
Print Name
STATE OF Kentucky)
)SS.
COUNTY OF Jefferson)
The foregoing instrument was acknowledged before me this 6th
day of April,1998,by John Butorac, as President of Tumbleweed,
LLC. on behalf of said limited liability company.
/s/ Kara R Strotman
Notary Public
STATE OF )
)SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this 6th
day of April,1998,by James Mulrooney, as Executive VP of
Tumbleweed, LLC. on behalf of said limited liability company.
/s/ Kara R Strotman
Notary Public
[notary stamp]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
Witness
/s/ Barbara J Kochevar By: /s/ Robert P Johnson
Barbara J Kochevar Robert P. Johnson, President
Print Name
Witness
/s/ Ann Mccrea
Ann Mccrea
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 9th
day of April, 1998, by Robert P Johnson, the President of AEI
Fund Management XVIII, Inc., a Minnesota corporation, corporate
general partner of AEI Real Estate Fund XVIII Limited
Partnership, on behalf of said limited partnership.
/s/ Michael B Daugherty
Notary Public
[notary seal]
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
By: AEI Fund Management XIX, Inc.
Witness
/s/ Barbara J Kochevar By: /s/ Robert P Johnson
Barbara J Kochevar Robert P. Johnson, President
Print Name
Witness
/s/ Ann Mccrea
Ann Mccrea
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 9th
day of April, 1998, by Robert P Johnson, the President of AEI
Fund Management XIX, Inc., a Minnesota corporation, corporate
general partner of AEI Real Estate Fund XIX Limited Partnership,
on behalf of said limited partnership.
/s/ Michael B Daugherty
Notary Public
[notary seal]
ROBERT P. JOHNSON, INDIVIDUALLY
Witness
/s/ Barbara J Kochevar By: /s/ Robert P Johnson
Barbara J Kochevar Robert P. Johnson
Print Name
Witness
/s/ Ann Mccrea
Ann Mccrea
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 9th
day of April, 1998, by Robert P. Johnson.
/s/ Michael B Daugherty
Notary Public
[notary seal]
PURCHASE AGREEMENT
for the
OLD COUNTRY BUFFET, NORTHLAKE, ILLINOIS
This Purchase Agreement (the "Agreement") entered into on
the 17 day of April, 1998, by and between The Alpha Group, LLC or
its assigns, such assigns to be approved by Buyer which approval
will not be unreasonably withheld (the "Seller") and AEI Real
Estate Fund XVIII Limited Partnership, a Minnesota Limited
Partnership, or its assigns, such assigns to be approved by
Seller which approval will not be unreasonably withheld (the
"Buyer"). If Buyer shall desire further assignment said
assignment shall occur five (5) business days prior to the date
set forth in paragraph 2. hereof.
1. Property. Seller entered into an Agreement of Sale with
Sam's West, Inc. ("Sam's") on September 11, 1997, which Agreement
was amended by the First Amendment to Agreement of Sale on
December ____, 1997 and was further amended by the Second
Amendment to Agreement of Sale on March 9, 1998, (the "Sam's
Agreement"), for the purchase of an undivided 100% interest in
the fee title to that certain real property legally described on
the attached Exhibit "A" (the "Parcel"). Seller desires to sell
and Buyer desires to purchase the Parcel and a percentage
interest in and to the improvements to be completed on the Parcel
by OCB Realty Co., (hereinafter "Tenant") as an Old Country
Buffet restaurant (the "Improvements") and (the Parcel and the
Improvements collectively, the "Property"). On the Closing Date
referred to in paragraph 2, Seller shall assign its rights (and
Buyer shall assume only Seller's obligation to pay the Purchase
Price and those matters of record created by separate instrument
other than the Sam's Agreement) in and to the Sam's Agreement to
Buyer.
2. Closing Date. Buyer's purchase of the Parcel shall occur on
the earlier of May 15, 1998 or five (5) business days after
receipt and approval by Buyer of the last due diligence documents
in the contingency period including the receipt of the building
permit (the "Closing Date"). The Closing Date is subject to all
conditions precedent as referenced herein.
3. Lease. The Property is to be developed by Tenant, subject
to a Lease on the Property by and between Seller, as Landlord,
and Tenant (the "Lease"), the form of which Lease is attached
hereto as Exhibit "C". Said attached Lease has been approved by
the Buyer, and Seller will on the Closing date, assign all right,
title and interest in and to said executed Lease to Buyer on the
Closing Date.
4. Rent Commencement Date. The day the Tenant opens the
Property for business, or September 28, 1998, whichever comes
first, Tenant will commence paying rent as set forth in the Lease
attached hereto on Exhibit "C".
5. Escrow. $10,000 will be paid to Commonwealth Title (the
"Closing Agent") to be released to Seller on the Closing Date
subject to the terms of this Agreement. Upon execution of this
Agreement, a copy of this Agreement will be delivered to the
Closing Agent by Seller and will serve as escrow instructions
together with any additional instructions required by Seller
and/or Buyer or their respective counsels. Seller and Buyer
agree to cooperate with the Closing Agent and sign any additional
instructions reasonably required by the Closing Agent to close
escrow. If there is any conflict between any other instructions
and this Agreement, this Agreement shall control.
6. Purchase Price and Option to Repurchase & Seller's
Remedies.
6.01 Purchase Price.
The purchase price for the Property is $1,300,000 (the "Purchase
Price"), which as a contingency to Buyer's obligations hereunder
must be supported by an MAI appraisal of the Property reasonably
satisfactory to Buyer. Buyer shall have the right to review and
approve such appraisal until no later than April 17, 1998. The
appraisal shall be obtained by Buyer.
If all conditions as outlined in this Agreement have been
satisfied, on the Closing Date, Buyer shall disburse the
following funds to the Closing Agent for the purchase of the
Parcel:
(a) $320,000 shall be disbursed to Sam's West, Inc. for purchase
of the Parcel;
(b) $10,000 will be disbursed to the Seller for the
reimbursement of the deposit on the Parcel and the
acquisition/closing costs of the Parcel from Wal-Mart;
Closing costs in connection with this transaction shall be paid
as set forth in paragraph 12 herein.
The following funds shall be disbursed in accordance with the
provisions of this Agreement on or before September 28, 1998
("Second Funding") and such are subject to the following
conditions being satisfied, the Tenant is not in material default
under the Lease and Tenant having paid the first full months rent
under the Lease:
(a-1) $370,000 less interest accrued on the disbursement of
$330,000 from the Closing Date until the latter of the Rent
Commencement Date or up to and including the Second Funding
Date or such date as the Closing Agent has received the
Rent, as defined below. The net proceeds will be paid by
Buyer to Seller on or after the Rent Commencement Date as
set forth below provided that the Tenant has paid the first
full months rent under the lease.
Buyer shall give evidence to Seller five (5) days prior to
the Second Funding that funds have been deposited with the
Closing Agent in an interest bearing escrow account, and are
available and ready for disbursement, subject to the
conditions above.
It is the intent of the parties that the initial first full
months rent from the Tenant ("Rent") shall be deposited with
the Closing Agent by the Tenant on or before September 28,
1998. Upon receipt of said Rent, the Closing Agent is
instructed to, immediately on that day or the next business
day, thereafter disburse the net proceeds, as defined above,
due Seller, less any prorations and Seller's portion of the
closing costs in connection with the Second Funding,
provided that the Tenant is not in material default (as
required above), the Tenant leasehold policy has been paid
for by Seller (paragraph 12 herein), and the Seller is not
in breach of any surviving representation or warranty
(paragraph 15 herein), and disburse the Rent to Buyer to
complete the Second Funding, without further consent or
instruction from either Seller or Buyer, however Closing
Agent will comply as instructed and set forth in the Buyer's
closing instruction letter, said closing instruction letter
to be prepared in accordance with this Agreement and in no
event will supersede the business terms set forth herein,
subject to a standard escrow agreement as required by the
Closing Agent as of the Closing Date.
In the event the Closing Agent does not receive the Rent
from the Tenant by October 15, 1998 or Buyer shall notify
Seller and Closing Agent that Seller is in default hereunder
or the Tenant is in material default under the Lease, all
funds deposited by Buyer in accordance with paragraph 6.01
(a-1) hereof including interest accrued thereon shall
immediately be returned to Buyer.
Closing costs in connection with this transaction shall be paid
as set forth in paragraph 12 herein.
The following funds shall be disbursed in accordance with the
provisions of the Lease attached hereto as Exhibit "C" ("Final
Funding") and are subject to all conditions under the Lease being
satisfied:
(b-1) $600,000 as the "Construction Allowance" to be paid by
Buyer to Tenant under the terms and conditions as provided
for in the Lease attached hereto as Exhibit "C".
This provision shall survive the Closing Date.
6.02. Option to Repurchase & Seller's Remedies
In the event the Buyer has closed escrow on the subject property
as described in paragraph 2 and 6.01, and (a) Seller has
satisfied its obligations as outlined in this Agreement, (b) is
not in breach of any surviving representation or warranty, (c)
Tenant is not in material default under the Lease, (d) and Tenant
has paid the Rent (and the failure of any of the above to occur
until cured; however such cure period shall not extend later than
October 15, 1998, shall relieve Buyer of the obligation to make
the Second Funding), if then Buyer fails to fund the Second
Funding as outlined in paragraph 6.01 (a-1), Seller shall be
granted, by the Buyer, the unconditional right to Repurchase the
subject property as Sellers sole remedy for Buyers Default. This
Repurchase option shall be as follows:
Buyer shall relieve Seller of any and all obligations outlined in
this Agreement. This Agreement shall immediately become null and
void, with all obligations between the parties, expressed or
implied, terminated. Seller shall have the unconditional right
to Repurchase from the Buyer the Property for two hundred fifty
thousand dollars ($250,000) plus closing costs. Sellers
Repurchase price and release of all obligations in this agreement
shall be considered Liquidated Damages. Buyer agrees to use its
best efforts comply with and assist the Closing Agent in
effecting Sellers Repurchase option.
Additionally, the Closing Agent is instructed without further
consent or instruction from Buyer and Seller to, upon receipt of
Sellers two hundred fifty thousand dollars ($250,000) immediately
close escrow and disburse all funds due Buyer under this
Repurchase option.
6.03 Liquidated Damages Should Buyer fail or refuse to complete
the Second Funding without right to do so as set forth above, in
paragraph 6.02, in breach of this Agreement, Seller shall be
entitled to liquidated damages. By initialing this section Buyer
and Seller agree that Sellers' actual damages would be difficult
and impractical to ascertain, that the Repurchase option and
relief of Sellers obligations made pursuant to paragraph 6.02,
above is a reasonable estimate of Seller's actual damages, and
that in the event of Buyer's wrongful failure or refusal to
complete the Second Funding, Seller shall be entitled to such
liquidated damages, as Seller's sole damages remedy.
Seller /s/ REH Buyer /s/ RPJ
7. Interest. Seller shall pay to Buyer ten percent (10.0%)
interest per annum on all funds disbursed hereunder from the
Closing Date until the Rent Commencement Date which interest
shall accrue and be paid by Seller either out of Seller's
proceeds as set forth in paragraph 6.01 (a-1). If Tenant shall
fail to pay its Rent by October 15, 1998, Seller shall pay
immediately, to Buyer, such interest out-of-pocket upon such
default by Tenant. Such payment is subject to terms of paragraph
6.01 (a-1) herein.
8. Funds Verification. Buyer is to provide evidence
satisfactory to Seller, of the availability of funds for the
purchase of the Property, at any time as reasonably requested by
Seller.
9. Title. Seller shall deliver to Buyer a commitment for an
ALTA OwnerOs Policy of Title Insurance (ALTA owner-most recent
edition) issued by a nationally recognized title insurance
company acceptable to Buyer (the "Title Company"), insuring
marketable title in the Parcel or Property, subject only to such
matters as Buyer may approve and contain such endorsements as
Buyer may require, including extended coverage and ownerOs
comprehensive coverage (the "Title Commitment"). The Title
Commitment shall show Sam's West, Inc. as the present fee owner
of the Parcel and show Buyer as the fee owner to be insured, and
shall reflect the Title Company's commitment to issue a future
improvements endorsement raising the amount of title coverage to
the entire amount of the purchase price paid for the Property
upon final disbursement. The Title Commitment shall also include
an itemization of all outstanding and pending special assessments
and an itemization of taxes affecting the Parcel or Property and
the tax year to which they relate, shall state whether taxes are
current and if not, show the amounts unpaid, the tax parcel
identification numbers and whether the tax parcel includes
property other than the Property to be purchased. All easements,
restrictions, documents and other items affecting title shall be
listed in Schedule "B" of the Title Commitment. Copies of all
instruments creating such exceptions must be attached to the
Title Commitment.
Buyer shall be allowed ten (10) business days after receipt
of the Title Commitment and copies of all underlying documents or
until the end of the Contingency Period, whichever is later to be
consistent with Article 12.01 hereof, for examination and the
making of any objections thereto, said objections to be made in
writing or deemed waived. If any objections are so made, the
Seller shall be allowed thirty (30) days to cure such objections
or in the alternative to obtain a commitment for insurable title
insuring over Buyer's objections. If Seller shall decide to make
no efforts to cure Buyer's objections, or is unable to obtain
insurable title within said thirty (30) day period, this
Agreement shall be null and void and of no further force and
effect and neither party shall have any further duties or
obligations to the other hereunder.
The Buyer shall also have ten (10) business days to review
and approve any easement, lien, hypothecation or other
encumbrance placed of record affecting the Parcel or Property
after the date of the Title Commitment. If necessary, the
Closing Date or Second Funding shall be extended by the number of
days necessary for the Buyer to have ten (10) business days to
review any such items. Such ten (10) business day review period
shall commence on the date the Buyer is provided with a legible
copy of the instrument creating such exception to title. The
Seller agrees to inform the Buyer of any item executed by the
Seller placed of record affecting the Parcel or Property after
the date of the Title Commitment. If any objections are so made,
the Seller shall be allowed thirty (30) days to cure such
objections or in the alternative to obtain a commitment for
insurable title insuring over Buyer's objections. If Seller
shall decide to make no efforts to cure Buyer's objections, or is
unable to obtain insurable title within said thirty (30) day
period, this Agreement shall be null and void and of no further
force and effect and neither party shall have any further duties
or obligations to the other hereunder.
10. Site Inspection. Buyer has inspected and approved the
Parcel.
11. Due Diligence and Contingency Periods.
11.01 Due Diligence Documents and Contingency Period. Buyer
shall have until the later of April 17, 1998 or the end of the
tenth (10th) day, except as noted herein, after the delivery of
all of the Due Diligence Documents, as described below, to review
and approve the same. These documents shall be delivered by
Seller at Seller's expense unless specifically designated herein
to be obtained by Buyer, and such documents to be of current or
recent date, (the "Contingency Period"). Said documents will be
certified to Buyer prior to the Closing Date, however shall not
be subject to the Contingency Period.
(a) The Parcel will be platted as a separate legal lot and
satisfactory proof thereof provided to Buyer including
all costs associated therewith have been paid in full
or escrowed therefore, subject to Buyer's right to
review and approve the same within three (3) business
days after receipt (" 3 Day Contingency Period").
Buyers approval of those items in the Contingency
Period shall not be unreasonably withheld or delayed;
(b) Approval of Tenant Site Plans;
(c) The Title Commitment;
(d) Preliminary ALTA boundary survey of the Property as
described on Exhibit "C" attached hereto;
(e) Phase I and Phase II environmental assessment report
prepared in accordance with current ASTM standards by
Terracon, Inc., containing evidence that the Property
complies with all federal, state and local
environmental regulations;
(f) Site plan and map(s) showing site;
(g) Demographic report showing data on trade area and the
neighborhood, if available, to be obtained by Buyer;
(h) Soils report;
(i) Lease and Lease Guarantee of Buffets, Inc., and
Assignment of the Lease, if any;
(j) A current Certificate of Good Standing for the Tenant,
together with all other documents Buyer or Title
Company deem necessary to support the authority of the
persons executing any documents on behalf of the Seller
or Tenant, the cost of obtaining such documents for the
Tenant will be equally shared by Seller and Buyer, said
costs to Seller not to exceed $100 and shall be
obtained and approved by Buyer not later than April 17,
1998; however, the Title Company shall have until the
closing date to obtain all documents deemed necessary
for both Tenant and Seller;
(k) Building Permit, satisfactory to Tenant, subject to the
3 Day Contingency Period;
(l) Zoning compliance letter from the municipality or
county exercising land use control over the Property in
form and substance satisfactory to Buyer, to be
obtained and approved by Buyer not later than April 17,
1998;
(m) Financial statements Tenant as required within the
Lease on Exhibit "C" attached hereto, to be obtained
and approved by Buyer, not later than April 17, 1998;
and
(n) MAI appraisal, supporting the purchase price with the
contemplated Improvements thereon, to be obtained by
and acceptable to Buyer as outlined in paragraph 6.01
hereof.
(All of the above described documents (a) through (n) are
hereinafter collectively the "First Due Diligence Documents").
After receipt and review of the Due Diligence Documents
Buyer may cancel this Agreement for any reason in its sole
discretion by delivering a cancellation notice, return receipt
requested, to Seller and Closing Agent prior to the end of the
Contingency Period. Such notice shall be deemed effective upon
receipt by Seller.
It shall be a condition precedent to Buyer's obligations to close
hereunder that there have been no material adverse changes in any
of the information reflected in the Due Diligence Documents after
the date of such document and prior to closing.
Until this Agreement is terminated or the Closing has
occurred, the Seller shall deliver to the Buyer any documentation
that comes in the SellerOs possession that modifies any of the
Due Diligence Documents, including the Lease and the Guaranty, or
could render any of the Due Diligence Documents materially
inaccurate, incomplete or invalid. The Buyer shall, in any
event, have five (5) days before the Closing Date to review and
approve any such document and, if necessary, the Closing Date
shall be extended by the number of days necessary for the Buyer
to have five (5) days to review and approve any such document or
documents such approval not to be unreasonably withheld or
delayed.
11.02 Form of Closing Documents. Prior to the end of the
Contingency Period but in no event later than April 17, 1998,
unless otherwise noted in paragraph 11.01 or below, Seller and
Buyer (and where applicable, Tenant) shall agree on the form of
the following documents to be delivered to Buyer on the Closing
Date by Seller as set forth in Article 17 hereof:
(a) General warranty deed;
(b) FIRPTA Affidavit;
(c) Opinion of Counsel re: enforceability of the Lease
prepared by Buyer's attorney licensed in the State in
which the Parcel is located, such Counsel to be
selected and paid for by Buyer; Seller is to provide
executed Lease not later than April 3, 1998 and Buyer
to obtain Opinion not later than April 17, 1998;
(d) Resolution of Tenant re: due authority of the Tenant to
execute the Lease, Buyer to obtain not later than
April 20, 1998;
(e) Estoppel from Tenant to be executed at closing and
reaffirmed on the Rent Commencement DateBuyer to obtain
not later than April 20, 1998;
(f) Estoppel from Seller Buyer to obtain not later than
April 20, 1998;
(g) Form Lease Guaranty of Buffets, Inc., as attached
hereto; and
(h) Lease and Assignments of Lease, if any Buyer to obtain
not later than April 20, 1998;
In the event that Seller and Buyer do not reach mutual
agreement on the form of the above described documents (a)
through (h) prior to the end of the Contingency Period, this
Agreement may be terminated by either Seller or Buyer and neither
party shall have any further duties or obligations to the other
hereunder.
12. Closing Costs. It is understood between Seller and Buyer,
that Seller shall pay for all closing costs associated with the
Sam's Agreement, the premium for a standard coverage title policy
containing the future improvements endorsement and reflecting an
insured amount of $1,300,000 subject to pending disbursements,
and documentary transfer taxes payable in connection with the
Warranty Deed (the amount of such transfer taxes shall not be
posted on the Warranty Deed but shall be attested to by Seller in
a separate affidavit), the costs of the updating and certifying
all Due Diligence Documents prior to the Closing Date unless
otherwise noted herein, or any other cost as defined under the
Sam's Agreement. Recording fees, escrow fees and all
miscellaneous fees and charges shall be equally split between
Seller and Buyer. The cost of obtaining Tenant's Certificate of
Good standing in the State of Illinois shall be equally split
between Seller and Buyer, such cost not to exceed $100 to Seller.
Buyer shall pay for an Opinion of Counsel regarding the
enforceability of the Lease in the State the Parcel is located as
defined in paragraph 11.02 (d) herein. The Seller is responsible
to pay for the cost of the Tenant's leasehold title insurance
policy on or before the Second Funding as required by the Tenant.
The obligations of this paragraph survive the Closing Date.
13. Real Estate Taxes and Assessments. Seller represents to
Buyer that to the best of its knowledge, all real estate taxes
and installments of special assessments due and payable on or
before the Closing Date have been or will be paid in full as of
the Closing Date. It is understood between Seller and Buyer that
all unpaid levied and pending special assessments are paid by the
Tenant as defined in the Lease and shall be the responsibility of
the Tenant under the Lease after the Closing Date. The
obligations of this paragraph shall survive the Closing Date.
14. Prorations. Except as otherwise set forth herein, the Buyer
and the Seller, as of the Closing Date, shall prorate to the
Closing Date: (i) ad valorem taxes, personal property taxes,
charges or assignments affecting the Property (on a calendar year
basis), (ii) utility charges, including charges for water, gas,
electricity, and sewer, if any, (iii) other expenses relating to
the Property which have accrued but not paid as of the Closing
Date, based upon the most current ascertainable tax bill and
other relevant billing information, including any charges arising
under any of the encumbrances to the Parcel or Property. To the
extent that information for any such proration is not available
on the Closing Date or if the actual amount of such taxes,
charges or expenses differs from the amount used in the
prorations at closing, then the parties shall make any
adjustments necessary so that the prorations at closing are
adjusted based upon the actual amount of such taxes, charges or
expenses. The parties agree to make such reprorations as soon as
possible after the actual amount of real estate taxes, charges or
expenses prorated at closing becomes available.
15. Seller's Representations and Warranties. These Seller's
representations and warranties deemed to be true and correct as
of the Closing Date and shall survive the closing until the day
of the Second Funding. Seller represents and warrants as of this
date and to the best of SellerOs knowledge after due inquiry
that:
(a) Except for this Agreement and the Letter of Intent with
Buffets, Inc. executed September 16, 1997, the executed
Agreement of Sale with Sam's West, Inc. dated September
11, 1997, and the First Amendment to the Agreement of
Sale dated December ___, 1997 and the Second Amendment
to the Agreement of Sale dated March 9, 1998, and the
Lease as referenced on Exhibit "D", it is not aware of
any other agreements or leases with respect to the
Property;
(b) Seller has all requisite power and authority to
consummate the transaction contemplated by this
Agreement and has by proper proceedings duly authorized
the execution and delivery of this Agreement and the
consummation of the transaction contemplated hereunder;
(c) Seller does not have any actions or proceedings
pending, which would materially affect the Property or
Tenant, except matters fully covered by insurance;
(d) The consummation of the transactions contemplated
hereunder, and the performance of this Agreement and
the delivery of the warranty deed to Buyer, will not
result in any breach of, or constitute a default under,
any instrument to which Seller is a party or by which
Seller may be bound or affected;
e) All of Seller's covenants, agreements, and
representations made herein, and in any and all
documents which may be delivered pursuant hereto, shall
survive the delivery to Buyer of the warranty deed and
other documents furnished in accordance with this
Agreement, and the provision hereof shall continue to
inure to Buyer's benefit and its successors and assigns
up to the Second Funding;
(f) The Parcel or Property is in good condition,
substantially undamaged by fire and other hazards, and
has not been made the subject of any condemnation
proceeding;
(g) The use and operation of the Parcel or Property now is
in full compliance with applicable local, state and
federal laws, ordinances, regulations and requirements;
and
(h) Seller has not caused or permitted any, and to the best
of Seller's knowledge, the Parcel or Property is not in
violation of any federal, state or local law, ordinance
or regulations relating to industrial hygiene or to the
environmental conditions, on, under or about the Parcel
Property, including, but not limited to, soil and
groundwater conditions. There is no proceeding or
inquiry by any governmental authority with respect to
the presence of hazardous materials on the Parcel or
Property or the migration of hazardous materials from
or to other property.
16. Buyer's Representations and Warranties. Buyer represents
and warrants to Seller that:
(a) Buyer has all requisite power and authority to
consummate the transaction contemplated by this
Agreement and has by proper proceedings duly authorized
the execution and delivery of this Agreement and the
consummation of the transaction contemplated hereunder;
(b) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereunder will violate or be
in conflict with any agreement or instrument to which
Buyer is a party or by which Buyer is bound; and
(c) These Buyer's representations and warranties deemed to
be true and correct as of the Closing Date and shall
survive the closing.
17. Closing.
(a) On or before the Closing Date, Seller, except as noted, will
deposit into Escrow with the Closing Agent the following
documents:
(1) A general warranty deed conveying insurable title to
the Property to Buyer, in form and substance as agreed
to between Sam's and Buyer during the Contingency
Period;
(2) Estoppel letter from Tenant, in form and substance as
agreed to between Seller, Buyer and Tenant during the
Contingency Period;
(3) Affidavit of Seller, in form and substance as agreed to
between Seller and Buyer during the Contingency Period;
(4) FIRPTA Affidavit, in form and substance as agreed to
between Seller and Buyer during the Contingency Period;
(5) Assignment of Lease, in form and substance as agreed to
between Seller and Buyer during the Contingency Period;
(6) The Lease as agreed to between Buyer and/or Tenant and
executed by Seller and Tenant, prior to Contingency
Period;
(7) Lease Guaranty of Buffets, Inc. as agreed to between
Seller and buyer during the Contingency Period;
(8) Opinion of Counsel regarding enforceability of the
Lease and compliance with local law (from an attorney
acceptable to Buyer in the state where the Parcel or
Property is located) in form and substance as agreed to
by Buyer during the Contingency Period, Buyer will
confirm the receipt of the same; and
(9) Resolution of Tenant regarding due authority of Tenant
and execution and delivery of the Lease by Tenant, in a
form and substance as agreed to between Seller and
Buyer during the Contingency Period Buyer will confirm
the receipt of the same.
(b) On or before the Closing Date, Buyer will deposit funds set
forth in paragraph 6.01 (a) and (b) with the Closing Agent. On
or before five (5) days prior to the date of the Second Funding
or the Final Funding, Buyer will deposit funds as required and
set forth in paragraph 6.01 (a-1) and (b-1) with the Closing
Agent.
(c) Both parties will sign and deliver to the Closing Agent any
other documents reasonably required by the Closing Agent and/or
the Title Company.
18. Termination. This Agreement may be terminated prior to the
Closing Date at Buyer's option and any funds disbursed by the
Buyer to the Seller, returned to Buyer in full immediately in the
event of any of the following occurrences in addition to other
remedies available to Buyer as set forth herein :
(a) Seller fails to comply with any of the terms hereof;
(b) A default exists in any material financial obligation
of Seller or Tenant;
(c) Any representation made or contained in any submission
from Seller or Tenant, or in the Due Diligence
Documents, proves to be untrue, substantially false or
misleading at any time prior to the Closing Date;
(d) There has been a material adverse change in the
financial condition of Seller or Tenant or there shall
be a material action, suit or proceeding pending or
threatened against Seller which affects Seller's
ability to perform under this Agreement or against
Tenant which affects Lessee's ability to perform under
the Lease;
(e) Any bankruptcy, reorganization, insolvency, withdrawal,
or similar proceeding is instituted by or against
Seller or Tenant;
(f) Seller or Tenant shall be dissolved, liquidated or
wound up;
(g) Notice given by Buyer pursuant to the terms hereof;
(h) Buyer, Tenant or Seller fail to successfully negotiate
documents contemplated hereunder or as required in
Sam's Agreement; and
(i) Seller or Tenant fails to obtain city, state or federal
approvals and permits required.
Notwithstanding (a) through (i) above, if Seller shall
refuse to close the transaction contemplated herein and Buyer is
ready, willing and able to close the transaction, Buyer is
entitled to all remedies available to it at law or equity.
If Buyer shall not have exercised a right of termination as
allowed hereunder and Seller is otherwise in compliance with the
terms hereof, Seller shall retain all only the remedies available
to it at law or equity through the Closing Date, after such date
Seller shall retain only the remedies as set forth in paragraph
6.02 and 6.03.
19. Damages, Destruction and Eminent Domain. If, prior to the
Closing Date, the Parcel or Property, or any part thereof, should
be destroyed or further damaged by fire, the elements, or any
cause, due to events occurring subsequent to the date of this
Agreement, this Agreement shall become null and void, at Buyer's
option, exercised by written notice to Seller within ten (10)
business days after Buyer has received written notice from Seller
of said destruction or damage. Seller, however, shall have the
right to adjust or settle any insured loss until (a) all
contingencies set forth in Article 8 hereof have been satisfied,
or waived; and (b) any period provided for above in Article 8
hereof for Buyer to elect to terminate this Agreement has expired
or Buyer has, by written notice to Seller, waived Buyer's right
to terminate this Agreement. If Buyer elects to proceed and to
consummate the purchase despite said damage or destruction, there
shall be no reduction in or abatement of the Purchase Price, and
Seller shall pay the deductible, if any, to Buyer, and assign to
Buyer the Seller's right, title and interest in and to all
insurance proceeds resulting form said damage or destruction to
the extent that the same are payable with respect to damage to
the Parcel or Property, subject to rights of the Tenant.
If prior to the Closing Date, the Parcel or Property, or any
part thereof, is taken by eminent domain, which taking delays
commencement of the Lease or delays payment of rent by the Tenant
or renders the Lease invalid, this Agreement shall become null
and void, at Buyer's option. If Buyer elects to proceed and to
consummate the purchase despite said taking, there shall be no
reduction in, or abatement of, the Purchase Price and Seller
shall assign to Buyer all the Seller's right, title and interest
in and to any award made, or to be made, in the condemnation
proceeding pro-rata in relation to the Parcel or Property.
In the event that this Agreement is terminated by Buyer as
provided above, any funds disbursed hereunder shall be returned
to Buyer immediately after execution by Buyer of such documents
reasonably requested by Seller to evidence the termination
hereof.
20. Notices. All notices from either of the parties hereto to
the other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified mail,
return receipt requested, postage prepaid, or by a nationally
recognized courier service guaranteeing overnight delivery to the
party at his or its address set forth below, or to such other
address as such party may hereafter designate by written notice
to the other party.
If to Seller: The Alpha Group, LLC
C/O Colliers Tingey International
1310 E. Shaw Avenue
Fresno, CA 93710
Attention: Mr. Jack Messina
Phone No.: (209) 221-1271
If to Buyer: AEI Fund Management, Inc.
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, Minnesota 55101
Attention: Robert P. Johnson
Phone No.: (612) 227-7333
Notice shall be deemed received 48 hours after proper
deposit in U.S. Mail, or 24 hours after proper deposit with a
nationally recognized overnight courier.
21. Miscellaneous.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the essence.
This Agreement will not be construed for or against a party
whether or not that party has drafted this Agreement. If there
is any action or proceeding between the parties relating to this
Agreement, the prevailing party will be entitled to recover
attorney's fees and costs. This is an integrated agreement
containing all agreements of the parties about the Parcel or
Property and the other matters described, and it supersedes any
other agreement or understandings. Exhibits attached to this
Agreement are incorporated into this Agreement.
(b) This Agreement shall be assignable by Buyer, at its option,
in whole or in part, in such manner as Buyer may determine, to an
affiliate of affiliates of Buyer.
(c) The Buyer and Seller each warrant to the other that neither
party hereto has had any dealing with any real estate brokers or
salespersons which would result in a claim for a commission.
(d) Seller remains liable for all obligations under the Sam's
Agreement that may survive the Closing Date up to the Second
Funding date and shall provide evidence, reasonably satisfactory
to Buyer, that such obligations have been satisfied or that
sufficient funds are available or escrowed with an independent
third party, such as a title company, in order to complete the
same.
Buyer is submitting this offer by signing a copy of this
Agreement and delivering it to Seller. Seller has until April
16, 1998 within which time to accept this offer by signing and
returning this Agreement to Buyer. When executed by both
parties, this Agreement will be a binding agreement for valid and
sufficient consideration which will bind and benefit Seller,
Buyer and their respective successors and assigns.
IN WITNESS WHEREOF, Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
SELLER:
THE ALPHA GROUP, LLC
By: /s/ Robert E Holmes
Its: member
STATE OF Benton)
) ss.
COUNTY OF Arkansas)
On this 16th day of April, 1998, before me, the undersigned,
a Notary Public in and for said State, personally appeared Robert
E Holmes, personally known to me to be the person who executed
the within instrument as the member of The Alpha Group, an
Arkansas corporation, on behalf of said corporation.
/s/ Gay L Fejleh
Notary Public
[notary seal]
BUYER:
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
BY: AEI FUND MANAGEMENT XVIII, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
STATE OF Minnesota)
) ss.
COUNTY OF Ramsey)
On this 17th day of April, 1998, before me, the undersigned,
a Notary Public in and for said State, personally Robert P.
Johnson, personally known to me to be the person who executed the
within instrument as the President of AEI Fund Management XVIII,
Inc., a Minnesota corporation, as Corporate General Partner of
AEI Real Estate Fund XVIII Limited Partnership, on behalf of said
corporation.
/s/ Barbara J Kochevar
Notary Public
[notary seal]
EXHIBIT "A"
LEGAL DESCRIPTION
See attached
Part of the Northeast Quarter of Section 6, Township 39 North,
Range 12 East of Third Principal Meridian, in Cook County,
Illinois, described as follows:
Commencing at the Southeast corner of Lot 7 in Block 9 as
designated upon the Plat of The H.O. Stone Northlake Addition
being a subdivision of part of the Northeast Quarter of said
Section 6, the Plat of which subdivision is recorded as Doc. No.
14036603 in the Recorder's Office of Cook County, Illinois;
thence North 61 degrees 02 minutes 56 seconds West along the
South line of said Blokc 9, a distance of 298.67 feet to the
Southwest corner of Lot 18 in Block 9 of said subdivision;thence
North 0 degrees 00 minutes 41 seconds East, a distance of 32.74
feet; thence North 45 degrees 04 minutes 00 seconds East, a
distance of 21.88 feet to the Point of Beginning; thence North 89
degrees 59 minutes 19 seconds West, a distance of 55.72 feet;
thence North 50 degrees 32 minutes 46 seconds West, a distance of
35.35 feet; thence North 61 degrees 36 minutes 58 seconds West, a
distance of 50.12 feet; thence North 0 degrees 00 minutes 47
seconds East, a distance of 106.46 feet; thence North 89 degrees
55 minutes 14 seconds West, a distance of 13.18 feet; thence
North 0 degrees 00 minutes 00 seconds East, a distance of 33.41
feet; thence South 89 degrees 51 minutes 03 seconds East, a
distance of 231.68 feet; thence South 31 degrees 21 minutes 45
seconds East, a distance of 48.81 feet; thence South 0 degrees 00
minutes 00 seconds East, a distance of 143.92 feet; thence North
89 degrees 59 minutes 19 seconds West, a distance of 116.82 feet
to the Point of Beginning containing 43,417 square feet (0.9967
acres) more or less, all being situated in Cook County, Illinois.
Part of the Northeast Quarter of Section 6, Township 39 North,
Range 12 East of Third Principal Meridian, in Cook County,
Illinois, described as follows:
Beginning at the Northeast corner of Lot 10 Block 6 as designated
upon the Plat of the H.O. Stone Northlake Addition being a
subdivision of part of the Northeast Quarter of said Section 6,
the Plat of which subdivision is recorded as Don. No. 14036603 in
the Recorder's Office of Cook County, Illinois; thence South 1
degree 59 minutes 01 seconds West along the East line of said
Block 6 and Block 9 in The H.O. Stone Northlake Addition, a
distance of 930.12 feet to the Southeast corner of Lot 7 Blcok 9;
thence North 61 degrees 02 minutes 56 seconds West along the
South line of said Lot 7, and Lot 18 of Block 9 in the H.O Stone
Northlake Addition, a distance 298.67 feet to the Southwest
corner of said Lot 18 Blcok 9; thence South 2 degrees 00 minutes
57 seconds West, a distance of 11.22 feet to a pint in the Center
line of a 20" alley in the H.O. Stone Northlake Addition; thence
North 61 degrees 02 minutes 56 seconds West along the centerline
of said alley, a distance of 446.18 feet to a pint on the East
line of Lot 23 Block 8 extended Nrotherly in the H.O. Stone
Northlake Addition; thence South 2 degrees 01 minutes 28 seconds
West along the East line of said Lot 23 Blcok 8 and the Northerly
extension thereof, a distance of 136.14 feet to the Southeast
corner of said Lot 23 Blcok 8; thence North 61 degrees 02 minutes
21 seconds West along the Southerly line of said Blcok 8, a
distance of 273.02 feet to the Southwest corner of Lot 31 Blcok 8
in the H.O Stone Northlake Addition; thence North 0 degrees 21
minutes 56 seconds West along the West line of said Block 8 and
the Northerly extension thereof, a distance of 139.39 feet to a
point on the Westerly extension of the South line of Lot 5 as
designated upon the Plat of Ether's Resubdivision, being a
resubdivision of lts 11 to 22 inclusive and lot 32 together with
the vacated alley in Block 8 in the H.O. Stone Northlake Addition
Subdivision, the Plat of said Resubdivision is recorded as Doc.
No. 14036604 in the Recorder's Office of Cook County, Illinois;
thence North 89 degrees 38 minutes 04 seconds East along the
South line of said Lot 5 of Ehler's Resubdivision extended, a
distance of 20.00 feet to the Southwest corner of said Lot 5 of
Ehler's Resubdivision; thence North 0 degrees 21 minutes 56
seconds West along the West line of Lots 2 through 5 of said
Ehler's Resubdivision, a ditance of 239.90 feet to the Southwest
corner of Lot 1 of said Ehler's Resubdivision; thence North 13
degrees 17 minutes 01 seconds East, a distance of 20.55 feet to
the Southewest corner of Lot 4 Block 8 of The H.O. Stone
Northlake Addition; thence North 17 degrees 23 minutes 47 seconds
East, a distance of 94.10 feet to a point on the West line of Lot
5 Block 8, 35.00 feet South of the Northwest corner of said Lot 5
Block 8 of The H.O. Stone Norhtlake Addition; thence North 36
degrees 49 minutes 52 seconds East, a distance of 43.70 feet to
the Northeast corner of said Lot 5 Blcok 8; thence North 90
degrees 00 minutes 00 seconds East along the North line of The
H.O Stone Northlake Addition, a distance of 796.80 feet to the
Point of Beginning containing 645,623 square feet (14.8215 acres)
more or less, all being situated in Cook County, Illinois.
EXHIBIT "B"
SURVEY REQUIREMENTS
1. The plat or map of such survey must bear the name, address
and signature of the licensed land surveyor who made the
survey, that surveyor's official seal and license number (if
any, or both), and the date of the survey, with the
following certification:
I, _________________________, a registered land surveyor, in
and for the State of ___________ do hereby certify to AEI
Real Estate Fund XVIII Limited Partnership., a Minnesota
limited partnership, or its assigns (PLEASE CONTACT AEIOS
CLOSING MANAGER AT 1-800-328-3519 FOR INFORMATION), and
____________________ (insert name of title company), that
this is a true and correct plat of a survey of
(Insert Legal Description)
which correctly shows the location of all buildings,
structures and improvements on said described Parcel; that
there are no visible encroachments onto adjoining
properties, streets, alleys, easements or setback lines by
any of said buildings, structures or improvements; that
there are no recorded or visible right of ways or easements
on said described Parcel, except as shown on said survey;
that there are no party walls or visible encroachments on
said described Parcel by buildings, structures or other
improvements situated on adjoining property, except as shown
on said plat or survey; and that the described Parcel has
direct access to a publicly dedicated right-of-way at the
location shown on said plat or survey.
By: _________________________
Dated: _______________________
2. If the street address of the Parcel is available, it should
be noted on the survey.
3. The survey boundary should be drawn to a convenient scale,
with that scale clearly indicated. If feasible, a graphic
scale should be indicated. When practical, the plat or map
of survey should be oriented so that North is at the top of
the drawing. Supplementary or exaggerated scale diagrams
should be presented accurately on the plat or map and drawn
to scale. No plat or map drawing less than the minimum size
of 8-1/2" by 11" will be acceptable.
4. The plat or map of survey should meet with the minimum
Standard Detail Requirements for Land Title Surveys as
adopted by the American Title Association and American
Congress on Surveying and Mapping.
5. The character and location of all buildings upon the Parcel
must be shown and their location given with reference to
boundaries. Proper street numbers should be shown where
available. Physical evidence of easements and/or servitudes
of all kinds, including but not limited to those created by
roads, rights of way, water courses, drains, telephone,
telegraph or electric lines, water, sewer, oil or gas
pipelines, etc., on or across the surveyed Parcel and on
adjoining properties if they appear to affect the enjoyment
of the surveyed Parcel should be located and noted. If the
surveyor has knowledge of any such easements and/or
servitudes, not physically evidenced at the time the present
survey is made, such physical non-evidence should be noted.
All recorded easements, rights of way and other record
matters affecting the Parcel should be located and
identified by recording date. Surface indications, if any,
of underground easements and/or servitudes should also be
shown. If there are no buildings erected on the Parcel
being surveyed, the plat or map of survey should bear the
statement "No Buildings". Curb cuts and adjoining streets
should be shown.
6. Joint or common driveways and alleys must be indicated.
Independent driveways along the boundary must be shown
together with the width thereof. Encroaching driveways,
strips, ribbons, aprons, etc., should be noted. Rights of
access to public highways should be shown. The right-of-way
line of any public street must be shown in relationship to
the Parcel surveyed and the street must be labeled "Publicly
Dedicated" or "Private Thoroughfare" as the case may be.
7. As a minimum requirement, at least two (2) sets of prints of
the plat or map of survey should be furnished to AEI and one
(1) set to the title company.
8. The survey should certify as to the total square footage of
the area surveyed and as to the square footage at the
exterior walls of any improvements on the Parcel. The
survey should note the absence of, or indicate the existence
of, any building restriction or setback lines. Paved areas
should be shown and the survey should designate the area for
parking and its dimensions. If completed, the survey should
indicate the actual number of parking spaces and, if
possible, the actual parking spaces should be outlined on
the survey.
9. Flood Zone designation to be included.
EXHIBIT "C"
LEASE AND LEASE GUARANTY
STANDARD GROUND LEASE
BY AND BETWEEN
OCB REALTY CO., as Tenant,
AND
ALPHA GROUP, L.L.C., as Landlord
Covering land at the
WAL-MART/SAM'S CLUB SHOPPING CENTER
(Shopping Center/Location)
in Northlake, Illinois
(City, State)
TABLE OF CONTENTS
SECTION 1. PREMISES
SECTION 2. TERM; COMMENCEMENT DATE
2.1 Original Lease Term
2.2 Notice of Tender; Target and Drop Dead Dates
2.3 Options to Extend
SECTION 3. LEASE YEAR
SECTION 4. LANDLORD'S WORK
SECTION 5. TENANT'S WORK
SECTION 6. RENT
6.1 Minimum Rent
6.2 Percentage Rent
6.3 Timing and Payment of Percentage Rent; Gross Sale
Reports
6.4 Additional Rent
6.5 Proration
6.6 Adjustments and Reimbursements
SECTION 7. TAXES
7.1 Real Property Taxes
7.2 Payment in Installments
7.3 Right To Contest
7.4 Personal Property Taxes
7.5 Limitation on Tax Increases
SECTION 8. COMMON AREAS, FACILITIES AND SERVICES; OPERATING
EXPENSES
8.1 Initial Improvement of Parking and Other Areas
8.2 Inclusion of Any Common Areas
8.3 Preservation of Parking
8.4 Definition of "Operating Expenses"
8.5 Payment of Tenant's Share of Operating Expenses
8.6 Limitations on Tenant's Share of Operating Expense
8.7 Tenant's Right To Assume Duties
8.8 Tenant's Examination or Audit of Charges
SECTION 9. UTILITIES
SECTION 10.ADVERTISING; PROMOTION; HANDBILLS
SECTION 11.USE OF THE PREMISES; TENANT'S LIMITED EXCLUSIVITY
COMMITMENT
11.1 Tenant's Permitted Use
11.2 Appurtenant Rights
11.3 No Exclusive; Unapproved Uses
SECTION 12.MAINTENANCE AND REPAIR OF
PREMISES; ALTERATIONS AND SIGNS
12.1 Repairs and Maintenance
12.2 Alterations
12.3 Signs
SECTION 13.INSURANCE; RESTORATION OF DAMAGE
13.1 Tenant's Insurance
13.2 Landlord's Insurance
13.3 General Insurance Requirements
13.4 Restoration of Damage to the Building
13.5 Waiver of Claims and Subrogation
SECTION 14.INDEMNIFICATION BY PARTIES
14.1 Indemnification by Tenant
14.2 Indemnification by Landlord
SECTION 15.ESTOPPEL, SUBORDINATION, NONDISTURBANCE AND
ATTORNMENT
15.1 Estoppel Certificates
15.2 Subordination, Nondisturbance and Attornment
SECTION 16.ASSIGNMENT AND SUBLETTING
16.1 Restrictions on Transfer
16.2 Reason for Any Disapproval Given
16.3 Consent Generally
16.4 Sublease to Operating Company
SECTION 17.CONDEMNATION
17.1 Substantial Taking
17.2 Partial Taking
17.3 Arbitration Procedure
17.4 Transfer in Lieu of Condemnation
SECTION 18.DEFAULT
18.1 Tenant's Default
18.2 Landlord's Default
SECTION 19.WARRANTY OF QUIET ENJOYMENT; SURRENDER OF PREMISES;
HOLDOVER TENANCY
19.1 Warranty of Quiet Enjoyment
19.2 Ownership of Building; Surrender of Premises by
Tenant
19.3 Holding Over
SECTION 20.GENERAL PROVISIONS
20.1 Successors
20.2 Rules and Regulations
20.3 Extensions or Forbearances by Parties
20.4 Sale by Landlord
20.5 Notice
20.6 Cotenancy
20.7 Investment Tax Credit
20.8 Entire Agreement
20.9 Interpretation and Use of Pronouns
20.10 Caption and Section Numbers
20.11 "Force Majeure" Delays
20.12 Waiver
20.13 Joint Obligation
20.14 Time of the Essence
20.15 Accord and Satisfaction
20.16 Due Date
20.17 Late Charge
20.18 Cumulative Remedies
20.19 Applicable Law and Construction
20.20 Decision Making by Parties
20.21 Attorneys' Fees
20.22 Use Permitted
20.23 Leasehold and Equipment Financing
20.24 Authority
20.25 Financial or Sales Information
20.26 Reasonable Efforts to Mitigate
20.27 Trash Dumpster
20.28 Indemnification
20.29 Disclaimers
20.30 Effective Date of Lease
20.31 Broker's Commission
20.32 Recording
20.33 Authorship
20.35 Third Parties
20.35 Temporary Space
20.36 Limitations on Landlord's Liability
SECTION 21.HAZARDOUS SUBSTANCES
21.1 Representations by Landlord
21.2 Indemnity by Landlord
21.3 Indemnity by Tenant
21.4 Survival of Obligations
21.5 Definitions of "Hazardous Substances" and Related
Terms
Exhibits and Attachments
EXHIBIT A-1 Legal Description of the Premises
EXHIBIT A-2 Drawing or Plan of Shopping Center
EXHIBIT B Site Plan
EXHIBIT C Landlord's Work and Tenant's Work
EXHIBIT D Rules and Regulations (if any) [NONE]
EXHIBIT E Memorandum of Ground Lease
EXHIBIT F Non-Disclosure Agreement
EXHIBIT G Subordination, Non-Disturbance and Attornment
Agreement [with Landlord's Lender or Lessor]
EXHIBIT H Agreement by Landlord (Leasehold Financing Without
Subordination) [with Tenant's Lender]
EXHIBIT I Storefront Elevation and Pre-Approved Pylon Sign
Location
SCHEDULE #1 Standard Landlord Supplied Site
Specifications [Intentionally Deleted]
SCHEDULE #2 Standard Exclusions from Gross Sales
SCHEDULE #3 Standard Exclusions from Common Area Expenses
[Intentionally Deleted]
GUARANTY (If Applicable)
STANDARD GROUND LEASE
This Standard Ground Lease ("Lease") is made and entered
into this ____ day of February, 1998, by and between ALPHA GROUP,
L.L.C., a _______________ limited liability company, and its
successors and assigns (as referenced below), with principal
offices at 1209 North Walton Boulevard, Bentonville, Arkansas
72712 ("LANDLORD"), and OCB REALTY CO., a Minnesota corporation,
with principal offices at 10260 Viking Drive, Eden Prairie, MN
55344-7229 ("TENANT").
W I T N E S S E T H:
1. PREMISES. Landlord leases to Tenant, and Tenant leases
from Landlord, certain land ("PREMISES"), consisting of
approximately 43,189 square feet of gross land area, the legal
description of which is (or will be) attached hereto as EXHIBIT
A-1. The Premises is part of a shopping center development known
as the Wal-Mart/Sam's Club Shopping Center ("SHOPPING CENTER"),
as shown on EXHIBIT A-2 attached hereto, located at North Avenue
and Railroad Avenue in Northlake, Cook County, Illinois , on
which Tenant intends to build a building (the "BUILDING")
containing approximately Nine Thousand One Hundred and Eight-
three (9,183) square feet of gross leasable area, the location of
which will be as approximately shown on the site plan attached
hereto as EXHIBIT B.
For purposes of this Lease, (i) "LEASABLE AREA" of land
shall be the gross land area that can be developed and used for
building, parking, landscaping, sidewalks or other commercial
development use, (ii) "LEASABLE AREA" of buildings shall be
computed by measuring from the outside face of corridor walls to
the outside face of exterior walls and from the center line to
center line of demising walls, with no deduction or exclusion in
the computation of leasable area by reason of interior partitions
or other interior construction or equipment, and (iii) the "GROSS
LEASABLE AREA OF THE SHOPPING CENTER" shall be the sum of the
leasable areas of all leasable or occupiable portions of
improvements within the Shopping Center (and with respect to any
undeveloped pads, shall include the maximum building area
permitted on the pad under applicable law and recorded covenants,
conditions and restrictions).
2. TERM; COMMENCEMENT DATE.
2.1 ORIGINAL LEASE TERM. Unless further extended as
provided herein, the term of this Lease ("LEASE TERM" or "TERM")
shall be twenty (20) full Lease Years and any Partial Lease Year
(as defined below), commencing with the Commencement Date (as
defined below). The "COMMENCEMENT DATE" will be the date on
which each of the following has occurred: (i) Landlord has
acquired fee title to the Premises, has all necessary
governmental approvals and Wal-Mart Approvals (as defined below)
for the creation of the Premises as a separate legal lot capable
of commercial development for the purposes set forth in this
Lease (BUT WITHOUT any need for Landlord to pursue or obtain the
building permit and other approvals required for Tenant's
specific plans for development of the Premises), and has
tendered possession of the Premises to Tenant; and (ii) if there
is a lender/mortgagee which has a lien that may be superior in
priority to the interest of Tenant under this Lease, Landlord
shall have provided Tenant with an executed non-disturbance
agreement from the lienholder under any and all mortgages, deeds
of trust and superior lien interests, on terms and conditions
reasonably satisfactory to Tenant and such secured party. The
parties anticipate that the Commencement Date will be on or about
April 1, 1998.
2.2 NOTICE OF TENDER; TARGET AND DROP DEAD DATES. Landlord
shall give Tenant written notice of its intent to tender
possession of the Premises to Tenant, not less than seven (7)
days prior to such tender of possession ("NOTICE OF TENDER").
Tenant will not be required to accept tender of possession before
the Commencement Date or April 1, 1998, whichever is later
(sometimes referred to below as the "TARGET DATE"); PROVIDED,
however, that (i) Tenant may, but will not be required to, accept
tender of possession prior to the Target Date; and (ii) if for
any reason such Notice of Tender is not given by the forty-fifth
(45th) day after the Target Date (the "DROP DEAD DATE"), Tenant
may elect to terminate this Lease without further liability to
Landlord, upon written notice to Landlord at any time thereafter.
In the event Landlord diligently pursues satisfaction of the
requirements for tender of possession as stated in Section 2.1
but cannot reasonably satisfy such requirements (in its sole but
reasonable discretion) by the Drop Dead Date, any termination of
this Lease by Landlord or Tenant will cause each party to be
released from any further obligation or liability to the other
hereunder; provided, that if the agreement between Landlord and
Sam's for the purchase of the Premises by Landlord is assignable
or Sam's is otherwise willing to consent to an assignment to
Tenant, Tenant may elect to require that Landlord's purchase
agreement with Sam's be assigned to Tenant if Tenant is willing
to continue to pursue this project notwithstanding such Drop Dead
Date, so long as Tenant reimburses Landlord for any earnest money
or deposit under such agreement that by its terms may be credited
against the purchase price of the Premises and Sam's releases
Landlord from any further liability under such purchase
agreement.
2.3 OPTIONS TO EXTEND. Tenant shall have four (4)
successive options (the "EXTENSION OPTION(S)") to renew and
extend the Term for additional consecutive periods of five (5)
years each (each, an "EXTENDED TERM"). The Extension Options
shall be exercised by Tenant giving Landlord written notice
thereof at least six (6) months prior to the end of the initial
Term or previous Extended Term, as the case may be; PROVIDED,
that Tenant's Extension Option(s) will not in any event expire
from failure to exercise the same if Landlord does not give or
has not given an "Exercise Deadline Notice" (as defined below).
An "EXERCISE DEADLINE NOTICE" is a written notice given to Tenant
at any time within the last year of the Lease Term stating as
follows: "Pursuant to your Lease at Northlake, Illinois, you as
Tenant have until [state deadline date
that is 6 months before end of the current term] or until ten
(10) business days after receipt of this letter, whichever is
later, to exercise your option to extend the Lease Term for an
additional 5 year term and FAILURE TO DO SO WILL RESULT IN THE
LOSS OF YOUR EXTENSION OPTION(S) IN THE LEASE. NOTICE OF
EXERCISE OF SUCH OPTIONS MAY BE GIVEN BY YOU AT ANY TIME AFTER
YOUR RECEIPT OF THIS NOTICE, BUT MUST BE DELIVERED TO US BY SUCH
DEADLINE DATE TO OUR ADDRESS FOR NOTICES UNDER THIS LEASE, WHICH
IS AS FOLLOWS: [state then
current address for notices]." During the Extended Term(s),
except as expressly provided in this Lease, all terms and
conditions of this Lease shall remain unamended and in full force
and effect.
3. LEASE YEAR. As used in this Lease, the "LEASE YEAR" means
that portion of the Term consisting of the period from January 1
through December 31. Any portion of the Term which is less than
a Lease Year shall be a "PARTIAL LEASE YEAR." The portion of the
Term commencing on the Commencement Date and ending on the
following December 31 shall be the "FIRST PARTIAL LEASE YEAR."
4. LANDLORD'S WORK. Landlord warrants that the Premises, at
the time of tender of possession, will be delivered in its
present condition. Except as so provided and except for
Landlord's obligation to pursue and obtain the necessary
governmental approvals for creation and commercial use of the
Premises as described in Section 2.1, there is NO "Landlord's
Work." After execution of this Lease, Landlord will diligently
pursue such matters, keep Tenant informed about the status
thereof, and promptly advise Tenant of any anticipated delay or
problem in satisfying the requirements under Section 2.1 by the
Target Date, in accordance with the provisions of this Lease.
5. TENANT'S WORK. Upon Landlord's tender of possession of the
Premises consistent with Sections 2.1 and 2.2 above and Tenant's
receipt of Landlord's approval of Plans and of necessary
governmental permits and approvals, as referenced in the attached
EXHIBIT C, Tenant, at its sole cost and expense, will promptly
commence construction of its building and related improvements
("BUILDING") and installation of fixtures, equipment and other
items of "Tenant's Work" as identified on the attached EXHIBIT C
("TENANT'S WORK"), and shall diligently pursue such work to
completion. So long as Non-Disclosure Agreements are executed as
provided in section 4 of the attached EXHIBIT C (in the form
attached as EXHIBIT F), Tenant shall submit to Landlord, for
review and approval by Landlord and Sam's West, Inc. ("SAM'S")
(and, if required by the WalMart Agreements, Wal-Mart), Tenant's
drawings showing the Building and site improvements to be
constructed by Tenant, including the site plan, grading plan,
landscaping plan, floor plan, parking plan and necessary
elevations, before submitting the same to the City of Northlake
(the "CITY") for permits. Tenant will also provide to Landlord a
good faith estimate of the total costs of construction of the
Building (excluding furniture, fixtures and equipment ("FF&E")
which Tenant is entitled to remove at the end of the Lease term).
The Building, site improvements and other items of Tenant's Work
will be constructed by Tenant at its sole expense (subject only
to the provisions of the attached EXHIBIT C concerning the
Construction Allowance).
Upon Tenant's or its employees, agents or contractors
entering the Premises prior to the Commencement Date for any
purpose (including without limitation, the performance of
Tenant's Work), all covenants and conditions of this Lease shall
apply to the parties as if the Term had begun at such time, with
the exception of provisions as to Minimum Rent, Percentage Rent,
Additional Rent and any other charges payable by Tenant, which
shall go into effect as of the Commencement Date, even if
Tenant's Work is not completed; PROVIDED, however, the
Commencement Date for the Term and for rental obligations shall
be delayed by one (1) day for each day, if any, that Tenant is
delayed in the performance or completion of Tenant's Work by the
actions or inactions of Landlord.
6. RENT.
6.1 MINIMUM RENT. From and after the Rent Commencement
Date (as defined below), and continuing throughout the Term,
except as otherwise set forth herein, Tenant agrees to pay to
Landlord, without demand, a guaranteed rental ("MINIMUM RENT")
equal to the following amounts per annum:
First Partial Lease Year and Lease Years 1 through 5 $ 130,000
Lease Years 6 through 10 $ 143,000
Lease Years 11 through 15 $ 157,300
Lease Years 16 through 20 $ 173,030
First Extended Term (Lease Years 21 through 25) $ 190,333
Second Extended Term (Lease Years 26 through 30) $ 209,366
Third Extended Term (Lease Years 31 through 35) $ 230,303
Fourth Extended Term (Lease Years 36 through 40) $ 253,333
The "RENT COMMENCEMENT DATE" will be: (i) the day Tenant
opens the Premises for business, or (ii) September 28, 1998,
whichever comes first. Promptly following the Commencement Date,
Landlord and Tenant shall enter into and record a memorandum of
this Lease as set forth in Section 20.32 of this Lease. Tenant
will notify Landlord as soon as reasonably practicable prior to
the Commencement Date as to Tenant's estimated date for opening
for business at the Premises, and will promptly notify Landlord
as to the actual opening date for business at the Premises, when
it occurs.
The Minimum Rent shall be payable in equal monthly
installments of one-twelfth of the annual Minimum Rent, on or
before the first day of each month in advance to Landlord at
Landlord's address as specified above, or at such other place as
Landlord may from time to time designate in writing, without
deductions or setoff whatsoever, except as provided in this
Lease. For Partial Lease Years or partial lease months, Minimum
Rent shall be prorated as provided in Section 6.5 of this Lease.
Minimum Rent shall be adjusted based on the actual leasable area
of the Premises, with any such change being effective the first
day of the first calendar month following the date of such
change; PROVIDED, however, in no event shall the total Minimum
Rent for any period of the Term be more than the amounts set
forth above, respectively.
6.2 PERCENTAGE RENT. In addition to the Minimum Rent
provided for in Section 6.1 of this Lease, Tenant agrees to pay
percentage rent ("PERCENTAGE RENT") to Landlord in an amount
equal to two percent (2%) of Gross Sales (as defined below) for a
particular Lease Year in excess of the following amount (also
referred to as a "BREAKPOINT") for the Lease Year in the
following time periods:
First Partial Lease Year and Lease Years 1 through 5 $ 3,200,000
Lease Years 6 through 10 $ 3,400,000
Lease Years 11 through 15 $ 3,600,000
Lease Years 16 through 20 $ 3,800,000
First Extended Term (Lease Years 21 through 25) $ 4,000,000
Second Extended Term (Lease Years 26 through 30) $ 4,200,000
Third Extended Term (Lease Years 31 through 35) $ 4,400,000
Fourth Extended Term (Lease Years 36 through 40) $ 4,600,000
For Partial Lease Years or partial lease months, the
calculation of Percentage Rent and the applicable Breakpoint
shall be prorated as provided in Section 6.5 of this Lease. As
used in this Lease, the term "GROSS SALES" means the gross amount
received by Tenant from all orders placed and filled, and all
sales and services made or rendered, in or from the Premises,
whether for cash or credit. There shall be excluded from Gross
Sales the items described on the attached SCHEDULE #2.
6.3 TIMING AND PAYMENT OF PERCENTAGE RENT; GROSS SALES
REPORTS. Percentage Rent shall be due and payable annually
within forty-five (45) days after the end of the applicable Lease
Year. Concurrently with the payment of Percentage Rent, Tenant
shall deliver a report of its Gross Sales for the applicable
Lease Year. Such report shall be certified by an authorized
employee of Tenant and kept in accordance with Tenant's usual
accounting practices. If Landlord requires an audit or
examination of Tenant's records of Gross Sales pertaining to the
Premises, Tenant will make available to Landlord, at Tenant's
corporate or principal accounting office, all of Tenant's books
and records necessary to accomplish the audit. Landlord's right
to audit or examine such records shall be limited to the current
Lease Year and the immediately preceding Lease Year, and such
right may be exercised by Landlord only one (1) time in any
consecutive twelve (12) month period.
6.4 ADDITIONAL RENT. Tenant shall pay to Landlord, as
additional rent ("ADDITIONAL RENT"), during the Term and any
extensions thereof, its allocated share of Taxes (as provided in
Article 7 below) and Tenant's Proportionate Share of Shopping
Center Expense (as defined below). Tenant shall pay all sums
required to be paid as Additional Rent directly to Landlord at
the place where the Minimum Rent is payable, without deduction or
setoff except as provided in this Lease.
As used in this Lease, "TENANT'S PROPORTIONATE SHARE" means
the allocated share of any expenses which, under the terms of the
Wal-Mart Agreements (as defined below) or any other encumbrance
on the Premises approved by Tenant, are allocated to the
Premises.
6.5 PRORATION. Whenever this Lease provides that payments
of Minimum Rent, Percentage Rent or Additional Rent, or any
limitation thereon are to be prorated (the "PRORATED SUM"), for a
Partial Lease Year, the Prorated Sum shall be prorated at a rate
of one-twelfth of the yearly sum scheduled for that Partial Lease
Year for each month, and for a partial lease month the Prorated
Sum shall be prorated at a rate of one-thirtieth of the monthly
Prorated Sum, for each day, and shall be payable, in advance, on
the first day of the partial lease month.
6.6 ADJUSTMENTS AND REIMBURSEMENTS. Any adjustment to a
required monthly installment of Additional Rent shall be made
after thirty (30) days' advance notice stating the amount of the
adjustment, how it was calculated and allocated, and such other
information about the costs incurred by Landlord as Tenant may
reasonably require. No adjustment will be made retroactively for
any period or expense more than eighteen (18) months prior to the
date of the adjustment. Landlord will promptly respond to
reasonable requests for reasonable back-up documentation
concerning adjustments and reimbursements required hereunder.
7. TAXES.
7.1 REAL PROPERTY TAXES. During the Term (including any
Extended Terms), Tenant will pay or cause to be paid, prior to
delinquency, its allocated share (as set forth in this Section
7.1) of real property taxes and assessments ("TAXES") levied or
assessed against the Premises, the Building and all improvements
on the Premises. Taxes will be prorated between the parties for
any partial year at the commencement and expiration or other
termination of this Lease. The Premises are (or will be placed
into) a separate tax lot, and Tenant will pay the taxes
attributable to such tax lot as its allocated share.
If the Premises at any time is not a separate tax lot, then
Tenant will be responsible for paying to its allocated share of
Taxes levied or assessed against the tax lot that includes the
Premises, based on the assessed values of land and improvements
shown in the tax statement for the tax lot that includes the
Premises. Tenant's allocated share of Taxes pertaining to the
land will be based on the area of the Premises compared to the
entire area covered by the tax statement, and Tenant's allocated
share of Taxes pertaining to improvements will be based on the
assessed value of Tenant's improvements on the Premises compared
to the assessed value of all improvements covered by the tax
statement. Tenant will pay its allocated share of Taxes within
thirty (30) days after the date such Taxes are due to the taxing
authority so long as Tenant has received Landlord's notice of the
amount due from Tenant, including a copy of the tax statement and
a written summary of how Tenant's allocated share was computed.
If assessed values for land and/or improvements are not available
from the county assessor's office, then Tenant's allocated share
of Taxes will be determined in the same manner as Tenant's
Proportionate Share pursuant to Section 6.4.
7.2 PAYMENT IN INSTALLMENTS. If the Taxes (including any
special assessments or local improvement district assessments)
are payable in installments, only installments coming due during
the Term (including any Extended Terms) will be the
responsibility of Tenant under this Lease. If either party's
consent is required to cause the bonding of any assessment or to
contest any taxes, the party will not unreasonably withhold or
delay its consent upon request. Landlord warrants and represents
to Tenant that, to the best of Landlord's knowledge, neither the
Shopping Center nor the Premises are presently subject to any
assessments, and to the best of Landlord's knowledge, there are
no assessments presently contemplated to come into effect against
the Shopping Center or the Premises during the Term of this
Lease.
7.3 RIGHT TO CONTEST. Tenant will be permitted to contest
any levy of Taxes or any lien or other charge on the Premises
claimed or asserted by any party other than Landlord, if a good
faith dispute exists as to the amount or the obligation to pay.
If the Premises are subjected to a lien as a result of
nonpayment, Tenant shall provide to Landlord, upon its demand,
such security or assurances reasonably acceptable to Landlord
that Tenant can and will satisfy the lien before enforcement
against the Premises.
7.4 PERSONAL PROPERTY TAXES. Tenant shall pay, before
delinquency, all personal property taxes assessed against its
leasehold improvements, FF&E, inventory and other personal
property on the Premises.
7.5 LIMITATION ON TAX INCREASES. [This Section has been
intentionally deleted by the parties.]
8. COMMON AREAS, FACILITIES AND SERVICES; OPERATING EXPENSES.
8.1 INITIAL IMPROVEMENT OF PARKING AND OTHER AREAS.
Landlord's responsibility with respect to the Premises will be to
deliver the Premises as described in Sections 2.1 and 4, and will
not include the need to do any improvements within the Premises
or Shopping Center. Tenant will be responsible for improvement
of parking and improvements within the Premises, including
paving, curbs, sidewalks, lights, landscaping, pedestrian and
parking areas, and related land and site improvements, in
accordance with the requirements of this Lease and the attached
EXHIBITS B AND C.
8.2 INCLUSION OF ANY COMMON AREAS. Pursuant to the WalMart
Agreements (as referenced below), Tenant and its agents,
employees, customers and invitees shall have the reasonable
nonexclusive right, in common with others within the Shopping
Center, to use such landscape areas, sidewalks, accessways,
roadways, and other common areas and facilities as may from time
to time exist and be generally available to all occupants of the
Shopping Center (the "COMMON AREAS") (subject to Tenant's right
of exclusive use of the loading docks, entry and circulation
space and any parking within the Premises). The parties
recognize that Landlord is acquiring and will hold only the
Premises and does not intend to acquire or own other portions of
the Shopping Center, which are leased or owned by Wal-Mart and
Sam's, and that Landlord's (and Tenant's) rights to use any
Common Areas are subject to the terms of, and as set forth in,
the WalMart Agreements. Landlord agrees that it will: (i) not
take any action to amend, waive or impair (or fail to take any
action reasonably required to preserve) Tenant's rights of use
under the WalMart Agreements, (ii) to the extent of Landlord's
rights (if any) under the WalMart Agreements to require the same,
will require that any work being done on the Common Areas will be
performed in a good and workmanlike manner designed to minimize
any interference with the enjoyment and use of the Common Areas;
and (iii) to the extent of Landlord's rights (if any) under the
WalMart Agreements to grant or deny consent to the same, will not
consent to any such action to be undertaken if it would impair
access to the Premises from North Avenue, Railroad
Avenue and Lake Street, or the visibility of the Premises or its
signs from North Avenue, Railroad Avenue and Lake Street, or make
the Premises less attractive or interfere in any way with
Tenant's business in the Premises, cause additional structures to
be constructed on top of the Premises, cause the relocation of
the Premises or its access, or reduce, interfere, change the use
of, or build or construct any improvements (temporary or
permanent) upon the Premises or within the fifteen (15) spaces on
the Wal-Mart Property that Tenant is entitled to use for parking
pursuant to the WalMart Agreements, or reduce the parking ratio
of the Shopping Center below the current parking ratio.
Notwithstanding the foregoing, Landlord will NOT be
responsible for enforcing the WalMart Agreements and may satisfy
its obligations under the foregoing sentence by doing the
following: (i) if any matter under the WalMart Agreement requires
Landlord's consent or approval or other action or WalMart of
Sam's otherwise request such consent, approval or action,
Landlord will promptly forward to Tenant the information in
Landlord's possession showing the matter requiring such consent,
approval or other action; (ii) if Tenant approves or disapproves
the matter or otherwise notifies Landlord in writing after
receipt of such matter as to the action that Tenant wants
Landlord (or the third party requesting such consent, approval or
other action) to take, Landlord will promptly forward a copy of
Tenant's letter or notice to the third party and state that such
letter states Landlord's response to the matter; and (iii) in
furtherance of the foregoing, Landlord hereby grants to Tenant a
power of attorney, coupled with an interest, to deliver notices
in response to requests for consent or approval or other action,
in Landlord's name, place and stead but solely at Tenant's (NOT
Landlord's) expense, which will be binding on Landlord as to
matters that concern (or are restricted under) the WalMart
Agreements or any matter restricted under this Section 8.2;
PROVIDED, that (a) Landlord's reasonable approval will be
required, and Tenant agrees that it will not utilize such power
of attorney, during any period in which Tenant is in default
under this Lease (after expiration of applicable notice and/or
grace periods); (b) Tenant will promptly forward a copy to
Landlord of any such notice or other action under which Tenant
uses such power of attorney; and (c) Tenant will obtain
Landlord's approval of any Material Financial Obligation (as
defined below) that might be binding on the Premises.
Landlord will NOT in any event be required to approve, nor
will Tenant use its power of attorney to agree to, any work or
financial obligation exceeding six (6) months' Minimum Rent under
this Lease (a "MATERIAL FINANCIAL OBLIGATION") which would, if
not paid by Tenant, constitute a lien against the Premises that
would be binding on the Premises notwithstanding any expiration
or other termination of this Lease, and is not payable by Tenant
in a single assessment or over a period not exceeding twelve (12)
months.
Subject to Tenant's ability to obtain governmental permits
and approvals and subject to any required consents from Wal-Mart
and Sam's, Landlord approves the conceptual drawings or
preliminary site plan attached hereto as EXHIBIT B, including the
buildable areas, parking lot layouts, receiving areas and parking
ratios presently existing within the Shopping Center.
8.3 PRESERVATION OF PARKING. Pursuant to the WalMart
Agreements, Tenant will have the exclusive right of use of all
parking developed within the Premises, and will have the right of
use (on a "first come, first served" basis) of fifteen parking
spaces within the WalMart Property.
8.4 DEFINITION OF "OPERATING EXPENSES." The term
"OPERATING EXPENSES" as used herein shall mean costs and expenses
in operating, cleaning, equipping, protecting, lighting, heating,
air conditioning, insuring, repairing and maintaining the Common
Areas of the Shopping Center, if any, to the extent allocable to
the Premises pursuant to the WalMart Agreements or any other
encumbrance on the Premises approved by Tenant.
8.5 PAYMENT OF TENANT'S SHARE OF OPERATING EXPENSES.
Tenant agrees to pay, as Additional Rent subject to Sections 8.6
and 8.7 below, the Operating Expenses allocable to the Premises
during the Term and any extension thereof ("TENANT'S SHOPPING
CENTER EXPENSE"). Landlord will promptly deliver to Tenant all
budgets, invoices and other communications of any kind concerning
any Operating Expenses, or at Tenant's option, will require third
parties to deliver such budgets, invoices and other
communications directly to Tenant.
8.6 LIMITATIONS ON TENANT'S SHARE OF OPERATING EXPENSE.
[This Section has been intentionally deleted by the parties.]
8.7 TENANT'S RIGHT TO ASSUME DUTIES. [This Section has been
intentionally deleted by the parties.]
8.8 TENANT'S EXAMINATION OR AUDIT OF CHARGES. No payment
by Tenant with respect to Taxes or Tenant's Shopping Center
Expense shall derogate Tenant's rights to request documentation
and to examine or audit the books and records of Landlord, if
any, kept in connection with the Taxes and Operating Expenses.
Landlord agrees to make such books and records available to
Tenant. If any such examination or audit shows that Taxes paid
to Landlord or Tenant's Shopping Center Expense has been
overstated by more than three percent (3%), Landlord shall
immediately pay to Tenant the reasonable cost of such examination
or audit, and in any event shall remit the total amount of such
overstatement.
9. UTILITIES. All utilities (including, without limitation,
gas, water, telephone, and electricity) shall be separately
metered to the Premises. Tenant shall pay all utility charges
for utilities to the Premises from and after the Commencement
Date.
10. ADVERTISING; PROMOTION; HANDBILLS. Nothing in this Lease
shall require Tenant to: (i) participate in any joint
advertising or promotional event; (ii) become a member of any
merchants association or promotion fund concerning the Shopping
Center; or (iii) contribute any funds whatsoever to any such
merchant's association or promotional fund.
11. USE OF THE PREMISES; TENANT'S LIMITED EXCLUSIVITY
COMMITMENT.
11.1 TENANT'S PERMITTED USE. The Premises shall be used as
a restaurant, which may, at the option of Tenant and subject to
applicable laws and governmental regulation, serve alcohol.
Tenant shall conduct its business at the Premises under the trade
name "Old Country Buffet," "HomeTown Buffet" or any other name
used by Tenant for its restaurants; except in instances of a
permitted assignment or sublease, or upon the written consent of
Landlord, which consent shall not be unreasonably withheld or
unduly delayed. Landlord represents and warrants that, to the
best of Landlord's information and knowledge, Tenant's use of the
Premises in no way conflicts with the uses of, or agreements
with, other tenants/occupants in the Shopping Center. Tenant
will not, however, use, or permit the use of, the Premises for a
tavern or bar (defined as any establishment that derives more
than fifty percent (50%) of its gross revenue in any year from
the sale of alcoholic beverages), dance hall, adult book store,
movie theater, bowling alley, discount rack shoe store,
automotive maintenance facility engaged in quick lube/oil
changes, or any other business whose principal revenues (i.e.,
more than 50% of gross revenues in any year) are from the sale of
alcoholic beverages, amusement or non-restaurant related
entertainment (PROVIDED, that this restriction will not be deemed
applicable to a sit-down restaurant where alcoholic beverages and
entertainment are secondary to the primary restaurant operation,
such as "TGI Friday's" or "Damon's - The Place for Ribs" and
similar operations).
11.2 APPURTENANT RIGHTS. Subject to any limitations in or
the provisions of the WalMart Agreements or any other encumbrance
on the Premises approved by Tenant, if applicable to Tenant's
rights of use, the parties agree that Tenant's rights of use
under this Lease, which are appurtenant to Tenant's leasehold
estate and included in this Lease, include, without limitation,
the following: (i) full and unimpaired access to the Premises,
which rights of access are at the two (2) points shown (or to be
shown) on the Site Plan attached as Exhibit B and are directly
onto publicly dedicated streets which have been accepted for
maintenance by the City/County/State; (ii) the rights of
exclusive use of any parking spaces within Tenant's Premises for
Tenant's customers, invitees and employees; (iii) the rights of
exclusive use of the loading docks, entry, and circulation space
within Tenant's Premises for Tenant's use; (iv) the rights of
access to light and air and nonexclusive rights to use all public
and private utility lines serving the Premises; and (v) the
rights of nonexclusive use of any Common Areas in the Shopping
Center.
11.3 No Exclusivity; Unapproved Uses. Landlord does not
own any other portion of the Shopping Center and does not promise
or commit that there will not be other uses in the Shopping
Center that may compete with Tenant's business. In the event
that Landlord acquired other portions of the Shopping Center (in
addition to the Premises) or at any point any other party
requests Landlord's consent or approval for the operation within
the Shopping Center of another buffet-style restaurant, or a
cafeteria or cafeteria-style restaurant or a family-style
restaurant, or so-called "home-meal replacement" business (such
as by way of example and not in limitation, the type of food
operation operated by Boston Chicken, Inc./Boston Market, Cracker
Barrel Corner Market, Eatzi's, and/or Kenny Rogers Roasters), or
the operation of a salad bar(s) or buffet(s) at other facilities
within the Shopping Center whose primary marketing orientation is
not that of a buffet-style, cafeteria or cafeteria-style
restaurant, or (with respect to any portion of the Shopping
Center within 400 feet of the front entrance of the Premises) as
a child-oriented play/amusement center (such as, by way of
example and not in limitation, the type of centers presently
operated by Discovery Zone, Leaps & Bounds or Fandangles), or an
establishment serving alcohol, a theater, or a health club (the
"UNAPPROVED USES"), Landlord will not consent to or approve any
such Unapproved Use and grants a power of attorney to Tenant, on
the same basis and subject to the same conditions as stated in
Section 8.2, to consent or deny consent or approval or take other
actions, at Tenant's expense, in response to any requested action
of Landlord from third parties with respect to any such
Unapproved Use.
12. MAINTENANCE AND REPAIR OF PREMISES; ALTERATIONS AND SIGNS.
12.1 REPAIRS AND MAINTENANCE. Tenant shall keep (or cause
to be kept) the Premises and the Building and all improvements
within the Premises at all times in a neat, clean, and sanitary
condition, reasonably keep (or cause to be kept) the glass of all
windows and doors clean and presentable, and reasonably keep (or
cause to be kept) such Building in a good state of repair.
Tenant will reasonably maintain and repair the walls, roof and
other structural components and building systems of the Building
and will be responsible for repair and maintenance of the
interior portion of the Building and all painting, exposed
electrical, plumbing and other utility systems, doors, glass and
all of Tenant's personal property. Tenant shall reasonably keep
(or cause to be kept) the outside doors and their closure
apparatus and mechanisms in good condition, replace all cracked
or broken glass, and reasonably protect the sprinkler system and
all pipes and drains so that they will not freeze or become
clogged. Tenant shall also reasonably maintain, operate and
repair the utility systems within the Building, including the
cost of connection to the utility distribution systems. Tenant
will keep its entrances to the Building free from snow and ice.
12.2 ALTERATIONS. Tenant may install signs, machinery and
personal property and make such alterations and improvements to
the Building (after its construction) as Tenant may deem
advisable; PROVIDED, that Tenant will obtain Landlord's
reasonable approval of any major structural alteration that would
diminish the value or utility of the Premises or conflict with,
or require approval under, the WalMart Agreements. Structural
additions and structural improvements (excluding Tenant's own
FF&E, signs and other personal property) shall at once become a
part of the realty and upon expiration or termination of this
Lease shall belong to Landlord and shall be surrendered with the
Premises, EXCEPT as otherwise approved in writing by Landlord.
All alterations and improvements shall be made in a good and
workmanlike manner and in compliance with applicable laws and
ordinances, including the limitations imposed by local building
laws and governmental requirements.
12.3 SIGNS. Tenant may, in its discretion and subject to
applicable laws and ordinances and subject to the need to obtain
approval from Sam's, install and maintain its standard sign on
the architecturally prominent
front sign band and side of the Premises with individually
illuminated letters of at least forty-eight (48") inches in
height (excluding ascending and descending character elements).
Tenant is not being granted, by this Lease, any right to place
signage on the Shopping Center pylon sign (which belongs solely
to Wal-Mart). Tenant shall have the right to apply to the City
for Tenant's own pylon sign, to be located in a location approved
by Wal-Mart pursuant to the WalMart Agreements; the parties
anticipate that such pylon sign will be in the location and be as
described in the drawings attached as EXHIBIT I, but any change
in such location or such sign that is approved both by the City
and by Wal-Mart will not require further approval from Landlord.
Subject to City approval, Tenant may hang professionally prepared
"coming soon" and "now open" banners on the front and side of the
Building within sixty (60) days before and after its opening for
business and/or erect a temporary street monument within the
Premises. Subject to the need to obtain City approval and Sam's
approval (and/or Wal-Mart approval, if required under the Wal-
Mart Agreements), Tenant will be allowed maximum signage
permitted by applicable law
13. INSURANCE; RESTORATION OF DAMAGE.
13.1 TENANT'S INSURANCE. Tenant agrees to purchase, in
advance, and to carry in full force and effect during the Term of
this Lease and any extension thereof, at its sole expense, the
following insurance:
(i) Property insurance against loss by fire
and other hazards covered by the so-called
"all-risk" or "special form" policy, on a
replacement cost basis and in an amount sufficient
to avoid application of any co-insurance clause,
covering the Building.
(ii) Commercial general liability insurance
(on an Insurance Services Office form or
equivalent) covering all acts of Tenant, its
employees, agents, representatives and guests on
or about the Premises, in a combined single limit
amount of not less than Three Million and No/100
Dollars ($3,000,000.00), which policy shall
include, but not be limited to, coverage for
Bodily Injury, Property Damage, Personal Liability
and Contractual Liability (applying to this
Lease).
(iii) Such property insurance on Tenant's
own FF&E, inventory and other personal property of
Tenant as Tenant determines to be appropriate.
(iv) In the event Tenant serves alcohol
on the Premises, so-called "dramshop" insurance
in an amount consistent with industry standards.
Tenant may self insure with respect to plate glass. Where
applicable, Tenant may maintain reasonable deductibles on the
insurance required by this Section 13.1. All of Tenant's
insurance required to be furnished pursuant to Section 13.1(ii)
shall name Landlord as an additional insured to the extent of
Tenant's indemnification obligations set forth in Section 14.1.
So long as Tenant (and/or the Guarantor, Buffets, Inc., which
may be providing the insurance coverages required under this
Lease for the benefit of Landlord and Tenant) maintains a net
worth of at least $100,000,000, Tenant will not be required to
name Landlord as an additional insured on Tenant's
property/casualty insurance covering the Building (PROVIDED, that
the property/casualty policy permits Tenant to waive subrogation,
as provided by this Lease), nor will Tenant be required to name
Landlord as loss payee on Tenant's property/casualty insurance
covering the Building. If at any time such net worth if less
than $100,000,000 or the policy does not permit Tenant to waive
subrogation, then Tenant shall name Landlord as an additional
insured on such property/casualty insurance covering the
Building. If at any time such net worth is less than
$100,000,000, then the loss payee on such property/casualty
coverage on the Building will be "Landlord and Tenant, as their
respective interests may appear." Tenant's property/casualty
coverage on the Building will cover the entire Building and be
maintained by Tenant throughout the Lease term, for the benefit
of both Landlord's and Tenant's interests therein. Tenant's
coverages will be primary (and any coverage maintained by
Landlord will be secondary and solely for Landlord's benefit, if
Landlord elects to maintain any coverages). All of Tenant's
insurance shall provide for thirty (30) days written notice to
Landlord prior to cancellation or non-renewal. Certificates of
all such insurance shall be delivered to Landlord at least thirty
(30) days prior to the termination date of any existing policy
and upon written request by Landlord. If Tenant fails to comply
with the requests of this Section 13, Landlord
may, but shall not be obligated to, obtain such insurance and
keep the same in effect and Tenant shall pay Landlord the premium
therefor upon demand until such time that Tenant conforms with
its insurance requirements set forth above.
13.2 LANDLORD'S INSURANCE. [This Section has been
intentionally deleted. There is no insurance required to be
maintained by Landlord.]
13.3 GENERAL INSURANCE REQUIREMENTS. If any insurance
required hereunder ceases to be available, or is available on
terms so unacceptable that prudent landlords or tenants, as the
case may be, generally do not carry such insurance, then in lieu
of such insurance the pertinent party may carry the most
comparable insurance which is available and generally carried by
prudent parties. All policies of insurance required under this
Article 13 may be in the form of blanket or umbrella policies.
Further, all insurance required hereunder shall be issued by
financially responsible insurers. An insurer with a current A.M.
Best Company rating of at least A:VII shall be conclusively
deemed to be acceptable.
13.4 RESTORATION OF DAMAGE TO THE BUILDING. Subject to the
provisions of the following paragraph, in the event of any
casualty to the Building on the Premises, Tenant shall use the
insurance proceeds to alter, repair, demolish, construct new
improvements on, restore or replace the damaged or destroyed
Building, as Tenant may elect in its discretion. Costs of
restoration will not exceed the net insurance proceeds available.
The Minimum Rent shall not be abated. If fire or other casualty
during the last three (3) years of the Term or during any
Extended Term causes damage to the Building in an amount
exceeding twenty percent (20%) of its full construction-
replacement cost, Tenant may elect to terminate this Lease by
giving written notice of such termination to Landlord within
sixty (60) days following the date of damage, in which case any
insurance proceeds (plus any deductible or self-insured amount)
shall be paid to Landlord.
The proceeds of Tenant's property/casualty insurance on the
Building and improvements which by the terms of this Lease would
revert to Landlord on expiration or other termination of this
Lease (excluding Tenant's FF&E and other items that Tenant is
permitted to remove pursuant to this Lease) that are payable on
account of the casualty (plus the amount of any deductible or
self-insured retention level, which will be paid by Tenant) will
be the "Restoration Fund." Reconstruction may include
reconstruction of the improvements and/or demolition, alteration
and construction by Tenant of additional improvements and other
alterations of the Premises, to be approved by Landlord pursuant
to this Lease, to the extent appropriate to permit continuation
of Tenant's business operation on the Premises. The Restoration
Fund will be made available to pay the costs of such. So long as
Tenant is not then in default under this Lease, Tenant will not
be required to obtain Landlord's approval as to Tenant's
settlement with its insurer of the casualty claim, but Tenant
will keep Landlord informed as to the status of settlement of the
claim for any casualty to the Building and/or improvements.
HOWEVER, IF THE COST OF RESTORATION OF THE CASUALTY WOULD EXCEED
FIVE PERCENT (5%) OF THE THEN REPLACEMENT COST OF THE BUILDING,
then Tenant agrees that the entire Restoration Fund will treated
as escrowed funds and shall be deposited at a neutral depository
account at a financial institution selected by Tenant and
reasonably acceptable to Landlord (the "DEPOSITORY ACCOUNT").
Draws from the Depository Account may be made only with the
reasonable written consent of Landlord and shall be handled in
the same manner as construction draws on a construction loan.
Tenant will submit plans, obtain Landlord approvals of the work,
and otherwise comply with all provisions of this Lease in
connection with the performance of the restoration work. Draws
from the Depository Account will be subject to a 10 percent
holdback until completion of the work.
Tenant will not be required to incur costs for the
restoration in excess of the Restoration Fund proceeds, but will
cause the Building and improvements, to the extent feasible, to
be restored: (i) to a complete architectural unit, (ii) in
condition appropriate to permit continuation of business
operation, and (iii) substantially the same value and utility as
immediately before the casualty, to the extent feasible (taking
into consideration, among other matters, the amount of the
Restoration Fund).
13.5 WAIVER OF CLAIMS AND SUBROGATION. Notwithstanding any
other provision in this Lease to the contrary, to the extent
possible without invalidating or decreasing the coverage under
their respective insurance policies, Landlord and Tenant hereby
release one another from any and all liability or responsibility
(to the other or anyone claiming through or under them by way of
subrogation or otherwise) for any loss or damage to the extent
covered by the policies of insurance required to be maintained
hereunder or under any other policies of insurance actually
maintained by the party (whichever is applicable), even if such
loss or damage has been caused by the fault
or negligence of the other party, or anyone for whom such party
may be responsible, which loss or damage: (i) is caused by a
peril required by this Lease to be covered by the insurance of
the party incurring the loss; or (ii) if insured for a greater
amount than required, to the extent of the recovery under any
property insurance policy covering the party incurring the loss.
Each party, to the extent applicable, shall apply to their
insurers to obtain such waivers, to the extent necessary, and
each party shall obtain any special endorsements, if required by
their insurer to evidence compliance with the aforementioned
waiver.
14. INDEMNIFICATION BY PARTIES.
14.1 INDEMNIFICATION BY TENANT. Tenant hereby agrees to
protect, defend, indemnify and hold Landlord harmless against any
and all claims, actions, damages, liability, causes of action,
judgments, liens, costs and expenses in connection with injury or
loss of life to person, or damage to property, arising out of the
use, occupancy or operation of Tenant's business in the Premises
or the condition of the Premises or any breach or default by
Tenant in the performance of any term of this Lease on Tenant's
part to be performed or any inaction or action of Tenant, its
agents, concessionaires, contractors, employees or licensees in
or about the Premises. In the event Landlord shall be made a
party to any litigation or proceeding commenced by or against
Tenant (except with respect to suits or litigation commenced by
Tenant against Landlord as a result of a breach of this Lease by
Landlord), then Tenant shall protect and hold Landlord harmless
and shall pay all costs and expenses and reasonable attorneys'
fees incurred or paid by Landlord in connection with such
litigation or proceeding and shall satisfy any judgment or fines
that may be entered against Landlord in such litigation or
proceeding.
14.2 INDEMNIFICATION BY LANDLORD. Subject to the
limitations stated below, Landlord hereby agrees to protect,
defend, indemnify and hold Tenant harmless against any and all
claims, actions, damages, liability, causes of action, judgments,
liens, costs and expenses in connection with injury or loss of
life to person, or damage to property, arising out of the use,
occupancy or operation of the Landlord's business in or about the
Premises or the condition of the Premises or any breach or
default by Landlord in the performance of any term of this Lease
on Landlord's part to be performed or any inaction or action of
Landlord, its agents, concessionaires, contractors, employees or
licensees in or about the Premises. In the event Tenant shall be
made a party to any litigation or proceeding commenced by or
against Landlord (except with respect to suits or litigation
commenced by Landlord against Tenant as a result of a breach of
this Lease by Tenant), then Landlord shall protect and hold
Tenant harmless and shall pay all costs and expenses and
reasonable attorneys' fees incurred or paid by Tenant in
connection with such litigation or proceeding and shall satisfy
any judgment or fines that may be entered against Tenant in such
litigation or proceeding.
Landlord shall NOT be liable for any loss or damage to
persons or property resulting from fire, explosion, falling
plaster, steam, gas, electricity, water or rain which may leak
from any part of the Building or from the pipes, appliances or
plumbing works therein or from the roof, street or subsurface or
from any other place resulting from dampness or any other cause
whatsoever, unless caused by or due to the negligence of
Landlord, its agents, servants or employees.
15. ESTOPPEL, SUBORDINATION, NONDISTURBANCE AND ATTORNMENT.
15.1 ESTOPPEL CERTIFICATES. Upon twenty (20) days' prior
notice of the request, either party will execute, acknowledge and
deliver to the other party a certificate stating: (a) that this
Lease is unmodified, amended and/or supplemented and in full
force and effect (or, if there have been modifications, that this
Lease is in full force and effect as modified, and setting forth
such modifications), (b) the dates to which rent and other sums
payable hereunder have been paid, and (c) either that to the
knowledge of the party no default exists under this Lease or
specifying each such default that exists under this Lease or
specifying each such default of which the party has knowledge.
Any such certificate may be relied upon as to the facts stated
therein by any actual or prospective mortgagee or purchaser of
the Premises from Landlord or any actual or prospective sublessee
or assignee of Tenant's interest in this Lease in connection with
one of the transactions permitted or approved under Article 16.
A party shall not be obligated to update any certificate once
delivered (other than in response to a request of execution of a
new estoppel certificate).
15.2 SUBORDINATION, NONDISTURBANCE AND ATTORNMENT. Provided
that Tenant's use and occupancy of the Premises shall not be
disturbed and all of Tenant's other rights under this Lease are
fully recognized (unless Tenant's right of possession under this
Lease shall have been terminated in accordance with the
provisions of this Lease), Tenant agrees that, upon request of
the Landlord, Tenant will in writing subordinate its rights
hereunder to the lien of any mortgage or deed of trust to any
bank, insurance company or other institutional lender, now or
hereafter in force against the Premises or Shopping Center, and
to all advances made or hereafter to be made upon the security
thereto; PROVIDED, that Tenant's subordination shall apply to the
extent that the party who receives the benefit of the
subordination (the "LENDER") enters into or approves a written
agreement stating that Tenant's right to quiet possession
pursuant to this Lease shall not be disturbed by such party so
long as Tenant pays the rent and observes and performs all of the
provisions of this Lease and that the lender will be bound by the
leasehold mortgagee protection described in Section 20.23 below.
In the event any proceedings are brought for foreclosure, or
in the event of the exercise of the power of sale under any
mortgage or deed of trust or other lien made by Landlord covering
the Premises, Tenant shall attorn to the Lender or other
purchaser upon any such foreclosure or sale and recognize such
Lender or other purchaser as the Landlord under this Lease.
At the time Landlord acquires the fee title to the Premises,
Landlord will cause any Lender that may provide financing to
Landlord for such acquisition to record its lien interest subject
to and after recordation of the memorandum of lease evidencing
this Lease, so that this Lease will not be subject to termination
in the event of foreclosure or a deed-in-lieu of foreclosure
under Lender's loan instruments. If required by the Lender,
Tenant will enter into a subordination, non-disturbance and
attornment agreement with the Lender (an "SNDA"). As between
Landlord and Tenant, the parties approve the form of SNDA
attached as Exhibit G; however, if the Lender requires that the
SNDA be on Lender's form, Tenant will not unreasonably withhold
approval of any commercially reasonable SNDA form of the Lender,
so long as it is with an institutional lender and the SNDA form
of such Lender does not materially modify or impair the rights
and entitlements under this Lease, change Tenant's rights to
rebuild and to continue this Lease following condemnation or
casualty, or otherwise materially and detrimentally alter the
approved format of the SNDA as attached hereto. Landlord will
use reasonable efforts to obtain the Lender's approval of the
attached SNDA. Landlord shall similarly provide Tenant with
executed SNDA's from any and all future mortgagees, holders of
deeds of trust, and any other parties holding an interest in the
Premises, no later than the date said parties obtain such an
interest. Tenant may waive these conditions precedent upon
written notice to Landlord, although no other action by Tenant
short of such notice shall be deemed an implied waiver of
Tenant's privileges hereunder.
16. ASSIGNMENT AND SUBLETTING.
16.1 RESTRICTIONS ON TRANSFER. Except as otherwise provided
below, Tenant shall not assign or in any manner transfer this
Lease or any estate or interest therein or sublease the Premises
without Landlord's prior written consent, which consent shall not
be unreasonably withheld or delayed so long as the following
conditions are satisfied: (i) Tenant affirms to Landlord in
writing Tenant's liability under this Lease and acknowledges that
it is not being released from liability hereunder (unless the
express terms of Section 16.3 below are satisfied for such
release), and (ii) Tenant provides to Landlord a written
confirmation that Tenant is not aware of any defaults or events
of default outstanding in the performance by Landlord of the
terms of this Lease and/or any other known outstanding offsets,
setoffs, abatements of rent, or defenses by Tenant to the
enforcement of this Lease or payment of rent under this Lease, to
which Tenant may be entitled under any terms of this Lease, OTHER
THAN as may be stated in Tenant's written confirmation. Any
assignment or other transfer without such consent shall, at the
option of Landlord, constitute a default under this Lease.
Notwithstanding anything contained herein to the contrary,
Tenant may, without the necessity of the consent of Landlord or
the need to provide the affirmation and confirmation referenced
above as a condition to any of the following events, at any time
assign, sublease or otherwise transfer this Lease or any portion
thereof to: any parent, subsidiary or affiliate corporation or
entity; any corporation resulting from the consolidation or
merger of Tenant into or with any other entity; any person, firm,
entity or corporation acquiring a majority of Tenant's issued and
outstanding capital stock or all or substantially all of Tenant's
physical assets; or any person, firm, entity or corporation
acquiring at least ten (10) of Tenant's restaurants nationally
(hereinafter, a "PERMITTED TRANSFER"). Such transactions will be
treated as Permitted Transfers for which Landlord's consent is
not required; PROVIDED, however, promptly following any such
assignment, Tenant shall notify Landlord in writing of the
assignment, including a description of the transaction and the
identity of the assignee. Notwithstanding the foregoing, no
provision of this Lease will be construed to require Tenant to
obtain Landlord's consent for any financing of or on Tenant's
leasehold estate or FF&E or require consent for (or to notify
Landlord with respect to) any transfer of Tenant's stock. As
used herein, the expression "AFFILIATE CORPORATION OR ENTITY"
means a person or business entity, corporate or otherwise, that
directly or indirectly through one or more intermediaries,
controls or is controlled by or is under control with Tenant.
The word "CONTROL" means the right and power, direct or indirect,
to direct or cause the direction of the management and policies
of a person or business entity, corporation or otherwise. No
Permitted Transfer will constitute a release of liability.
16.2 REASON FOR ANY DISAPPROVAL GIVEN. If Tenant follows
the procedures in Section 16.1 for seeking Landlord's consent and
Landlord does not approve the request, Landlord will give Tenant
a written statement specifying the particular reasons why the
proposed transfer and transferee were not reasonably acceptable
to Landlord and any steps required to be taken by Tenant (if
applicable) to obtain Landlord's consent, and at least thirty
(30) days for Tenant to comply with such requirements or take
other appropriate action with respect to Landlord's refusal to
grant consent.
16.3 CONSENT GENERALLY. The giving of consent in one
instance shall not preclude the need for Tenant to obtain
Landlord's consent to further transfers. No changes in the rent
or economic terms of this Lease will be required of Tenant as a
condition of Landlord's consent. In the event that Tenant, with
or without the previous consent of Landlord, does assign or in
any manner transfer this Lease or any estate or interest therein
or sublease the Premises, Tenant shall not be released from any
of its obligations under this Lease. Landlord's consent to any
of the foregoing shall not release or waive the prohibition
against them thereafter or constitute a consent to any other
assignment, transfer or sublease.
16.4 SUBLEASE TO OPERATING COMPANY. Landlord and Tenant
hereby acknowledge and agree that effective on the Commencement
Date (or at any time thereafter), Tenant may sublease the entire
Premises to, at Tenant's election, OCB Restaurant Co., HomeTown
Buffet, Inc., or Buffets, Inc., all of which are affiliated
corporations of Tenant.
17. CONDEMNATION.
17.1 SUBSTANTIAL TAKING. If the entire Premises is
condemned, or if such a substantial portion of the Premises,
means of access or adjacent roadway is taken which renders the
Premises reasonably unusable for Tenant's business operations,
then this Lease shall terminate as of the date upon which
possession is taken by the condemning authority. The net
condemnation proceeds shall be divided between Landlord and
Tenant in proportion to the value of their respective interests
in the Premises and Building immediately prior to the termination
of this Lease. The "value" of Landlord's interest in the
Premises and Building, for purposes of this Lease, will include,
for this purpose, the value of Landlord's percentage interest in
the Building acquired pursuant to the terms of Section 19.2, and
the value of Landlord's reversionary interest in the Building.
Landlord shall have the right to offset any amounts in default
that Tenant owes Landlord pursuant to this Lease against any
proceeds payable to Tenant under this paragraph. The "value" of
Tenant's interest in the Premises and Building, for purposes of
this Lease, will include, for this purpose, the value of Tenant's
percentage interest in the Building pursuant to the terms of
Section 19.2. Tenant will also be entitled to receive and retain
any separate award attributable to the taking of Tenant's FF&E,
moving expenses, severance damages, and any other award that may
be separately available from the condemning authority and that
does not diminish the award for the Building.
17.2 PARTIAL TAKING. In the event of a partial taking by
condemnation of the Premises, means of access or roadway as
described above, and Section 17.1 does not apply, the net
condemnation proceeds shall be made available to Tenant to make
necessary repairs and alterations to the Premises and Building
(as appropriate) so as to permit Tenant to continue its
operations and to restore the Premises and Building or other
property not so taken. Minimum Rent shall be abated during the
period of restoration to the extent the Premises and Building are
not reasonably usable for Tenant's use; provided, that the period
of abatement shall not exceed twelve (12) months. Costs of
restoration will not exceed the net condemnation proceeds
available. Any net condemnation proceeds from the taking which
are not used to repair, alter and restore the Premises and
Building shall belong to Landlord (the "RETAINED AWARD"). After
restoration, the Minimum Rent shall be reduced for the remainder
of the Term by an amount determined by multiplying the Minimum
Rent by a fraction, the numerator of which is the amount of the
Retained Award so paid to Landlord and the denominator of which
is $ [the agreed value and purchase price for the Premises
that Landlord is paying to acquire it, prior to the commencement
of this Lease].
17.3 ARBITRATION PROCEDURE. If the parties cannot agree
upon the adjustment to Minimum Rent pursuant to Section 17.2,
either party may request that the fair market rental values be
determined by arbitration. The arbitration will be by three
arbitrators, with the arbitrators' fee divided equally between
the parties. Landlord and Tenant will each select as arbitrator
an independent Realtor-appraiser having knowledge with respect to
commercial shopping center real estate values and practices in
the geographic area in which the Shopping Center is situated, and
the two arbitrators shall select a third arbitrator having the
above qualifications. The arbitrators will be instructed to
determine the fair market rental value of the Premises before and
after the condemnation. The arbitration shall be conducted
according to the procedures of the arbitration statutes of the
State in which the Shopping Center is located, and the award
shall have the effect provided therein.
17.4 TRANSFER IN LIEU OF CONDEMNATION. Sale of property to
a purchaser with the power of eminent domain in the face of a
threat or the probability of the exercise of the power shall be
treated as a taking by condemnation.
18. DEFAULT.
18.1 TENANT'S DEFAULT. If Tenant defaults in the payment of
Minimum Rent, Percentage Rent or any Additional Rent or other
charge payable by Tenant and Tenant does not cure such default
within fifteen (15) days after written notice thereof shall have
been given to Tenant (provided, that if Landlord has already
given two (2) such notices within the twelve (12) month period
immediately prior to the event of default, then for the remainder
of the 12-month period, only five (5) days notice will be
required); or if Tenant defaults in the prompt and full
performance of any other provision of this Lease and Tenant does
not cure the default within thirty (30) days after written notice
is given to Tenant (or such longer period as may be necessary to
cure such default so long as Tenant begins correction of the
default within the thirty (30) day period and thereafter proceeds
with reasonable diligence and in good faith to effect the remedy
as soon as practicable); then Tenant shall be in default under
this Lease.
Upon such default, Landlord may elect, upon at least ten
(10) days prior written notice of its intention to do so, if the
default is not cured within such ten (10) day period, to
terminate this Lease or, without terminating this Lease, to
terminate Tenant's right to possession of the Premises. In
addition to any other rights and remedies Landlord may have by
law or otherwise (other than related to any right of acceleration
of rent, which Landlord specifically waives), Landlord shall have
the right of re-entry and may remove all persons and property
from the Premises. Landlord's entry upon and taking possession
of the Premises shall not in any way terminate this Lease or
release the Tenant in whole or in part from Tenant's obligation
to pay the Minimum Rent and Additional Rent hereunder for the
then current Term or discharge Tenant from any loss or damage
sustained by Landlord on account of Tenant's breach of the Lease,
unless Landlord elects in writing to terminate the Lease.
Upon Landlord's re-entering the Premises, Landlord shall use
reasonable efforts to relet all or any part of the Premises for
such term or terms and at such rental or rentals as Landlord, in
the exercise of Landlord's reasonable discretion, may deem
advisable. Upon such reletting, all rent and other sums received
by Landlord from such reletting shall be applied first to the
payment of any indebtedness other than rent due hereunder from
Tenant to Landlord; second to the payment of any costs and
expenses of such reletting, including reasonable brokerage fees
and attorneys' fees and the reasonable costs of alterations and
repairs undertaken for such reletting; third to the payment of
rent and other charges due and unpaid hereunder and the residue,
if any, shall be held by Landlord and applied in the payment of
future amounts that become due and payable hereunder. If such
rentals and other sums received from such reletting during any
month be less than that to be paid during such month by Tenant
hereunder, Tenant shall pay such deficiency immediately to
Landlord. Notwithstanding any such reletting without
termination, Landlord may at any time hereafter elect to
terminate this Lease for such previous breach.
Tenant shall pay all damages Landlord may incur by reason of
Tenant's default, including (without limitation) reasonable costs
and attorneys' fees.
Landlord may, but shall not be obligated to, cure at any
time upon reasonable notice to Tenant (but not less than thirty
(30) days unless an emergency), any default by Tenant under this
Lease and whenever Landlord so elects, all costs and expenses
incurred by Landlord in curing the default, together with
interest thereon at the annual rate of two percent (2%) over the
rate then announced by Chase Manhattan Bank as its base or prime
rate from the date of such payment by Landlord shall be payable
as Additional Rent to the Landlord and the Landlord shall have in
the event of the nonpayment thereof the same rights as in the
case of default by Tenant in the payment of rent. If it shall be
unlawful to charge Tenant the aforesaid interest rate, then in
such event the interest rate shall be the highest rate per annum
allowed by law.
No consent or waiver, express or implied by Landlord to any
breach of any term of this Lease on the part of the Tenant shall
be construed as a consent or waiver of any other breach of the
same or any term, unless in writing signed by Landlord.
18.2 LANDLORD'S DEFAULT. In the event Landlord fails to
perform its responsibilities pursuant to this Lease, Tenant's
notice as to Landlord's nonperformance will be sent
simultaneously to Landlord and any mortgagee of Landlord which
has requested such notice, provided such mortgagee has first
provided Tenant with a non-disturbance agreement consistent with
Section 15.2. Landlord will be in default under this Lease if
Landlord fails to cause such responsibilities to be fully
performed within thirty (30) days (48 hours in the event of an
emergency) after written notice by Tenant to Landlord specifying
the nature of the default with reasonable particularity. If a
non-emergency default is of such a nature that it cannot be
remedied fully within the thirty (30) day period, this
requirement shall be satisfied if Landlord begins correction of
the default within the thirty (30) day period and thereafter
proceeds with reasonable diligence and in good faith to effect
the remedy as soon as practicable. Tenant shall not have the
right to terminate this Lease as a result of Landlord's default.
In the event of such default, Tenant shall have all remedies
available under law for breach of contract, including (without
limitation) the right of specific performance. In addition,
Tenant may elect in its discretion to perform the required action
or take corrective action reasonably required to cure the default
if it pertains to the Premises, in which event Landlord shall
reimburse Tenant for the reasonable out-of-pocket costs of such
action, together with reasonable and necessary costs and
disbursements and interest, on the same basis as described in
Section 18.1, and such amounts may be deducted from the rent
thereafter to become due under this Lease, after at least twenty
(20) days' written notice to Landlord (and its mortgagee) as to
the costs so incurred.
Any mortgagee of Landlord which has notified Tenant of its
address in the manner provided for notices in this Lease will
have the right to cure Landlord's defaults under this Section.
The cure period will commence on notice to such mortgagee of the
default and extend for a period ending twenty (20) days after the
end of the time period for Landlord to cure a default. In this
connection, any representative of the mortgagee or beneficiary
shall have the right to enter upon the Premises for the purpose
of curing Landlord's default.
19. WARRANTY OF QUIET ENJOYMENT; SURRENDER OF PREMISES; HOLDOVER
TENANCY.
19.1 WARRANTY OF QUIET ENJOYMENT. Upon payment by the
Tenant of the rents herein provided and upon the observance and
performance of all other covenants, terms and conditions on
Tenant's part to be observed and performed, Tenant shall quietly
enjoy the Premises without hindrance or interruption by Landlord
or anyone claiming by, through or under Landlord. Landlord
represents and warrants that, on the Commencement Date, each of
the following will be true: (i) Landlord shall have good and
marketable fee title to the Premises, subject to matters of
record; (ii) the Premises shall not subject to the lien of any
deed of trust, mortgage or other similar encumbering instrument,
except for any that are recorded after (and are subject to) this
Lease (or memorandum thereof); (iii) Landlord has the full and
unencumbered power, right and authority to make this Lease for
the Term hereof; and (iv) subject to matters of record, Landlord
will put Tenant into complete and exclusive possession of the
Premises free from all orders, restrictions, covenants,
agreements, leases, easements, laws, codes, ordinances,
regulations or decrees which would, in any way, prevent or
inhibit the use of the Premises by Tenant as provided in this
Lease, prevent or restrict the use of the access roads and
passageways of the Shopping Center by Tenant, its agents,
employees or invitees, or limit ingress and egress to and from
North Avenue, Railroad Avenue and Lake Street, other than the
WalMart Agreements and any other encumbrances on the Premises
approved by Tenant, and (v) the Premises will, at the time of
Notice of Tender by Landlord, have all necessary governmental
approvals to be a separate legal lot.
19.2 OWNERSHIP OF BUILDING; SURRENDER OF PREMISES BY TENANT.
The parties intend and agree that the Construction Allowance
being provided by Landlord pursuant to the attached Exhibit C
(the "CONSTRUCTION ALLOWANCE") is being advanced solely to pay
for part of the construction costs of improvements that will be
deemed realty under Illinois law and be owned by Landlord. In
furtherance thereof, Landlord will be deemed to be an owner of an
undivided interest in the Building that is proportionate to its
proportionate share of the total construction costs of the
initial construction of the Building, which shall be and remain
realty and part of the Premises that Landlord owns and leases to
Tenant pursuant to this Lease. Notwithstanding such part
ownership, Tenant (and not Landlord) will be solely responsible
throughout the Term of this Lease for maintaining the Building,
maintaining insurance thereon and paying the costs and expenses
attributable to the Building.
Upon completion of construction, Tenant will provide to
Landlord a certified statement of the total construction costs
for the Building, and a calculation that shows Landlord's
proportionate share of such total construction costs and
Landlord's proportionate interest in the Building for purposes of
this Lease. If desired by Landlord or any accountant to either
party, Tenant and Landlord will execute a bill of sale or other
instrument reasonably required to confirm the parties' respective
interest in the Building. Upon request, Tenant will provide or
make available to Landlord, for its examination, such back-up
information on construction costs as Landlord may reasonably
require to verify Tenant's statements and calculations. The
"BUILDING" for these purposes will not include any of Tenant's
identification signage, FF&E and personal property that Tenant
may be entitled to remove on the expiration or earlier
termination of this Lease (which will be owned solely by Tenant
and removed by it upon such expiration or termination).
Subject to the provisions set forth in this paragraph, upon
expiration or termination of this Lease, Landlord shall, at no
charge to Landlord, become the owner of and have Tenant's
reversionary interest in the Building and all improvements of
Tenant which have become part of the real property. Tenant shall
surrender the Premises to Landlord in good repair, operating
condition, working order and appearance, subject to reasonable
wear and tear and (to the extent provided herein for termination
after casualty) damage by fire and other casualty. Depreciation
and wear from ordinary use need not be restored, but all repairs
for which Tenant is responsible will be completed to the latest
practical date prior to such surrender. If this Lease is
terminated in connection with a casualty, Tenant will assign to
Landlord the entire insurance proceeds pertaining to the Building
and improvements that revert to Landlord. Tenant shall promptly
remove all of its own identification signage, inventory, FF&E and
other personal property that remain the property of Tenant, and
will restore any physical damage caused by such removal. Any such
property of Tenant not so removed shall be deemed abandoned by
Tenant and shall become the property of the Landlord.
19.3 HOLDING OVER. In the event Tenant remains in
possession of the Premises or any part thereof after termination
of this Lease in accordance with Section 19.2, by lapse of time
or otherwise, Tenant shall be deemed to be occupying the Premises
as a tenant on a month-to-month basis at a monthly rent fixed for
the holdover period at the last monthly installment of Minimum
Rent payable during the Term of this Lease or any extension
thereof, and Tenant will also be responsible for paying any
applicable Percentage Rent and Additional Rent. All other
conditions, provisions and obligations of this Lease shall remain
the same and in full force and effect.
20. GENERAL PROVISIONS.
20.1 SUCCESSORS. All rights and liabilities herein given to
or imposed upon the respective parties hereto shall extend to and
bind their respective heirs, executors, administrators,
successors, assigns and sublessees. Tenant acknowledges that it
has been advised that Landlord intends to create a limited
partnership or other entity to hold title to the Premises and
this Lease, and this Lease is freely transferable by Landlord to
any entity that Landlord may form to acquire the Premises.
20.2 RULES AND REGULATIONS. Tenant will comply with the
terms of the WalMart Agreements during the term of this Lease.
Landlord will not have the right to adopt rules and regulations
that would be binding on Tenant, other than its execution of the
WalMart Agreements.
20.3 EXTENSIONS OR FORBEARANCES BY PARTIES. No extension of
time, forbearance, neglect or waiver on the part of Landlord or
Tenant, as the case may be, with respect to any one or more of
the covenants, terms or conditions of this Lease shall be
construed as a waiver of any of the other covenants, terms or
conditions of this Lease or as an estoppel against Landlord or
Tenant, as the case may be, nor shall any extension of time,
forbearance, or waiver on the part of Landlord or Tenant, as the
case may be, in any one or more instance or particulars be
construed to be a waiver or estoppel in respect to any other
instance or particular covered by this Lease.
20.4 SALE BY LANDLORD. In the event of any transfer(s) of
Landlord's interest in the Premises, Landlord shall automatically
be relieved of any and all obligations and liabilities on the
part of Landlord occurring from and after the date of such
transfer, so long as Landlord provides Tenant written notice of
such transfer(s), and Landlord's purchaser or grantee expressly
assumes, in writing, all obligations and liabilities of Landlord
from and after the date of such transfer; provided, however,
Landlord shall continue to remain fully liable for all liability
accrued prior to the date of such sale(s) or transfer(s).
Landlord agrees to provide Tenant with written notice of any such
transfer(s) no later than the effective date thereof.
20.5 NOTICE. All notices and demands which may or are
required to be given by either party to the other hereunder shall
be in writing and delivered in person or sent by United States
certified or registered mail, postage prepaid, or by reputable
nationally recognized overnight delivery service. Notices and
demands to Tenant shall be addressed to it at its corporate
offices, at 10260 Viking Drive, Eden Prairie, Minnesota 55344-
7229, Attn: Real Estate Officer, with a copy to 10260 Viking
Drive, Eden Prairie, Minnesota 55344-7229, Attention: General
Counsel. Tenant may change such addresses for notice purposes at
any time by written notice to Landlord. Notices and demands to
the Landlord shall be addressed to it at 1209 North Walton
Boulevard, Bentonville, Arkansas 72712, or at such other place as
Landlord may from time to time designate in a written notice to
Tenant. Any such notice if mailed as provided herein shall be
deemed to have been rendered or given on the second business day
after its deposit, postage prepaid, in the U.S. Mail or with the
overnight delivery service. Notwithstanding any of the
foregoing, either party hereto may give the other party facsimile
and telephone notices as to emergency repairs.
20.6 COTENANCY. [This Section has been intentionally deleted
by the parties.]
20.7 INVESTMENT TAX CREDIT. Tenant shall be entitled to any
investment tax credits under federal, state or local law with
respect to its interest in the Building (but not Landlord's
interest therein) and any item of Tenant's Work.
20.8 ENTIRE AGREEMENT. This Lease and the exhibits,
schedules and riders, if any, attached hereto set forth all of
the covenants, promises, agreements, conditions and
understandings between Landlord and Tenant concerning the
Premises, and there are no other covenants, promises, agreements,
conditions, warranties, representations or understandings, either
oral or written, between them other than as set forth herein. No
alteration, amendment, change or addition to this Lease shall be
binding upon Landlord or Tenant unless reduced to writing and in
a lease supplement that is executed by each party.
20.9 INTERPRETATION AND USE OF PRONOUNS. Whenever herein
the singular number is used, the same shall include the plural
and the masculine gender shall include the feminine and the
neuter genders. Nothing contained herein shall be deemed or
construed by the parties hereto or any third party to create a
relationship between the parties other than the relationship of
Landlord and Tenant.
20.10 CAPTION AND SECTION NUMBERS. The captions and
section numbers appearing in this Lease are inserted only as a
matter of convenience and in no way define, limit, construe or
describe the scope or intent of such sections of this Lease nor
in any way affect this Lease.
20.11 "FORCE MAJEURE" DELAYS. In the event that either
party hereto shall be delayed, or hindered in, or prevented from
the performance of any act required hereunder by reason of acts
of God, strikes, lockouts, labor troubles, inability to procure
materials, failure of power, restrictive governmental laws or
regulations, riots, insurrection, war, acts (or failure to act)
of government (provided timely application and diligent
prosecution for such governmental action, if required was
undertaken by the delayed party) or other reason of like nature
not the fault of, or within the control of, the party delayed in
performing work or doing acts required under the terms of this
Lease (collectively referred to as "FORCE MAJEURE" delays), then
performance of such work or act shall be excused for the period
of the delay and the period for the performance of any such work
or act shall be extended for a period equivalent to the period of
such delay. This provision shall not operate to excuse Tenant
from prompt payment of Minimum Rent, Percentage Rent or
Additional Rent or any other payments required by the terms of
this Lease, unless the Commencement Date or periods permitting
Tenant to abatement of rent are postponed or extended by such
delays.
20.12 WAIVER. The waiver of any term, covenant or
condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition on any subsequent breach of the
same or any other term, covenant or condition herein contained.
The subsequent acceptance of rent hereunder by Landlord shall not
be deemed to be a waiver of any preceding default by Tenant of
any term, covenant or condition of this Lease, other than the
failure of the Tenant to pay the particular rental so accepted,
regardless of Landlord's knowledge of such preceding default at
the time of the acceptance of such rent.
20.13 JOINT OBLIGATION. If there is hereafter more than
one party liable as Tenant, the obligations hereunder imposed
shall be joint and several.
20.14 TIME OF THE ESSENCE. Time is of the essence of
this Lease and each and all of its provisions in which
performance is a factor.
20.15 ACCORD AND SATISFACTION. No payment by Tenant or
receipt by Landlord of a lesser amount than the monthly Minimum
Rent and Additional Rent and annual Percentage Rent herein
stipulated shall be deemed to be other than on account and no
endorsement or statement on any check or any letter accompanying
any check or payment of any rent or charge shall be deemed an
accord and satisfaction, and Landlord shall accept such check or
payment without prejudice to Landlord's rights to recover the
balance of such rent or charge or pursue any other remedy
provided in this Lease.
20.16 DUE DATE. If the due date by which any amount
payable by one party hereto to the other is not specifically
stated herein, the amount shall be due and payable within thirty
(30) days following request therefor or, if necessary, the
rendering by the requesting party to the other party of the
statement therefor.
20.17 LATE CHARGE. If Tenant shall fail to pay, within
five (5) days after receipt of written notice of nonpayment, any
Minimum Rent, Percentage Rent or any Additional Rent due under
this Lease, then Tenant shall pay to Landlord as a late charge
and in consideration of the additional costs incurred by Landlord
and the additional record keeping required to be performed by
Landlord, the sum One Hundred and No/100 Dollars ($100.00),
although such late charge shall not be payable by Tenant in the
first two (2) instances of late payment in any one (1) calendar
year.
20.18 CUMULATIVE REMEDIES. No remedy or election
hereunder shall be deemed exclusive but shall, whenever possible,
be cumulative with all other remedies at law or in equity, except
to the extent specifically waived or modified by this Lease.
20.19 APPLICABLE LAW AND CONSTRUCTION. This Lease shall
be governed by and construed in accordance with the laws of the
State of Illinois. If any provision of this Lease or the
application thereof to any person or circumstances shall to any
extent be invalid or unenforceable, the remainder of this Lease
shall not be affected thereby and each provision of the Lease
shall be valid and enforceable to the fullest extent permitted by
law.
20.20 DECISION MAKING BY PARTIES. Wherever a party's
consent, approval, decision or determination is required under
this Lease, such consent or approval shall be given or decision
or determination shall be made promptly, in writing and in a
commercially reasonable manner. No change in rent, the rights of
the parties or the economic terms of this Lease shall be required
as a condition to granting of consent. Any denial of consent
will include in reasonable detail the reason for denial or aspect
of the request that was not acceptable.
20.21 ATTORNEYS' FEES. In the event of any action or
proceeding by either party against the other under this Lease,
the prevailing party shall be entitled to recover for the fees of
its attorneys in such action or proceeding, including costs of
appeal, if any, in such amount as the court may adjudge
reasonable as attorneys' fees.
20.22 USE PERMITTED; WALMART AGREEMENTS. Landlord
represents and warrants that, to the best of Landlord's
knowledge, Tenant's use of the Premises pursuant to this Lease
does not violate the WalMart Agreements or any other recorded
covenants, conditions and restrictions ("CCR's"), if any, of the
Shopping Center, any Construction Operation and Reciprocal
Easement Agreement ("CORE"), or other leases or agreements which
are binding on Landlord or the Shopping Center. To the extent
required, Landlord will obtain, and provide to Tenant prior to
the Commencement Date, a written acknowledgment, consent or
approval by Wal-Mart and Sam's of this Lease to confirm that no
further consent of approval by either of them is required for
Tenant's use and development of the Premises pursuant to this
Lease. Tenant's rights of use under the CCR's and CORE are for
non-exclusive rights of use.
Tenant's obligations under this Lease are conditioned upon
and subject to its review and approval, and the recordation of,
agreements with Sam's and WalMart (the "WALMART AGREEMENTS")
establishing, for the Term of this Lease (as it may be extended
pursuant to this Lease) easements and rights of use of the
fifteen (15) parking spaces on the adjoining WalMart property and
Tenant's right of use of accessways, any common utility lines
required to service the Premises, and any other common areas
within the adjoining Sam's and WalMart properties. This
condition must be satisfied prior, or as soon as possible after,
execution of this Lease and prior to the date on which Tenant is
required to commence any construction or other work. Once the
WalMart Agreements are approved, Landlord and Tenant will co-
operate on the timing of recordation of the WalMart Agreements
with recordation of the memorandum of lease or short-form lease
evidencing this Lease, so that Tenant will be able to obtain
title insurance that insures both its leasehold estate under this
Lease and its appurtenant easement right under the WalMart
Agreements.
20.23 LEASEHOLD AND EQUIPMENT FINANCING.
Notwithstanding any provision of this Lease, Tenant will have the
right to mortgage, pledge or otherwise encumber Tenant's
leasehold estate under this Lease and its interest in the
Premises ("LEASEHOLD FINANCING"). Such Leasehold Financing shall
be and at all times remain subject and subordinate to this Lease.
Landlord shall enter into a leasehold mortgagee protection
agreement (substantially in the form attached as EXHIBIT H,
subject to such changes as Landlord and Tenant's lender may
reasonably approve) with Tenant's lender upon Tenant's request
(the "LEASEHOLD FINANCING AGREEMENT"). Tenant shall reimburse
Landlord for its reasonable costs (up to $800), in reviewing and
approving the Leasehold Financing Agreement subsequently required
or related documentation. No change in the rent or other
economic terms of this Lease shall be required of Tenant as a
condition to Landlord's consent. Landlord hereby disclaims and
irrevocably and unconditionally waives any statutory or common
law lien on the any property of Tenant that Tenant is entitled to
remove on expiration or termination of this Lease. Time periods
that are provided in such Leasehold Financing Agreement are
solely for the benefit of Tenant's lender and will not restrict
any right or remedy that Landlord may have against Tenant under
this Lease for recovery of damages, late charges and other
remedies for default under this Lease.
Notwithstanding any other provision of this Lease, Tenant
will have the right to lease or mortgage, pledge and encumber its
trade fixtures, equipment and personal property (for this
purpose, collectively, the "EQUIPMENT") from time to time (the
"EQUIPMENT FINANCING") with a leasing company or through an
institutional lender (collectively, an "EQUIPMENT LENDER").
Landlord further agrees that the Equipment shall remain personal
property, notwithstanding the manner or mode of the attachment to
the Premises. Landlord recognizes and acknowledges that any
claims that Equipment Lender now has or may hereafter have
against the Equipment by virtue of the equipment lease or
financing documents, are superior to any lien or claim of any
nature which Landlord now has or may hereafter have to the
Equipment by statute, agreement or otherwise. In the event of
default by Tenant in the payment of any amount to the Equipment
Lender, or in the performance of any of the other terms and
conditions of the equipment lease or financing documents, or
extensions or renewals thereof, the Equipment Lender or its
assigns may remove such Equipment or any part thereof from the
Premises. Landlord will make no claim whatsoever to any
Equipment covered by any equipment lease or financing documents.
The Equipment Lender may, without affecting the validity of this
waiver, extend the terms of payment of any rental or other sum or
the performance of any of the other terms or conditions of the
equipment lease or financing documents, without the consent of
Landlord and without giving notice to Landlord. This waiver
shall inure to the benefit of the successors and assigns of the
Equipment Lender and shall be binding upon the heirs, personal
representatives, successors and assigns of Landlord. Landlord
will execute, not later than ten (10) days after receipt of a
written request, any consent, easement, Landlord's waiver of lien
rights, acknowledgment, estoppel certificate or other document
required by the Equipment Lender in order to carry out the intent
of this paragraph (the "EQUIPMENT DOCUMENTS"). If Landlord fails
to do so in such ten (10) day period, Tenant is hereby designated
as attorney-in-fact for Landlord, coupled with an interest, to
execute and deliver the Equipment Documents on behalf of
Landlord.
20.24 AUTHORITY. Each individual executing this Lease
on behalf of their respective party represents and warrants that
he/she is duly authorized to execute and deliver this Lease on
behalf of such party, and that this Lease is binding upon such
party.
20.25 FINANCIAL OR SALES INFORMATION. Any financial
statements required to be supplied herein and all gross sales
reports related to the Premises shall be held in confidence by
the party receiving the same and will be utilized solely for
purposes of this Lease, but may be provided in confidence by
Landlord to any potential (or actual) mortgagee of the Shopping
Center, to Landlord's attorneys, accountants and professional
advisers, and to any potential (or actual) purchaser of the
Shopping Center.
20.26 REASONABLE EFFORTS TO MITIGATE. In the event of
default by Tenant under this Lease, Landlord will use
commercially reasonable efforts to mitigate its damages;
PROVIDED, however, to the extent permitted under Illinois law,
Tenant (i) waives any right under such state's law to require
Landlord to expend its own funds to cure an event of default by
Tenant or to mitigate damages, and (ii) agrees that it would not
be unreasonable for Landlord to decline to expend its own funds
(versus utilizing rent thereafter under this Lease or from third
parties, in the event Landlord repossesses the Premises) in order
to mitigate its damages.
20.27 TRASH DUMPSTER. Tenant will be permitted to
maintain a trash dumpster (20 x 16) outside of the Premises for
Tenant's own use, at a location selected by Tenant [if not
otherwise shown in green on EXHIBIT B]. Tenant may change the
location of the dumpster, in Tenant's discretion, within the
Premises, subject to any need to obtain the City's approvals, or
WalMart's or Sam's consent if restricted under the WalMart
Agreements.
20.28 INDEMNIFICATION. The provisions of this Lease
concerning indemnification are subject to the following
conditions: (i) the party seeking indemnification (the
"INDEMNIFIED PARTY") will promptly notify the indemnifying party
(the "INDEMNITOR") in writing as soon as the Indemnified Party
becomes aware of the injury, action, event, claim or demand
giving rise to the obligation to indemnify; (ii) the Indemnified
Party will take no steps (such as admission of liability) which
will operate to bar Indemnitor from obtaining any protection
afforded by any policies of insurance it may hold or which
operate to prejudice the defense in any such legal proceedings or
otherwise prevent Indemnitor from protecting itself against such
claim, action, demand, or legal proceeding. Indemnitor shall
have the sole and exclusive right to conduct the response to or
defense of any such claim, action, demand, or legal proceeding;
and (iii) the parties will reasonably cooperate (at Indemnitor's
expense) in responding to any claim, action, demand or legal
proceeding covered by the Indemnity.
20.29 DISCLAIMERS. No provision of the Lease will be
construed as a limitation on Tenant's right to conduct business
in other locations. There is no express or implied radius
restriction or covenant of operation.
20.30 EFFECTIVE DATE OF LEASE. The submission of this
Lease for examination does not constitute a reservation of or
option for the Premises, and this Lease shall become effective as
a lease only upon execution and delivery by Landlord and Tenant.
20.31 BROKER'S COMMISSION. Each of the parties
represents and warrants that there are no claims for brokerage
commissions or finders fees in connection with the execution of
this Lease with the exception of Colliers Tingey International,
whose commission shall be paid by Landlord, and each of Landlord
and Tenant indemnify the other against and hold it harmless from
all liabilities arising from any such claim made through the
indemnifying party.
20.32 RECORDING. Tenant shall not record this Lease
without the prior written consent of Landlord; PROVIDED, however,
upon the occurrence of the Commencement Date, or at the request
of either Landlord or Tenant (return delivery within thirty (30)
days after request), the parties shall join in the execution of
and record a memorandum or so-called short form of this Lease, in
the form attached hereto as EXHIBIT E. All costs incurred in
connection with recording the short form lease shall be shared
equally by Landlord and Tenant.
20.33 AUTHORSHIP. This Agreement is a jointly
negotiated work product and authorship shall not be ascribed to
any particular party.
20.34 THIRD-PARTIES. Nothing in this Lease, expressed
or implied, is intended to confer on any person, other than the
parties or their respective heirs, executors, administrators,
successors, assigns and sublessees, any rights or remedies by
reason of this Lease and in no event shall any third-party be
deemed a third-party beneficiary hereunder.
20.35 TEMPORARY SPACE. [This Section has been
intentionally deleted by the parties.]
20.36 LIMITATIONS ON LANDLORD'S LIABILITY. If Landlord
is in default hereunder, and as a consequence Tenant recovers a
money judgment against Landlord, such judgment shall be a lien
and charge only against Landlord's interest in the Premises, its
interest in the Building and this Lease, and may be satisfied
only out of the rent and other consideration payable to Landlord
under this Lease, the proceeds of sale received on execution of
the judgment and levy against the right, title, and interest of
Landlord in the Premises, Building and this Lease, and out of
rent or other income from such real property thereafter
receivable by Landlord therefrom or out of the consideration
received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title, and interest in the
Premises, Building and this Lease, and not from any other assets,
real property or other property of Landlord or its partners.
Neither Landlord, nor any agent, partner, or employee of Landlord
shall be personally liable for any portion of such a judgment.
This Section 20.36 will not restrict any claim or
judgment Tenant may obtain in connection with any injury, damage
or claim arising from the gross negligence or intentional
misconduct of Landlord, its agents, partners or employees of
Landlord or any independent contractor of Landlord.
21. HAZARDOUS SUBSTANCES.
21.1 REPRESENTATIONS BY LANDLORD. Landlord represents and
warrants that the following are true as of the date of this Lease
and will be true as of the Commencement Date: (i) there has been
no release, disposal or storage of Hazardous Substances on the
Premises to the knowledge of Landlord (as "knowledge" is defined
and limited on the attached Exhibit C); (ii) the Premises have
not been to Landlord's knowledge (as "knowledge" is defined and
limited on the attached EXHIBIT C) and are not presently used for
the storage, manufacture, disposal, handling, transportation or
use of any Hazardous Substances; (iii) there are no past or
present investigations, administrative proceedings, notices of
violation or other civil or criminal action threatened or pending
known to Landlord (as "knowledge" is defined and limited on the
attached EXHIBIT C) alleging noncompliance with or violation of
any statutes, regulations or ordinances relating to any
environmental permits, release or discharge of any Hazardous
Substances, and Landlord has complied with all applicable
governmental regulations including (but not limited to) obtaining
all necessary licenses, completing in a timely fashion all
necessary reporting and filing requirements, and satisfying
financial responsibility and related obligations with respect
thereto, all to the extent applicable; (iv) Landlord has not, nor
to the knowledge of Landlord (as "knowledge" is defined and
limited on the attached EXHIBIT C) has any prior tenant or any
other third party, violated any statute, regulation or ordinance
relating to any environmental permit or the release of any
Hazardous Substances; (v) to the best of Landlord's knowledge (as
"knowledge" is defined and limited on the attached EXHIBIT C),
there are not now, and have never been any aboveground or
underground storage tanks located on or under the Shopping
Center; (vi) [this subsection has been intentionally deleted];
and (vii) upon Landlord's tender of possession of the Premises to
Tenant, the Premises shall be free from all Hazardous
Substances, to the knowledge of Landlord (as "knowledge" is
defined and limited on the attached EXHIBIT C).
21.2 INDEMNITY BY LANDLORD. Landlord further warrants and
covenants that it will not in the future, install, use, generate
or dispose of or grant consent or permission (to the extent of
Landlord's right to do so, if any) for any other occupant of the
Shopping Center or any third party to install, use, generate or
dispose of on or about the Shopping Center any Hazardous
Substances, except for immaterial quantities of Hazardous
Substances customarily used in the construction, maintenance or
operation of like properties which have been and should be used
in accordance with applicable laws, statutes, regulations and
ordinances then in effect. Landlord hereby agrees to protect,
defend, indemnify and hold Tenant harmless from and against all
claims, liabilities, penalties, costs, fines, damages and
expenses, including, but not limited to, costs and expenses which
Tenant is obligated to incur to correct or remedy the situation,
the costs of defending civil enforcement actions, the costs of
participating in regulatory proceedings, or any other civil or
administrative action, including without limitation, attorneys'
and expert fees and disbursements, directly or indirectly
incurred by Tenant arising out of the inaccuracy of any
representation, covenant, or warranty by Landlord in this
Article 21 or the presence of Hazardous Substances on, in or
under the Premises as of the date of Landlord's tender of
possession of the Premises to Tenant. Landlord may satisfy its
obligations under this paragraph either by taking action to clean
up any Hazardous Substances for which Landlord may be
responsible, or by diligently taking commercial reasonable
actions to enforce any right or action to require that third
parties clean up any Hazardous Substances.
21.3 INDEMNITY BY TENANT. Tenant warrants and covenants
that it shall not install, use, generate, store or dispose of, in
or about the Premises or the Shopping Center any Hazardous
Substances, except for immaterial quantities of Hazardous
Substances customarily used in the construction, maintenance or
operation of restaurants all of which shall be used in accordance
with applicable laws, statutes, regulations and ordinances then
in effect. Tenant hereby agrees to protect, defend, indemnify
and hold Landlord harmless from and against any claims,
liabilities, penalties, fines, costs, damages and expenses,
including but not limited to, costs and expenses which Landlord
is obligated to incur to correct or remedy the situation, the
costs of defending civil enforcement actions, the costs of
participating in regulatory proceedings, or any other civil or
administrative action, including without limitation, attorneys'
and expert fees and disbursements, arising out of Tenant's
installation, use, generation, storage or disposal of any
Hazardous Substances in or about the Premises or the Shopping
Center. Tenant may satisfy its obligations under this paragraph
either by taking action to clean up any Hazardous Substances for
which Tenant may be responsible, or by diligently taking
commercial reasonable actions to enforce any right or action to
require that third parties clean up any Hazardous Substances.
21.4 SURVIVAL OF OBLIGATIONS. The representations,
warranties and indemnifications set forth in this Article 21
shall survive the expiration or earlier termination of this
Lease.
21.5 DEFINITIONS OF "HAZARDOUS SUBSTANCES" AND RELATED
TERMS. The term "HAZARDOUS SUBSTANCES" shall mean:
(a) polychlorinated biphenyls ("PCBs") or "PCB items" (as defined
in 40 C.F.R. Sec. 761.3) or any equipment which contains PCB's;
(b) any asbestos or asbestos-containing materials; (c) stored,
leaked or spilled petroleum products; or (d) any other chemical,
material or substance (i) which is regulated as a "toxic
substance" (as defined by the Toxic Substance Control Act, 15
U.S.C. Sec. 2601 et seq., as amended), (ii) which is a "hazardous
waste" (as defined by the Resource Conservation and Recovery Act,
42 U.S.C. Sec. 6901 et seq., as amended), (iii) which is a
"hazardous substance" (as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. Sec. 9601 et seq., as amended), or (iv)
exposure to which is prohibited, limited or regulated by any
federal, state, county, regional, local or other governmental
statute, regulation, ordinance or authority of which, even if not
so regulated, may or could pose a hazard to the health and safety
of the occupants of or invitees to the Premises, or the owners,
tenants or occupants of the Shopping Center or the property
adjacent to the Shopping Center.
IN WITNESS WHEREOF, Landlord and Tenant have signed and
sealed this Ground Lease as of the day, month and year first
above written.
LANDLORD:
ALPHA GROUP, L.L.C.,
a limited liability company
By
Witness
Print
Its
TENANT:
OCB REALTY CO.,
a Minnesota corporation
/s/ Julie Saude By /s/ Roe H Hatlen
Witness Print Roe H. Hatlen
Its Chief Executive Officer
EXHIBIT A-1
LEGAL DESCRIPTION OF THE PREMISES
See attached (or to be mutually approved and attached).
ALPHA GROUP PROPERTY
Part of the Northeast Quarter of Section 6, Township 39 North,
Range 12 East of Third Principal Meridian, In Cook County,
Illinois, described as follows:
Commencing at the Southeast corner of Lot 7 in Block 9 as
designated upon the Plat of The H.O. Stone Northlake Addition
being a subdivision of part of the Northeast Quarter of said
Section 5, the Plat of which subdivision is recorded as Doc. No.
14036603 in the Recorder's Office of Cook County, Illinois;
thence North 61 egrees 02 minutes 56 seconds West along the South
line of said Block 9, a distance of 298.67 feet to the Southwest
corner of Lot 18 in Block 9 of said subdivision; thence North 0
degrees 00 minutes 41 seconds East, a distance of 32.74 feet;
thence North 45 degrees 00 minutes 00 seconds East, a distance of
21.88 feet to the Point of Beginning; thence North 89 degrees 59
minutes 19 seconds West, a distance of 5572 feet; thence North 50
degrees 32 minutes 46 seconds West, a distance of 35.35 feet;
thence North 61 degrees 36 minutes 58 seconds West, a distance of
50.12 feet; thence North 0 degress 00 minutes 47 seconds East, a
distance of 106.45 feet; thence North 80 degrees 55 minutes 14
seconds West, a distance off 13.15 feet; thence North 0 degrees
00 minutes 00 seconds East, a distance of 33.41 feet; thence
South 89 degrees 51 minutes 03 seconds East, a distance of 231.58
feet; thence South 31 degrees 21 minutes 45 seconds East, a
distance of 48.81 feet; thence South 0 degrees 00 minutes 00
seconds East, a distance of 143.92 feet; thence North 89 degrees
59 minutes 19 seconds West, a distance of 116.,82 feet to the
Point of Beginning containing 43,417 square feet (0.9967 acres)
more or less, all being situated in Cook County, Illinois.
EXHIBIT A-2
[DRAWING OR PLAN OF THE SHOPPING CENTER]
See attached (or to be mutually approved and attached).
EXHIBIT B
[DRAWING OR PLAN OF THE SHOPPING CENTER]
SITE PLAN
Identify:
Premises (Crosshatched) [Section 1]
Shopping Center (Red) [Section 1]
Protected Parking Area [Section 8.3]
Tenant's Dumpster Area (Green) [Section 20.27]
Employee Parking Area* (Orange) [Section 8.3]
*[if any]
EXHIBIT C
LANDLORD'S WORK AND TENANT'S WORK
1. CONTINGENCY; CONDITION AND TITLE TO PREMISES. This Lease is
subject to: (i) Tenant's reasonable determination that the
Premises does not contain any hazardous substances or hazardous
materials listed by the U.S. Environmental Protection Agency or
by the State in which the Premises is located under applicable
environmental laws and regulations ("HAZARDOUS SUBSTANCES"), and
(ii) the parties' ability to obtain the permit(s) required for
constructing Landlord's Work and Tenant's Work as referenced in
this Exhibit (as to Landlord, such "permits" will mean the
creation of the Premises as a separate legal lot capable of
commercial development, with zoning that will permit Tenant's
intended use, and any approvals needed of Sam's and WalMart to
this Lease and the intended development of the Premises).
The only "Landlord's Work" is to perform its delivery
obligations as set forth in Section 4 of the Lease, and does not
involve any work on or to the Premises.
Promptly after execution of this Lease, Landlord will
provide to Tenant the following (except as otherwise waived in
writing by Tenant): (i) a current TITLE INSURANCE
COMMITMENT/REPORT acceptable to Tenant from a reputable national
title insurance company selected by Tenant ("TITLE COMPANY"),
showing a good and merchantable leasehold estate in the leased
Premises vested in Tenant (or that Title Company is committed to
issue such a policy, upon recordation of the memorandum of lease)
and showing Landlord as the fee owner of the Shopping Center,
together with copies of all easements, covenants, restrictions,
agreements or other documents which affect the leased Premises
and Shopping Center; (ii) an ALTA/ACSM SURVEY OF THE PREMISES
(or, at Landlord's option, an ALTA/ACSM survey of the Shopping
Center that shows the boundaries and location of the Premises) by
a licensed surveyor or civil engineer licensed in the state in
which the Shopping Center is located, in form reasonably
acceptable to, and certified to, Tenant and in sufficient detail
to provide the basis for an ALTA policy of title insurance
without boundary, encroachment or survey exceptions and showing
the location of all utilities; and (iii) such SOIL TESTS,
GEOTECHNICAL STUDIES, ENVIRONMENTAL TESTS OR AUDITS AND OTHER
REPORTS OR STUDIES ON THE PHYSICAL CONDITION OF THE PREMISES OR
SHOPPING CENTER AS ARE IN LANDLORD'S POSSESSION.
Tenant will have thirty (30) days after mutual execution of
this Lease to perform such investigations concerning Hazardous
Substances within the Premises or such "Level One" environmental
assessments as Tenant may desire, and may terminate this Lease by
written notice to Landlord within forty-five (45) days after
mutual execution of this Lease if Tenant is not reasonably
satisfied with the results thereof. If not so terminated within
such time period, the contingency in subparagraph (i) above shall
conclusively be deemed waived.
Tenant shall have twenty (20) days after receipt of the
survey, preliminary title report and copies of all title
exceptions within which to notify Landlord in writing of Tenant's
disapproval of any exceptions shown in the title report, other
than an exception for current property taxes. Tenant shall have
twenty (20) days after receipt of the soils tests and
environmental audit within which to notify Landlord in writing of
Tenant's disapproval of any aspect of the tests or audit or their
results. In the event of such disapproval, Landlord shall have
thirty (30) days after receipt of Tenant's notice to eliminate
any disapproved title exception or to correct any disapproved
aspect of the tests or audit (or to satisfy Tenant that the
disapproved title exception or the soil or environmental
condition to which Tenant objected will be corrected by Landlord
within a time period approved by Tenant in writing, but not in
any event later than the date Landlord delivers possession of the
leased Premises to Tenant). If Landlord is unable or unwilling
to eliminate a disapproved title exception or disapproved aspect
of the soil tests or environmental audit, either party may elect
to rescind this Lease by notice to the other party. In such
event, all obligations of the parties under this Lease shall
thereafter cease, unless Tenant notifies Landlord (within ten
(10) days after Tenant's receipt of any such rescission notice
from Landlord) that Tenant elects to waive its prior disapproval.
As to the permits and approvals referenced in subparagraph
(ii) above, the respective parties will diligently pursue
obtaining required permit(s) in accordance with the terms of this
Lease, will keep each other informed of the status of such
matters and will notify the other party at such times as the
party obtains (or is denied) such permit(s). Notwithstanding the
nature of the delaying cause (including "force majeure" delays),
in the event that such permit(s) have not been obtained not later
than the Drop Dead Date provided in Section 2.2 of the Lease,
then either party may elect to cancel this Lease upon written
notice to the other, in which event Tenant will be refunded any
rent payment or deposit made in connection with the execution of
this Lease and both parties will have no further obligation to
the other pursuant to this Lease. If at any time prior to such
date Tenant determines that the condition relating to such
permit(s) or approvals cannot be satisfied after diligent effort,
Tenant shall give Landlord not less than 15 days' notice of
termination of this Lease, specifying in reasonable detail the
condition(s) that cannot be satisfied. Tenant will turn over to
Landlord the written work product in its possession concerning
the Premises as Landlord may reasonably require, including
applications for governmental approvals and related data.
If this Lease is not terminated, then upon the Commencement
Date, Landlord will cause Title Company to issue to Tenant a
leasehold policy of the title insurance in ALTA extended coverage
form and in the amount of at least One Million Five Hundred
Thousand Dollars ($1,500,000). Such policy will not include
exceptions for any taxes or assessments levied, assessed or
imposed for any period prior to the Commencement Date, or for the
rights of any party in possession, other than Tenant and other
than easements of record which have been approved in writing by
Tenant as provided above.
2. ZONING AND RELATED MATTERS. Landlord represents and
warrants that, as of the date hereof and as of the date on which
Landlord delivers possession of the Premises to Tenant, the
following will be true and correct: (i) no portion of the
Premises is classified with any governmental or other authority
as a wetland or environmentally restricted area Substances, to
the knowledge of Landlord (as "knowledge" is defined and limited
below); (ii) the Premises is not identified as having any
archeological or historic significance, to the knowledge of
Landlord (as "knowledge" is defined and limited below); (iii) the
Premises is not located in a flood hazard area as set forth in
the Federal Emergency Management Agency Flood Insurance Rate Map
or Flood Hazard Boundary Map or other hazard area, to the
knowledge of Landlord (as "knowledge" is defined and limited
below); (iv) TO THE LANDLORD'S KNOWLEDGE (as defined and limited
below), the Premises is free from poorly or improperly filled
ground or other geological or engineering conditions known to
Landlord that may preclude or significantly interfere with the
development and use of the Premises for a restaurant; and
(v) the Premises presently has (EXCEPT as otherwise noted on any
addendum to this Lease) the necessary state, county, municipal
and other governmental authorities' permits (EXCEPT building
permits), final zoning (without further appeal rights), and other
land use approvals and curb cuts for traffic access and all
utility, sewer, storm sewer and other public utility lines within
the Premises or on its boundary lines, sufficient to allow its
construction and development as contemplated, to the knowledge of
Landlord (as "knowledge" is defined and limited below).
As used in this Exhibit, the terms "KNOWN" and "KNOWLEDGE"
mean actual (not constructive) knowledge by the employees and
officers of Landlord that have been involved in the negotiation
of this Lease or who are regularly engaged in the management of
Landlord's real estate operations that include the Shopping
Center. Landlord will NOT be liable to Tenant on the
representations and warranties under this paragraph unless
Landlord had actual knowledge of the condition or event which
made the representation or warranty false as of the date this
Lease is executed and Landlord failed to disclose to Tenant the
fact known to Landlord which made the representation or warranty
false.
3. LANDLORD'S WORK. [This Section has been intentionally
deleted by the parties.]
4. TENANT'S PLANS. Prior to commencement of construction of
Tenant's Work, Tenant will prepare and deliver to Landlord, for
its review and approval, one (1) set of fully dimensioned scale
working drawings of the proposed Building, prepared by a
licensed architect, including types of materials and colors,
interior partitions, ceiling plan, roof plan, if applicable,
plumbing fixtures, and electrical plans prepared by a licensed
electrical engineer setting forth all electric requirements of
Tenant (collectively referred to as "Plans"). Landlord shall
have fifteen (15) days after receipt of the Plans to provide its
comments. If Landlord has not notified Tenant in writing of its
approval or disapproval within the time periods stated above, the
Plans shall be conclusively deemed approved by Landlord. If
Landlord disapproves such Plans, Tenant shall promptly revise and
resubmit such Plans to Landlord, correcting or altering such
disapproved items. If at any time that Tenant is required to
approve Landlord's plans but does not respond within the
specified time period, such plans shall also be conclusively
deemed to be approved. Upon mutual approval of the Plans, Tenant
shall submit the Plans to the City/County for governmental
approval.
Notwithstanding the foregoing, Landlord acknowledges and
approves an architecturally prominent storefront of the Premises
which shall generally conform to the elevation plan attached
hereto as EXHIBIT I. Tenant shall not be required to submit
Plans to Landlord until such time as Landlord has executed a Non-
Disclosure Agreement in favor of Tenant in the form attached
hereto as EXHIBIT F. Prior to Landlord providing a copy of such
Plans to Sam's or Wal-Mart, Landlord will obtain execution by
them of a Non-Disclosure Agreement in the same form.
5. TENANT'S WORK. Tenant will perform all work required to
construct the Building and restaurant within the Premises
(pursuant to plans and specifications to be approved by Landlord
pursuant to this Lease), after Landlord delivers the Premises to
Tenant. Tenant will obtain any permits required for such work,
will diligently pursue it to completion in a good and workmanlike
manner, and will promptly notify Landlord as to any problem in
construction schedule. All of Tenant's Work shall conform to
the approved Plans, and any material changes thereto will be
approved in writing by Landlord. When Tenant's Work is
completed, the parties will conduct a walkthrough of the Premises
to confirm that the Premises is in the condition required by this
Lease or to identify "punch list" items to be corrected by
Tenant.
6. TENANT'S SIGN SPECIFICATIONS. Tenant will have the right to
install signs on the Premises and on any pylon sign of Tenant's
within the Premises with Tenant's identification signage.
7. CONSTRUCTION ALLOWANCE. As a contribution to Tenant's Work,
Landlord shall pay to Tenant a construction allowance (the
"CONSTRUCTION ALLOWANCE") of SIX HUNDRED THOUSAND and No/100
Dollars ($600,000.00). An interim payment of ZERO and No/100
Dollars ($0) shall be paid on Tenant's completion of one-third of
Tenant's Work. An additional interim payment of ZERO and No/100
Dollars ($0) shall be paid upon Tenant's completion of two-thirds
of Tenant's Work. The final remaining payment of SIX HUNDRED
THOUSAND and No/100 Dollars ($ 600,000.00) shall be paid upon
completion of Tenant's Work. Landlord shall pay such
installments to Tenant within fifteen (15) days after Tenant's
written request therefor and delivery to Landlord of a true copy
of the certificate of occupancy for the Premises (which
requirement, if the governing jurisdiction issues temporary
certificates of occupancy in connection with the initial opening
for business of the Premises, will be satisfied by Tenant's
delivery of such temporary certificate of occupancy (subject to
the qualification stated below) to Landlord, but Tenant will
thereafter continue to pursue, obtain and provide to Landlord a
copy of the final certificate of occupancy, when available). If
Tenant delivers a temporary certificate of occupancy to Landlord
and it has so many "punch list" items needed for completion and
issuance of a final certificate of occupancy such that the "punch
list" items cannot reasonably be completed within one hundred and
twenty (120) days from the date of delivery of the temporary
certificate of occupancy to Landlord, then Landlord will have the
right to withhold from disbursement to Tenant such portion of the
Construction Allowance as may be reasonably necessary to provide
security for completion of all "punch list" items, in an amount
equal to 115 percent (115%) of the estimated cost to finish all
"punch list" items.
Upon the prior written request of Landlord, Tenant
shall provide Landlord partial mechanics' lien waivers for all
Major Contractors (as defined below) for interim allowance
payments and full mechanics' lien waivers for all Major
Contractors for the final allowance payment (or will provide the
affidavit and indemnity, as provided in Section 8 below).
Failure by the Landlord to pay any installment of the
allowance when due shall constitute a default of Landlord under
this Lease. In addition to any remedies available to Tenant
under this Agreement or at law or equity as a result of
Landlord's default, Tenant may: (a) charge Landlord interest on
the overdue amount from the date such installment is due on all
delinquent installments at the lesser of (i) the highest rate
allowed by law or (ii) a rate of two percent (2%) over the rate
then announced by Chase Manhattan Bank as its base or prime rate
per annum; and (b) set off any delinquency and applicable
interest against one hundred percent (100%) of the Minimum Rent,
Percentage Rent and/or Additional Rent payments first coming due
under this Lease until such delinquency is fully repaid.
8. LIEN CLAIMS; RIGHT TO CONTEST; AFFIDAVIT AND INDEMNITY. In
the event a lien is filed against the Premises or Shopping Center
by reason of Tenant's Work or any alteration, addition or repair
to the Premises made by or at the order of Tenant, Tenant shall
be allowed to contest such lien; provided, however, Tenant shall
cause such lien to be bonded within thirty (30) days after such
lien is filed and Tenant hereby agrees to hold Landlord harmless
from and against any and all claims and demands by contractors or
other third parties against the Premises or Shopping Center
relating to or arising out of such work, alteration, addition or
repair.
Whenever Tenant is required to supply Landlord with lien
waivers, Tenant may satisfy such requirements by providing
Landlord with an affidavit and indemnity by Tenant that all
persons engaged in, or providing materials in connection with,
Tenant's Work have been paid, and indemnifying Landlord with
respect to any person who may subsequently claim or file a lien
is filed against the Premises or Shopping Center by reason of
Tenant's Work or any alteration, addition or repair to the
Premises made by or at the order of Tenant (the "AFFIDAVIT AND
INDEMNITY"). Tenant's obligations under such Affidavit and
Indemnity will be guaranteed by Buffets, Inc. (the "GUARANTOR").
9. CERTAIN CONSTRUCTION-RELATED PROVISIONS. So long as Tenant
(including, for this purpose, the net worth of Guarantor) has a
net worth of $50,000,000 or greater, the following will apply:
(a) RIGHT TO CONSTRUCTION MANAGE; BONDING AND SURETY
OBLIGATIONS OF TENANT. Notwithstanding the foregoing and other
provisions of this Lease and attached exhibits, Tenant may
construction manage the work and need not employ a general
contractor, and there will be no bonding requirements imposed by
this Lease on work to be performed by Landlord or Tenant.
However, for purposes of this Lease, as to any unbonded work by
Tenant, Tenant will be the surety to Landlord with respect to the
work and cause it to be promptly performed and completed, lien-
free and in a good and workmanlike manner.
(b) DOCUMENTATION CONCERNING CONTRACTOR AND SUBCONTRACTORS.
References in this Lease to documentation required of Tenant with
respect to contractors and subcontractors and suppliers will mean
Tenant's general contractor, if there is one, and Major
Contractors. As used in this Lease, a "MAJOR CONTRACTOR" is a
contractor or supplier having a statutory right to claim a
construction, mechanic's or materialman's lien under State law
whose contract equals or exceeds fifteen percent (15%) of the
total construction budget for Tenant's Work.
(c) TIME PERIODS FOR TENANT'S WORK. Notwithstanding any
provision of this Lease concerning any time period for Tenant to
commence or complete Tenant's Work (including, without
limitation, any provision concerning commencement of rental
obligations that is related to the time period for the completion
of Tenant's Work), any such time period(s) will be extended by
any "force majeure" events or by any delays by Landlord in
providing any approvals required hereunder (it being understood
that Tenant may, but is not required to, accept and rely on any
"deemed approved" provisions of this Lease for any failure by
Landlord to respond within a stated time period, and/or Tenant
may at its option require written confirmation of such approval,
and delays by Landlord in providing such written confirmation of
approval will extend Tenant's time periods for Tenant's Work and
commencement of rent).
EXHIBIT D
RULES AND REGULATIONS
(None - NOT APPLICABLE)
EXHIBIT E
MEMORANDUM OF GROUND LEASE
THIS MEMORANDUM OF GROUND LEASE, is made and entered into as
of this ______ day of ____________________, 19__, by and between
ALPHA GROUP, L.L.C.,a ____________________ limited liability
company ("Landlord"), and OCB Realty Co., a Minnesota corporation
("Tenant").
RECITALS
WHEREAS, Landlord and Tenant entered into that certain
ground lease dated ____________________ (the "Lease"), relating
to certain leased land (the "Premises") which are a part of the
shopping center development commonly known as ___________________
(the "Shopping Center"), situated on certain real property in the
City of _______________, _____________ County, _____________,
which Shopping Center is legally described on Exhibit A attached
hereto; and
WHEREAS, Tenant has subleased the Premises to OCB Restaurant
Co.; and
WHEREAS, Landlord and Tenant now wish to memorialize of
record the existence of the Lease and certain specific terms of
the same.
NOW THEREFORE, in consideration of the Lease and other good
and valuable consideration, Landlord and Tenant agree as follows:
1. Landlord and Tenant are parties to the Lease to demise
and let the Premises, upon the terms and conditions more
particularly set forth in the Lease.
2. The term of the Lease shall be for an initial term of
twenty (20) full Lease Years and any Partial Lease Year (as such
terms are defined in the Lease), commencing on
_______________________, 1998 (the "Commencement Date"), and
expiring on December 31, 2018.
3. Subject to the terms and conditions more particularly
set forth in the Lease, Tenant has the option to extend the term
of the Lease for four (4) additional periods of five (5) years
each, such periods to commence at the expiration of the initial
term or preceding extended term of the Lease, as the case may be.
4. Reference is made to the Lease for a full statement of
the terms and conditions of the Lease, all of which are hereby
incorporated by reference.
5. Nothing in this Memorandum of Ground Lease shall be
construed to amend, modify, change, alter, amplify, interpret or
supersede any of the terms and provisions of the Lease, which
shall in all things control.
IN WITNESS WHEREOF, Landlord and Tenant have caused this
Memorandum of Ground Lease to be executed as of the day and year
first above written.
Witness: LANDLORD:
ALPHA GROUP, L.L.C.,
a limited liability company
Print
By:
Print:
Its:
Witness: TENANT:
OCB REALTY CO.,
Print a Minnesota corporation
By:
Print:
Its:
STATE OF _________________ )
)ss.
COUNTY OF _______________ )
The foregoing instrument was acknowledged before me this
____ day of ___________________, 199_, by
_______________________, the ______________________ of
_______________________________, a __________________________, on
behalf of the ____________________.
(seal)
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF __________ )
The foregoing instrument was acknowledged before me this
____ day of ____________________, 199_, by
________________________, the ______________________ of OCB
Realty Co., a Minnesota corporation, on behalf of the
corporation.
(seal)
Notary Public
EXHIBIT F
NON-DISCLOSURE AGREEMENT
THIS NON-DISCLOSURE AGREEMENT is made and entered into this
____ day of __________, 19__ by and between OCB Realty Co., a
Minnesota corporation (the "Tenant"), and ALPHA GROUP, L.L.C., a
____________________ limited liability company (the "Landlord").
WHEREAS, the purpose of this Agreement is to set forth terms
and conditions under which the Tenant may disclose to Landlord
certain information that is confidential and proprietary to the
Tenant for the purpose of furthering the business relationship
between the Tenant and the Landlord.
NOW THEREFORE, the Tenant and the Landlord hereby agree as
follows:
I. CONFIDENTIAL INFORMATION. "Confidential Information"
of the Tenant means any information which is not made generally
available to others by the Tenant. Confidential Information may
be oral or written, or recorded on electronic or other storage
media. Confidential Information may include (but is not limited
to) sales and profitability information, methods, processes,
procedures, techniques, recipes, formulas, floorplans, designs,
drawings, blueprints, computer programs, know-how,
specifications, new product and service ideas, product
development plans, marketing plans, strategies, and identities of
other suppliers, vendors or contractors with which the Tenant
deals. However, Confidential Information shall not include
information which the Landlord can demonstrate by means of prior
written records or other clear and convincing circumstances
(a) was or becomes generally available to the public other than
as a result of a disclosure by Landlord or by its directors,
officers, or lenders (collectively, the "Landlord
Representatives"), or (b) was or becomes known to the Landlord on
a nonconfidential basis from a source other than the Tenant,
provided that such source (and if applicable, its sources) is not
bound by a confidentiality agreement with the Tenant.
II. CONFIDENTIALITY. EXCEPT as otherwise provided below,
Landlord agrees, at all times during and after the existence of
the commercial relationship between the Tenant and the Landlord,
to protect and hold the Confidential Information strictly secret
and confidential, to use such Confidential Information only for
the purpose(s) for which it is disclosed, and not to directly or
indirectly disclose, publish, reproduce or use (or cause or
permit the disclosure, publication, reproduction or use of) such
Confidential Information for any other purpose. The Landlord
will disclose the Confidential Information only to such of the
Landlord's Representatives as need to know such Confidential
Information for the Landlord to carry out the activities and
purposes for which it was disclosed by the Tenant.
III. RETURN OF CONFIDENTIAL INFORMATION. At such time as
the Landlord no longer needs to retain such Confidential
Information to carry out the purposes and activities for which it
was disclosed, the Landlord will promptly return to the Tenant or
destroy all tangible material containing or reflecting such
Confidential Information and will not retain any copies,
extracts, summaries or other reproductions in whole or in part of
such tangible material, and such return/destruction shall be
certified in writing to the Tenant.
IV. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon the parties, the Representatives of the Landlord,
and each party's and Representative's respective heirs,
successors and assigns. The Landlord shall take reasonable
precautions to ensure that its Representatives comply with the
provisions of this Agreement, and shall indemnify and hold
harmless the Tenant against any breaches hereof by its
Representatives. The Landlord agrees to identify, upon request,
all persons to whom any Confidential Information may have been
disclosed.
V. SEVERABILITY; REMEDIES. If any provision or
application of this Agreement is held unlawful or unenforceable
in any respect, such illegality or unenforceability shall not
affect other provisions or applications which can be given
effect, and this Agreement shall be construed as if the unlawful
or unenforceable provision or application had not been contained
herein. The Landlord acknowledges that the Tenant may not have
an adequate remedy at law in the event of any unauthorized use or
disclosure of Confidential Information by the Landlord or its
Representatives, and that the Tenant shall therefore be entitled,
in addition to any other remedies that may be available, to
injunctive and/or other equitable relief to prevent or remedy any
such unauthorized use or disclosure.
VI. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Minnesota.
VII. EXCEPTIONS TO CONFIDENTIALITY. The foregoing will
not restrict the following: (i) Landlord may submit information
it obtains in connection with this Lease that may fit the
definition of Confidential Information IN CONFIDENCE (but
Landlord will not be liable for any breach of confidentiality by
the recipient, so long as Landlord labels the information
presented or otherwise notifies the recipient that such
information is Confidential) to any of Landlord's institutional
lenders that may be financing Landlord's interest in the Premises
or to any potential or actual mortgagee or purchaser of
Landlord's interest, or to employees, directors, officers and
partners of Landlord, or to Landlord's accountants, legal counsel
and professional advisors; (ii) such Confidential Information may
be disclosed or submitted to the court or decision-making body as
may be required in connection with any litigation, arbitration or
other proceeding between the parties; and/or (iii) such
Confidential Information may be disclosed or submitted as may be
legally required by the Securities and Exchange Commission or any
governmental or court order or law or regulation.
Notwithstanding the foregoing, if Landlord receives any third
party request for any Confidential Information that may be in
Landlord's possession, Landlord will promptly notify Tenant of
the request and reasonably cooperate (at no out-of-pocket expense
to Landlord) on any action by Tenant to preserve its
confidentiality (e.g., and not in limitation, returning such
Confidential Information to Tenant so it is no longer in
Landlord's possession).
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands as of the day and year first above written.
LANDLORD:
ALPHA GROUP, L.L.C.,
a limited liability company
By
Witness Print
Its
TENANT:
OCB REALTY CO.,
a Minnesota corporation
By
Witness Print Roe H. Hatlen
Its Chief Executive Officer
EXHIBIT G
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
(the "Agreement"), dated this ___ day of ______________, 19___,
by and among OCB Realty Co., a Minnesota corporation ("Tenant"),
ALPHA GROUP, L.L.C., a limited liability company ("Landlord"),
and ____________________________________________, a
_____________________________ ("Lender").
RECITALS
WHEREAS, Lender is the current holder of a [mortgage/deed of
trust] made by Landlord in Lender's favor dated ______________,
19___, and filed in the Office of ________________________
County, as ______________________ (the "[Mortgage/Deed of
Trust]"); and
WHEREAS, the [Mortgage/Deed of Trust] relates to that
certain shopping center development owned by Landlord, located in
_____________________________, commonly known as
_____________________________, and legally described on Exhibit A
attached hereto (the "Shopping Center"); and
WHEREAS, Tenant is the tenant, and Landlord is the landlord,
under that certain Lease dated __________ (the "Lease"), relating
to a certain portion of the Shopping Center more particularly
described in the Lease (the "Premises"); and
WHEREAS, Lender, Landlord and Tenant have requested of and
granted to each other the agreements hereinafter stated and
desire to evidence said agreements in writing.
NOW, THEREFORE, For good and valuable consideration paid by
each to the other, the receipt and sufficiency of which is hereby
acknowledged, Landlord, Tenant and Lender hereby agree as
follows:
1. Subordination. Except as otherwise provided herein,
the Lease is now and shall at all times continue to be, subject
and subordinate in each and every respect to the lien of and
security interest created by the [Mortgage/Deed of Trust], and to
any and all renewals, extensions, modifications, substitutions or
replacements thereof, subject to the terms and conditions of this
Agreement.
2. Nondisturbance. So long as Tenant is not in default,
beyond any applicable cure periods provided in the Lease, in the
payment of the rental reserved in the Lease, or in the observance
or performance of any of the other terms, covenants or conditions
contained in the Lease or in this Agreement on Tenant's part to
be observed and performed:
(a) Tenant's possession of the Premises and Tenant's
rights and privileges under the Lease shall not be terminated,
canceled or in any way disturbed, diminished or interfered with
by the Lender during the term of this Lease and any extension or
renewal thereof, whether or not the [Mortgage/Deed of Trust] is
in default and whether or not Lender acquires Landlord's interest
in the Lease by foreclosure or deed in lieu of foreclosure, or
otherwise.
(b) Lender will not join Tenant as a party defendant
in any action or proceeding for the purpose of terminating
Tenant's interest and estate under the Lease as a result of any
default under the [Mortgage/Deed of Trust]; PROVIDED, however,
Lender may join Tenant in a foreclosure action if such joinder is
necessary for the purpose of foreclosing the [Mortgage/Deed of
Trust] against Landlord, but then only for such purpose and not
for the purpose of terminating the Lease.
(c) If Lender has control of any funds or allowances
owed Tenant by Landlord, Lender shall release the funds or
allowances pursuant to the terms of the Lease.
3. Attornment. If the interests of Landlord shall be
transferred to and owned by Lender by reason of foreclosure or
other proceedings brought by it in lieu of or pursuant to a
foreclosure, or by any other manner, and Lender succeeds to the
interest of the Landlord under the Lease, Tenant shall be bound
to Lender under all of the terms, covenants, and conditions of
the Lease for the balance of the term thereof remaining and any
extensions or renewals thereof which may be effected in
accordance with any option therefor in the Lease, with the same
force and effect as if Lender were the landlord under the Lease,
and Tenant does hereby attorn to Lender as its landlord, said
attornment to be effective and self-operative immediately upon
Lender succeeding to the interest of Landlord under the Lease
without the execution of any further instruments on the part of
any of the parties hereto; provided, however, that Tenant shall
be under no obligation to pay rent to Lender until Tenant
receives written notice from Lender that it has succeeded to the
interest of the Landlord under the Lease. The parties hereto
agree that the respective rights and obligations of Tenant and
Lender upon such attornment, to the extent of the then remaining
balance of the term of the Lease and any such extensions and
renewals, shall be and are the same as now set forth therein; it
being the intention of the parties for this purpose to
incorporate the Lease in this Agreement by reference with the
same force and effect as if set forth at length in this
Agreement.
4. Representations and Warranties of Landlord. Landlord
represents and warrants to Tenant that the [Mortgage/Deed of
Trust] is the only encumbrance on the Shopping Center or on the
Premises and that the interest of Tenant under the Lease is not
subordinate to any other lien or interest.
5. Rental Payment. Landlord and Lender agree that upon
receipt of written notice from Lender that Lender has succeeded
to the interest of Landlord under the Lease, that Tenant may pay
all rental and other charges reserved under the Lease directly to
Lender. Landlord and Lender further agree that any such payments
shall be credited by both Lender and Landlord against Tenant's
rental and other obligations under the Lease, regardless of
whether Lender had the right to make such demand and regardless
of any contrary demands which may be made by Landlord.
6. Successors and Assigns; Binding Effect. This Agreement
shall be binding upon Landlord, its successors and assigns, shall
be binding upon and inure to the benefit of Tenant, its
successors, assigns and sublessees and shall be binding upon and
inure to the benefit of Lender, its successors and assigns who
acquired title thereto from or through Lender.
7. Entire Agreement. This Agreement contains the whole
agreement between the parties hereto as to the [Mortgage/Deed of
Trust] and the priority thereof, herein described, and there are
no agreements, written or oral, outside or separate from this
Agreement, and all prior negotiations, if any, are merged into
this Agreement.
8. Relationship Between Parties. The subordination of the
Lease to the [Mortgage/Deed of Trust] will not be construed to
give Lender, or its successors and assigns, any interest in
casualty insurance maintained by Tenant or proceeds to which
Tenant is entitled under the Lease, nor will it be construed to
modify any of the provisions of the Lease or of the parties'
obligations under the Lease.
9. Notices. Any notices required or permitted hereunder
may be given in the manner provided in Section 30.5 of the Lease.
Tenant's addresses for notice purposes are as set forth in
Section 30.5 of the Lease. Lender's address for notice purposes
is as set forth below. All notices shall be effective upon the
delivery or attempted delivery to the party's address for notice
purposes (subject to any change in such address for notices that
a party may make by written notice to the other).
10. Governing Law. This Agreement will be governed and
construed in accordance with the laws of the State of Illinois.
IN WITNESS WHEREOF, the parties have causes this Agreement
to be duly executed as of the date first shown above.
Tenant: OCB REALTY CO.
By:
Its:
Landlord: ALPHA GROUP, L.L.C.
By:
Its:
Lender:
By:
Its:
Address for notice purposes:
STATE OF MINNESOTA )
)ss.
COUNTY OF ____________ )
The foregoing instrument was acknowledged before me
this ____ day of_________________, 19___, by
__________________________________, the ____________________ of
OCB Realty Co., a Minnesota corporation, on behalf of the
corporation.
Notary Public
STATE OF _____________ )
)ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me
this ____ day of_________________, 19___, by
______________________________, the ________________ of
_____________________________, a _______________ corporation, on
behalf of the corporation.
Notary Public
STATE OF _____________ )
)ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me
this ____ day of_________________, 19___, by
______________________________, the ________________ of
_____________________________, a _______________ corporation, on
behalf of the corporation.
Notary Public
EXHIBIT H
AGREEMENT BY LANDLORD
(Leasehold Financing Without Subordination)
The undersigned is the holder of the interest of the
landlord, ALPHA GROUP, L.L.C. ("Landlord") in and to that certain
Ground Lease dated __________________, 19__ (the "Lease")
covering certain property in __________________ [city],
____________________ [state], as more particularly described in
the attached Exhibit A (the "Property"), the tenant's interest in
which is held by OCB REALTY CO. [or corporate affiliate]
("Tenant"), and BUFFETS, INC., a Minnesota corporation
("Guarantor"). Tenant has requested Landlord's consent to this
Agreement by Landlord (the "Agreement") in connection with
financing that may be obtained during the term of the Lease.
Landlord has requested that Guarantor sign this Agreement by
Landlord (the "Agreement"), to confirm and agree to the terms
thereof that relate to Tenant's and Guarantor's obligations.
Landlord hereby consents to the pledge and assignment by
Tenant of Tenant's right, title and interest in and to the Lease,
Tenant's leasehold estate and Tenant's interest in any subleases
affecting the Property, or any portion thereof, to
________________________________ and its successors and assigns
and any lender advancing financing to refinance its loan
(collectively, the "Lender"), and all additional, replacement,
refinancing, consolidation, or substitution leasehold mortgages,
trust deeds, security assignments, pledges, and similar security
instruments hereafter given by Tenant thereon (the "Loan
Instruments") in favor of the Lender.
Until Landlord receives written notice from Lender that the
Loan Instruments have been released by Lender and terminated,
Landlord agrees that:
1. Notices of Default. In the event of any default under
the Lease, Landlord will deliver a copy of the notice of default
to Lender at its address for notices (as designated to Landlord
by written notice), and Landlord hereby agrees not to take any
action to dispossess Tenant or to enforce any claim with respect
thereto without giving Lender prior written notice thereof, which
will be transmitted to Lender simultaneously with the giving of
such notice to Tenant, and the right for Lender to cure such
default within a period of twenty (20) days after the running of
any notice or grace period permitted to Tenant in the Lease.
Landlord shall accept such performance by or at the instigation
of Lender as if the same had been done by Tenant. No event of
default shall be deemed to exist under the Lease with respect to
the payment of rentals or other charges, the performance of work
required to be performed, or of acts to be done, or of conditions
to be remedied, if Lender corrects or commences correction of the
default within the required time period and thereafter pursues
such correction to completion. Any failure by Landlord to give
such notice to Lender will not "toll" the time periods under the
Lease for default with respect to the exercise of any right or
remedy Landlord may have against Tenant (subject only to the
limitation in paragraph 3 below).
2. Lender's Rights. In the event of default by Tenant
under the Lease or under the Loan Instruments with Lender, Lender
may exercise such rights as Lender may have against Tenant,
including the right to take possession of the Property and
exercise Tenant's rights under the Lease, foreclose Tenant's
interest in the Lease as permitted by law, and reassign, sell,
and/or sublet Tenant's interest in the Lease (but any such
reassignment or sale by Lender will be subject to written
approval by Landlord of the transferee, to the extent required
under the Lease, which approval shall not be unreasonably
withheld or delayed). Landlord's consent will not be required in
connection with the assignment of the Lease and any conveyance of
the Property to Lender. If Lender or such purchaser acquires the
Property and subsequently proposes to transfer it to third
parties, Landlord will reasonably approve and consent to an
assignment of the Lease to third parties which have the
capability of performing or causing to be performed the Tenant's
obligation under the Lease, provided that the transferee assumes
the Lease.
3. No Termination Without Lender's Right To Foreclose.
Notwithstanding any other provision of the Lease, upon the
occurrence of any event of default under the Lease, Landlord
shall take no action to terminate the Lease (if permitted in the
Lease) without first giving to Lender written notice of
Landlord's election to take such actions, and a reasonable time
thereafter within which either (i) to obtain possession of the
Property (including possession by a receiver) or (ii) to
institute foreclosure proceedings or otherwise acquire Tenant's
interest under this Lease with diligence. Upon obtaining
possession or acquiring Tenant's interest under the Lease, Lender
shall be required promptly to cure all defaults then reasonably
curable by Lender and to continue to pay or perform such
obligations of Tenant under the Lease so long as the Lender
continues such possession. Lender may elect to return possession
of the Premises to Tenant or discontinue any foreclosure
proceedings then in progress at any time. No provision of the
Lease or this Agreement shall be interpreted as an obligation on
the part of Lender to commence or continue any action to obtain
possession of the Property or acquire Tenant's interest under the
Lease.
The provisions of this Agreement concerning notice to Lender
will not limit the right of Landlord to pursue, nor require
Landlord to wait or delay until the expiration of any applicable
notice and/or grace period required under this Agreement as to
Lender, any and all rights and remedies that Landlord may have
against Tenant under the Lease, including (without limitation)
the assessment of late charges or interest, the collection of
damages, the enforcement of the Lease and other rights and
remedies permitted in the Lease (excepting, only, that Landlord
will not terminate the Lease or take action to dispossess Tenant
from the Premises unless and until any notice and/or grace
periods required by the Lease and any required to be given to
Lender under this Agreement have both expired).
4. Notice of Outstanding Defaults. In the event Landlord
dispossesses Tenant or exercises any right contained in the Lease
to terminate the Lease prior to the expiration of the term
(except as a result of condemnation), Landlord shall serve upon
Lender written notice that such actions have been taken
completed, together with a statement of all events of default
under the Lease then known to Landlord. Lender shall have the
option to obtain a new lease (as provided in paragraph 7 below)
upon the written request of Lender given within thirty (30) days
after service of such notice of termination by Landlord.
Notwithstanding the execution of such new Lease, Tenant shall not
be released and will remain liable for its obligations under the
Lease.
5. No Liability. Neither this Agreement, the Loan
Instruments, any assignment of lease to Lender as security, nor
any action taken under any such instruments shall be construed as
giving rise to any duty, responsibility, or liability on the part
of Lender to Landlord, until such time as Lender commences
foreclosure upon or otherwise acquires Tenant's interest under
the Lease.
6. No Cancellation. There shall be no cancellation,
surrender or material modification (by way of example, any
modification of rent or other payment obligations or of the term
of the Lease) of the Lease by joint action of Landlord and Tenant
without the prior written consent of Lender, which will not be
unreasonably withheld with respect to proposed modifications to
the Lease.
7. New Lease. Upon the acquisition by Lender of Tenant's
leasehold interest, foreclosure on such interest or termination
of Tenant's interest under the Lease for any reason (except as a
result of condemnation), Lender shall have the option to obtain a
new lease on written request to Landlord within thirty (30) days
after the completion of the acquisition or foreclosure or notice
of termination to Lender. Such new lease shall be effective as
of the date of termination of the Lease, and shall be for the
remainder of the term of the Lease and identical to the Lease,
except for the name of the tenant. Such new lease shall require
the tenant to perform any unfulfilled obligations of Tenant under
the Lease which are then reasonably curable.
No such new lease between Landlord and Lender will waive or
affect the rights and remedies that Landlord has against Tenant
and Guarantor, as guarantor of Tenant, for Tenant's default or
release such parties from liability for damages and other amounts
that may be payable under the Lease and applicable law for
Tenant's default (but the rent received or receivable from the
new lease will be applied or off-set, as provided under
applicable law, against such damages).
8. Right to Tenant's Interest in Deposits. Effective upon
the commencement of the term of any new lease executed pursuant
to paragraph 7, any and all moneys deposited with Landlord which
Tenant would have been entitled to use but for the termination of
the Lease may be used by the tenant under such new lease for the
purposes of and in accordance with the provisions of such new
lease.
9. Right to Tenant's Interest in Proceeds. Any proceeds
from insurance policies or proceeds arising from a condemnation
to which Tenant is entitled are to be held by Lender and applied
pursuant to the provisions of the Loan Instruments and the Lease.
Lender may reserve its rights to apply to the Loan Instruments
all, or any part, of such proceeds to which Tenant may be
entitled to retain pursuant to the Lease and which the Lease does
not require to be used for the repair or reconstruction of the
Property.
10. Proceedings. Lender shall be given notice of any
arbitrations by the parties to the Lease and will have the right
to intervene in and be a party to such proceedings. Lender will
receive in any event a copy of any award or decision made in the
proceeding.
11. Release of Liability. If Lender acquires title to
Tenant's leasehold interest or otherwise forecloses on such
interest, or obtains a new lease from Landlord as described in
paragraph 7, and the leasehold interest is assigned to a
transferee in accordance with the requirements of paragraph 2,
Lender shall be automatically released from all liability for the
performance or observance of the terms of the Lease effective on
the date of such assignment, so long as the transferee assumes
the Lease and all curable defaults as of such date are cured and
so long as Landlord has given written approval of the credit
worthiness of the transferee. Landlord's written approval shall
not be unreasonably withheld.
This paragraph 11 will not affect or release Tenant or
Guarantor, as guarantor of Tenant, from their respective
obligations under the Lease and guaranty of the Lease.
Furthermore, provisions for release of Lender on assignment will
not be available to the transferee (other than Lender), after any
assignment to a transferee other than Lender pursuant to and in
accordance with paragraph 2.
12. Insolvency Defaults. The Lease will not be terminated
for any bankruptcy or insolvency default (or similar default
which Lender cannot reasonably "cure"), so long as Lender
commences appropriate legal action (within the time period
specified in paragraph 3 above) to acquire Tenant's leasehold
interest for such default and thereafter pursues the action
diligently to completion and pays and performs the obligations of
Tenant as described in Paragraph 3 above.
13. Successors and Assigns. This Agreement is for the
benefit of the parties hereto, and their respective successors
and assigns.
14. Cooperation by Parties. Landlord will cooperate with
Tenant in executing an agreement substantially in accordance with
this Agreement and naming the specific Lender(s), if required by
the Lender(s), and executing any estoppel certificate,
acknowledgment or similar document reasonably required by Tenant
and the Lender(s) in connection with any leasehold financing.
Landlord agrees to execute, acknowledge (if appropriate), and
deliver any agreements clarifying or modifying the Lease and
reasonably required by Tenant and the Lender(s), provided that
any such modification shall not in any way cause any material
diminishment of Tenant's obligations or Landlord's rights and
remedies pursuant to the Lease.
15. No Default. Landlord acknowledges that, to the best of
its knowledge, the Lease described above is presently in full
force and effect, the Lease has not been modified or amended
(except as shown on the attachments thereto and by this
Agreement), and Landlord has no actual knowledge of any default
or event of default by Tenant thereunder as of the date of this
Agreement.
16. Attorneys' Fees. In the event of litigation between
the parties to enforce or interpret the terms of this Agreement,
the prevailing party shall, in addition to any other relief, be
entitled to recover from the losing party reasonably attorneys'
fees and costs incurred at trial, upon any appeal and on any
petition for review.
17. Complete Agreement. This Agreement sets forth the
complete understanding of the parties with respect to this
transaction, may be amended only in writing signed by the party
against whom it is sought to be enforced, and without limiting
the generality of the foregoing, shall not be deemed modified by
any course of dealing.
18. Notices. Any notice to be given under this Agreement
shall be in writing and shall be effective when either delivered
in person or deposited as registered or certified mail, postage
prepaid, return receipt requested, directed to the other party at
its address for notices stated below, or such other address as a
party may designate by written notice to the other. Any notice
sent by registered or certified mail will be deemed received on
the actual date of delivery of the notice to the address of the
party, and not to the named individual or party, as evidenced by
the registered or certified mail return receipt.
19. No Release of Tenant. It is specifically understood
and agreed that the giving of this consent to said assignments
shall not release or relieve Tenant from any of its respective
obligations under the Lease.
DATED this _____ day of _______________, 19___.
LANDLORD: ALPHA GROUP, L.L.C.
By:
By:
TENANT: OCB REALTY CO.
By:
GUARANTOR: BUFFETS, INC., a Minnesota corporation
By
Print: Roe H. Hatlen
Its: Chief Executive Officer
LENDER: [Lender's Name]
By:
STATE OF _______ )
) ss.
County of _________ )
On this _____ day of _______________, 19__, before me,
the undersigned, a Notary Public in and for said State,
personally appeared _______________ and ________________
personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) who executed the
within instrument, and acknowledged to me that such person(s)
executed the same.
WITNESS my hand and official seal.
Notary Public for
My commission expires:
Residing at:
STATE OF _______ )
) ss.
County of _________ )
On this _____ day of _______________, 19__, before me,
the undersigned, a Notary Public in and for said State,
personally appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the
person(s) who executed the within instrument as the
____________________________ of __________________________, a
corporation, the corporation therein named, and acknowledged to
me that such corporation executed the same.
WITNESS my hand and official seal.
Notary Public for
My commission expires:
Residing at:
STATE OF _______ )
) ss.
County of _________ )
On this _____ day of _______________, 19__, before me,
the undersigned, a Notary Public in and for said State,
personally appeared __________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the
person(s) who executed the within instrument as the
____________________________ of OCB REALTY CO., the corporation
therein named, and acknowledged to me that such corporation
executed the same.
WITNESS my hand and official seal.
Notary Public for
My commission expires:
Residing at:
EXHIBIT I
STOREFRONT ELEVATION
and PRE-APPROVED PYLON SIGN LOCATION
[graphic showing sign and store front elevation]
SCHEDULE #1
STANDARD LANDLORD SUPPLIED SITE SPECIFICATIONS
[THIS EXHIBIT HAS BEEN INTENTIONALLY DELETED BY THE PARTIES]
SCHEDULE #2
STANDARD EXCLUSIONS FROM GROSS SALES
Gross Sales shall not include:
(a) Receipts from vending machines, coin-operated amusement
devices and pay telephones.
(b) Receipts from the sale of gift certificates until such are
redeemed at the Premises.
(c) Any sale to, or the value of any meals consumed by,
employees of Tenant which are provided as a benefit of
employment, not to exceed three percent (3%) of Gross Sales.
(d) The value of any complimentary meals provided as a customer
service or as part of Tenant's community marketing efforts,
not to exceed two percent (2%) of Gross Sales.
(e) Any refund which is made to any customer.
(f) Any sales tax or other payment required by governmental law
or regulation.
(g) Receipts from catering or from orders placed at the
Premises, but filled elsewhere.
(h) Bad debts and "non-sufficient funds" checks.
(i) Sales of furniture or equipment not in the ordinary course
of business.
(j) Any charge paid by Tenant as a finance charge for credit
card services.
(k) Insurance recoveries or other proceeds not directly related
to sales or services from the Premises.
SCHEDULE #3
STANDARD EXCLUSIONS FROM COMMON AREA EXPENSES
[THIS EXHIBIT HAS BEEN INTENTIONALLY DELETED BY THE PARTIES]
GUARANTY
On this __ day of February, 1998, the undersigned, BUFFETS,
INC., a Minnesota corporation ("Guarantor"), in consideration of,
and in order to induce the execution and delivery by ALPHA GROUP,
L.L.C., a limited liability company ("Landlord"), to OCB Realty
Co., a Minnesota corporation ("OCB"), of that certain lease dated
February __, 1998, by and between Landlord, as landlord, and OCB,
as tenant, a copy of which is attached to this Guaranty (the
"Lease"), does hereby unconditionally guarantee (i) the payment,
when due, of all amounts of rent or other payments which may become
due and payable by OCB pursuant to the terms and conditions of the
Lease, and (ii) the performance of all other monetary obligations
of OCB thereunder. Guarantor's obligations under this Guaranty
shall extend through the entire term of the Lease and any renewal
or extension of the Lease.
Guarantor hereby waives notice to Guarantor of (i) acceptance
of this Guaranty, (ii) any action taken or omitted by Landlord in
reliance on this Guaranty, and (iii) any default by OCB with
respect to any term or condition of the Lease (but without
affecting any provision of the Lease concerning notice and/or grace
periods under the Lease and notices required to be given to
Tenant).
Guarantor agrees that, without its consent, the Lease may be
modified, amended, and supplemented in any manner, including, but
not limited to, a renewal or extension of the term of the Lease,
and agrees that no such amendment, modification, supplement,
renewal or extension shall release, affect or impair Guarantor's
liability under this Guaranty. However, Guarantor shall be
released of its obligations hereunder on and after the date that
OCB's obligations under the Lease terminate, including as the
result of a permitted assignment under the Lease wherein OCB is
released from further performance.
Guarantor agrees that its liability under this Guaranty shall
not be affected, reduced or impaired by reason of the failure of
Landlord to pursue or enforce against OCB any right or remedy
available to Landlord, and Guarantor hereby waives all right to
require Landlord to pursue, enforce or resort to any or all such
rights or remedies of Landlord.
Guarantor acknowledges and agrees that Guarantor's
obligations to Landlord under this Guaranty are direct and
unconditional obligations of Guarantor and are separate and
distinct from OCB's obligations to Landlord under the Lease.
The occurrence of any of the following events shall not have
any effect whatsoever on any of Guarantor's obligations to
Landlord hereunder, each of which obligations shall continue
in full force or effect as though such event had not
occurred: (a) the commencement by OCB of a voluntary case
under the federal bankruptcy laws, as now constituted or
hereafter amended or replaced, or any other applicable
federal or state bankruptcy, insolvency or other similar law
(collectively, the "Bankruptcy Laws"), (b) the consent by
OCB to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official of OCB or of any
substantial part of its property, (c) any assignment by OCB
for the benefit of creditors, (d) the failure of OCB
generally to pay its debts as such debts become due, or (e)
the entry of a decree or order for relief by a court having
jurisdiction in respect of OCB in any involuntary case under
the Bankruptcy Laws, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar
official) of OCB or of any substantial part of its property,
or ordering the winding-up or liquidation of any of its
affairs and the continuance of any such decree or order
unstated and in effect for a period of sixty (60)
consecutive days. The liability of Guarantor under this
Guaranty is not and shall not be affected or impaired by any
payment made to Landlord under or related to the Lease for
which Landlord is required to reimburse OCB pursuant to any
court order or in settlement of any dispute, controversy or
litigation in any bankruptcy, reorganization, arrangement,
moratorium or other federal or state debtor relief
proceeding.
BUFFETS, INC., a Minnesota
corporation
By:
Print: Roe H. Hatlen
Its: Chief Executive Officer
AFFIDAVIT AND INDEMNITY AGREEMENT
(Post-Construction)
The undersigned OCB REALTY CO., a Minnesota
corporation ("Tenant") is leasing certain property (the
"Premises") from ALPHA GROUP, L.L.C., a limited
liability company (the "Landlord") at
Northlake, Illinois
pursuant to a Ground Lease Agreement dated
, 1998 (the "Lease").
Tenant hereby affirms, certifies and confirms to
Landlord that the work on the Premises as described in the
plans and specifications for Tenant's Work (as referenced
and defined in the Lease) is 100% completed.
Pursuant to the terms of the Lease, Tenant hereby
represents, warrants and covenants with Landlord that all
persons engaged in or providing materials in connection with
Tenant's Work have been paid, and Tenant does hereby agree
to defend, indemnify, and hold Landlord, and its employees,
agents and representatives harmless from any claim, loss, or
liability (including reasonable attorneys' fees incurred)
arising out of or in connection with any person subsequently
claiming or filing a lien with respect thereto. In
addition, Tenant covenants and agrees with Landlord that
Tenant will be the surety to Landlord with respect to the
payment of the costs of Tenant's Work and satisfaction of
any rights to lien the Premises, on the same basis as if
Tenant's Work were covered by payment and performance bonds.
By execution hereof, the undersigned Tenant hereby
agrees that this Affidavit and Indemnity Agreement (the
"Agreement") will be deemed part of the "Lease," and any
breach of the obligations of Tenant which are covered by
this Agreement shall be a breach of Tenant's obligations
under the Lease. Performance of this Agreement and payment
of obligations of Tenant hereunder is hereby guaranteed by
the undersigned Guarantor.
In the event of any litigation concerning this
Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees and court costs, at trial, upon
appeal and any petition for review.
This Agreement will be governed and construed in
accordance with the laws of the state in which the Premises
is located.
IN WITNESS WHEREOF, the undersigned have caused
this Agreement to be duly executed and delivered as of
, 199__.
TENANT: OCB REALTY CO.,
a Minnesota corporation
By
Witness Print Roe H. Hatlen
Its Chief Executive Officer
GUARANTOR: BUFFETS, INC., a Minnesota
corporation
By
Witness Print: Roe H. Hatlen
Its: Chief Executive Officer
DEVELOPMENT FINANCING AND LEASING COMMITMENT
(the "Commitment")
April 24, 1998
AEI Real Estate Fund XVIII Limited Partnership, or its
assigns, (together,"AEI"), agrees to purchase, and you,
Tumbleweed, LLC. ("Lessee"), agree to lease from AEI, a parcel of
land to be located at East Broad Street, Columbus, Ohio legally
described on EXHIBIT "A" attached hereto (together with the
"Improvements" as defined below, the "Parcel"), with the
understanding that the building, site improvements, fixtures,
HVAC, non-trade fixture items financed by AEI, constituting a
Tumbleweed restaurant (the "Improvements") is to be developed by
you on the Parcel after AEI's purchase of the Parcel from Broad
Street Retail, LLC ("Seller"), which Parcel's development and
lease will be subject to the provisions and conditions herein
contained:
A. LESSEE
Lessee Name: Tumbleweed LLC
Address: 1900 Mellwood Ave
Louisville, Kentucky 40206
Phone: 502 893-0323
B. ACQUISITION OF PARCEL
This Commitment is contingent upon AEI's purchase of the
Parcel from Seller, pursuant to an assignment to AEI of the
purchaser's interest in a purchase agreement between Lessee and
Seller. Said purchase agreement and assignment shall be in a
form and substance reasonably satisfactory to AEI. The
assignment of the purchase agreement to AEI would not be executed
until the Closing Date, defined in ARTICLE D.2.
C. FEES AND COSTS
1. A commitment fee equal to Two percent (2.0%) of the
Estimated Total Project Cost of the Parcel (defined below) (the
"Commitment Fee"), will be payable by Lessee to AEI upon the
signing and delivery of this Commitment by Lessee to AEI.
Lessee's estimate of the total project cost which will be
incurred to acquire the land and complete the Improvements is
$1,490,000 ("Estimated Total Project Cost").
Subject to ARTICLE L hereof, the Commitment Fee shall
be considered earned upon AEI's execution and delivery of this
Commitment to Lessee. At Lessee's election, the Commitment Fee
may be included as a funded project cost and reimbursed to Lessee
at closing on AEI's acquisition of the Parcel (the "Closing").
Said Commitment Fee will be adjusted on the date of the final
disbursement of the Development Financing, defined in ARTICLE C.4
hereof, (the "Final Disbursement Date") to reflect two percent
(2.0%) of the final Actual Total Project Cost, defined in ARTICLE
D.1 hereof.
2. All outstanding real estate taxes, and levied and
pending special assessments, due and payable prior to the Closing
Date, as defined in ARTICLE C.2 hereof, or assessed for the year
in which closing shall occur, if due and payable in the year in
which closing shall occur, shall be paid by Seller or Lessee in
full at or prior to the Closing Date (pro-rated in the Purchase
Agreement for the Parcel as of the Closing Date).
3. Lessee shall pay all expenses incident to the Closing
and necessary to comply with the requirements herein, as
consistent with this Commitment, including AEI's outside legal
costs incurred by AEI and reimburseable in such amounts as agreed
to by AEI as set forth on the Estimated Total Project Cost Budget
set forth on EXHIBIT B . Such costs may be included, at Lessee's
option, as project costs funded by AEI.
4. AEI shall permit Lessee to construct the Improvements
on the Parcel owned by AEI, according to the plans and
specifications submitted to AEI, and pursuant to a construction
contract between Lessee and its contractor ("General
Contractor"), a copy of which would be provided in advance of the
Closing Date to AEI. Subject to the terms of the Development
Financing Agreement, attached as EXHIBIT "G" hereto, funds will
be advanced for the construction of the Improvements and related
soft costs, up to the Actual Total Project Cost set forth in
ARTICLE D.1 hereof (the "Development Financing") by AEI as set
forth in ARTICLE E. hereof.
At the Final Disbursement Date, AEI shall pay Lessee a
fee for developing the Improvements in the amount of $15,675 (the
"Parcel Development Fee"). The Parcel Development Fee will be
included as a funded project cost and paid to Lessee on the Final
Disbursement Date. However, the Actual Total Project Cost
(defined in ARTICLE D.1 hereof), including the Parcel Development
Fee, shall not exceed the approved MAI appraised value.
D. CLOSING TERMS
1. Actual Total Project Cost: The Actual Total Project
Cost will include only all verifiable project costs actually
incurred, which costs are approved by AEI, either as part of the
Estimated Total Project Cost Budget, or subsequently in AEI's
reasonable discretion (the "Actual Total Project Cost"), being
those costs described on EXHIBIT "B" attached hereto.
2. Closing Date: The closing date for AEI's purchase of
the Parcel from Seller and the commencement of the Lease
described in ARTICLE F. hereof shall be May 15, 1998 or sooner
(the "Closing Date"), after delivery and approval of all of the
items contemplated hereunder including, but not limited to, the
execution of the documents described in ARTICLE H. hereof. If
Lessee has not performed under this Commitment by the Closing
Date, this Commitment shall be null and void at the option of
AEI. In the event Lessee requests an extension of this
Commitment, and said extension is approved by AEI in its sole
discretion, a written addendum to this Commitment shall be
required.
3. Closing Agent: The closing contemplated hereunder
shall be handled by the national office of Lawyer's Title
Insurance Company located in Phoenix, Arizona, acting under
instructions from AEI's counsel.
4. This Commitment shall not be assignable by Lessee
without AEI's prior written approval, by law, or otherwise, but
may be assigned by AEI at its option, in whole or in part, in
such manner as AEI may determine, to an affiliate or affiliates
of AEI.
5. Parcel Inspection: As a condition precedent to AEI's
obligations hereunder, the Parcel shall be inspected and approved
by AEI.
6. As a condition precedent to closing on AEI's
acquisition of the Parcel and AEI's first disbursement for the
Development Financing, the supporting documentation listed below
must be submitted to AEI not less than ten (10) business days
prior to the Closing Date, in form and content satisfactory to
AEI and its counsel:
a. Lessee is to furnish AEI with an acceptable cost
breakdown itemizing estimated construction costs, including, but
not limited to, land acquisition, building construction, site
development, landscaping and soft costs, equal to the Estimated
Total Project Cost (the "Project Cost Budget");
b. The Lessee shall submit to AEI current financial
statements as described on EXHIBIT "C".
c. The Lessee shall furnish a commitment for an ALTA
Owner's Policy of Title Insurance (ALTA owner - most recent
edition) insuring marketable title in the Parcel, subject only to
such matters as AEI may approve and excluding exceptions for
mechanic's liens, survey and parties in possession (the "Title
Commitment"). The policy shall be issued by the national office
of Lawyer's Title Insurance Company located in Phoenix, Arizona
(the "Title Company") and shall contain such endorsements as AEI
may require including, a future disbursements endorsement up to
the Estimated Total Project Cost, an extended coverage
endorsement, creditor's rights endorsement, and an owners
comprehensive coverage endorsement. The Title Commitment shall
list Seller as the present fee owner and should show AEI as the
fee owner to be insured. The Title Commitment shall also include
an itemization of all outstanding and pending special assessments
or should state that there are none, if such is the case, and
state the manner in which any outstanding assessments are
payable, that is, whether they are payable in monthly or yearly
installments, setting forth the amount of each such installment
and its duration. The Title Commitment shall also include an
itemization of taxes affecting the Parcel and the tax year to
which they relate; should state whether taxes are current and, if
not, shall show the amounts unpaid, the tax parcel numbers, and
whether the tax parcel includes property other than the Parcel to
be purchased. All easements, restrictions, documents, and other
items affecting title should be listed in Schedule "B" of the
Title Commitment. COPIES OF ALL INSTRUMENTS CREATING SUCH
EXCEPTIONS MUST BE ATTACHED TO THE TITLE COMMITMENT.
During construction of the Improvements, AEI is to
be furnished with down-date endorsements to the owner's title
insurance policy with continuing affirmative mechanic's lien
coverage pursuant to acceptable endorsements increasing coverage
to the aggregate of all disbursements made by AEI to the date
thereof.
d. AEI is to be furnished with a policy of builder's
risk insurance, as well as public liability coverage, hazard
insurance, and workman's' compensation coverage, all in such
amounts and placed with such companies as may be reasonably
acceptable to AEI, in accordance with the Instructions to
Insurance Agent set forth on EXHIBIT "D-1" attached hereto. In
addition, AEI shall be furnished with satisfactory flood and
earthquake insurance, unless satisfactory evidence is given that
the Parcel is not located within a federally designated flood
plain area or is above the applicable 100 year flood plain level,
and not in a federally designated earthquake prone area or is not
in an ISO High Risk Earthquake Zone respectively.
All policies of insurance must name as additional
named insureds: AEI or its specific assigns and the Corporate
General Partners of AEI and of said assignee, and Robert P.
Johnson, as the Individual General Partner of said assignee, and
Lessee as insured or additional insured, as their respective
interests may appear, and shall provide that the policies cannot
be canceled without thirty (30) days written notice to the
parties. In addition, all policies shall contain endorsements by
the respective insurance companies waiving all rights of
subrogation, if any, against the parties named as insured or
additional insured. All insurance companies must be approved in
writing by AEI. No closing will occur without all insurance
policies completed and in place.
e. Preliminary survey acceptable to AEI prepared by a
licensed surveyor, complying with the guidelines set forth on
EXHIBIT "E-1" attached hereto.
f. Final plans and specifications for the
Improvements upon which construction shall commence, prepared by
an architect or engineer reasonably acceptable to AEI.
g. A soils report prepared by an engineer reasonably
acceptable to AEI.
h. Appraisal of the Parcel by an independent MAI
appraiser acceptable to AEI (AEI shall make the initial attempts
to obtain such appraisal in a form satisfactory to AEI).
i. A letter from the appropriate officer of the
municipality or county exercising land use control over the
Parcel stating: (a) the zoning code affecting the Parcel; (b)
that the Parcel and its intended use complies with such zoning
code, city ordinances and building and use restrictions; (c) that
there are no variances, conditional use permits or special use
permits required for use of the Improvements on the Parcel, or if
such permits are required, specifying the existence of same and
their terms, and (d) that the Parcel complies with the platting
ordinances affecting them and can be conveyed without the
requirement of a plat or replat of the Parcel. If the Parcel
falls within any subdivision rules or regulations, evidence of
compliance with such subdivision regulations, or waiver of the
same by the appropriate officials, is required. (AEI shall make
the initial attempts to obtain such zoning compliance letter in a
form satisfactory to AEI).
j. Written advice from all proper public utilities
and municipal authorities, that utility services are available
and connected to the Parcel for gas, electricity, telephone,
water and sewer (AEI shall make the initial attempts to obtain
such utility letters in a form satisfactory to AEI).
k. Copy of the building permit for construction of
the Improvements on the Parcel.
l. Copies of all construction contracts.
m. Copy of architect's contract.
n. Copy of purchase agreement for the land between
Lessee and
Seller and all amendments and assignments of said purchase
agreement, including the assignment of the purchase agreement
to AEI.
o. Photographs of all sides of the Parcel.
p. Certified copies of the Articles of Formation or
Incorporation, By-Laws (and/or Operating or Membership Agreement)
and Good Standing Certificate for the Lessee, together with all
other documents AEI deems necessary to support the authority of
the persons executing any documents on behalf of the corporation,
including encumbrancy certificates and corporate resolutions of
the directors and shareholders (or of the Partnership, including
resolution of the partners).
q. UCC searches on Seller and Lessee from the offices
of the Secretary of State and the county recorder for the state
and county in which the Parcel is located.
r. Phase I Environmental Assessment Report prepared
by an engineer reasonably satisfactory to AEI containing evidence
satisfactory to AEI that the Parcel complies with all federal,
state and local environmental regulations. Additional reports may
be required by AEI based upon its review of the Phase I report.
If Lessee fails to deliver any additional reports AEI may deem
necessary to complete and approve its environmental investigation
of this Parcel, AEI may terminate this Commitment and retain that
portion of the Commitment Fee to cover any and all of its costs
incurred hereunder.
s s.Executed documents described in Article H.
hereof.
t. All documentation listed on Exhibit "F" attached
hereto.
7. At the completion of construction of the Improvements
on the Parcel and prior to the Final Disbursement of the
Development Financing, Lessee shall deliver the following
documents to AEI:
a. Certificate of Completion executed by the Project
Architect, General Contractor. Said Certificate shall be in a
form reasonably satisfactory to AEI, and substantially similar to
the form previously delivered by Lessee in prior transactions
with Lessor or its affiliates.
b. Certificate of Occupancy.
c. Copies of all necessary permits and licenses of
any governmental body or authority which are necessary to permit
the use and occupancy of the Improvements on the Parcel,
specifically including, but not limited to, liquor licenses.
d. Certified cost statement itemizing the Actual
Total Project Costs signed by the Lessee and related
documentation supporting said project costs.
e. Insurance policies issued by companies acceptable
to AEI for coverage as required by the lease, with AEI named as
additional named insured, complying with the guidelines set forth
on EXHIBIT "D-2" attached hereto.
f. As-built survey, complying with the requirements
of EXHIBIT "E-2" attached hereto.
g. Final date-down endorsement to title policy.
h. Final draw documentation as required by the
development financing documentation described in ARTICLE E.
hereof.
i. Estoppel from Lessee.
j. Lease amendment setting forth the second full
lease year's commencement date, the rent for the remainder of the
term and terminating the Development Financing Agreement (as
described in ARTICLE E. hereof).
E. DEVELOPMENT FINANCING TERMS
Disbursements for construction of the Improvements and related soft
costs, the Development Financing, will be made in accordance with
the provisions of the Development Financing Agreement and
Development Financing Disbursement Agreement attached hereto as
EXHIBITS "G" AND `H" respectively.
F. LEASE TERMS
The Lease, in the form attached hereto as EXHIBIT "I" (or to
be agreed upon between the parties hereto prior to the Closing
Date), will be executed and delivered by AEI and Lessee at
Closing, to include the following terms:
1. Base Rent:
a. Annual rent on the Initial Disbursed Funds from
date of disbursement through the Rental Modification Date: eight
and one-half percent (8.5%).
b. Initial Annual Rent as a Percentage of Actual
Total Project Cost from the earlier of the Rental Modification
Date or the Final Disbursement Date: ten and one quarter percent
(10.25%).
Rent shall be payable in advance of the first day
of each month in equal monthly installments.
c. Beginning in the second lease year and each lease
year thereafter, such annual rent will increase as set forth in
the Lease attached as EXHIBIT I.
2. Initial Lease Term: Fifteen (15) years plus the
Development Financing Period set forth in the Development
Financing Agreement.
3. Renewal Terms: Two (2) terms of five (5) years each
with rent increases as set forth above in ARTICLE F.1.C.
4. Type of Use: Tumbleweed Restaurant
5. Lease effective date: The Lease shall be effective as
of the Closing Date.
6. Lessee's Right of Assignment: The Lease shall not be
assignable by Lessee until after the Final Disbursement Date, and
then only in accordance with the terms of the Lease.
G. GUARANTOR(S) OF LEASE AND DEVELOPMENT FINANCING AGREEMENT
Not Applicable.
H. DOCUMENTS
The documents listed below shall be prepared by AEI's
counsel in accordance with the terms hereof and executed at, or
prior to, the Closing Date in form and substance satisfactory to
AEI:
1. Development Financing Agreement;
2. Development Financing Disbursement Agreement;
3. Assignment of purchase agreement for the land;
4. Assignments of construction contracts and
architect's contract;
5. Net Lease Agreement;
6. Attorney's Opinion Letter to be given by Lessee's
internal and outside counsel necessarily familiar with the
conduct of Lessee's business and the jurisdiction in which the
Parcel is situated to render such opinion, as to the
enforceability of the Lease and compliance of the Lease with
local law and due authority of the signatures, in a form and
substance reasonably satisfactory to AEI. Such form of opinion
shall be satisfactory if reasonably similar in form and content
(except as to matters and documents particular to this
transaction) to opinions previously delivered to AEI or its
affiliates by similarly situated Lessees;
7. Affidavit of Lessee;
8. Hazardous Substances Indemnification Agreement of
Lessee;
9. FIRPTA Affidavit of Seller;
Lessee, or its counsel, shall furnish a copy of the proposed
warranty deed and opinions to AEI's counsel for its review and
approval prior to closing and such other documents as the Title
Company deems necessary for the terms contemplated hereunder in
accordance with the provisions of this Commitment.
I. FAIR CREDIT REPORTING ACT
Lessee warrants that all credit information submitted is
true and correct, and authorizes AEI to make credit
investigations and obtain credit reports and other financial
information, written or oral, respecting Lessee's credit and
financial positions, as it may deem necessary or expedient at
Lessee's cost and expense.
J. INTERPRETATION
This Commitment and the terms of the transaction
contemplated to be made in conformity herewith, shall be
construed in accordance with all applicable governmental
regulations and in accordance with the laws of the state where
the Parcel is located.
K. CERTIFICATION
Lessee hereby certifies that:
1. It has no actions or proceedings pending, which would
materially affect the Parcel, Lessee, except matters fully
covered by insurance;
2. The consummation of the transactions contemplated
hereby, and the performance of this Commitment and the delivery
of the Lease and other security and credit instruments
contemplated hereunder, will not result in any material breach
of, or constitute a material default under, any indenture, bank
loan or credit agreement, or other instruments to which Lessee is
a party or by which Lessee may be bound or affected, which breach
or default would have a material adverse effect on Lessee's
performance under this Commitment;
3. All of Lessee's covenants, agreements, and
representations made herein, and in any and all documents which
may be delivered pursuant hereto, shall survive the delivery to
AEI of the Lease and other documents furnished in accordance
herewith, for one year from the Final Disbursement Date, and the
provisions hereof shall continue to inure for such period to
AEI's benefit, and its successors and assigns;
4. The Parcel is in good condition, substantially
undamaged by fire and other hazards, and has not been made the
subject of any condemnation proceeding.
L. TERMINATION
This Commitment may be terminated in writing prior to
closing at AEI's option (but reserving to AEI its right to pursue
its remedies at law or equity for Lessee's breach hereof) in such
manner as AEI may reasonably determine, if: 1) Lessee fails to
comply with any of the material terms hereof, including but not
limited to, obtaining AEI's approval of the documents listed in
ARTICLE D.6. hereof, and does not satisfactorily cure the same on
or before the Closing Date; 2) a material default exists in any
financial obligation of Lessee which would have a material
adverse effect on Lessee's performance under this Commitment; 3)
any representation made in any submission proves to be untrue,
substantially false or misleading at any time prior to the
Closing Date which would have a material adverse effect on
Lessee's performance under this Commitment; 4) there has been a
material adverse change in the financial condition of Lessee or
there shall be a material action, suit or proceeding pending or
threatened against Lessee which would have a material adverse
effect on Lessee's performance under this Commitment; 5) any
bankruptcy, reorganization, insolvency, withdrawal, or similar
proceeding is instituted by or against Lessee and such proceeding
is not removed prior to Closing; 6) Seller's financial condition
gives rise to a commercially reasonable risk that the transaction
contemplated hereby constitutes a fraudulent conveyance subject
to attack by Seller's creditors. Provided, however, if AEI shall
terminate this Agreement under paragraph 6 only, AEI's remedy
shall be limited to reimbursement of its out of pocket costs
(including reasonable attorneys fees), and AEI shall return the
remaining balance, if any, after such out of pocket expenses, of
the Commitment Fee of Lessee hereunder.
In the event Lessee and AEI do not reach mutual agreement
prior to the Initial Disbursement of Funds on the documents
contemplated to be executed by either party hereunder by delivery
of written notice to the other party, this Commitment may be
terminated at the option of either party. AEI shall, in such
event, refund the Commitment Fee to Lessee, less AEI's reasonable
out-of-pocket expenses incurred hereunder, including, but not
limited to, attorney's fees.
AEI and Lessee acknowledge the unique nature of the Parcel
and agree that the mutual remedies of any party hereunder shall
be limited to the liquidated damages in the amount of either the
return of the Commitment Fee to Lessee or retention of the
Commitment Fee by AEI plus the outside counsel fees incurred by
the non-breaching party in connection with this Commitment prior
to the date of termination hereof; provided, however, if Lessee
shall refuse to close (and being without right to terminate this
Commitment as otherwise set forth herein) even though AEI shall
be ready, willing, and able to do so, and Lessee shall thereafter
occupy the Leased Premises, AEI shall retain all remedies
available to it at law or in equity.
N. INCORPORATION OF SUBMITTED WRITTEN MATERIALS AND AMENDMENTS
This Commitment is issued by AEI pursuant to all written
materials previously submitted by Seller, Lessee to AEI as set
forth on EXHIBIT J (the "Submitted Written Materials") and it is
a proviso hereof that the content, terms and provisions of said
Submitted Written Materials are by express and specific reference
incorporated herein and made a part hereof. Provided, however,
in the case of any contradiction, variance, or ambiguity between
any of the content, terms and provisions hereof and those of the
Submitted Written Materials, the terms specifically delineated in
this Commitment shall govern and shall supersede the conditions
of the Submitted Written Materials. Neither this Commitment 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, and in the case of AEI,
signed by Robert P. Johnson, President of AEI, or his designee in
writing signed by Mr. Johnson authorizing such other party to
execute a specific change, waiver, discharge or termination
instrument on behalf of AEI.
O. FEES AND COSTS
As a condition hereof, Lessee agrees to pay the fees of
AEI's outside counsel plus all costs and expenses incurred by
AEI, as well as all title and escrow charges, the cost of
issuance of interim title certifications, recording and release
fees and all other costs incurred in connection with the
transaction contemplated hereunder.
P. ADVERTISING
During construction, AEI may place a sign on the Parcel at a
location to be determined by Lessee in its reasonable discretion,
specifying that it is participating in the financing on the
Parcel, to the extent permitted by law or private covenant,
condition, or agreement affecting the Project. Further, AEI may
publicize the financing and may include in publicity releases, if
applicable, the names of Lessee's corporate officers, principals,
and a general description of the Parcel, occupancy and rentals.
Q. EXPIRATION
This Commitment must be executed and returned to AEI no
later than May 1, 1998 for the terms to be effective.
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
By:/s/ Robert P Johnson
Robert P. Johnson, President
Witness:
/s/ Rick J Vitale
Rick J Vitale [Print Name]
Witness:
/s/ Ryan Picek
Ryan Picek [Print Name]
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 24th
day of April, 1998, by Robert P. Johnson, President of AEI Fund
Management XVIII, Inc, the corporate general partner of AEI Real
Estate Fund XVIII Limited Partnership.
/s/ Barbara J Kochevar
Notary Public
[notary seal]
This Commitment is accepted and agreed to
this 22nd day of April, 1998.
(Lessee) Tumbleweed LLC
By: /s/ James Mulrooney
Its: Executive VP & CFO
By: /s/ John Butorac
Its: President
Witness:
/s/ Pamela Brown
Pamela Brown[Print Name]
Witness:
/s/ Donna Edmonds
Donna Edmonds[Print Name]
STATE OF Kentucky )
) ss
COUNTY OF Jefferson )
On this 22nd day of April, 1998, before me, the undersigned,
a Notary Public in and for said State, personally appeared James
Mulrooney and John Butorac, personally known to me to be the
persons who executed the within instrument as the Executive VP &
CFO and President of Tumbleweed, LLC., a Kentucky limited
liability company, on behalf of said limited liability company.
/s/ Kara R Strotman
Notary Public
[notary seal]
I authorize the release of any information deemed necessary by
AEI to verify any and all information supplied to AEI. Lessee
shall hold AEI harmless for any damages arising from verification
of said information.
(Lessee) Tumbleweed LLC
By:/s/ James Mulrooney
Its: Executive VP & CFO
By: /s/ John Butorac
Its: President
Dated: April 22nd, 1998
EXHIBIT `A'
LEGAL DESCRIPTION
EXHIBIT "B"
ESTIMATED TOTAL PROJECT COST BUDGET
TUMBLEWEED, LLC
COLUMBUS, OH
PROJECT COST BUDGET
MARCH 31, 1998
Land and Hard Costs:
Land Acquisition Cost $ 495,000.00
Building/General Construction 750,000.00
Construction Contingency - 10.0% 75,000.00
Soft Costs:
Surveys 2,500.00
Appraisal 4,000.00
Phase I Environmental 2,000.00
TAP Fees 5,000.00
Design Fee-Architect 2,500.00
Architect/Engineering 32,000.00
Liquor License 5,000.00
Title Insurance & Closing Costs (Development financing) 12,000.00
Development Interest 24,500.00
Attorney's Fees-Borrower (Development Financing) 66,000.00
Attorney's Fees-AEI (Development Financing) 12,500.00
AEI Development Commitment Fee 2%* 29,800.00
AEI Credit Report Fees (Promesa) 300.00
AEI State Qualification Fees 1,500.00
AEI Site Inspection Fee 1,500.00
Tumbleweed Parcel Development Fee 15,675.00
Miscellaneous 13,225.00
TOTAL PROJECT COST $1,490,000.00
* Total project costs prior to AEI commitment fee is $1,460,200.
The Commitment Fee (rounded) is calculated on the total project
cost.
EXHIBIT "E-1"
Survey Requirements
(Pre-Construction)
1. The plat or map of such survey must bear the name, address
and signature of the licensed land surveyor who made the survey,
that surveyor's official seal and license number (if any, or
both), and the date of the survey, with the following
certification:
I, _________________________, a registered land surveyor, in
and for the State of ___________ do hereby certify to
(PLEASE CONTACT BARBARA KOCHEVAR AT 1-800-328-3519 FOR
INFORMATION), and _________________ (insert name of title
company), that this is a true and correct plat of a survey of
(Insert Legal Description)
which correctly shows the location of all buildings,
structures and improvements on said described Parcel; that there
are no visible encroachments onto adjoining properties, streets,
alleys, easements or setback lines by any of said buildings,
structures or improvements; that there are no recorded or visible
right of ways or easements on said described Parcel, except as
shown on said survey; that there are no party walls or visible
encroachments on said described Parcel by buildings, structures
or other improvements situated on adjoining property, except as
shown on said plat or survey; and that the described Parcel has
direct access to a publicly dedicated right-of-way at the
location shown on said plat or survey.
By: _________________________
Dated: _______________________
2. If the street address of the Parcel is available, it should
be noted on the survey.
3. The survey boundary should be drawn to a convenient scale,
with that scale clearly indicated. If feasible, a graphic scale
should be indicated. When practical, the plat or map of survey
should be oriented so that North is at the top of the drawing.
Supplementary or exaggerated scale diagrams should be presented
accurately on the plat
or map and drawn to scale. No plat or map drawing less than
the minimum size of 8-1/2" by 11" will be acceptable.
4. The plat or map of survey should meet with the minimum
Standard Detail Requirements for Land Title Surveys as adopted by
the American Title Association and American Congress on
Surveying and Mapping.
5. The character and location of all buildings upon the Parcel
must be shown and their location given with reference to
boundaries. Proper street numbers should be shown where
available. Physical evidence of easements and/or servitudes of
all kinds, including but not limited to those created by roads,
rights of way, water courses, drains, telephone, telegraph or
electric lines, water, sewer, oil or gas pipelines, etc., on or
across the surveyed Parcel and on adjoining properties if they
appear to affect the enjoyment of the surveyed Parcel should be
located and noted. If the surveyor has knowledge of any such
easements and/or servitudes, not physically evidenced at the time
the present survey is made, such physical non-evidence should be
noted. All recorded easements, rights of way and other record
matters affecting the Parcel should be located and identified by
recording date. Surface indications, if any, of underground
easements and/or servitudes should also be shown. If there are
no buildings erected on the Parcel being surveyed, the plat or
map of survey should bear the statement "No Buildings". Curb
cuts and adjoining streets should be shown.
6. Joint or common driveways and alleys must be indicated.
Independent driveways along the boundary must be shown together
with the width thereof. Encroaching driveways, strips, ribbons,
aprons, etc., should be noted. Rights of access to public
highways should be shown. The right-of-way line of any public
street must be shown in relationship to the Parcel surveyed and
the street must be labeled "Publicly Dedicated" or "Private
Thoroughfare" as the case may be.
7. As a minimum requirement, at least two (2) sets of prints of
the plat or map of survey should be furnished to AEI and one (1)
set to the title company.
8. The survey should certify as to the total square footage of
the area surveyed and as to the square footage at the exterior
walls of any improvements on the Parcel. The survey should note
the absence of, or indicate the existence of, any building
restriction or setback lines. Paved areas should be shown and
the survey should designate the area for parking and its
dimensions. If completed, the survey should indicate the actual
number of parking spaces and, if possible, the actual parking
spaces should be outlined on the survey.
EXHIBIT "E-2"
Survey Requirements
(As-Built/Post-Construction)
1. The plat or map of such survey must bear the name, address
and signature of the licensed land surveyor who made the survey,
that surveyor's official seal and license number (if any, or
both), and the date of the survey, with the following
certification:
I, _________________________, a registered land surveyor, in
and for the State of ___________ do hereby certify to
(PLEASE CONTACT BARBARA KOCHEVAR AT 1-800-328-3519 FOR
INFORMATION), and ____________________ (insert name of title
company), that this is a true and correct plat of a survey of
(Insert Legal Description)
which correctly shows the location of all buildings,
structures and improvements on said described Parcel; that there
are no visible encroachments onto adjoining properties, streets,
alleys, easements or setback lines by any of said buildings,
structures or improvements; that there are no recorded or visible
right of ways or easements on said described Parcel, except as
shown on said survey; that there are no party walls or visible
encroachments on said described Parcel by buildings, structures
or other improvements situated on adjoining property, except as
shown on said plat or survey; and that the described Parcel has
direct access to a publicly dedicated right-of-way at the
location shown on said plat or survey.
By: _________________________
Dated: _______________________
2. If the street address of the Parcel is available, it should
be noted on the survey.
3. The survey boundary should be drawn to a convenient scale,
with that scale clearly indicated. If feasible, a graphic scale
should be indicated. When practical, the plat or map of survey
should be oriented so that North is at the top of the drawing.
Supplementary or exaggerated scale diagrams should be presented
accurately on the plat or map and drawn to scale. No plat or map
drawing less than the minimum size of 8-1/2" by 11" will be
acceptable.
4. The plat or map of survey should meet with the minimum
Standard Detail Requirements for Land Title Surveys as adopted by
the American Title Association and American Congress on
Surveying and Mapping.
5. The character and location of all buildings upon the Parcel
must be shown and their location given with reference to
boundaries. Proper street numbers should be shown where
available. Physical evidence of easements and/or servitudes of
all kinds, including but not limited to those created by roads,
rights of way, water courses, drains, telephone, telegraph or
electric lines, water, sewer, oil or gas pipelines, etc., on or
across the surveyed Parcel and on adjoining properties if they
appear to affect the enjoyment of the surveyed Parcel should be
located and noted. If the surveyor has knowledge of any such
easements and/or servitudes, not physically evidenced at the time
the present survey is made, such physical non-evidence should be
noted. All recorded easements, rights of way and other record
matters affecting the Parcel should be located and identified by
recording date. Surface indications, if any, of underground
easements and/or servitudes should also be shown. If there are
no buildings erected on the Parcel being surveyed, the plat or
map of survey should bear the statement "No Buildings". Curb
cuts and adjoining streets should be shown.
6. Joint or common driveways and alleys must be indicated.
Independent driveways along the boundary must be shown together
with the width thereof. Encroaching driveways, strips, ribbons,
aprons, etc., should be noted. Rights of access to public
highways should be shown. The right-of-way line of any public
street must be shown in relationship to the Parcel surveyed and
the street must be labeled "Publicly Dedicated" or "Private
Thoroughfare" as the case may be.
7. As a minimum requirement, at least two (2) sets of prints of
the plat or map of survey should be furnished to AEI and one (1)
set to the title company.
8. The survey should certify as to the total square footage of
the area surveyed and as to the square footage at the exterior
walls of any improvements on the Parcel. The survey should note
the absence of, or indicate the existence of, any building
restriction or setback lines. Paved areas should be shown and
the survey should designate the area for parking and its
dimensions. If completed, the survey should indicate the actual
number of parking spaces and, if possible, the actual parking
spaces should be outlined on the survey.
EXHIBIT "F"
PRELIMINARY DOCUMENTATION CHECKLIST
Prior to closing, the following should be received and approved
by AEI, along with those items specified more fully in the
Commitment:
1. Purchase Agreement for the Parcel
2. Site Investigation Package as prepared by Project Civil
Engineers
3. Site Documents
4. Site plan and maps showing site(s) and location(s) of
competition.
5. Complete city map.
EXHIBIT `G'
FORM OF
DEVELOPMENT FINANCING AGREEMENT
DEVELOPMENT FINANCING AGREEMENT
THIS AGREEMENT, made and entered into effective as of this
____ day of May, 1998, by and between Tumbleweed, LLC
(hereinafter referred to as "Lessee"), whose address is 1900
Mellwood Avenue, Louisville, Kentucky, and AEI Real Estate Fund
XVIII Limited Partnership, whose principal business address is
1300 Minnesota World Trade Center, 30 East Seventh Street, St.
Paul, Minnesota 55101 (hereinafter collectively referred to as
"Lessor") .
W I T N E S S E T H, that:
WHEREAS, Lessee is contemplating building the following
Improvements on the premises described in Exhibit "A" attached
hereto :
Construction of an approximately 5,500 square foot building
and improvements to be used as a Tumbleweed Restaurant.
WHEREAS, Lessee has made application to Lessor for development
financing to defray the costs of constructing such Improvements;
WHEREAS, Lessor's Assignor has issued to Lessee its
Development Financing and Leasing Commitment to advance funds in
the amount hereinafter specified, subject to compliance with the
terms and conditions of this Development Financing Agreement and
the Net Lease Agreement (the "Lease") of even date herewith;
NOW, THEREFORE, in consideration of entering into the Lease
and other good and valuable consideration, the receipt of which
is hereby acknowledged by the parties hereto, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have
the following meanings:
1. "Application" shall mean Lessee's application to the
Lessor for the Development Financing the terms and conditions
of which are incorporated herein by reference.
2. "Architect's Contract" shall mean Lessee's contract
with the Project Architect.
3. "Commitment" shall mean Lessor's Commitment to Lessee
agreeing to provide the Development Financing. (The
"Development Financing and Leasing Commitment" dated of even
date herewith.)
4. "Completion Date" shall mean midnight, November 15,
1998, subject to Force Majeure, as defined herein.
5. "Construction Costs" shall mean land costs, all costs
paid to construct and complete the Improvements, as specified
on Exhibit "B" attached hereto and made a part hereof.
6. "Construction Contracts" shall mean the contracts
between Lessee and Contractors for the furnishing of labor,
services or materials to the Leased Premises in connection
with the construction of the Improvements.
7. "Contractors" shall mean those firms directly engaged
by Lessee to construct the Improvements, whether one or more.
8. "Contract Documents" shall mean the Project Architect's
Contract, Plans and Specifications and the contract with the
Contractor.
9. "Development Financing" shall mean the funds to be made
available pursuant to the Commitment and not to exceed the
lesser of the Construction Costs or the maximum loan amount
of One Million Four Hundred Ninety Thousand Dollars ($
1,490,000) as specified in the Commitment.
10. "Development Financing and Carrying Charges" shall mean
all fees, taxes and charges incurred under the Development
Financing and in the construction of the Improvements
including, but not limited to, non-refundable commitment
fees; interest charges, service and inspection fees,
attorney's fees, title insurance fees and charges, recording
fees and insurance premiums.
11. "Development Financing Documents" shall mean this
Agreement, the Lease, Assignment of Architects and
Construction Contracts, Guarantees, and such other documents
given to the Lessor as security for the Development
Financing.
12. "LTIC-CDD" shall mean Lawyers Title Insurance
Corporation, Construction Disbursement Department, the
nationally recognized title insurer, or Lessor's in-house
designee, 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 design and supervise construction of the
Improvements.
22. "Rental Modification Date" shall mean a date one
hundred and twenty days (120) from the date hereof.
23. "Sub-Contractors" shall mean those persons furnishing
labor or materials for the Project pursuant to the Sub-
Contracts.
24. "Sub-Contracts" shall mean the contracts between the
Contractor and its materialmen and mechanics in the
furnishing of labor or materials for the Project.
25. "Title" shall mean Lawyers Title Insurance Corporation
issuing the Lessor's fee owner's title insurance policy.
ARTICLE II
THE DEVELOPMENT FINANCING
Subject to compliance with the provisions of this Agreement,
Lessor agrees to advance to Lessee, and Lessee agrees to request
from Lessor, the Development Financing. The Development
Financing shall be advanced in stages by Lessor to 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
Lessee agrees to commence construction of the Improvements
within thirty (30) days from the date of this Agreement. After
commencement of construction of any Improvements, Lessee agrees
to diligently pursue said construction to completion, and to
supply such moneys and to perform such duties as may be necessary
to complete the construction of said Improvements pursuant to the
Plans and Specifications and in full compliance with all terms
and conditions of this Agreement and the Development Financing
Documents, all of which shall be accomplished on or before the
Completion Date, subject to Force Majeure and without liens,
claims or assessments (actual or contingent) asserted against the
Leased Premises for any material, labor or other items furnished
in connection therewith, subject to Lessee's right to contest
such liens, claims, or assessments provided the same are removed
as a lien upon the Leased Premises prior to foreclosure of such
lien, and all in full compliance with all construction, use,
building, zoning and other similar requirements of any pertinent
governmental jurisdiction. Lessee will provide to Lessor, upon
request, evidence of satisfactory compliance with all the above
requirements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE LESSEE
Lessee hereby represents and warrants to the Lessor, which
representations and warranties shall be deemed to be restated by
Lessee each time Lessor makes an advance of the Development
Financing, that:
1. VALIDITY OF DEVELOPMENT FINANCING DOCUMENTS - The Development
Financing Documents are in all respects legal, valid and binding
according to their terms.
2. NO PRIOR LIEN ON FIXTURES - No mortgage, bill of sale,
security agreement, financing statement, or other title retention
agreement (except those executed in favor of Lessor) has been, or
will be, executed with respect to any fixture (except Lessee's
trade fixtures not financed with this Development Financing) used
in conjunction with the construction, operation or maintenance of
the improvements.
3. CONFLICTING TRANSACTION OF LESSEE - The consummation of the
transactions hereby contemplated and the performance of the
obligations of Lessee under and by virtue of the Development
Financing Documents will not result in any breach of, or
constitute a default under, any mortgage, lease, bank loan or
credit agreement, corporate charter, by-laws, partnership
agreement, or other instrument to which Lessee is a party or by
which it may be bound or affected, the breach of which would
materially affect Lessee's ability to perform its obligations
hereunder.
4. PENDING LITIGATION - There are no actions, suits or
proceedings pending, or to the knowledge of Lessee threatened,
against or affecting it or the Leased Premises, or involving the
validity or enforceability of any of the Development Financing
Documents, at law or in equity, or before or by any governmental
authority, except actions, suits and proceedings that are fully
covered by insurance or which, if adversely determined would not
substantially impair the ability of Lessee to perform each and
every one of its obligations under and by virtue of the
Development Financing Documents; and to the Lessee's knowledge it
is not in default with respect to any order, writ, injunction,
decree or demand of any court or any governmental authority.
5. VIOLATIONS OF GOVERNMENTAL LAW, ORDINANCES OR REGULATIONS -
To the best knowledge of Lessee, there are no violations or
notices of violations of any federal or state law or municipal
ordinance or order or requirement of the State in which the
Leased Premises are located or any municipal department or other
governmental authority having jurisdiction affecting the Leased
Premises, which violations in any way have a material adverse
affect on the Leased Premises and which remain uncured after
notice by such governmental authority or department (if notice is
required) and the expiration of the time within which Lessee may
cure such violation, or if no time limitation is specified,
within a reasonable time after notice to cure such violation .
6. COMPLIANCE WITH ZONING ORDINANCES AND SIMILAR LAWS - To the
best knowledge of Lessee, the Plans and Specifications and
construction pursuant thereto and the use of the Leased Premises
contemplated thereby comply and will comply with all present
governmental laws and regulations and requirements, zoning
ordinances, standards, and regulations of all governmental bodies
exercising jurisdiction over the Leased Premises. Lessee agrees
to provide the Project Architect's certification to such effect
prior to the funding of the first disbursement under the
Development Financing.
7. LESSEE'S STATUS AND AUTHORITY - If the Lessee be a
corporation, limited liability company, trust or a partnership,
Lessee warrants and represents that (i) it is duly organized,
existing and in good standing under the laws of the state in
which it is incorporated or created; (ii) it is duly qualified to
do business and is in good standing in the state in which the
Leased Premises are located; (iii) it has the corporate or other
power, authority and legal right to carry on the business now
being conducted by it and to engage in the transactions
contemplated by this Agreement and the Development Financing
Documents; and (iv) the execution and delivery of this Agreement
and the Development Financing Documents and the performance and
observance of the provisions hereof and thereof have been (or
future acts will be) duly authorized by all necessary trust,
partnership, or corporate actions of Lessee. Lessee will furnish
such resolutions, affidavits and opinions of counsel to such
effect as Lessor may reasonably require.
8. AVAILABILITY OF UTILITIES - All utility services necessary for
the construction of the Improvements will be available prior to
the commencement of construction, and all utility services
necessary for the proper operation of the Improvements for their
intended purposes are available at the Leased Premises or will be
available at the Leased Premises prior to the Final Disbursement
Date, at commercially comparable utility rates and hook-up
charges for the vicinity, including water supply, storm and
sanitary sewer facilities, gas, electricity and telephone
facilities. Lessee shall furnish evidence of such availability
of utilities from time to time at Lessor's request.
9. BUILDING PERMITS - All building permits required for the
construction of the Improvements have been obtained prior to the
commencement of the construction of the Improvements and copies
of same will be delivered to Lessor.
10. CONDITION OF LEASED PREMISES - The Leased Premises are
not now damaged or injured as a result of any fire, explosion,
accident, flood or other casualty, nor to the best of Lessee's
knowledge, subject to any action in eminent domain.
11. APPROVAL OF PLANS AND SPECIFICATIONS - To the best
knowledge of Lessee in reliance upon the Project Architect's
certification to such effect, the Plans and Specifications
conform to the requirements and conditions set out by applicable
law or any effective restrictive covenant, to all governmental
authorities which exercise jurisdiction over the Leased Premises
or the construction thereon, and no construction will be
commenced upon the Leased Premises until said Plans and
Specifications shall have been approved by Lessor, which consent
shall not be unreasonably withheld or delayed and shall be given
or withheld within ten business days after written request
therefor. Subject to Article VI, paragraph 14, no material
changes are to be made in the Plans and Specifications as
approved without Lessor's prior consent, which consent shall not
be unreasonably withheld or delayed and shall be given or
withheld within ten business days after written request therefor;
except, after prior written notice to Lessor, provided the
Development Financing shall remain in balance as set forth in
Article VII, paragraph 3 herein, Lessor shall consent to
reallocation among line items or use of the Construction
Contingency in the aggregate of not more than the amount budgeted
as set forth on Exhibit B for Construction Contingency, unless
Lessee shall deposit Owner Equity with LTIC-CDD 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. Lessee will cause the Contractors to promptly
furnish Lessor with the complete list of all Sub-contractors or
entities as and when under contract, which Contractors propose to
engage to furnish labor and/or materials in constructing the
Improvements (such list containing the names, addresses, and
amounts of such sub-contracts as written in excess individually
of $5,000, and prior to disbursement of funds to or for the
benefit of such Subcontractors, affidavits of authorized
signatory and other documents commercially reasonably required by
Title to insure that the Leased Premises remain lien free) and
will from time to time furnish Lessor or Title with true copies
of all Contracts entered into by Lessee and with the terms of all
verbal agreements therefor, if any, and as to subcontractors,
letters signed by sub-contractors whose contracts are in excess
of $5,000 setting forth the present amount of their contract and
the amounts remaining to be paid under that contract, if the same
information is not stated on a lien waiver reflecting the most
currently requested payment to such subcontractor.
13. BROKERAGE COMMISSIONS - No brokerage commissions are due
in connection with the transaction contemplated hereby or if
there are commissions due or payable the same will be paid by
Lessee. Lessee agrees to and shall indemnify Lessor from any
liability, claims or losses arising by reason of any such
brokerage commissions. This provision shall survive the
repayment of the Development Financing and shall continue in full
force and effect so long as the possibility of such liability,
claims or losses exists.
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.
18. NOTICE OF COMMENCMENT\FURNISHING - To provided Lessor prior
to the initial request for a Disbursement, with a copy of the
Notice of Commencement and any amendments thereto prepared in
accordance with Ohio Revised Code Section 1311.04 and to be
recorded with the Franklin County Recorder's Office. Lessee
represents and warrants that a Notice of Commencement has not
been and will not be recorded prior to the recording of the Deed
transferring title to the Leased Premises to Lessor. Lessee
shall post and keep posted the Notice of Commencement and all
amendments thereto in a conspicuous place on the Premises during
the course of construction of the Project. Lessee further
represents and warrants to timely comply with all provisions of
Ohio Revised Code Section 1311.04 and failure to do so shall be
deemed an Event of Default as defined under the Lease. Lessee
shall provide Lessor with a copy of each Notice of Furnishing (as
defined in Ohio Revised Code Section 1311.05) received by Lessee
during the course of construction of any Improvements on the
Leased Premises.
ARTICLE VI
COVENANTS OF LESSEE
Lessee hereby covenants and agrees with Lessor as follows:
1. SURVEYS - Prior to execution of any Development Financing
Documents and prior to the initial request for a Disbursement (as
defined in ARTICLE VIII hereof), Lessee has furnished to Lessor
three copies of a current perimeter land survey, in form and
substance satisfactory to Lessor, certified to Lessor, giving a
description of the Leased Premises and showing all encroachments
onto or from the Leased Premises, currently certified by a
registered surveyor and bearing his registry number and showing
access rights, easements, or utilities, rights of way, all
setback requirements upon the Leased Premises, improvements,
matters affecting title and such other items as Lessor may
reasonably request.
2. TITLE INSURANCE - Prior to the initial request for
Disbursement the Lessee has furnished Lessor with an ALTA policy
of title insurance, and prior to any subsequent request for
Disbursement such ALTA policy of title insurance shall be brought
down to the date of Disbursement by endorsement, all in form and
substance satisfactory to Lessor issued at the Lessee's expense
and written by Title insuring the Leased Premises to be
marketable, free from exceptions for mechanic's and materialmen's
liens and free from other exceptions not previously approved by
the Lessor, naming Lessor as fee owner insured to the extent of
advances made hereunder subject only to such exceptions as may be
reasonably approved by Lessor.
3. RESTRICTIONS ON CONVEYANCE OR SECONDARY FINANCING - Lessee
will not transfer, sell, convey or encumber the Leased Premises
or subject the Leased Premises to any secondary financing in any
way without the written consent of the Lessor, except as
permitted in Article V, paragraph 2 relating to trade fixture
financing sources or suppliers.
4. INSURANCE - To obtain or cause Contractor to obtain and
maintain such insurance or evidence of insurance as Lessor may
reasonably require, including but not limited to the following:
(a) BUILDER'S RISK INSURANCE - Builder's Risk Insurance
written on the so-called "Builder's Risk-Completed Value
Basis" in an amount equal to the full replacement cost of the
Improvements at the date of completion with coverage
available on the so-called multiple peril form of policy,
including coverage against collapse and water damage, naming
Lessor as additional named insured, such insurance to be in
such amounts and form and written by such companies as shall
be reasonably approved by Lessor, and the originals of such
policies (together with appropriate endorsement thereto,
evidence of payment of premiums thereon and written
agreements by the insurer or insurers therein to give Lessor
ten (10) days' prior written notice of any intention to
cancel) shall be promptly delivered to Lessor, said insurance
coverage to be kept in full force and effect at all times
until the completion of construction of the Improvements.
(b) HAZARD INSURANCE - Fire and Extended Coverage
Insurance, and such other hazard insurance as Lessor may
require and as called for in the Lease in an amount equal to
the full replacement cost of the Improvements naming Lessor
as an additional named insured, such insurance to be in such
amounts and form and written by such companies as shall be
reasonably approved by Lessor, and the originals of such
policies (together with appropriate endorsements thereto,
evidence of payment of premiums thereon and written agreement
by the insurer or insurers therein to give Lessor ten (10)
days' prior written notice of any intention to cancel) shall
be promptly obtained and delivered to Lessor immediately upon
completion of the construction of the Improvements and before
any portion is occupied by Lessee or any tenant of Lessee
with such insurance to be kept in full force and effect at
all times thereafter.
(c) PUBLIC LIABILITY - Comprehensive public liability
insurance (including operations, contingent liability
operations, operations of sub- contractors, completed
operations and contractual liability insurance) in limits of
coverage as set forth in the Lease.
(d) WORKMEN'S COMPENSATION INSURANCE - Evidence of
compliance with the required coverage under statutory
workmen's compensation requirements.
5. COLLECTION OF INSURANCE PROCEEDS - To cooperate with Lessor in
obtaining for Lessor the benefits of any insurance or other
proceeds lawfully or equitably payable to it in connection with
the transaction contemplated hereby and the collection of any
indebtedness or obligation of the Lessee to Lessor incurred
hereunder (including the payment by Lessee of the expense of an
independent appraisal on behalf of Lessor in case of a fire or
other casualty affecting the Leased Premises).
6. APPLICATION OF DEVELOPMENT FINANCING PROCEEDS - To use the
proceeds of the Development Financing solely for the purpose of
paying for Construction Costs and such incidental costs relative
to the construction as may be reasonably approved from time to
time in writing by Lessor, and in no event to use any of the
Development Financing proceeds for personal, corporate or other
purposes.
7. EXPENSES - To pay all costs of closing the Development
Financing and all expenses of Lessor with respect thereto,
including, but not limited to, legal fees by Lessor's counsel and
all other reasonable attorney's fees (limited as set forth in the
Commitment), costs of title insurance, transfer taxes, license
and permit fees, recording expenses, surveys, intangible taxes,
appraisal fees, Inspecting Architect fees, expenses of retaking
possession upon default by Lessee hereunder or other costs of
enforcement (including reasonable attorney's fees) and similar
items.
8. LAWS, ORDINANCES AND ETC. - To comply promptly with any law,
ordinance, order, rule or regulation of all authorities
exercising jurisdiction over the Leased Premises or the
construction thereon, including appropriate supervising boards of
fire underwriters and similar agencies and the requirements of
any insurer issuing coverage on the Project.
9. RIGHT OF LESSOR TO INSPECT LEASED PREMISES - Upon 48 hours
notice, except in cases which Lessor reasonably deems to be an
emergency, in which event upon reasonable notice under the
circumstances, to permit Lessor and Title and their
representatives and agents to enter upon the Leased Premises and
to inspect the Improvements and all materials to be used in
construction thereof and to cooperate and cause Contractor to
cooperate with Lessor or Title and their representatives and
agents during such inspections, provided that such is
accomplished without interrupting the construction process.
Provided, further, however, that this provision shall not be
deemed to impose upon Lessor or Title any duty or obligation
whatsoever to undertake such inspections, to correct any defects
in the Improvements or to notify any person with respect thereto.
10. BOOKS AND RECORDS - To set up and maintain accurate and
complete books, accounts and records pertaining to the Project
including the working drawings in a manner reasonably acceptable
to Lessor. The Lessor, Title and Inspecting Architect shall have
the right at all reasonable times and upon reasonable prior
notice to inspect, examine and copy all books and records of
Lessee relating to the Project, and to enter and have free access
to the Leased Premises and Improvements and to inspect all work
done, labor performed and material furnished in or about the
Project, provided that such is accomplished without interrupting
the construction process. Notwithstanding the foregoing, Lessee
shall be responsible for making inspections as to the
Improvements during the course of construction and shall
determine to its own satisfaction that the work done or materials
supplied by the Contractors and all Subcontractors has been
properly supplied or done in accordance with the applicable
contracts. Lessee will hold Lessor and Title harmless from and
Lessor and Title shall have and have no liability or obligation
of any kind to Lessee or creditors of Lessee in connection with
any defective, improper or inadequate workmanship or materials
brought in or related to the Improvements or the Leased Premises,
or any mechanic's liens arising as a result of such workmanship
or materials. Upon Lessor's request, Lessee shall replace or
cause to be replaced any such work or material found to be
materially deficient by the Project Architect or Independent
Architect. Lessor shall cooperate with Lessee in obtaining any
rights under any applicable warranties to accomplish such work.
Any inspections made by Inspecting Architect, Title or Lessor are
for the sole benefit of Lessor and neither Lessee nor any
creditor, tenant or vendee of Lessee shall be entitled to rely on
such inspection. Lessee shall obtain for Lessor coincident
rights to rely upon any warranties obtain by Lessee from its
Contractors or subcontractors.
11. CORRECTION OF DEFECTS - To promptly correct any
structural defects in the Improvements or any material departure
from the Plans and Specifications not previously approved by
Lessor. The advance of any Development Financing proceeds shall
not constitute a waiver of Lessor's right to require compliance
with this covenant.
12. SIGN REGARDING DEVELOPMENT FINANCING - To allow Lessor to
erect and maintain at a suitable site on the Leased Premises, at
a location to be chosen by Lessee in its reasonable discretion, a
sign indicating that Development Financing is being provided by
Lessor, to the extent permitted by law or private covenant,
condition, or agreement affecting the Project.
13. ADDITIONAL DOCUMENTS - To furnish to Lessor all
instruments, documents, initial surveys, footing or foundation
surveys, if conducted, certificates, plans and specifications,
appraisals, financial statements, title and other insurance
reports and agreements and each and every other document and
instrument required to be furnished by the terms hereof, all at
Lessee's expense; to assign and deliver to Lessor such documents,
instruments, assignments and other writings, and to do such other
acts necessary or desirable to preserve and protect the Leased
Premises, as Lessor may require; and to do and execute all and
such further lawful and reasonable acts, conveyances and
assurances for the carrying out of the intents and purposes of
this Agreement, the Lease, or the Commitment, as Lessor shall
reasonably require from time to time.
14. ARCHITECTS AND CONSTRUCTION CONTRACTS - To commit no
default nor knowingly permit a default under the terms of the
Architects or Construction Contracts; To waive none nor knowingly
permit a waiver of the obligations of the parties thereunder; To
do no act which would relieve such parties from their obligations
thereunder; To make no amendments to such contracts, without the
prior written consent of Lessor; To enter into no change orders
or extras that cause a reallocation among budgeted line items, or
that in the aggregate or singularly result in a net increase in
excess of 10% of the original contract amount without Lessor's
prior written consent, which consent shall not be unreasonably
withheld or delayed; provided, however, Lessor shall be given
written notice and copies of all change orders; provided,
further, however, with written notice to Lessor prior to any
request for funds subsequent to any such change order or
reallocation, the Lessee shall be allowed to enter into any
change order or extra which is accounted for by use of any
reallocation among line items or any remaining budgeted
Contingency line item, or if the same has been exhausted, Lessee
shall be allowed increases in the original contract amount
without Lessor's consent if Lessee has, upon the execution of
said change order, deposited with Lessor the amount by which such
change order increases the total Construction Cost; To allow all
such contracts to be subject to the approval of Lessor for its
loan purposes; To allow Lessor to take advantage of all the
rights and benefits of the contracts upon any default by Lessee;
and to submit evidence to Lessor that both the Architect and the
Contractors will permit Lessor to acquire Lessee's interest under
their respective contracts and the Contract Documents without
additional charge or fee should an event of default occur
hereunder, which default is not cured within applicable notice
and cure periods.
15. ENFORCE PERFORMANCE OF SUB-CONTRACTS - To enforce, or
cause to be enforced, the prompt performance of the Sub-Contracts
in accordance with their terms and not to approve any changes in
the same that in the aggregate or singularly result in a net
increase in excess of 10% of the original General Contractor's
contract amount without Lessor's prior written consent, which
consent shall not be unreasonably withheld or delayed, provided
Lessee's right to enter into any such change order shall be on
the same terms set forth in Section 14 above.
16. COMPLIANCE WITH RULES - To comply with, and to require
the Contractors to comply with, all rules, regulations,
ordinances and laws bearing on the conduct of the work on the
Improvements, including the requirements of any insurer issuing
coverage on the Project and the requirements of any applicable
supervising boards of fire underwriters.
17. OPINIONS OF COUNSEL - To furnish such opinions of counsel
as may be reasonably requested of the Lessee in connection with
the matters contemplated by this Agreement.
18. SOIL TESTS - To provide the Lessor with a soil report
prepared by an acceptable engineer certifying as to the status of
the soil conditions on the Leased Premises, the need or lack of
need for special pilings and foundations and that either any
pilings and foundation necessary to support the Improvements have
been placed in a manner and quantity sufficient to provide the
required support or that no such pilings and foundations are
necessary for the support and construction of the Improvements.
19. MARKETABLE TITLE - To execute and deliver or cause to be
executed and delivered such instruments as may be required by the
Lessor and Title to provide Lessor with a marketable, valid title
to the Leased Premises subject only to such exceptions to title
as may be reasonably approved by Lessor.
20. VIOLATIONS OF GOVERNMENTAL LAW, ORDINANCES OR REGULATIONS
- - Lessee will permit no violations nor commit the same, of any
federal or state law or municipal ordinance or order or
requirement of the State in which the Leased Premises are located
or any municipal department or other governmental authority
having jurisdiction affecting the Leased Premises, which
violations in any way have a material adverse affect on the
Leased Premises and which remain uncured after notice by such
governmental authority or department (if notice is required) and
the expiration of the time within which Lessee may cure such
violation, or if no time limitation is specified, within a
reasonable time after notice to cure such violation .
21. COMPLIANCE WITH ZONING ORDINANCES AND SIMILAR LAWS - The
Plans and Specifications and construction pursuant thereto and
the use of the Leased Premises contemplated thereby will comply
with all governmental laws and regulations and requirements,
zoning ordinances, standards, and regulations of all governmental
bodies exercising jurisdiction over the Leased Premises,
including environmental protection and equal employment
regulations, and appropriate supervising boards of fire
underwriters and similar agencies.
22. APPROVAL OF PLANS AND SPECIFICATIONS - The Plans and
Specifications will conform to the requirements and conditions
set out by applicable law or any effective restrictive covenant,
and to all governmental authorities which exercise jurisdiction
over the Leased Premises or the construction thereon.
23. NOTICE OF COMMENCMENT\FURNISHING - To provide Lessor prior to
the initial request for a Disbursement, with a copy of the Notice
of Commencement and any amendments thereto prepared in accordance
with Ohio Statute and to be recorded with the County Recorder's
Office where the Leased Premises are situate immediately
following the recording of the Memorandum of Lease between the
parties hereto. Lessee shall post and keep posted the Notice of
Commencement and all amendments thereto in a conspicuous place on
the Leased Premises during the course of construction of the
Project. Lessee further represents and warrants to timely comply
with all provisions of Ohio Statute respecting keeping the Leased
Premises free of mechanic's liens and failure to do so shall be
deemed an Event of Default as defined under the Net Lease
Agreement and this Agreement. Lessee shall provide Lessor with a
copy of each Notice of Furnishing (as defined in Ohio Statute)
received by Lessee during the course of construction of any
Improvements on the Leased Premises.
ARTICLE VII
CONDITIONS PRECEDENT TO A DISBURSEMENT
It shall be a condition precedent to each Disbursement under this
Development Financing Agreement that:
1. DEVELOPMENT FINANCING DOCUMENTS - The Development Financing
Documents shall have been duly executed and delivered to Lessor
and shall be in full force and effect.
2. LESSEE EQUITY - Lessee shall have paid all of the Lessee
Equity funds into the Project before the first Disbursement (or
any subsequent Disbursement if additional Lessee Equity should be
required) and Lessee shall deliver evidence of such payment
reasonably satisfactory to Lessor.
3. DEVELOPMENT FINANCING BALANCE - As of the date immediately
prior to any Disbursement, the total amount of unadvanced
proceeds of the Development Financing shall be sufficient, in the
commercially reasonable opinion of Lessor (the opinion of Lessor
being based upon affidavit of the General Contractor, the Project
Architect, the Inspecting Architect, or other reliable licensed
third party contractor) to complete the Improvements free of
liens. To the extent the total of the unadvanced proceeds of the
Development Financing shall be insufficient, at any time, in
Lessor's reasonable opinion, (based upon the affidavit as set
forth above) to complete the Improvements, or be less than the
total Construction Costs not yet paid for or not yet incurred
(including interest accruing for the remainder of the term or
extensions thereof, if any), the Lessee shall immediately deposit
with the Lessor or with Title, as additional Lessee Equity funds,
an amount equal to such deficiency and such additional Lessee
Equity funds shall be disbursed by LTIC-CDD prior to the
Disbursement of any further advance or advances under this
Agreement.
4. NO DEFAULT - No event of default, which remains uncured after
the expiration of applicable cure periods, shall exist under this
Agreement or the Development Financing Documents.
5. REPRESENTATIONS AND WARRANTIES - The representations and
warranties in Article V hereof shall be true and correct on and
as of the date of each Disbursement.
6. COVENANTS - Lessee shall have complied with all of the
covenants made by it in Article VI hereof.
7. SWORN CONSTRUCTION STATEMENT - Prior to the initial
disbursement hereunder, the Lessee shall have submitted to Lessor
and Title a Construction Cost Statement or the Construction
Contract (if such information is contained therein) sworn to by
Lessee and Contractors reflecting all major Sub-Contractors or
materialmen who shall then be engaged in furnishing labor,
materials or supplies for the Improvements. The list should show
the name of each and every Contractor, Sub-Contractor and
materialman (or at least such entities or individuals whose
contract is in excess of $5,000), its address and an estimate of
the dollar value of the work, labor and materials to be done or
supplied and a general statement of the nature of the work to be
done or materials to be supplied by each Contractor. Thereafter,
if such list should change or new subcontractors shall execute
contracts not reflected on the above list, the Lessee shall
furnish to the Lessor any amendments or additions to the original
statement as so submitted.
8. APPLICATION FOR PAYMENT - Lessor shall have received an
Application for Payment pursuant to Article VIII hereof.
9. TITLE - Title shall issue its endorsement to the title policy
insuring the Lessor as fee owner under the policy in the
aggregate amounts of all prior Disbursements and the requested
Disbursement.
10. WORK IN PLACE - All work or materials for which a
Disbursement is requested shall be in place and incorporated into
the Improvements.
11. AMENDED NOTICE OF COMMENCEMENT - Lessee shall provide Lessor
with any amended Notice of Commencement filed in accordance with
Ohio Statue, and any Notice of Furnishing (as defined in Ohio
Statute) received by Lessee during the course of construction of
any Improvements on the Leased Premises.
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 Project
Architect, Lessee, Contractor, and if required by Lessor, by the
Inspecting Architect. 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 abate
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. A Draw Request Certificate in the form attached hereto
as Exhibit "D" certifying that each contractor or materialman
for which payment is requested in the relevant Application
for Payment has satisfactorily completed the work or
furnished the materials for which payment is requested in
accordance with the applicable contract; that all work for
which an Application for Payment is made substantially
conforms to the Contract Documents and any approved changes,
and is in place; and that sufficient funds remain of the
undisbursed Development Financing proceeds to complete the
Project and that all funds previously disbursed have been
applied as per the previous Application for Payment.
b. Waivers of Mechanics' Liens and Materialmen's Liens
executed by all Contractors for all work done and all
materials furnished to the Leased Premises and included in
such current Application for Payment, or evidence reasonably
required by Title to insure over the same by special specific
endorsement, or such other releases of lien pursuant to
bonding or otherwise to prevent such liens from attaching to
the Leased Premises.
c. Waivers of Mechanics' Liens and Materialmen's Liens
executed by all Sub-Contractors and workmen and materialmen
for all work done and all materials furnished to the Leased
Premises and included in the immediately preceding
Application for Payment, or evidence reasonably required by
Title to insure over the same by special specific
endorsement, or such other releases or lien pursuant to
bonding or otherwise to prevent such liens from attaching to
the Leased Premises.
d. Such other supporting evidence, including invoices and
receipts as may be requested by Lessor or 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.
2. INTEREST ADVANCE - If interest has accrued on the Development
Financing and is unpaid or fees are payable to the Lessor
hereunder, Lessor shall be, and hereby is, authorized at any time
to advance to itself from the proceeds of the Development
Financing the total amount of such accrued interest and fees,
whether or not an Application for Payment has been submitted by
the Lessee and the same shall be deemed to be an advance of the
proceeds of the Development Financing under this Agreement in the
same manner and with the same effect as if advanced under the
provisions above. It is understood Lessor may establish an
automatic interest reserve whereby Lessor may withdraw from the
Development Financing account on a regular basis the accrued
interest on the Development Financing and credit the Development
Financing balance with the same.
3. ASSESSMENT AND TAX ADVANCE - As taxes and assessments become
due on the Leased Premises, Lessor shall be, and hereby is,
authorized to advance to itself automatically from the proceeds
of the Development Financing, the total amount of such taxes and
assessments and the same shall be deemed to be an advance of the
proceeds of the Development Financing under this Agreement in the
same manner and with the same effect as if advances under the
provisions above, if not previously paid before due pursuant to
Lessee's obligations under the Lease.
4. DISBURSE UNDER DEVELOPMENT FINANCING DOCUMENT - All sums
advanced and disbursed hereunder shall be disbursed under and
shall be secured by the Development Financing Documents.
5. PAYMENTS TO SUBCONTRACTORS - In its reasonable discretion LTIC-
CDD may make payments directly to any subcontractor or
materialman.
6. RETAINAGE - Each Disbursement shall be limited to an amount
equal to ninety percent (90%) of the value, exclusive of
Contractor's profit and overhead, of the materials and labor
furnished to the Leased Premises and the balance (herein called
the Retainage) shall be retained by Lessor, provided that thirty
(30) days after completion by each subcontractor or materialman
of his subcontract Lessor will disburse to such party, or to the
Contractor on behalf of such party the Retainage withheld from
said party, provided that as a condition to such disbursement the
Lessee and Project Architect and the Inspecting Architect shall
certify to Lessor the date that such Party's subcontract has been
fully and satisfactorily completed and the subcontractor or
materialmen shall have supplied Title with satisfactory final
lien waivers, including final lien waivers for any of its
submaterialmen or sub- contractors and the requirements of any
bonding company issuing the Bonds shall have been fulfilled. Any
Retainage due the Contractor for work performed or materials
furnished by the Contractor and the final balance of Contractor's
profit and overhead shall be disbursed on the Final Disbursement
Date pursuant to Article IX hereof. Contractor's profit and
overhead shall be disbursed based upon and in proportion to the
percentage of completion of the Project, or amounts payable under
the Construction Contract for work actually performed, whichever
is less, as certified by the Project Architect.
ARTICLE IX
FINAL DEVELOPMENT FINANCING BALANCE
Unless and until Lessor and Lessee have entered into a mutually
satisfactory escrow holdback and undertaking agreement to, inter
alia, complete the Improvements and otherwise satisfy the
requirements of this Article IX, at no time and in no event shall
Lessor be obligated to disburse the balance of the proceeds of
the Development Financing, including any Retainage until the date
the following have been satisfied (the "Final Disbursement
Date"):
1. Lessor shall have received reasonably satisfactory evidence of
the final completion of the Improvements in substantial
accordance with the Contract Documents and the Certificate of
Final Completion from the Project Architect accepted by the
Contractor and Lessee.
2. Lessor shall have received satisfactory as-built surveys
reflecting the final location of the Improvements as fully
completed on the Leased Premises in accordance with the Contract
Documents, said survey to be prepared by a registered or licensed
surveyor bearing his registry number, certifying to Lessor as to
the legal description of the Leased Premises and showing all
Improvements located on the Leased Premises and indicating the
street address of the Improvements, absence of any encroachments
on the Leased Premises or from the Leased Premises onto adjacent
land, showing all access points, and showing conformance to all
set back requirements and delineating all utility easements that
are specifically legally described, rights of way and other
matters affecting the Leased Premises, and certifying as to the
total acreage of the land, the exterior dimensions of the
Improvements, and the number of parking spaces, if any, and such
other matters as Lessor may reasonably request.
3. Lessor shall have received a requisite affidavit of the
Lessee, Contractor and Project Architect, and approved by the
Inspecting Architect certifying as to the final cost of the
Improvements.
4. Title shall have been furnished with such final lien waivers
sufficient in the opinion of Title to dissolve any possible
Mechanic's and Materialman's Liens affecting title to the Leased
Premises or Lessee shall have provided a bond or other security
sufficient to remove the lien as an encumbrance upon title to the
Leased Premises and Title shall have issued its endorsements to
the title policy increasing the insured coverage to the full
amount of all sums disbursed under this Development Financing
Agreement.
5. Lessor shall have received evidence that all of the terms,
provisions and conditions on the part of the Lessee to be
performed or caused to be performed hereunder and under the
Lease, including but not limited to obtaining casualty insurance
for the full insurable value of the Improvements, have been
fulfilled to the satisfaction of Lessor.
6. Lessor shall have received a Final Certificate of Occupancy
issued by the appropriate governmental authority covering the
Improvements and a Certificate of Substantial Completion from the
Project Architect indicating that the Improvements as built
comply with all building codes and zoning ordinances, including
any plat requirements or requirements of recorded operating
covenants or agreements affecting the Leased Premises.
7. All remaining uncompleted "punch list" items shall have been
satisfactorily completed.
8. The requirements of all bonding companies, if any, with
respect to release of retainage shall have been met.
9. An amendment to the Lease shall be executed by Lessee and
Lessor setting forth the date the first Lease Year shall end and
the Rent for the balance of the first Lease Year, and evidencing
the satisfaction and termination of this Agreement.
ARTICLE X
EVENTS OF DEFAULT
An "event of default" shall be deemed to have occurred hereunder
and under the Lease, if:
1. DEFAULT UNDER DEVELOPMENT FINANCING DOCUMENTS - Any default or
event of default occurs (which remains uncured after the
expiration of any applicable cure period as may be set forth in
any Development Financing Document) under any of the Development
Financing Documents as defined therein; or
2. FAILURE TO COMPLETE CONSTRUCTION - Lessee shall fail for any
reason, except Lessor's wrongful refusal to fund the Development
Financing pursuant to the terms hereof, to substantially complete
the construction of the Improvements by the Completion Date; or
3. BREACH OF AGREEMENT - Lessee breaches or fails to perform,
observe or meet any covenant or condition of this Agreement,
provided, however, with respect to non-monetary defaults
hereunder, Lessee shall have twenty days after notice from Lessor
to cure such non-monetary default, or if such default (but for
the payment of monies) cannot be cured within twenty days, such
longer time as may be reasonably necessary to effect a cure if
Lessee is diligently pursuing a course of conduct reasonably
designed to cure the default.; or
4. BREACH OF WARRANTY - Any warranties made or agreed to be made
in any of the Development Financing Documents or this Agreement
shall be breached by Lessee or shall prove to be false or
misleading, and the same shall not be cured or made to be true
and correct within the applicable cure periods; or
5. FILING OF LIENS AGAINST THE LEASED PREMISES - Any lien for
labor, material, taxes or otherwise shall be filed against the
Leased Premises and such lien shall not be promptly paid,
released, contested in an appropriate forum, or bonded over to
Lessor's reasonable satisfaction before the lien shall materially
adversely affect Lessor's interest in the Premises; or
6. LITIGATION AGAINST LESSEE - Any suit shall be filed against
Lessee, and is not resolved within 120 days and, which if
adversely determined, could substantially impair the ability of
Lessee to perform each and every one of its obligations under and
by virtue of the Development Financing Documents; or
7. LEVY UPON THE LEASED PREMISES - A levy be made under any
process on the Leased Premises and such levy shall not be
promptly Bonded over prior to the execution of such levy; or
8. TRANSFER OF LEASED PREMISES - Lessee shall without the prior
written consent of Lessor, voluntarily or by operation of law,
sell, transfer, convey or encumber all or any part of its
interest in the Leased Premises or in any of the personalty
located thereon, or used or intended to be used in connection
therewith; or
9. ABANDONMENT - Lessee abandons the project or delays or ceases
work thereon for a period of fifteen consecutive (l5) days, or
delays construction or suffers construction to be delayed for any
period of time for any reason whatsoever so that completion of
Improvements cannot be accomplished in the judgment of Lessor on
or before the Completion Date, subject to force majeure; or
10. BANKRUPTCY - Lessee shall make an assignment for the
benefit of its creditors or shall admit in writing its inability
to pay its debts as they become due or shall file a petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent or
shall file a petition seeking any reorganization, dissolution,
liquidation, arrangement, composition, readjustment, or similar
relief under any present or future bankruptcy or insolvency
statute, law or regulation, or shall file an answer admitting to
or not contesting the material allegations of a petition filed
against it in any such proceedings, or shall not have the same
dismissed or vacated, or shall seek or consent or acquiesce in
the appointment of any trustee, receiver or liquidator of a
material part of its properties, or shall not after the
appointment without the consent or acquiescence of it of a
trustee, receiver, or liquidator of any material part of its
properties have such receiver, liquidator or appointment vacated;
or
11. EXECUTION LEVY - Execution shall have been levied against
the Leased Premises or any lien creditors commence suit to
enforce a judgment lien against the Leased Premises or such
action or suit shall have been brought and shall not be
immediately bonded over and shall continue unstayed and in effect
for a period of more than 120 consecutive days; or
12. ATTACHMENT - Any part of the Lessor's commitment to make
the advances hereunder shall at any time be subject or liable to
attachment or levy at the suit of any creditor of the Lessee or
at the suit of any subcontractor or creditor of the Contractor
and shall remain unstayed prior to the time Lessor shall be
obligated to comply with the same.
ARTICLE XI
REMEDIES OF LESSOR
Lessee hereby agrees that the occurrence of any one or more of
the events of default set out in Article X hereof, shall also
constitute an event of default under each of the Development
Financing documents, thereby entitling Lessor, after the
expiration of any applicable cure period, at its option, to
proceed to exercise any or all of the following remedies:
1. EXERCISE OF REMEDIES - To exercise any of the various remedies
provided in any of the Development Financing Documents, including
the acceleration of the Put described in Articles XIV hereof;
2. CUMULATIVE RIGHTS - Cumulatively to exercise all other rights,
options and privileges provided by law;
3. CEASE MAKING ADVANCES - To refrain from making any advances
under this Agreement but Lessor may make advances after the
happening of any such event without thereby waiving the right to
refrain from making other further advances or to exercise any of
the other rights Lessor may have.
4. RIGHTS TO ENTER - To require Lessee to vacate the Leased
Premises and permit Lessor (whether prior to the exercise of the
Put or during any period prior to the closing of the sale
pursuant to the Put;
(a) To enter into possession;
(b) To perform or cause to be performed any and all work
and labor necessary to complete the Improvements in
accordance with the Plans and Specifications;
(c) To employ security watchmen to protect the Leased
Premises; and
(d) To disburse that portion of the Development Financing
Proceeds not previously disbursed (including any Retainage) to
the extent necessary to complete the construction of the
Improvements in accordance with the Contract Documents and if the
completion requires a larger sum than the remaining undisbursed
portion of the Development Financing, to disburse such additional
funds, all of which funds so disbursed by Lessor shall be deemed
to have been disbursed to Lessee. For this purpose, Lessee
hereby consents upon an uncured default by Lessee after the
expiration of any applicable notice and cure period, to the
Lessor taking the following actions, or not, in Lessor's
reasonable discretion: to complete the construction of the
Improvements in the name of the Lessee, and hereby empowers
Lessor to take all actions necessary in connection therewith
including but not limited to using any funds of Lessee including
any balance which may be held in escrow and any funds which may
remain unadvanced hereunder for the purpose of completing the
said portion of the Improvements in the manner called for by the
Contract Documents; to make such additions and changes and
corrections in the Contract Documents which shall be necessary or
desirable to complete the said portion of the Improvements in
substantially the manner contemplated by the Contract Documents;
to employ such contractors, subcontractors, agents, architects,
and inspectors as shall be required for said purposes; to pay,
settle or compromise all existing or future bills and claims
which are or may be liens against said Leased Premises, or may be
necessary or desirable for the completion of the said portion of
the Improvements or the clearance of title to the Leased
Premises; to execute all applications and certificates in the
name of Lessee which may be required by any construction contract
and to do any and every act with respect to the construction of
the said portion of the Improvements which Lessee may do in its
own behalf. Lessor shall also have power to prosecute and defend
all actions and proceedings in connection with the construction
of the said portion of the Improvements and to take such action
and require such performance as it deems necessary. In
accordance therewith, Lessee hereby assigns and quitclaims unto
Lessor all sums to be advanced hereunder including Retainage.
Any funds so disbursed or fees or charges so incurred shall be
included in any amount necessary for the Lessee to pay pursuant
to the Put.
(e) To discontinue making advances hereunder to the Lessee
and to terminate Lessor's obligations under this Agreement.
5. RIGHTS NON CUMULATIVE - No right or remedy by this Agreement
or by any Development Financing Document or instrument delivered
by the Lessee pursuant hereto, conferred upon or reserved to the
Lessor shall be or is intended to be exclusive of any other right
or remedy and each and every right and remedy shall be cumulative
and in addition to any other right or remedy or now or hereafter
arising at a law or in equity or by statute. Except as Lessor
may hereafter otherwise agree in writing, no waiver by Lessor or
any breach by or default of Lessee of any of its obligations,
agreements, or covenants under this Agreement shall be deemed to
be a waiver of any subsequent breach of the same or any other
obligation, agreement or covenant, nor shall any forbearance by
Lessor to seek a remedy for such breach be deemed a waiver of its
rights and remedies with respect to such a breach, nor shall
Lessor be deemed to have waived any of its rights and remedies
unless it be in writing and executed with the same formality as
this Agreement.
6. EXPENSES - The Development Financing and this Agreement and
the performance by the Lessor or Lessee of their obligations
hereunder shall be without cost and expense to the Lessor, all of
which costs and expenses the Lessee agrees to pay and hold Lessor
harmless of and payment of which shall be secured by the
Development Financing Documents. Specifically, Lessee agrees to
pay all title charges, surveyor's fees, appraisals, loan fees and
attorney's fees and costs and the like incurred in connection
with this Agreement.
ARTICLE XII
GENERAL CONDITIONS AND MISCELLANEOUS
The following conditions shall be applicable throughout the term
of this Agreement:
1. RIGHTS OF THIRD PARTIES - All conditions of the obligations of
Lessor hereunder, including the obligation to make disbursements
are imposed solely and exclusively for the benefit of Lessee, and
no other person shall have standing to require satisfaction of
such conditions in accordance with their terms or be entitled to
assume that Lessor will refuse to make advances in the absence of
strict compliance with any or all thereof, and no other person
shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any and all of which may be freely waived in
whole or in part by Lessor at any time if in its sole discretion
it deems it desirable to do so. In particular, Lessor makes no
representations and assumes no duties or obligations as to third
parties concerning the quality of the construction of the
Improvements or the absence therefrom of defects. In this
connection, Lessee agrees to and shall indemnify Lessor from any
liability, claims or losses resulting from the disbursement of
the Development Financing proceeds or from the condition of the
Leased Premises whether related to the quality of construction or
otherwise and whether arising during or after the term of the
Development Financing made by Lessor to Lessee in connection
therewith, except for Lessor's gross negligence or willful
misconduct. This provision shall survive the termination of this
Agreement and shall continue in full force and effect so long as
the possibility of any such liability, claims or losses exists.
2. EVIDENCE OF SATISFACTION OF CONDITIONS - Any condition of this
Agreement which requires the submission of evidence of the
existence or non- existence of a specified fact or facts implies
as a condition the existence or non- existence, as the case may
be, of such fact or facts, and Lessor shall, at all times, be
free independently to establish to its reasonable satisfaction
such existence or non-existence.
3. ASSIGNMENT - Lessee may not assign this Development Financing
Agreement or any of its rights or obligations hereunder without
the prior written consent of Lessor.
4. SUCCESSORS AND ASSIGNS - Whenever in this Agreement one of the
parties hereto is named or referred to, the heirs, legal
representatives, successors and assigns of such parties shall be
included and all covenants and agreements contained in this
Agreement by or on behalf of the Lessee or by or on behalf of the
Lessor shall bind and inure to the benefit of their respective
heirs, legal representatives, successors and assigns, whether so
expressed or not.
5. HEADINGS - The headings of the sections, paragraphs and
subdivisions of this Agreement are for the convenience of
reference only, and are not to be considered a part hereof and
shall not limit or otherwise affect any of the terms hereof.
6. INVALID PROVISIONS TO AFFECT NO OTHERS - If fulfillment of any
provision hereof, or any transaction related thereto at the time
performance of any such provision shall be due, shall involve
transcending the limit of validity prescribed by law, then, ipso
facto, the obligation to be fulfilled shall be reduced to the
limit of such validity; and such clause or provision shall be
deemed invalid as though not herein contained, and the remainder
of this Agreement shall remain operative in full force and
effect.
7. NUMBER AND GENDER - Whenever the singular or plural number,
masculine or feminine or neuter gender is used herein, it shall
equally include the other.
8. AMENDMENTS - Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought.
9. NOTICES - Any notice which any party hereto may desire or may
be required to give to any of the parties shall be in writing and
the mailing thereof by certified mail, or equivalent, to the
respective parties' addresses set forth herein above 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 or 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 momies). Provided, however, in
order to invoke the extension of the Completion Date afforded by
this section, Lessee shall notify Lessor in writing within five
days of the occurrence of such force majeure, and in any event
the Completion Date shall be extended as a result of such
occurrence no more than reasonably necessary and in no event no
more than 90 days.
ARTICLE XIII
DAMAGE, DESTRUCTION, CONDEMNATION, USE OF INSURANCE PROCEEDS
1. DAMAGE OR DESTRUCTION OF THE LEASED PREMISES. Lessee will
give the Lessor prompt notice of any damage to or destruction of
the Leased Premises and in case of loss covered by policies of
insurance the Lessor (whether before or after the exercise of the
Put if Lessee be in default hereof) is hereby authorized at its
option to settle and adjust any claim arising out of such
policies and collect and receipt for the proceeds payable
therefrom, provided, that the Lessee may itself adjust and
collect for any losses arising out of a single occurrence
aggregating not in excess of $50,000.00. Any expense incurred by
the Lessor in the adjustment and collection of insurance proceeds
(including the cost of any independent appraisal of the loss or
damage on behalf of Lessor) shall be reimbursed to the Lessor
first out of any proceeds. The proceeds or any part thereof
shall be applied to reduction of the Put Price, which Put may
then be exercised by Lessor, without the application of any
prepayment premium, or to the restoration or repair of the Leased
Premises, the choice of application to be solely at the
discretion of Lessor.
2. CONDEMNATION. Lessee will give the Lessor prompt notice
of any action, actual or threatened, in condemnation or eminent
domain affecting the Leased Premises and hereby assigns,
transfers, and sets over to the Lessor the entire proceeds of any
award or claim for damages for all or any part of the Leased
Premises taken or damaged under the power of eminent domain or
condemnation, the Lessor being hereby authorized to intervene in
any such action and to collect and receive from the condemning
authorities and give proper receipts and acquittances for such
proceeds. Lessee will not enter into any agreements with the
condemning authority permitting or consenting to the taking of
the Leased Premises unless prior written consent of Lessor is
obtained. Any expenses incurred by the Lessor in intervening in
such action or collecting such proceeds shall be reimbursed to
the Lessor first out of the proceeds. The proceeds or any part
thereof shall be applied to reduction of the Put Price, which Put
may then be exercised by Lessor, without the application of any
prepayment premium, or to the restoration or repair of the Leased
Premises, the choice of application to be solely at the
discretion of Lessor.
3. DISBURSEMENT OF INSURANCE AND CONDEMNATION PROCEEDS. Any
restoration or repair shall be done under the supervision of an
architect acceptable to Lessor and pursuant to plans and
specifications approved by the Lessor. Subject to paragraph 4
below, in any case where Lessor may elect to apply the proceeds
to repair or restoration or permit the Lessee to so apply the
proceeds they shall be held by Lessor for such purposes and will
from time to time be disbursed by Lessor to defray the costs of
such restoration or repair under such safeguards and controls as
Lessor may reasonably require to assure completion in accordance
with the approved plans and specifications and free of liens or
claims. Lessee shall on demand deposit with Lessor any sums
necessary to make up any deficits between the actual cost of the
work and the proceeds and provide such lien waivers and
completion bonds as Lessor may reasonably require. Any surplus
which may remain after payment of all costs of restoration or
repair shall be applied against the rent then most remotely to be
paid, whether due or not, without application of any prepayment
premium or credit.
4. LESSOR TO MAKE PROCEEDS AVAILABLE. In the event of
insured damage to the improvements or in the event of a taking by
condemnation of only a portion of the improvements or land area
of the Leased Premises, and provided, the portion remaining can
with restoration or repair continue to be operated for the
purposes utilized immediately prior to such damage or taking, and
if the appraised value of the Leased Premises after such
restoration or repair shall not have been reduced, and provided
further, no event of default exists under this Agreement after
the expiration of any applicable cure periods and Lessee is
diligently pursuing a course of conduct reasonably designed to
cure such default, and the Lessee certified to Lessor their
intention to remain in possession of the Leased Premises without
any abatement or adjustment of rental payments, the Lessor agrees
to make the proceeds available to the restoration or repair of
the improvements on the Leased Premises in accordance with the
provisions of paragraph 3 hereof.
ARTICLE XIV
MANDATORY PUT UPON DEFAULT
Should Lessee commit an event of Default under this Agreement
or any Development Financing Document (after the expiration of
any applicable notice and cure period) ("Uncured Default"),
Lessor shall have the following rights:
Upon an Uncured Default, or damage or destruction or
condemnation of the Leased Premises not addressed by paragraph
XIII (4), if Lessor elects to exercise the following option,
Lessee shall purchase the Leased Premises from Lessor subject to
the following terms and conditions:
A. The purchase price at which Lessor shall sell the
Leased Premises to Lessee, shall be the total amount of
Initial Disbursed Funds disbursed by Lessor to acquire
the Leased Premises at the Closing Date (as defined in
the Commitment), plus the total amount of funds
disbursed pursuant to this Agreement, plus all accrued
interest and incurred expenses of Lessor fundable
pursuant to this Agreement, plus all reasonable costs of
collection and enforcement of the terms hereof.
B. At such time as Lessor shall elect to sell the Leased
Premises, Lessor shall give Lessee written notice of its
intent to exercise its option to sell the Leased
Premises to Lessee, including in such notice Lessor's
calculation of the Purchase Price through the actual
closing of the sale of the Leased Premises to Lessee
pursuant to the terms hereof (the "Sale Date"), which
shall be sixty days from such notice by Lessor. Lessee
shall on or before the Sale Date deliver the purchase
price as set forth in subparagraph (A) of this Article
to Lessor. Upon such delivery, which shall be preceded
by ten (10) days notice to Lessor, Lessor shall deliver
to Lessee a warranty deed and appropriate affidavits
evidencing that Lessor transfers the Leased Premises to
Lessee subject to restrictions, easements or other
encumbrances upon title existing as of the date of
delivery, if any, except to the extent, if any, placed
of record or caused by Lessor. The purchase price to be
paid to Lessor shall be a net amount. All expenses in
connection with the transfer of the Leased Premises,
including, but not limited to appraisal fees, title
insurance, recording fees, documentary stamps,
conveyance tax, title evidence, and all other closing
costs, shall be paid by the Lessee. The purchase price
shall be paid by Lessee in cash to Lessor concurrently
with the conveyance of the Leased Premises by the Lessor
to the Lessee. If Lessor elects to sell the Leased
Premises to Lessee pursuant to the terms hereof, the
Leased Premises shall be conveyed by the Lessor to the
Lessee "As Is".
If Lessee shall fail to pay the Purchase Price on or before
the Sale Date, Lessor may terminate the Lease, and sell the
Leased Premises to any third party purchaser. Lessor may then
send Lessee notice of the shortfall (the "Deficiency"), if any,
between the amount of the net proceeds received by Lessor in such
sale, and the total amount of Initial Disbursed Funds disbursed
by Lessor to acquire the Parcel at the Closing Date (as defined
in the Commitment), plus the total amount of funds disbursed
pursuant to this Agreement, plus all accrued interest and
incurred expenses of Lessor fundable pursuant to this Agreement,
plus all reasonable costs of collection and enforcement of the
terms hereof. Lessee shall immediately upon receipt of such
notice of Deficiency remit the amount of the Deficiency in good
funds to Lessor.
Lessor's rights under this Mandatory Put shall expire on the
Final Disbursement Date when the amendment to the Lease has been
executed by all parties as set forth in Article IX hereof.
ARTICLE XV
RENT, INTEREST, AND RENTAL MODIFICATION DATE
1. Rent shall be payable by Lessee and calculated as follows, on
the funds advanced by Lessor on the Closing Date for the purchase
of the land and related closing costs (the "Initial Disbursed
Funds"): Rent shall accrue in the amount of $
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 the Rental Modification Date, if not otherwise in default
hereunder, Lessee shall begin paying Rent by the first of each
month (prorata for the balance of any partial month in which the
Rental Modification Date occurs, payable with the first such
adjusted Rent payable on the first day of the first full month
following the Rental Modification Date) in the amount of $
per month out of pocket. On the Final Disbursement Date, absent
an Uncured Default, Rent shall be adjusted and documented by the
lease amendment contemplated in ARTICLE IX hereof and paid to
Lessor as described in ARTICLE F. of the Commitment.
2. Disbursed proceeds of the Development Financing shall
accrue interest at a rate of eight and one-half percent (8.5%)
per annum, which interest shall accrue unpaid unless advanced by
Lessor to itself, or Lessee shall default hereunder, which
default shall remain uncured after the expiration of any
applicable notice and cure period. However, one hundred and
twenty days (120) from the date hereof, (the "Rental Modification
Date"), Lessee shall begin making monthly payments of
subsequently accruing interest at the rate of 10.25% per annum
out of pocket ("Out of Pocket Invoiced Interest") within 5 days
after invoice from Lessor.
3. Upon the occurrence of an event of default which remains
uncured after the expiration of applicable notice and cure
periods, disbursed proceeds of the Development Financing shall
accrue interest at a rate of Fifteen Percent (15.0%) per annum,
or the highest rate allowed by law, whichever is less, and the
rental rate on the Initial Disbursed funds shall increase to
Fifteen Percent (15.0%) per annum, or the highest rental rate
allowed by law, whichever is less.
ARTICLE XVI
COUNTERPART EXECUTION
Counterpart Execution. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Lessee and Lessor have hereunto caused
these presents to be executed on the date first above written.
Tumbleweed, LLC, a Kentucky Limited
Liability Company
By: /s/ James Mulrooney
Its: Executive VP & CFO
By: /s/ John Butorac
Its: President
[Lessor's Signature appears on following page.]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
By:
Robert P. Johnson, President
EXHIBIT B
CONSTRUCTION COSTS
PROJECT COST BUDGET
EXHIBIT "B"
ESTIMATED TOTAL PROJECT COST BUDGET
TUMBLEWEED, LLC
COLUMBUS, OH
PROJECT COST BUDGET
MARCH 31, 1998
Land and Hard Costs:
Land Acquisition Cost $ 495,000.00
Building/General Construction 750,000.00
Construction Contingency - 10.0% 75,000.00
Soft Costs:
Surveys 2,500.00
Appraisal 4,000.00
Phase I Environmental 2,000.00
TAP Fees 5,000.00
Design Fee-Architect 2,500.00
Architect/Engineering 32,000.00
Liquor License 5,000.00
Title Insurance & Closing Costs (Development financing) 12,000.00
Development Interest 24,500.00
Attorney's Fees-Borrower (Development Financing) 66,000.00
Attorney's Fees-AEI (Development Financing) 12,500.00
AEI Development Commitment Fee 2%* 29,800.00
AEI Credit Report Fees (Promesa) 300.00
AEI State Qualification Fees 1,500.00
AEI Site Inspection Fee 1,500.00
Tumbleweed Parcel Development Fee 15,675.00
Miscellaneous 13,225.00
TOTAL PROJECT COST $1,490,000.00
* Total project costs prior to AEI commitment fee is $1,460,200.
The Commitment Fee (rounded) is calculated on the total project
cost.
Exhibit C
APPLICATION FOR PAYMENT
Tumbleweed, LLC. ("Lessee") hereby requests a disbursement
in the amount of______________________ ($____________________)
pursuant to that certain Development Financing Agreement dated
effective as of May _____, 1998 by and between Lessee, AEI Real
Estate Fund XVIII Limited Partnership ("Lessor"). The amounts
requested have been or will be used to pay the items identified
on Exhibit "A" attached hereto and made a part hereof.
After payment of the amounts requested herein, the balance
of undisbursed Development Financing proceeds of
$_____________________ will be sufficient to complete
construction and pay all related project costs currently known
and approved by Lessor. In the event of cost overruns which
cannot be accounted for by re-allocation among line items, Lessee
agrees to contribute the necessary equity to complete
construction pursuant to Development Financing Agreement and
Development Financing Disbursement Agreement.
All representations and warranties made by the Lessee in the
Development Financing Documents (as defined in the Development
Financing Agreement) are true and correct as of the date hereof
and Lessee is not in default of any of the provisions thereof.
The total cost of the items for which Lessor is funding is
estimated to be $1,490,000. To date, $______________(exclusive
of this request) has been disbursed pursuant to the Development
Financing Disbursing Agreement.
Dated:______________________________
Lessee:
Tumbleweed, LLC., a Kentucky
Limited Liability Company
By: /s/ James Mulrooney
Its: Executive VP & CFO
Lessee
Exhibit D-1
DRAW REQUEST CERTIFICATE
This Certificate made by Tumbleweed, LLC.("Lessee").
RECITALS
WHEREAS, Lessee and AEI Real Estate Fund XVIII Limited
Partnership("Lessor") have entered into a Development Financing
Agreement dated effective as of May , 1998 (the
"Development Financing Agreement") pursuant to which Lessor
agreed to loan $1,490,000 to Lessee for the purpose of
constructing a Tumbleweed Restaurant on certain real property
described on Exhibit "A" attached to the Development Financing
Agreement ("Project"); and
WHEREAS, Lessee and Contractor have entered into a contract
dated , 1998, ("Construction Contract"); and
WHEREAS, the Development Financing Agreement requires the
submission to Escrowee and Lessor of this Certificate prior to
the advancement of any loan proceeds under the Development
Financing Agreement.
NOW, THEREFORE, Lessee does hereby certify to Escrowee and
Lessor as follows:
1. This Draw Request for the period from
____________________________, 1998 to _____________________,
1998, showing work completed to date of $
and requesting a current payment of $________________________
relates to costs incurred pursuant to the Construction Contract,
and other line items, all as shown on the Development Financing
Budget attached to the Development Financing Agreement, and are
costs only pertaining to the Project and are included in the
Development Financing Agreement.
2. As of the date of this Draw Request, the balance
remaining due for all costs under the Construction Contract,
including retainage and approved change orders, to complete the
Project after receipt of payments requested herein will be
$________________.
3. As of the date of this Draw Request, the remaining
balance due on the Development Financing Agreement as set forth
above is sufficient to complete the Project in accordance with
the Plans and Specifications (as defined in the Development
Financing Agreement) to the degree set forth by the Development
Financing Agreement.
4. That all work covered by this Draw Request has been
completed in accordance with the Construction Contract, Plans and
Specifications, and any amendments thereto approved by Lessor.
5. That all work completed to date conforms to the
Construction Contract, Plans and Specifications, and any
amendments thereto approved by Lessor.
6. That all funds previously disbursed for costs incurred
pursuant to the Construction Contract under the Development
Financing Agreement have been applied as provided in all previous
Draw Request Certificates.
7. That as of the date hereof, to the best of Lessee's
knowledge after due inquiry, the Project complies with the
requirements of all zoning and building laws, ordinances,
regulations and permits; the requirements of all governmental
agencies having jurisdiction over the Project; and there is no
action or proceeding pending before any court or administrative
agency with respect to such laws, ordinances, regulations and/or
any certifications or permits issued thereunder.
Dated this ______ day of ____________________, 1998.
Lessee: Tumbleweed, LLC.
By:
Its
STATE OF )
)ss.
COUNTY OF )
I, _______________________________________________, a Notary
public of the said State and County do hereby certify that
_________________________________________ personally appeared
before me this day and he is the ____________________________ of
Tumbleweed, LLC., and that by authority duly given and as the act
of the corporation, the foregoing instrument was signed in its
name by its _______________________________, on behalf of said
limited liability company.
Witness my hand and official stamp or seal, this ______ day of
_________________, 1998.
_____________________________
____________
My commission expires:________ Notary Public
CONTRACTOR AND ARCHITECT
Exhibit D-2
DRAW REQUEST CERTIFICATE
This Certificate made by
,("Contractor"), AND
("Architect").
RECITALS
WHEREAS, Tumbleweed, LLC. ("Lessee") and AEI Real Estate
Fund XVIII Limited Partnership ("Lessor") have entered into a
Development Financing Agreement dated effective as of May ,
1998 (the "Development Financing Agreement") pursuant to which
Lessor agreed to advance $1,490,000 to Lessee for the purpose of
constructing a Tumbleweed Restaurant on certain real property
described on Exhibit "A" attached to the Development Financing
Agreement ("Project"); and
WHEREAS, Lessee and Contractor have entered into a contract
dated , 1998, ("Construction Contract"); and
WHEREAS, Lessee and Architect have entered into a contract
dated , 1998, ("Architect Contract"); and
WHEREAS, the Development Financing Agreement requires the
submission to Escrowee and Lessor of this Certificate prior to
the advancement of any loan proceeds under the Development
Financing Agreement.
NOW, THEREFORE, Contractor and Architect do hereby certify
to Escrowee and Lessor as follows:
1. This Draw Request for the period from
____________________________, 1998 to _____________________,
1998, showing work completed to date of $
and requesting a current payment of $________________________
relates to costs incurred pursuant to the Construction Contract,
and are costs only pertaining to the Project.
2. As of the date of this Draw Request, the balance
remaining due for all costs under the Construction Contract,
including retainage and approved change orders, to complete the
Project after receipt of payments requested herein will be
$________________.
3. As of the date of this Draw Request, the remaining
balance due on the Construction Contract as set forth above is
sufficient to complete the Project in accordance with the Plans
and Specifications (as defined in the Construction Contract) to
the degree set forth by the Construction Contract.
4. That all work covered by this Draw Request has been
completed in accordance with the Construction Contract, Plans and
Specifications, and any amendments thereto approved by Lessor.
5. That each subcontractor or materialmen for which payment
is requested in this Draw Request has satisfactorily completed
the work or furnished materials for which payment is requested in
accordance with the Construction Contract.
6. That all work completed to date conforms to the
Construction Contract, Plans and Specifications, and any
amendments thereto approved by Lessor.
7. That all funds previously disbursed for costs incurred
pursuant to the Construction Contract have been applied as
provided in all previous Draw Request Certificates.
8. That as of the date hereof, to the best of Contractor's
and Architect's knowledge after due inquiry, the Project complies
with the requirements of all zoning and building laws,
ordinances, regulations and permits; the requirements of all
governmental agencies having jurisdiction over the Project; and
there is no action or proceeding pending before any court or
administrative agency with respect to such laws, ordinances,
regulations and/or any certifications or permits issued
thereunder.
Dated this ______ day of ____________________, 1998.
CONTRACTOR:
By:
Its:
ARCHITECT:
By:
Its:
STATE OF )
)ss.
COUNTY OF )
I, _______________________________________________, a Notary
public of the said State and County do hereby certify that
_________________________________________ personally appeared
before me this day and he is the ____________________________ of
, a corporation, and that by authority duly
given and as the act of the corporation, the foregoing instrument
was signed in its name by its _______________________________, on
behalf of said corporation.
Witness my hand and official stamp or seal, this ______ day of
_________________, 1998.
_____________________________
____________
My commission expires:________ Notary Public
STATE OF )
)ss.
COUNTY OF )
I, _______________________________________________, a Notary
public of the said State and County do hereby certify that
_________________________________________ personally appeared
before me this day and he is the ____________________________ of
, a corporation, and that by authority duly
given and as the act of the corporation, the foregoing instrument
was signed in its name by its _______________________________, on
behalf of said corporation.
Witness my hand and official stamp or seal, this ______ day of
_________________, 1998.
_____________________________
____________
My commission expires:________ Notary Public
EXHIBIT `H'
FORM OF
DEVELOPMENT FINANCING DISBURSEMENT AGREEMENT
DEVELOPMENT FINANCING DISBURSEMENT AGREEMENT
THIS AGREEMENT, made and entered into effective as of this
day of May, 1998, by and among Tumbleweed, LLC (hereinafter
referred to as the "Lessee"), Lawyers Title Insurance Corporation
- - Construction Disbursement Department (hereinafter referred to
as "LTIC-CDD" or "Title"), and AEI Real Estate Fund XVIII Limited
Partnership, a Minnesota limited partnership whose corporate
general partner is AEI Fund Management XVIII, Inc., a Minnesota
corporation; whose principal business address is 1300 Minnesota
World Trade Center, 30 East Seventh Street, St. Paul, Minnesota
55101 (hereinafter collectively referred to as the "Lessor").
WITNESSETH:
WHEREAS, the Lessor and Lessee have entered into that
certain Net Lease Agreement and that certain Development
Financing Agreement of even date herewith (hereinafter referred
to as the "Lease" or the "Development Financing Agreement")
pursuant to which Lessor has agreed to make advances to the
Lessee in the aggregate principal amount of up to and including
$1,490,000 upon the terms and conditions therein set forth; and
WHEREAS, LTIC-CDD acknowledges receipt of an executed copy
of the Development Financing Agreement for the reference purposes
as specifically cross-referenced herein; and
WHEREAS, the Lessor desires that LTIC-CDD disburse the
advances made by the Lessor under the Development Financing
Agreement, and LTIC-CDD is willing to do so, on the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the terms of the Lease
and the Development Financing Agreement and other good and
valuable consideration, the receipt and the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. For purposes of this Agreement, unless the context
otherwise requires, all words used herein which are
defined in the Development Financing Agreement shall
have the same meaning as is given to them in the
Development Financing Agreement.
2. At the request of the Lessee, the Lessor will
deposit with LTIC-CDD from time to time undisbursed
proceeds of the Development Financing.
3. LTIC-CDD is authorized and directed to disburse
the funds deposited hereunder to:
a. Pay costs of construction of the
improvements to be erected on the above leased
premises.
b. Obtain releases and satisfaction of
liens and other encumbrances, if any, pursuant to
statements of amounts due which must be approved
by the Lessor.
4. The Inspecting Architect, if any, is to be
selected by Lessor at Lessor's option and the General
Contractor is to be a contractor selected by Lessee,
licensed to do business in the state wherein the Leased
Premises are located and selected by Lessee.
5. Prior to the first disbursement of funds
hereunder, it is a requirement of this Agreement that
LTIC-CDD be furnished:
a. A sworn Lessee statement disclosing the
various contracts entered into by the Lessee and
setting forth the names (when under contract) of
the contractors, their addresses, work or
materials to be furnished, amounts of the
contracts (if in excess of $5,000), amounts paid
to date and balance due and the names of all
parties who have furnished a Notice to Furnishing
pursuant to applicable Ohio Statute and copies of
said notice;
b. A sworn General Contractor's statement
setting forth in detail all contractors and
material suppliers with whom it has contracted to
date for or in connection with the improvements to
the Leased Premises, their addresses, work or
materials to be furnished, amounts of the
contracts (if in excess of $5,000), amounts paid
to date, and balance due and the names of all
parties who have furnished a Notice of Furnishing
pursuant to applicable Ohio Statute and copies of
said notice;
c. An approval by the Lessor for the
purposes of loan disbursement of the General
Contractor's statement and the Lessee's statement,
which are provided at 5.a. and 5.b. above.
d. Copies of the contracts with the
Architect, General Contractor and any other
construction contracts required by LTIC-CDD.
6. Prior to each disbursement of funds hereunder, it
is a requirement of this Agreement that LTIC-CDD be
furnished:
a. An Application for Payment in the form
attached to the Development Financing Agreement as
Exhibit "C".
b. A Draw Request Certificate in the form attached to
the Development Financing Agreement as Exhibit "D".
c. Sufficient funds to cover the requested
disbursements, and to pay for extras or change
orders for which waivers have not been deposited
and for which funds have not previously been
deposited.
d. Sufficient funds to cover unpaid title
and escrow charges.
e. Statements, waivers, affidavits,
supporting waivers and releases of lien (if
necessary) satisfactory to LTIC-CDD and Lessor.
f. Approval of Lessor of the relevant
Application for Payment.
g. Updated Sworn Lessee Statement as set
forth in paragraph 5(a) above.
h. Updated Sworn Contractors Statement as
set forth in paragraph 5 (b) above.
7. Not later than five (5) business days following
receipt of the documents delivered to it pursuant to
Paragraph 6, LTIC-CDD will orally notify the Lessor (i)
whether the delivered documents are satisfactory to it
and (ii) whether it has received lien waivers from all
contractors who should have been paid by it from the
proceeds of the disbursement made in response to the
previous Application for Payment. If waivers are
missing, LTIC-CDD will promptly advise Lessor and
Lessee, in reasonable detail, of the deficiency or
missing lien waivers, as the case may be. If such
deficiency is corrected to the reasonable satisfaction
of the Lessor, or if missing lien waivers are furnished
to LTIC-CDD, or if the Lessor is initially notified by
LTIC-CDD that the documents delivered to it are
satisfactory and that such lien waivers have been
delivered by it, the Lessor will (on the requested date
of disbursement) transmit to LTIC-CDD the amount of the
disbursement applied for in the relevant Application
for Payment, less an amount sufficient to pay interest
on the Note and fees of the Inspector/Architect, if
any, which have accrued and are payable in connection
with the relevant Application for Payment, by transfer
of such funds to LTIC-CDD for deposit in LTIC-CDD's
Account.
8. Upon receiving the funds transmitted by Lessor
pursuant to Paragraph 7, LTIC-CDD will pay the Lessee
and\or Contractor directly the amount in the relevant
Application for Payment under the terms and conditions
described herein, or, if less because Lessee Equity is
required to bring the Development financing into
balance as set forth in the Development Financing
Agreement, the amount approved by the Lessor. If
direct disbursements are required by Lessor to the
parties disclosed in the Application for Payment as
being entitled to receive payment, a sworn statement
from the Lessee and\or Contractor must be furnished
disclosing all parties to be paid and the amount to be
paid. Direct disbursements will be undertaken only the
written direction to do so from Lessor. If, for any
reason any of said funds on deposit in LTIC-CDD's
account are not disbursed by LTIC-CDD by the close of
business on the twelfth (12) business day following
credit of funds to its accounts, (if not sooner
requested to do so by Lessee) LTIC-CDD will forthwith
remit to the Lessor, in immediately available funds,
the amount of the funds in such account that were not
so disbursed. LTIC-CDD shall not be liable to Lessor
for interest on the funds deposited with it, except and
to the extent that LTIC-CDD fails to remit to Lessor
undisbursed funds deposited with it in accordance with
this Paragraph 8, in which event interest shall be at
the rate provided in the Note and shall be payable on
demand.
9. LTIC-CDD will keep and maintain, at all times,
full, true and accurate books and records, in
sufficient detail to reflect the disbursements made by
it hereunder. The Lessor may during normal business
hours, examine all books and records of LTIC-CDD
pertaining to disbursements made by it hereunder and
make extracts therefrom and copies thereof.
10. As LTIC-CDD makes a partial disbursement of
Development Financing Proceeds hereunder, it will cause
Title to furnish the Lessor the following:
ALTA down-date endorsement and upon
final advance, deletion of pending disbursement
clause.
11. Prior to the final disbursement of funds
hereunder, it is a requirement of this Agreement that
LTIC-CDD furnish to Lessor a Commitment for a ALTA
Owner's Policy of Title Insurance prepared by LTIC-CDD
(also referred to as "Title") subject to the usual
terms, conditions and exceptions contained in that form
of policy, exceptions approved by Lender and together
with the coverages required by the Lessor.
12. If at any time during the course of construction,
the total of the unpaid disclosed cost of the
construction as indicated by the column totals on the
general contractor's sworn statement exceeds the amount
of the undisbursed Development Financing Proceeds, as
calculated by subtracting the total amount of the
liability taken on the endorsement from the face amount
of the Development Financing, and the Development
Financing Balance shall be insufficient, in Lessor's
reasonable opinion, as set forth in Article VII,
paragraph 3, of the Development Financing Agreement, to
complete the Project, LTIC-CDD need not make further
disbursements under the terms of this Agreement until
the Lessee has deposited the sum necessary to make the
available funds equal to the unpaid disclosed cost of
construction, or unless specifically directed to do so
by Lessor. Also, if LTIC-CDD discovers a material
misstatement in an affidavit furnished by the general
contractor or the Lessee, it may stop disbursement
until the misstatement has been corrected. No
liability is assumed by LTIC-CDD to the Lessee as
regards protection against mechanic's lien claims.
13. The functions and duties assumed by LTIC-CDD
include only those described in this Agreement and LTIC-
CDD is not obligated to act except in accordance with
the terms and conditions of this Agreement. LTIC-CDD
does not insure that the building will be completed,
nor does it insure that the building when completed
will be in accordance with the plans and
specifications, nor that sufficient funds will be
available for the completion, nor does it make the
certifications of the Inspector/Architect its own, nor
does it assume any liability for same other than
procurement as one of the conditions precedent to each
disbursement.
14. The Lessee shall pay all reasonable title and
escrow charges as they are determined. These items are
to be considered as a cost of construction for purposes
of Paragraph 8.
15. At any time prior to its commitment of
disbursement of funds hereunder, LTIC-CDD reserves the
right to decline any risk offered for insurance
hereunder, whereupon it shall return to Lessor any
documents in its possession relating to such loan and
the funds received by it. Commencement of disbursement
makes this Agreement effective as to all funds that are
received and disbursed on the construction in question.
16. Where, after first disbursement, a further title
search reveals a subsequently arising exception over
which Title is unwilling to insure, LTIC-CDD will
notify Lessor and may discontinue disbursement until
the exception has been disposed of to its reasonable
satisfaction.
17. LTIC-CDD has no liability for loss caused by an
error in the certification furnished it hereunder as to
work in place.
18. LTIC-CDD shall not be responsible for any loss of
documents or funds while such documents or funds are
not in its custody. Documents or funds which are
deposited in the United States mail shall not be
construed as being in the custody of LTIC-CDD.
19. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns;
provided, however, that LTIC-CDD may not assign its
duties hereunder without the prior written consent of
the Lessor and Lessee.
20. This Agreement can be amended or modified only by
a writing signed by the parties hereto.
21. For the Final requisition of construction funds
the Contractor, in addition to the requirement for the
submission of a final Draw Request, shall furnish a
Final Contractors Affidavit stating that all parties
furnishing labor service or materials have been paid in
full along with Final Waivers of Lien from all parties
furnishing Notice of Furnishing and the Contractor. If
the fact be otherwise, the affidavit must show the name
of each party who has not been paid in full and the
amount due. Final Payment will then be made to the
Lessee or to those parties submitting Final Waivers,
when Final Waivers are submitted from the parties
requesting payment set forth in the Final Affidavit and
a Final Waiver of Lien is furnished by the Contractor
or Sub-Contractor. If Final Waivers are not available,
LTIC-CDD shall not disburse any funds until it receives
joint directions in writing to fund from the Lessee and
Lessor as well as sufficient funds to make each
disbursement.
22. LTIC-CDD may satisfy its obligation hereunder as
to any construction lien for which it may be liable due
to its failure to follow the instructions herein by
bonding off the claim of lien in accordance with
applicable Ohio Statute.
23. LTIC-CDD shall have no responsibility to a)
inspect the construction site; b) for claims of liens
not disclosed by the lessees or contractor statement;
c) to see that the improvements are constructed in
accordance with the plans and specifications, or that
said improvements are constructed, or that sufficient
funds are available for completion;
24. The Lessee covenants and agrees to promptly secure
the necessary recordable lien release or transfer any
construction lien filed on the Property to surety or
cash bond as further provided by Ohio Statutes as same
relates to construction liens.
25. In consideration of, among other things, LTIC-CDD
entering into this Agreement, Lessee indemnifies and
saves LTIC-CDD harmless from any and all losses, costs,
damages, expenses and liabilities, including attorneys
fees, which may incur under this agreement, arising
from any construction liens or from the breach of any
warranty or covenant made to LTIC-CDD by Lessee, or any
person claiming by, through, or under it.
26. Nothing contained in this Agreement shall in any
way limit or diminish the obligations of the Lessee or
Contractor nor the rights of the Lessor as may be
contained in any Development Financing Agreement
between the parties.
27. LTIC-CDD has no responsibility for determining
whether Lessee or Contractor is in compliance with the
terms of any Agreement with the Lessor, nor shall LTIC-
CDD be responsible for the failure of either party to
perform under such agreement. The funding of any
Development Financing Proceeds to LTIC-CDD shall be
deemed Lessor's direction to LTIC-CDD to Disburse.
28. Prior to the actual disbursement of funds by LTIC-
CDD, pursuant to this Agreement, LTIC-CDD will make a
record title search. If any intervening recorded
instruments appear of record, LTIC-CDD will advise
Lessor and Lessee of the same. No disbursements will
be made until the matter is removed from the record or
until LTIC-CDD shall receive from the Lessor written
approval to disburse and to reflect the instruments or
instrument in the endorsement to be issued.
29. LTIC-CDD will execute this Agreement only upon the
condition that the Deed conveying title to Lessor will
be recorded prior to the recording of a Notice of
Commencement.
30. 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.
Tumbleweed, LLC, a Kentucky Limited
Liability Company
By: /s/ James Mulrooney
Its: Executive VP & CFO
By /s/ John Butorac
Its President
LAWYERS TITLE INSURANCE COMPANY
CONSTRUCTION DISBURSEMENT DEPARTMENT
By
Its
[Remainder of page intentionally left blank - signature pages on
following pages]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
By:
Robert P. Johnson, President
Development Financing Disbursement Agreement, Tumbleweed,
Columbus, Ohio
EXHIBIT "I"
FORM OF
NET LEASE AGREEMENT
NET LEASE AGREEMENT
THIS LEASE, made and entered into effective as of the
day of May, 1998, by and among AEI Real Estate Fund XVIII Limited
Partnership, a Minnesota limited partnership whose corporate
general partner is AEI Fund Management XVIII, Inc., a Minnesota
corporation ("Fund XVIII"), whose principal business address is
1300 Minnesota World Trade Center, 30 East Seventh Street, St.
Paul, Minnesota 55101 (hereinafter collectively referred to as
"Lessor"), and Tumbleweed, LLC., a Kentucky limited liability
company (hereinafter referred to as "Lessee"), whose principal
business address is 1900 Mellwood Avenue, Louisville, Kentucky;
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at East Broad Street, Columbus,
Ohio, and legally described in Exhibit "A", which is attached
hereto and incorporated herein by reference; and
WHEREAS, Lessee will be constructing the building and
improvements (together the "Building") on the real property
described in Exhibit "A", which Building is described in the
plans and specifications heretofore submitted to Lessor; and
WHEREAS, Lessee desires to lease said real property and
Building (said real property and Building hereinafter referred to
as the "Leased Premises"), from Lessor upon the terms and
conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described to be
paid, kept, and performed by Lessee, Lessor does hereby grant,
demise, lease, and let unto Lessee, and Lessee does hereby take
and hire from Lessor and does hereby covenant, promise, and agree
as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and takes
from Lessor, the Leased Premises subject to the conditions of
this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Fifteen (15)
consecutive "Lease Years", as hereinafter defined, commencing on
May , 1998 ("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a
period of twelve (l2) consecutive calendar months from the
Occupancy Date. If the Occupancy Date shall be other than the
first day of a calendar month, the first "Lease Year" shall be
the period from the Occupancy Date to the end of the calendar
month of the Occupancy Date, plus the following twelve (l2)
calendar months. Each Lease Year after the first Lease Year
shall be a successive period of twelve (l2) calendar months.
(C) The parties agree that once the Occupancy Date has been
established, upon the request of either party, a short form or
memorandum of this Lease will be executed for recording purposes.
That short form or memorandum of this Lease will set forth the
actual occupancy and termination dates of the Term and optional
Renewal Terms, as defined in Article 28 hereof, and the existence
of any right of renewal, and that said right shall terminate when
the Lessee shall lose right to possession or this Lease is
terminated, whichever occurs first.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that the Building will be
constructed on the Leased Premises, and all other improvements to
the land, including the parking lot, approaches, and service
areas, will be constructed in all material respects by Lessee
substantially in accordance with the plot, plans, and
specifications heretofore submitted to Lessor.
(B) Lessee warrants that the Building and all other
improvements to the land contemplated do comply with the laws,
ordinances, rules, and regulations of all state and local
governments.
(C) Lessee agrees to pay, if not already paid in full, for
all architectural fees and actual construction costs relating to
the Building and other related improvements on the Leased
Premises, in the past, present or future, which shall include,
but not be limited to, plans and specifications, general
construction, carpentry, electrical, plumbing, heating,
ventilating, air conditioning, decorating, equipment
installation, outside lighting, curbing, landscaping,
blacktopping, electrical sign hookup, conduit and wiring from
building, fencing, and parking curbs, builder's risk insurance
(naming Lessor, Lessee, and contractor as co-insured), and all
construction bonds for improvements made by or at the direction
of Lessee.
(D) Opening for business in the Leased Premises by Lessee
shall constitute an acceptance of the Leased Premises and an
acknowledgment by Lessee that the premises are in the condition
described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first Lease Year:
Lessee shall pay to Lessor an annual Base Rent of $
, which amount shall be payable in advance on the first
day of each month in equal monthly installments of $
to Lessor Fund XVIII. If the first day of the Lease
Term is not the first day of a calendar month, then the
monthly Rent payable for that partial month shall be a
prorated portion of the equal monthly installment of
Base Rent.
(B) Annual Rent Payable beginning in the second and
each Lease Year thereafter:
1. In the second and each Lease Year
thereafter, the annual Base Rent due and payable
shall increase by an amount equal to the lesser
of: a) Two Percent (2%) of the Base Rent payable
for the immediately prior Lease Year, or b) A
percentage equal to two times the "CPI-U
Percentage Increase" of the Base Rent payable for
the prior Lease Year.
"CPI-U" shall mean the Consumer Price
Index for All Urban Consumers, (all items),
published by the United States Department of
Labor, Bureau of Labor Statistics (BLS) (1982-84
equal 100), U.S. Cities Average, or, in the event
said index ceases to be published, by any
successor index recommended as a substitute
therefor by the United States Government or a
comparable, nonpartisan substitute reasonably
designated by Lessor. If the BLS changes the base
reference period for the Price Index from 1982-
84=100, the CPI-U Percentage Increase shall be
determined with the use of such conversion formula
or table as may be published by the BLS.
The term "CPI-U Percentage Increase"
shall mean the percentage increase in the CPI-U
determined by reference to the increase, if any,
in the latest monthly CPI-U issued prior to the
first day of the Lease Year for which Base Rent is
being increased, over the CPI-U issued for the
same month in the year prior (e.g., the January
CPI-U for the year 2000 over the January CPI-U for
the year 1999.) Said month's CPI-U shall be used
even though that CPI-U will not be for the month
in which the renewal term commences. In no event
shall the CPI-U Percentage Increase be less than
zero.
(C) Overdue Payments.
Lessee shall pay interest on all overdue payments of Rent or
other monetary amounts due hereunder at the rate of fifteen
percent (15%) per annum or the highest rate allowed by law,
whichever is less, accruing from the date such Rent or other
monetary amounts were properly due and payable.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal Terms, if
any, of this Lease, at its own cost and expense, procure and
maintain insurance which covers the Leased Premises and
improvements against fire, wind, and storm damage (including
flood insurance if the Leased Premises is in a federally
designated flood prone area) and such other risks (including
earthquake insurance, if the Leased Premises is located in a
federally designated earthquake zone or in an ISO high risk
earthquake zone) as may be included in the broadest form of all
risk, extended coverage insurance as may, from time to time, be
available in amounts sufficient to prevent Lessor or Lessee from
becoming a co-insurer within the terms of the applicable
policies. In any event, the insurance shall not be less than one
hundred percent (100%) of the then insurable value, with such
commercially reasonable deductibles as Lessor may reasonably
require from time to time. Additionally, replacement cost
endorsements, vandalism endorsement, malicious mischief
endorsement, waiver of subrogation endorsement, waiver of co-
insurance or agreed amount endorsement (if available), and
Building Ordinance Compliance endorsement and Rent loss
endorsements (for a period of twelve months) must be obtained.
(B) Lessee agrees to place and maintain throughout the Term
or Renewal Terms, if any, of this Lease, at Lessee's own expense,
public liability insurance with respect to Lessee's use and
occupancy of said premises, including "Dram Shop" or liquor
liability insurance, if the same shall be or become available in
the State of Ohio, with initial limits of at least $2,000,000 per
occurrence/$5,000,000 general aggregate (inclusive of umbrella
coverage), or such additional amounts as Lessor shall reasonably
require from time to time.
(C) Lessee agrees to notify Lessor in writing if Lessee is
unable to procure all or some part of the aforesaid insurance.
In the event Lessee fails to provide all insurance required under
this Lease, Lessor shall have the right, but not the obligation,
to procure such insurance on Lessee's behalf, following five (5)
business days written notice to Lessee of Lessor's intent to do
so (unless insurance then in place would during such period, or
already has, lapsed, in which case no notice need be given) and
Lessee may obtain such insurance during said five day period and
not then be in default hereunder. If Lessor shall obtain such
insurance, Lessee will then, within five (5) business days from
receiving written notice, pay Lessor the amount of the premiums
due or paid, together with interest thereon at the lesser of 15%
per annum or the highest rate allowable by law, which amount
shall be considered Rent payable by Lessee in addition to the
Rent defined at Article 4 hereof.
(D) All policies of insurance provided for or contemplated
by this Article can be under Lessee's blanket insurance coverage
and shall name Lessor, Lessor's corporate general partner, and
Robert P. Johnson, individual general partner, and Lessee as
additional insured and loss payee, as their respective interests
(as landlord and lessee, respectively) may appear, and shall
provide that the policies cannot be canceled, terminated,
changed, or modified without thirty (30) days written notice to
the parties. In addition, all of such policies shall be in place
on or before the Occupancy Date and contain endorsements by the
respective insurance companies waiving all rights of subrogation,
if any, against Lessor. All insurance companies providing
coverages must be rated "A" or better by Best's Key Rating Guide
(the most current edition), or similar quality under a successor
guide if Best's Key Rating shall cease to be published. Lessee
shall maintain legible copies of any and all policies and
endorsements required herein, to be made available for Lessor's
review and photocopy upon Lessor's reasonable request from time
to time. On the Occupancy Date and no less than fifteen (15)
business days prior to expiration of such policies, Lessee shall
provide Lessor with legible copies of any and all renewal
Certificates of Insurance reflecting the above terms of the
Policies (including endorsements). Lessee agrees that it will
not settle any property insurance claims affecting the Leased
Premises in excess of $25,000 without Lessor's prior written
consent, such consent not to be unreasonably withheld or delayed.
Lessor shall consent to any settlement of an insurance claim
wherein Lessee shall confirm in writing with evidence reasonably
satisfactory to Lessor that Lessee has sufficient funds available
to complete the rebuilding of the Premises.
(E) Lessee shall defend, indemnify, and hold Lessor
harmless against any and all claims, damages, and lawsuits
arising after the Occupancy Date of this Lease and any orders,
decrees or judgments which may be entered therein, brought for
damages or alleged damages resulting from any injury to person or
property or from loss of life sustained in or about the Leased
Premises, unless such damage or injury results from the
intentional misconduct or the gross negligence of Lessor and
Lessee agrees to save Lessor harmless from, and indemnify Lessor
against, any and all injury, loss, or damage, of whatever nature,
to any person or property caused by, or resulting from any act,
omission, or negligence of Lessee or any employee or agent of
Lessee. In addition, Lessee hereby releases Lessor from any and
all liability for any loss or damage caused by fire or any of the
extended coverage casualties, unless such fire or other casualty
shall be brought about by the intentional misconduct or
negligence of Lessor. In the event of any loss, damage, or
injury caused by the joint negligence or willful misconduct of
Lessor and Lessee, they shall be liable therefor in accordance
with their respective degrees of fault.
(F) Lessor hereby waives any and all rights that it may
have to recover from Lessee damages for any loss occurring to the
Leased Premises by reason of any act or omission of Lessee;
provided, however, that this waiver is limited to those losses
for which Lessor is compensated by its insurers, if the insurance
required by this Lease is maintained. Lessee hereby waives any
and all right that it may have to recover from Lessor damages for
any loss occurring to the Leased Premises by reason of any act or
omission of Lessor; provided, however, that this waiver is
limited to those losses for which Lessee is, or should be if the
insurance required herein is maintained, compensated by its
insurers.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay the charges
for all public utility services rendered or furnished to the
Leased Premises, including heat, water, gas, electricity, sewer,
sewage treatment facilities and the like, all personal property
taxes, real estate taxes, special assessments, and municipal or
government charges, general, ordinary and extraordinary, of every
kind and nature whatsoever, which may be levied, imposed, or
assessed against the Leased Premises, or upon any improvements
thereon, at any time after the Occupancy Date of this Lease for
the period prior to the expiration of the term hereof, or any
Renewal Term, if exercised.
(B) Lessee shall pay all real estate taxes, assessments for
public improvements or benefits, and other governmental
impositions, duties, and charges of every kind and nature
whatsoever which shall or may, during the term of this Lease, be
charged, laid, levied, assessed, or imposed upon, or become a
lien or liens upon the Leased Premises or any part thereof. Such
payments shall be considered as Rent paid by Lessee in addition
to the Rent defined at Article 4 hereof. If due to a change in
the method of taxation, a franchise tax, Rent tax, or income or
profit tax shall be levied against Lessor in substitution for or
in lieu of any tax which would otherwise constitute a real estate
tax, such tax shall be deemed a real estate tax for the purposes
herein and shall be paid by Lessee; otherwise Lessee shall not be
liable for any such tax levied against Lessor.
(C) All real estate taxes, assessments for public
improvements or benefits, water rates and charges, sewer rents,
and other governmental impositions, duties, and charges which
shall become payable for the first and last tax years of the term
hereof shall be apportioned pro rata between Lessor and Lessee in
accordance with the respective number of months during which each
party shall be in possession of the Leased Premises (or through
the expiration of the term hereof, if longer) in said respective
tax years. Lessee shall pay within 60 days of the expiration of
the term hereof Lessor's reasonable estimate of Lessee's pro-rata
share of real estate taxes for the last tax year of the term
hereof, based upon the last available tax bill. Lessor shall
give Lessee notice of such estimated pro-rata real estate taxes
no later than 75 days from the end of the term hereof. Upon
receipt of the actual statement of real estate taxes for such
prorated period, Lessor shall either refund to Lessee any over
payment of the pro-rata Lessee obligation, or shall assess and
Lessee shall pay promptly upon notice any remaining portion of
the Lessee's pro-rata obligation for such real estate taxes.
(D) Lessee shall have the right to contest or review by
legal proceedings or in such other manner as may be legal (which,
if instituted, shall be conducted solely at Lessee's own expense)
any tax, assessment for public improvements or benefits, or other
governmental imposition aforementioned, upon condition that,
before instituting such proceeding Lessee shall pay (under
protest) such tax or assessments for public improvements or
benefits, or other governmental imposition, duties and charges
aforementioned, unless such payment would act as a bar to such
contest or interfere materially with the prosecution thereof and
in such event Lessee shall post with Lessor alternative security
reasonably satisfactory to Lessor. All such proceedings shall be
begun as soon as reasonably possible after the imposition or
assessment of any contested items and shall be prosecuted to
final adjudication with reasonable dispatch. In the event of any
reduction, cancellation, or discharge, Lessee shall pay the
amount that shall be finally levied or assessed against the
Leased Premises or adjudicated to be due and payable, and, if
there shall be any refund payable by the governmental authority
with respect thereto, if Lessee has paid the expense of Lessor in
such proceedings, Lessee shall be entitled to receive and retain
the refund, subject, however, to apportionment as provided during
the first and last years of the term of this Lease.
(E) Lessor, within sixty (60) days after notice to Lessee
if Lessee fails to commence such proceedings, may, but shall not
be obligated to, contest or review by legal proceedings, or in
such other manner as may be legal, and at Lessor's own expense,
any tax, assessments for public improvements and benefits, or
other governmental imposition aforementioned, which shall not be
contested or reviewed, as aforesaid, by Lessee, and unless Lessee
shall promptly join with Lessor in such contest or review, Lessor
shall be entitled to receive and retain any refund payable by the
governmental authority with respect thereto.
(F) Lessor shall not be required to join in any proceeding
referred to in this Article, unless in Lessee's reasonable
opinion, the provisions of any law, rule, or regulation at the
time in effect shall require that such a proceeding be brought by
and/or in the name of Lessor, in which event Lessor shall upon
written request, join in such proceedings or permit the same to
be brought in its name, all at no cost or expense to Lessor.
(G) Within thirty (30) days after Lessor notifies Lessee in
writing that Lessor has paid such amount, Lessee shall also pay
to Lessor, as additional Rent, the amount of any sales tax,
franchise tax, excise tax, on Rents imposed by the State where
the Leased Premises are located. At Lessor's option, Lessee
shall deposit with Lessor on the first day of each and every
month during the term hereof, an amount equal to one-twelfth
(1/12) of any estimated sales tax payable to the State in which
the property is situated for Rent received by Lessor hereunder
("Deposit"). From time to time out of such Deposit Lessor will
pay the sales tax to the State in which the property is situated
as required by law. In the event the Deposit on hand shall not
be sufficient to pay said tax when the same shall become due from
time to time, or the prior payments shall be less than the
current estimated monthly amounts, then Lessee shall pay to
Lessor on demand any amount necessary to make up the deficiency.
The excess of any such Deposit shall be credited to subsequent
payments to be made for such items. If a default or an event of
default shall occur under the terms of this Lease, Lessor may, at
its option, without being required so to do, apply any Deposit on
hand to cure such default, in such order and manner as Lessor may
elect.
ARTICLE 7. PROHIBITION ON ASSIGNMENTS AND SUBLETTING; TAKE-BACK
RIGHTS
(A) Except as otherwise expressly provided in this Article,
Lessee shall not, without obtaining the prior written consent of
Lessor, in each instance:
1. assign or otherwise transfer this Lease,
or any part of Lessee's right, title or interest
therein, except in the event the Lease is assigned
by Tumbleweed to its successor entity in the event
of either an Initial Public Offering or Direct
Public Offering of Lessee; or
2. sublet all or any part of the Leased
Premises or allow all or any part of the Leased
Premises to be used or occupied by any other
Persons (herein defined as a Party other than
Lessee, be it a corporation, a partnership, an
individual or other entity); or
3. mortgage, pledge or otherwise encumber
this Lease, or the Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control of any
class of capital stock of any corporate Lessee or
sublessee, or the transfer voting control of the
total interest in any other person which is a
Lessee or sublessee, however accomplished, whether
in a single transaction or in a series of related
or unrelated transactions, shall be deemed an
assignment of this Lease, or of such sublease, as
the case may be;
2. an agreement by any other Person,
directly or indirectly, to assume Lessee's
obligations under this Lease shall be deemed an
assignment;
3. any Person to whom Lessee's interest
under this Lease passes by operation of law, or
otherwise, shall be bound by the provisions of
this Article;
4. each material modification, amendment or
extension or any sublease to which Lessor has
previously consented shall be deemed a new
sublease; and
Lessee agrees to furnish to Lessor within five (5) business
days following demand at any time such information and assurances
as Lessor may reasonably request that neither Lessee, nor any
previously permitted sublessee or assignee, has violated the
provisions of this Article.
(C) If Lessee agrees to assign this Lease or to sublet all
or any portion of the Leased Premises, Lessee shall, prior to the
effective date thereof (the "Effective Date"), deliver to Lessor
executed counterparts of any such agreement and of all ancillary
agreements with the proposed assignee or sublessee, as
applicable. If Lessee shall fail to do so, and shall have
surrendered possession of the Leased Premises in violation of its
duty of prior notice and failed to obtain Lessor's prior consent
(if and where required herein), and, if in such event, Lessor in
its sole discretion (except as otherwise specifically limited
herein) shall not consent to a proposed sublease or assignment,
Lessor shall then have all of the following rights (in addition
to any rights Lessor may possess occasioned by Lessee's default
hereunder), any of which Lessor may exercise by written notice to
Lessee given within thirty (30) days after Lessor receives the
aforementioned documents:
1. with respect to a proposed assignment of
this Lease, the right to terminate this Lease on
the Effective Date as if it were the Expiration
Date of this Lease;
2. with respect to a proposed subletting of
the entire Leased Premises, the right to terminate
this Lease on the Effective Date as if it were the
Expiration Date; or
3. with respect to a proposed subletting of
less than the entire Leased Premises, the right to
terminate this Lease as to the portion of the
Leased Premises affected by such subletting on the
Effective Date, as if it were the Expiration Date,
in which case Lessee shall promptly execute and
deliver to Lessor an appropriate modification of
this Lease in form satisfactory to Lessor in all
respects.
4. with respect to a proposed subletting or
proposed assignment of this Lease, impose such
conditions upon Lessor's consent as Lessor shall
determine in its sole discretion.
(D) If Lessor exercises any of its options under Article
7(C) above, (and if Lessor shall impose conditions upon its
consent and Lessee shall fail to meet any conditions Lessor may
impose upon its consent), Lessor may then lease the Leased
Premises or any portion thereof to Lessee's proposed assignee or
sublessee, as the case may be, without liability whatsoever to
Lessee.
(E) Notwithstanding anything above to the contrary, Lessor
agrees to consent to any assignment or sublease all or any
portion of the Lessee's interests herein to a franchisee or
licensee in good standing of Tumbleweed, LLC, for the Tumbleweed
restaurant concept, provided Lessor is given prior written notice
of such sublease or assignment, accompanied by a copy of such
sublease or assignment, and the consents of Lessee (such consent
to be in form and substance satisfactory to Lessor) to such
assignment or sublet, affirming their continued liability
hereunder.
Lessor agrees that its consent to any other proposed
assignment or sublet shall not be unreasonably withheld or
delayed, provided Lessor is given prior written notice of such
sublease or assignment, accompanied by a copy of such sublease or
assignment, and the consents of Lessee (such consent to be in
form and substance satisfactory to Lessor) to such assignment or
sublet, affirming their continued liability hereunder.
(F) Notwithstanding anything above to the contrary, the
Lessee's interest herein shall not be assignable in any manner in
accordance with the terms hereof unless and until the termination
of the Development Financing Agreement as set forth in Article 35
hereof.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Lessee covenants and agrees to keep and maintain in
good order, condition and repair the interior and exterior of the
Leased Premises during the term of the Lease, or any renewal
terms, and further agrees that Lessor shall be under no
obligation to make any repairs or perform any maintenance to the
Leased Premises. Lessee covenants and agrees that it shall be
responsible for all repairs, alterations, replacements, or
maintenance of, including but without limitation to or of: The
interior and exterior portions of all doors; door checks and
operators; windows; plate glass; plumbing; water and sewage
facilities; fixtures; electrical equipment; interior walls;
ceilings; signs; roof; structure; interior building appliances
and similar equipment; heating and air conditioning equipment;
and any equipment owned by Lessor and leased to Lessee hereunder,
as itemized on Exhibit B attached hereto (if any) and
incorporated herein by reference; and further agrees to replace
any of said equipment when necessary. Lessee further agrees to
be responsible for, at its own expense, snow removal, lawn
maintenance, landscaping, maintenance of the parking lot
(including parking lines, seal coating, and blacktop surfacing),
and other similar items.
(B) If Lessee refuses or neglects to commence or complete
repairs promptly and adequately, after prior written notice as
required under Article 16(B) (except in cases of emergency to
prevent waste or preserve the safety and integrity of the Leased
Premises, in which case no notice need be given), Lessor may
cause such repairs to be made, but shall not be required to do
so, and Lessee shall pay the cost thereof to Lessor within five
(5) business days following demand. It is understood that Lessee
shall pay all expenses and maintenance and repair during the term
of this Lease. If Lessee is not then in default hereunder,
Lessee shall have the right to make repairs and improvements to
the Leased Premises without the consent of Lessor if such repairs
and improvements do not exceed Fifty Thousand Dollars
($50,000.00), provided such repairs or improvements do not affect
the structural integrity of the Leased Premises. Any repairs or
improvements in excess of Fifty Thousand Dollars ($50,000.00) or
affecting the structural integrity of the Leased Premises may be
done only with the prior written consent of Lessor, such consent
not to be unreasonably withheld or delayed. All alterations and
additions to the Leased Premises shall be made in accordance with
all applicable laws and shall remain for the benefit of Lessor,
except for Lessee's moveable trade fixtures. In the event of
making such alterations as herein provided, Lessee further agrees
to indemnify and save harmless Lessor from all expense, liens,
claims or damages to either persons or property or the Leased
Premises which may arise out of or result from the undertaking or
making of said repairs, improvements, alterations or additions,
or Lessee's failure to make said repairs, improvements,
alterations or additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances, rules,
orders, regulations and requirements of all federal, state, city
and local governments, and with all rules, orders and
regulations of the applicable Board of Fire Underwriters which
affect the use of the improvements. Lessee will comply with all
easements, restrictions, and covenants of record against or
affecting the Leased Premises and any franchise or license
agreements required for operation of the Leased Premises in
accordance with Article 14 hereof.
ARTICLE 10. SIGNS
Lessee shall have the right to install and maintain a sign
or signs advertising Lessee's business, provided that the signs
conform to law, and further provided that the sign or signs
conform specifically to the written requirements of the
appropriate governmental authorities.
ARTICLE 11. SUBORDINATION
(A) Lessor reserves the right and privilege to subject and
subordinate this Lease at all times to the lien of any mortgage
or mortgages now or hereafter placed upon Lessor's interest in
the Leased Premises and on the land and buildings of which said
premises are a part, or upon any buildings hereafter placed upon
the land of which the Leased Premises are a part, provided such
mortgagee shall execute its standard form, commercially
reasonable subordination, attornment and non-disturbance
agreement. Lessor also reserves the right and privilege to
subject and subordinate this Lease at all times to any and all
advances to be made under such mortgages, and all renewals,
modifications, extensions, consolidations, and replacements
thereof, provided such mortgagee shall execute its standard form,
commercially reasonable subordination, attornment and non-
disturbance agreement.
(B) Lessee covenants and agrees to execute and deliver,
upon demand, such further instrument or instruments subordinating
this Lease on the foregoing basis to the lien of any such
mortgage or mortgages as shall be desired by Lessor and any
proposed mortgagee or proposed mortgagees, provided such
mortgagee shall execute its standard form, commercially
reasonable subordination, attornment and non-disturbance
agreement.
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by any
public authority under the power of eminent domain, or by private
purchase in lieu thereof, then this Lease shall automatically
terminate upon the date possession is surrendered, and Rent shall
be paid up to that day. If any part of the Leased Premises shall
be so taken as to render the remainder thereof materially
unusable in the opinion of a licensed third party arbitrator
reasonably approved by Lessor and Lessee, for the purposes for
which the Leased Premises were leased, then Lessor and Lessee
shall each have the right to terminate this Lease on thirty (30)
days notice to the other given within ninety (90) days after the
date of such taking. In the event that this Lease shall
terminate or be terminated, the Rent shall, if and as necessary,
be paid up to the day that possession was surrendered.
(B) If any part of the Leased Premises shall be so taken
such that it does not materially interfere with the business of
Lessee, then Lessee shall, with the use of the condemnation
proceeds to be made available by Lessor, but otherwise at
Lessee's own cost and expense, restore the remaining portion of
the Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was leased.
Lessee shall make all repairs to the building in which the Leased
Premises is located to the extent necessary to constitute the
building a complete architectural unit. Provided, however, that
such work shall not exceed the scope of the work required to be
done by Lessee in originally constructing such building unless
Lessee shall demonstrate to Lessor's reasonable satisfaction the
availability of funds to complete such work. Provided, further,
the cost thereof to Lessor shall not exceed the proceeds of its
condemnation award, all to be done without any adjustments in
Rent to be paid by Lessee. This lease shall be deemed amended to
reflect the taking in the legal description of the Leased
Premises.
(C) All compensation awarded or paid upon such total or
partial taking of the Leased Premises shall belong to and be the
property of Lessor without any participation by Lessee, whether
such damages shall be awarded as compensation for diminution in
value to the leasehold or to the fee of the premises herein
leased. Nothing contained herein shall be construed to preclude
Lessee from prosecuting any claim directly against the condemning
authority in such proceedings for: Loss of business; damage to
or loss of value or cost of removal of inventory, trade fixtures,
furniture, and other personal property belonging to Lessee;
provided, however, that no such claim shall diminish or otherwise
adversely affect Lessor's award or the award of any fee
mortgagee.
ARTICLE 13. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and examine
the Leased Premises at any time during business hours, after
reasonable notice to Lessee, and Lessee agrees to allow Lessor
free access to the Leased Premises to show the premises. Upon
default by Lessee or at any time within ninety (90) days of the
expiration or termination of the Lease, Lessee agrees to allow
Lessor to then place "For Sale" or "For Rent" signs on the Leased
Premises. Lessor and Lessor's representatives shall at all times
while upon or about the Leased Premises observe and comply with
Lessee's reasonable health and safety rules, regulations,
policies and procedures. Lessor agrees to indemnify and hold
Lessee, its successors, assigns, agents and employees from and
against any liability, claims, demands, cause of action, suits
and other litigation or judgements of every kind and character,
including injury to or death of any person or persons, or
trespass to, or damage to, or loss or destruction of, any
property, whether real or personal, to the extent resulting from
the negligence or willful misconduct or Lessor or Lessor's
representatives while upon or about the Leased Premises.
ARTICLE 14. EXCLUSIVE USE
(A) After the Occupancy Date, Lessee expressly agrees and
warrants that the Leased Premises will be used exclusively as a
Tumbleweed Restaurant or other casual dining sit-down restaurant.
In any other such case, after obtaining Lessor's prior written
consent, such consent not to be unreasonably withheld or delayed,
Lessee may conduct any lawful business from the Leased Premises.
Lessee acknowledges and agrees that any other use without the
prior written consent of Lessor will constitute a default under
and a violation and breach of this Lease. Lessee agrees: To
open for business within a reasonable period of time after
completion of construction of the contemplated Improvements; to
operate all of the Leased Premises during the Term or Renewal
Terms during regular and customary hours for businesses similar
to the permitted exclusive use stated herein, unless prevented
from doing so by causes beyond Lessee's control or due to
remodeling; and to conduct its business in a professional and
reputable manner.
(B) If the Leased Premises are not operated as a Tumbleweed
Restaurant or other casual dining sit-down restaurant or other
permitted use hereunder, or remain closed for thirty (30)
consecutive days (unless such closure results from reasons beyond
Lessee's reasonable control) and in the event Lessee fails to pay
Rent when due or fulfill any other obligation hereunder, then
Lessee shall be in default hereunder and Lessor may, at its
option, cancel this Lease by giving written notice to Lessee or
exercise any other right or remedy that Lessor may have;
provided, however, that closings shall be reasonably permitted
for replacement of trade fixtures or during periods of repair
after destruction or due to remodeling.
ARTICLE 15. DESTRUCTION OF PREMISES
If, during the term of this Lease, the Leased Premises are
totally or partially destroyed by fire or other elements, within
a reasonable time (but in no event longer than one hundred eighty
(180) days and subject to the provisions herein below), Lessee
shall repair and restore the improvements so damaged or destroyed
as nearly as may be practical to their condition immediately
prior to such casualty. All rents payable by Lessee shall be
abated during the period of repair and restoration to the extent
that Lessor shall be compensated by the proceeds of the rent loss
insurance required to be maintained by Lessee hereunder.
Provided Lessee is not in default hereunder (and retains
according to the terms hereof the right to rebuild) with the
Lessor's prior written consent, which consent shall not be
unreasonably withheld or delayed, Lessee shall have the right to
promptly and in good faith settle and adjust any claim under such
insurance policies with the insurance company or companies on the
amounts to be paid upon the loss. The insurance proceeds shall
be used to reimburse Lessee for the cost of rebuilding or
restoration of the Leased Premises. Risk that the insurance
company shall be insolvent or shall refuse to make insurance
proceeds available shall be with Lessee. The Leased Premises
shall be so restored or rebuilt so as to be of at least equal
value and substantially the same character as prior to such
damage or destruction. If the insurance proceeds are less than
Fifty Thousand Dollars ($50,000), they shall be paid to Lessee
for such repair and restoration. If the insurance proceeds are
greater than or equal to Fifty Thousand Dollars ($50,000), they
shall be deposited by Lessee and Lessor into a customary
construction escrow at a nationally recognized title insurance
company, or at Lessee's option, with Lessor ("Escrowee") and
shall be made available from time to time to Lessee for such
repair and restoration. Such proceeds shall be disbursed in
conformity with the terms and conditions of a commercially
reasonable construction loan agreement. Lessee shall, in either
instance, deliver to Lessor or Escrowee (as the case may be)
satisfactory evidence of the estimated cost of completion
together with such architect's certificates, waivers of lien,
contractor's sworn statements and other evidence of cost and of
payments as the Lessor or Escrowee may reasonably require and
approve. If the estimated cost of the work exceeds One Hundred
Thousand Dollars ($100,000), all plans and specifications for
such rebuilding or restoration shall be subject to the reasonable
approval of Lessor.
Any insurance proceeds remaining with Escrowee after the
completion of the repair or restoration shall be paid to Lessor
to reduce the sum of monies expended by Lessor to acquire its
interest in the Lease Premises and rent hereunder shall be
reduced by 10.25% of such amount.
If the proceeds from the insurance are insufficient, after
review of the bids for completion of such improvements, or should
become insufficient during the course of construction, to pay for
the total cost of repair or restoration, Lessee shall, prior to
commencement of work, demonstrate to Escrowee and Lessor's
reasonable satisfaction, the availability of such funds necessary
to completion construction and Lessee shall deposit the same with
Escrowee for disbursement under the construction escrow
agreement.
Provided, further, that should the Leased Premises be
damaged or destroyed to the extent of fifty (50%) percent of its
value or such that Lessee cannot carry on business as a casual
dining restaurant without (in the opinion of a licensed third
party architect reasonably approved by Lessor and Lessee) being
closed for more than sixty (60) days (which duration of closure
may be established by Lessee by the affidavit of the approved
independent third party architect as to the estimated time of
repair) during the last two (2) years of the remaining term of
this Lease or any of the option terms of this Lease, if any
further options to renew remain, Lessee may elect within 30 days
of such damage, to then exercise at least one (1) option to renew
this Lease so that the remaining term of the Lease is not less
than five (5) years in order to be entitled to such insurance
proceeds for restoration or rebuilding. Absent such election,
this Lease shall terminate upon Lessor's receipt of funds at
least equal to the estimated cost of such repair or restoration.
ARTICLE 16. ACTS OF DEFAULT
Each of the following shall be deemed a default by Lessee
and a breach of this Lease:
(A) Failure to pay the Rent or any monetary
obligation herein reserved, or any part thereof
when the same shall be due and payable. Interest
and late charges for failure to pay Rent when due
shall accrue from the first date such Rent was due
and payable; provided, however, Lessee shall have
five (5) business days after written notice from
Lessor within which to cure the failure to pay the
Rent or any monetary obligation herein reserved.
(B) Failure to do, observe, keep and perform
any of the other terms, covenants, conditions,
agreements and provisions in this Lease to be
done, observed, kept and performed by Lessee;
provided, however, that Lessee shall have Thirty
(30) days after written notice from Lessor within
which to cure such default, or such longer time as
may be reasonably necessary if such default cannot
reasonably be cured within Thirty (30) days, if
Lessee is diligently pursuing a course of conduct
that in Lessor's reasonable opinion is capable of
curing such default, but in any event such longer
time shall not exceed 120 days after written
notice from Lessor of the default hereunder.
(C) The abandonment of the premises by
Lessee, the adjudication of Lessee as a bankrupt,
the making by Lessee of a general assignment for
the benefit of creditors, the taking by Lessee of
the benefit of any insolvency act or law, the
appointment of a permanent receiver or trustee in
bankruptcy for Lessee property, or the appointment
of a temporary receiver which is not vacated or
set aside within sixty (60) days from the date of
such appointment; provided, however, that the
foregoing shall not constitute events of default
so long as Lessee continues to otherwise satisfy
its obligations (including but not limited to the
payment of Rent) hereunder.
ARTICLE 17. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at any
time thereafter, Lessor may serve a written notice upon Lessee
that Lessor elects to terminate this Lease. This Lease shall
then terminate on the date so specified as if that date had been
originally fixed as the expiration date of the term herein
granted, provided, however, that Lessee shall have continuing
liability for future rents for the remainder of the original term
and any exercised renewal term as set forth in Article 19,
notwithstanding any earlier termination of the Lease hereunder
(except where Lessee has exercised a right to terminate where
granted herein), preserving unto Lessor the benefit of its
bargained-for rental payments.
ARTICLE 18. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or otherwise, or
in the event of an uncured default hereunder by Lessee, or in the
event that the premises or any part thereof, shall be abandoned
by Lessee and Rent shall not be paid or other obligations
(including but not limited to repair and maintenance obligations)
of Lessee hereunder shall not be met, then Lessor or its agents,
servants or representatives, may immediately or at any time
thereafter, re-enter and resume possession of the premises or any
part thereof, and remove all persons and property therefrom,
either by summary dispossess proceedings or by a suitable action
or proceeding at law, or by force or otherwise without being
liable for any damages therefor, except for damages resulting
from Lessor's negligence or willful misconduct. Notwithstanding
anything above to the contrary, if Lessee is still in possession
of the Leased Premises, Lessor agrees to use such legal
proceedings (summary or otherwise) prescribed by law to regain
possession of the Leased Premises.
ARTICLE 19. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in this
Lease or should it take possession pursuant to legal proceedings
or pursuant to any notice provided for by law, Lessor shall
undertake commercially reasonable efforts to mitigate Lessee's
continuing liability hereunder as such efforts may be prescribed
by law or statute (which shall include listing the Leased
Premises with a licensed commercial real estate broker and
securing the property against waste, but shall not otherwise
include the expenditure of Lessor's funds, unless the same be
required by law or statute and cannot be waived as provided for
herein), and in addition, Lessor may either (i) terminate this
Lease or (ii) it may from time to time, without terminating the
contractual obligation of Lessee to pay Rent under this Lease,
make such alterations and repairs as may be necessary to relet
the Leased Premises or any part thereof for the remainder of the
original Term or any exercised Renewal Terms, at such Rent or
Rents, and upon such other terms and conditions as Lessor in its
sole discretion may deem advisable. Termination of Lessee's
right to possession by Court Order shall be sufficient evidence
of the termination of Lessee's possessory rights under this
Lease, and the filing of such an Order shall be notice of the
termination of Lessee's renewal rights as set forth in any
Memorandum of Lease of record.
(B) Upon each such reletting, without termination of the
contractual obligation of Lessee to pay Rent under this Lease,
all Rents received by Lessor shall be applied as follows:
1. First, to the payment of any
indebtedness other than Rent due hereunder from
Lessee to Lessor;
2. Second, to the payment of any costs and
expenses of such reletting, including brokerage
fees and attorney's fees and of costs of such
alterations and repairs;
3. Third, to the payment of Rent and other
monetary obligations due and unpaid hereunder;
4. Finally, the residue, if any, shall be
held by Lessor and applied in payment of future
Rent as the same may become due and payable
hereunder.
If such Rents received from such reletting during any month are
less than that to be paid during that month by Lessee hereunder,
Lessee shall pay any such deficiency to Lessor. Such deficiency
shall be calculated and paid monthly. No such re-entry or taking
possession of such Leased Premises by Lessor shall be construed
as an election on its part to terminate Lessee's contractual
obligations under this Lease respecting the payment of rent and
obligations for the costs of repair and maintenance unless a
written notice of such intention be given to Lessee.
(C) Notwithstanding any such reletting without termination,
Lessor may at any time thereafter elect to terminate this Lease
for any uncured breach.
(D) In addition to any other remedies Lessor may have with
this Article 19, Lessor may recover from Lessee all damages it
may incur by reason of any uncured breach, including: The cost
of recovering and reletting the Leased Premises; reasonable
attorney's fees; and, the present value (discounted at a rate of
8% per annum) of the excess of the amount of Rent and charges
equivalent to Rent reserved in this Lease for the remainder of
the Term over the then reasonable Rent value of the Leased
Premises (or the actual Rents receivable by Lessor, if relet),
(the Lessee bearing the burden of proof to demonstrate the amount
of rental loss for the same period, that through reasonable
efforts to mitigate damages, could have been avoided) for the
remainder of the Term, all of which amounts shall be immediately
due and payable from Lessee to Lessor in full. In the event that
the Rent obtained from such alternative or substitute tenant is
more than the Rent which Lessee is obligated to pay under this
Lease, then such excess shall be paid to Lessor provided that
Lessor shall credit such excess against the outstanding
obligations of Lessee due pursuant hereto, if any.
(E) It is the object and purpose of this Article 19 that
Lessor shall be kept whole and shall suffer no damage by way of
non-payment of Rent or by way of diminution in Rent. Lessee
waives and will waive all rights to trial by jury in any summary
proceedings or in any action brought to recover Rent herein which
may hereafter be instituted by Lessor against Lessee in respect
to the Leased Premises. Lessee hereby waives any rights of re-
entry it may have or any rights of redemption or rights to redeem
this Lease upon a termination of this Lease.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and building
equipment used in connection with the operation of the Leased
Premises including, but not limited to, heating, electrical
wiring, lighting, ventilating, plumbing, walk-in
refrigerators/coolers, walk-in freezers, air conditioning
systems, and the equipment owned by Lessor and leased to Lessee
hereunder as specifically set forth on Exhibit B attached hereto,
if any, and incorporated herein by reference shall be the
property of Lessor. All other trade fixtures and all other
articles of personal property owned by Lessee shall remain the
property of Lessee.
(B) Lessee shall furnish and pay for any and all equipment,
furniture, trade fixtures, and signs, except for such items, if
any, described in Article 20(A) above, as owned by Lessor.
Lessee agrees that Lessor shall have a lien on all Lessee's
equipment, furniture, trade fixtures, furnishings, and signs as
security for the performance of and compliance with this Lease,
subject to the rights of any bona fide third party's security
interest in such property. Provided Lessee is not in default
hereunder, Lessor will agree that its interest in the personal
property of Lessee will be subordinated to financing which may
exist or which Lessee may cause to exist in the future on that
same personal property.
(C) At the end of the term of this Lease, the property
described at Article 20(B) above, after written notice to Lessor
given at least ten (10) business days prior to any proposed
removal, may be removed from the Leased Premises by Lessee
regardless of whether or not such property is attached to the
Leased Premises so as to constitute a "fixture" within the
meaning of the law; however, all damages and repairs to the
Leased Premises which may be caused by the removal of such
property shall be paid for by Lessee.
ARTICLE 21. LIENS
Lessee shall not do or cause anything to be done whereby the
Leased Premises may be encumbered by any mechanic's or other
liens. Whenever and as often as any mechanic's or other lien is
filed against said Leased Premises purporting to be for labor or
materials furnished or to be furnished to Lessee, Lessee shall
remove the lien of record by payment or by bonding with a surety
company authorized to do business in the state in which the
property is located, within forty-five (45) days from the date of
the filing of said mechanic's or other lien and delivery of
notice thereof to Lessee. Should Lessee fail to take the
foregoing steps within said forty-five (45) day period (or in any
event, prior to the expiration of the time within which Lessee
may bond over such lien to remove it as a lien upon the Leased
Premises), Lessor shall have the right, among other things, to
pay said lien without inquiring into the validity thereof, and
Lessee shall forthwith reimburse Lessor for the total expense
incurred by it in discharging said lien as additional Rent
hereunder.
ARTICLE 22. NO WAIVER BY LESSOR EXCEPT IN WRITING
No agreement to accept a surrender of the Leased Premises or
termination of this Lease shall be valid unless in writing signed
by Lessor. The delivery of keys to any employee of Lessor or
Lessor's agents shall not operate as a termination of the Lease
or a surrender of the premises. The failure of Lessor to seek
redress for violation of any rule or regulation, shall not
prevent a subsequent act, which would have originally constituted
a violation, from having all the force and effect of an original
violation. Neither payment by Lessee or receipt by Lessor of a
lesser amount than the Rent herein stipulated shall be deemed to
be other than on account of the earliest stipulated Rent. Nor
shall any endorsement or statement on any check nor any letter
accompanying any check or payment as Rent be deemed an accord and
satisfaction. Lessor may accept such check or payment without
prejudice to Lessor's right to recover the balance of such Rent
or pursue any other remedy provided in this Lease. This Lease
contains the entire agreement between the parties, and any
executory agreement hereafter made shall be ineffective to change
it, modify it or discharge it, in whole or in part, unless such
executory agreement is in writing and signed by the party against
whom enforcement of the change, modification or discharge is
sought.
ARTICLE 23. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set forth
in Article 4 and all other sums herein reserved as Rent and upon
the due performance of all the terms, covenants, conditions and
agreements herein contained on Lessee's part to be kept and
performed, shall have, hold and enjoy the Leased Premises free
from molestation, eviction, or disturbance by Lessor, or by any
other person or persons lawfully claiming the same, and that
Lessor has good right to make this Lease for the full term
granted, including renewal periods.
ARTICLE 24. BREACH - PAYMENT OF COSTS AND ATTORNEYS' FEES
Each party agrees to pay and discharge all reasonable costs,
and actual attorneys' fees, including but not limited to
attorney's fees incurred at the trial level and in any appellate
or bankruptcy proceeding, and expenses that shall be incurred by
the prevailing party in enforcing the covenants, conditions and
terms of this Lease or defending against an alleged breach,
including the costs of reletting. Such costs, attorneys fees,
and expenses if incurred by Lessor shall be considered as Rent as
due and owing in addition to any Rent defined in Article 4
hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not less
than ten (10) business days prior request by the other party,
execute, acknowledge and deliver to the requesting party a
statement in writing, executed by an executive officer of such
party, certifying that: (a) this Lease is unmodified (or if
modified then disclosure of such modification shall be made); (b)
this Lease is in full force and effect; (c) the date to which the
Rent and other charges have been paid; and (d) to the knowledge
of the signer of such certificate that the other party is not in
default in the performance of any covenant, agreement or
condition contained in this Lease, or if a default does exist,
specifying each such default of which the signer may have
knowledge. It is intended that any such statement delivered
pursuant to this Article may be relied upon by any prospective
purchaser or mortgagee of the Leased Premises or any assignee of
such mortgagee or a purchaser of the leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the term of this Lease, Lessee will, within ninety
(90) days after the end of Lessee's fiscal year, furnish Lessor
with Lessee's financial statements (in SEC Form 10-K, if
available). The financial statements shall be audited, at the
Lessee's expense, by a nationally recognized independent
certified public accounting firm reasonably acceptable to Lessor
and shall be prepared in conformity with generally accepted
accounting principles (GAAP). Lessee shall also provide Lessor
with financial statements for the Leased Premises within 90 days
after the end of each Lease Year. The financial statements for
the Leased Premises do not need to be prepared by an independent
certified public accountant, but shall be certified as true and
correct by the chief financial officer or other authorized
officer of Lessee. Additionally, during the term of the Lease,
Lessee will within forty-five (45) days from the end of each
quarter of each fiscal year, furnish Lessor with Lessee's
financial statements (in SEC Form 10-Q if available)and financial
statements of the Leased Premises for such quarter. Lessor shall
have the right to require such financial statements for the
Lessee and the Leased Premises on a monthly basis after the
occurrence of a default in any Lease Year. Provided, however, if
Lessee shall not commit a default for twelve consecutive months,
Lessor's right to require such monthly financial statements shall
terminate until Lessee shall again commit a default in any given
Lease Year. Said quarterly (or monthly, if required by Lessor)
financial statements do not need to be prepared by an independent
certified public accountant, but shall be certified as true and
correct by the chief financial officer or other authorized
officer of Lessee. The financial statements shall conform to
GAAP, and include a balance sheet and related statements of
operations, statement of cash flows, statement of changes in
shareholder's equity, and related notes to financial statements,
if any.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to make reasonable modifications of
this Lease requested by any Mortgagee of record from time to
time, provided such modifications are not substantial and do not
increase any of the Rents or obligations of Lessee under this
Lease or substantially modify any of the business elements of
this Lease.
ARTICLE 28. OPTION TO RENEW
If this Lease is not previously canceled or terminated and
if Lessee has materially complied with and performed all of the
covenants and conditions in this Lease after applicable cure
periods and is not currently in default, then Lessee shall have
the option to renew this Lease upon the same conditions and
covenants contained in this Lease for Two (2) consecutive
periods of Five (5) years each (singularly "Renewal Term"). Rent
during the Renewal Term shall increase each Lease Year by the
lesser of Two Percent (2%) of the Rent payable for the preceding
Lease Year, or the CPI-U Percentage Increase, as defined in
Article 4 hereof.
The first Renewal Term will commence on the day following
the date the original Term expires and successive Renewal Terms
would commence on the day following the last day of the then
expiring Renewal Term. Except as otherwise provided in Article
15 hereof, Lessee must give ninety (90) days written notice to
Lessor of its intent to exercise this option prior to the
expiration of the original Term of this Lease or any Renewal
Term, as the case may be.
ARTICLE 29. MISCELLANEOUS PROVISIONS
(A) All written notices shall be given to Lessor or Lessee
by certified mail or nationally recognized overnight mail.
Notices to either party shall be addressed to the person and
address given on the first page hereof. Lessor and Lessee may,
from time to time, change these addresses by notifying each other
of this change in writing. Notices of overdue Rent may be sent
to Lessee by regular, special delivery, or nationally recognized
overnight mail.
(B) The terms, conditions and covenants contained in this
Lease and any riders and plans attached hereto shall bind and
inure to the benefit of Lessor and Lessee and their respective
successors, heirs, legal representatives, and assigns.
(C) This Lease shall be governed by and construed under the
laws of the State where the Leased Premises are situate.
(D) In the event that any provision of this Lease shall be
held invalid or unenforceable, no other provisions of this Lease
shall be affected by such holding, and all of the remaining
provisions of this Lease shall continue in full force and effect
pursuant to the terms hereof.
(E) The Article captions are inserted only for convenience
and reference, and are not intended, in any way, to define,
limit, describe the scope, intent, and language of this Lease or
its provisions.
(F) In the event Lessee remains in possession of the
premises herein leased after the expiration of this Lease and
without the execution of a new lease and without Lessor's written
permission, Lessee shall be deemed to be occupying said premises
as a tenant from month-to-month, subject to all the conditions,
provisions, and obligations of this Lease insofar as the same can
be applicable to a month-to-month tenancy except that the monthly
installment of Rent shall be One Hundred Fifty percent (150%) the
amount due on the last month prior to such expiration.
(G) If any installment of Rent (whether lump sum, monthly
installments, or any other monetary amounts required by this
Lease to be paid by Lessee and deemed to constitute Rent
hereunder) shall not be paid when due, or non-monetary default
shall remain uncured after the expiration of any applicable cure
period, Lessor shall have the right to charge Lessee a late
charge of $250.00 per month for each month that any amount of
Rent installment remains unpaid or non-monetary default shall go
uncured after the first such occurrence in any 12 month period.
Said late charge shall commence after such installment is due or
non-monetary default goes uncured after the expiration of any
applicable cure period and continue until said installment,
interest and all accrued late charges are paid in full or such
non-monetary default is cured.
(H) Any part of the Leased Premises may be conveyed by
Lessor for private or public non-exclusive easement purposes at
any time, provided such easement does not interfere with the
access to the Leased Premises, visibility, or operations of the
business of Lessee. In such event Lessor shall, at its own cost
and expense, restore the remaining portion of the Leased Premises
to the extent necessary to render it reasonably suitable for the
purposes for which it was leased, all to be done without
adjustments in Rent to be paid by Lessee. All proceeds from any
conveyance of an easement shall belong solely to Lessor.
(I) For the purpose of this Lease, the term "Rent" shall be
defined as Rent under Article 4, and any other monetary amounts
required by this Lease to be paid by Lessee.
(J) Lessee agrees to cooperate with Lessor to allow Lessor
to obtain and use at Lessor's expense promotional photographs of
the Leased Premises, to the extent permitted by Lessee's
franchisor or licensor.
ARTICLE 30. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained herein
it is the intent of the parties that the rights and remedies
contained herein shall not be exclusive but rather shall be
cumulative along with all of the rights and remedies of the
parties which they may have at law or equity. In the event of a
breach by Lessor, Lessee shall be entitled to all remedies at law
or equity, to be cumulatively enforced.
ARTICLE 31. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor, its
successors and assigns, (i) that it has not used or permitted and
will not use or permit the Leased Premises to be used, whether
directly or through contractors, agents or tenants, and to the
best of Lessee's knowledge and except as disclosed to Lessor in
writing, the Leased Premises has not at any time been used for
the generating, transporting, treating, storage, manufacture,
emission of, or disposal of any dangerous, toxic or hazardous
pollutants, chemicals, wastes or substances as defined in the
Federal Comprehensive Environmental Response Compensation and
Liability Act of 1980 ("CERCLA"), the Federal Resource
Conservation and Recovery Act of 1976 ("RCRA"), or any other
federal, state or local environmental laws, statutes,
regulations, requirements and ordinances ("Hazardous Materials");
(ii) that there have been no investigations or reports involving
Lessee, or the Leased Premises by any governmental authority
which in any way pertain to Hazardous Materials (iii) that the
operation of the Leased Premises has not violated and is not
currently violating any federal, state or local law, regulation,
ordinance or requirement governing Hazardous Materials; (iv) that
the Leased Premises is not listed in the United States
Environmental Protection Agency's National Priorities List of
Hazardous Waste Sites nor any other list, schedule, log,
inventory or record of Hazardous Materials or hazardous waste
sites, whether maintained by the United States Government or any
state or local agency; and (v) that the Leased Premises will not
contain any formaldehyde, urea or asbestos, except as may have
been disclosed in writing to Lessor by Lessee at the time of
execution and delivery of this Lease. Lessee agrees to indemnify
and reimburse Lessor, its successors and assigns, for:
(a) any breach of these representations and warranties, and
(b) any loss, damage, expense or cost arising out of
or incurred by Lessor which is the result of a breach
of, misstatement of or misrepresentation of the above
covenants, representations and warranties, and
(c) any and all liability of any kind whatsoever which
Lessor may, for any cause and at any time, sustain or
incur by reason of Hazardous Materials discovered on
the Leased Premises during the term hereof or placed or
released on the Leased Premises by Lessee;
together with all attorneys' fees, costs and disbursements
incurred in connection with the defense of any action against
Lessor arising out of the above. These covenants,
representations and warranties shall be deemed continuing
covenants, representations and warranties for the benefit of
Lessor, and any successors and assigns of Lessor and shall
survive expiration or sooner termination of this Lease. The
amount of all such indemnified loss, damage, expense or cost,
shall bear interest thereon at the lesser of 15% or the highest
rate of interest allowed by law and shall become immediately due
and payable in full on demand of Lessor, its successors and
assigns.
ARTICLE 32. ESCROWS
Upon a default by Lessee which is uncured after the
expiration of any applicable notice and cure period, or upon the
request of Lessor's Mortgagee, if any, Lessee shall deposit with
Lessor on the first day of each and every month, an amount equal
to one-twelfth (1/12th) of the estimated annual real estate
taxes, assessments and insurance (if the insurance is to be
purchased by Lessor) ("Charges") due on the Leased Premises, or
such higher amounts reasonably determined by Lessor as necessary
to accumulate such amounts to enable Lessor to pay all charges
due and owing at least thirty (30) days prior to the date such
amounts are due and payable. From time to time out of such
deposits Lessor will, upon the presentation to Lessor by Lessee
of the bills therefor, pay the Charges or at Lessee's option,
will upon presentation of receipted bills therefor, reimburse
Lessee for such payments made by Lessee. In the event the
deposits on hand shall not be sufficient to pay all of the
estimated Charges when the same shall become due from time to
time or the prior payments shall be less than the currently
estimated monthly amounts, then Lessee shall pay to Lessor on
demand any amount necessary to make up the deficiency. The
excess of any such deposits shall be credited to subsequent
payments to be made for such items. If a default or an event of
default shall occur under the terms of this Lease, Lessor may, at
its option, without being required so to do, apply any Deposit on
hand to cure the default, in such order and manner as Lessor may
elect.
ARTICLE 33. NET LEASE
Notwithstanding anything contained herein to the contrary it
is the intent of the parties hereto that this Lease shall be a
net lease and that the Rent defined pursuant to Article 4 should
be a net Rent paid to Lessor. Any and all other expenses
including but not limited to, maintenance, repair, insurance,
taxes, and assessments, shall be paid by Lessee.
ARTICLE 34. DEVELOPMENT FINANCING AGREEMENT
The parties hereto hereby acknowledge that the terms hereof
are subject to and shall in the event of conflicts be controlled
by that certain Development Financing Agreement of even date
herewith, until such Agreement is terminated in accordance with
its terms.
ARTICLE 35. 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, Lessor and Lessee have respectively
signed and sealed this Lease as of the day and year first above
written.
LESSEE: Tumbleweed, LLC.
Witness
/s/ Pamela Brown By: /s/ James Mulrooney
Pamela Brown Its: Executive VP & CFO
Print Name
Witness
/s/ Donna Edmonds
Donna Edmonds
Print Name
Witness
/s/ Pamela Brown By: /s/ John Butorac
Pamela Brown Its: President
Print Name
Witness
/s/ Donna Edmonds
Donna Edmonds
Print Name
STATE OF Kentucky )
)SS.
COUNTY OF Jefferson)
The foregoing instrument was acknowledged before me this
22nd day of April, 1998, by James Mulrooney, as Executive VP &
CFO of Tumbleweed, LLC. on behalf of said limited liability
company.
/s/ Kara R Strotman
Notary Public
[notary seal]
STATE OF Kentucky)
)SS.
COUNTY OF Jefferson)
The foregoing instrument was acknowledged before me this
22nd day of April, 1998, by John Butorac, as President of
Tumbleweed, LLC. on behalf of said limited liability company.
/s/ Kara R Strotman
Notary Public
[notary seal]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
Witness
By: Robert P. Johnson, President
Print Name
Witness
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the
day of May, 1998, by , the
of AEI Fund Management XVIII, Inc., a Minnesota corporation,
corporate general partner of AEI Real Estate Fund XVIII Limited
Partnership, on behalf of said limited partnership.
Notary Public
EXHIBIT "J"
MATERIALS PREVIOUSLY SUBMITTED BY LESSEE
DEVELOPMENT FINANCING AGREEMENT
THIS AGREEMENT, made and entered into effective as of this
1st day of May, 1998, by and between Tumbleweed, LLC (hereinafter
referred to as "Lessee"), whose address is 1900 Mellwood Avenue,
Louisville, Kentucky, and AEI Real Estate Fund XVIII Limited
Partnership, whose principal business address is 1300 Minnesota
World Trade Center, 30 East Seventh Street, St. Paul, Minnesota
55101 (hereinafter collectively referred to as "Lessor") .
W I T N E S S E T H, that:
WHEREAS, Lessee is contemplating building the following
Improvements on the premises described in Exhibit "A" attached
hereto :
Construction of an approximately 5,500 square foot
building and improvements to be used as a Tumbleweed
Restaurant.
WHEREAS, Lessee has made application to Lessor for development
financing to defray the costs of constructing such Improvements;
WHEREAS, Lessor's Assignor has issued to Lessee its
Development Financing and Leasing Commitment to advance funds in
the amount hereinafter specified, subject to compliance with the
terms and conditions of this Development Financing Agreement and
the Net Lease Agreement (the "Lease") of even date herewith;
NOW, THEREFORE, in consideration of entering into the Lease
and other good and valuable consideration, the receipt of which
is hereby acknowledged by the parties hereto, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have
the following meanings:
1. "Application" shall mean Lessee's
application to the Lessor for the Development Financing the
terms and conditions of which are incorporated herein by
reference.
2. "Architect's Contract" shall mean
Lessee's contract with the Project Architect.
3. "Commitment" shall mean Lessor's
Commitment to Lessee agreeing to provide the Development
Financing. (The "Development Financing and Leasing
Commitment" dated of even date herewith.)
4. "Completion Date" shall mean midnight,
November 15, 1998, subject to Force Majeure, as defined herein.
5. "Construction Costs" shall mean land
costs, all costs paid to construct and complete the Improvements,
as specified on Exhibit "B" attached hereto and made a part
hereof.
6. "Construction Contracts" shall mean the
contracts between Lessee and Contractors for the furnishing of
labor, services or materials to the Leased Premises in connection
with the construction of the Improvements.
7. "Contractors" shall mean those firms
directly engaged by Lessee to construct the Improvements, whether
one or more.
8. "Contract Documents" shall mean the
Project Architect's Contract, Plans and Specifications and the
contract with the Contractor.
9. "Development Financing" shall mean the
funds to be made available pursuant to the Commitment and not to
exceed the lesser of the Construction Costs or the maximum loan
amount of One Million Four Hundred Ninety Thousand Dollars ($
1,490,000) as specified in the Commitment.
10. "Development Financing and Carrying
Charges" shall mean all fees, taxes and charges incurred under
the Development Financing and in the construction of the
Improvements including, but not limited to, non-refundable
commitment fees; interest charges, service and inspection fees,
attorney's fees, title insurance fees and charges, recording fees
and insurance premiums.
11. "Development Financing Documents" shall
mean this Agreement, the Lease, Assignment of Architects and
Construction Contracts, Guarantees, and such other documents
given to the Lessor as security for the Development Financing.
12. "LTIC-CDD" shall mean Lawyers Title
Insurance Corporation, Construction Disbursement Department, the
nationally recognized title insurer, or Lessor's in-house
designee, 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 design and supervise construction
of the Improvements.
22. "Rental Modification Date" shall mean a
date one hundred and twenty days (120) from the date hereof.
23. "Sub-Contractors" shall mean those
persons furnishing labor or materials for the Project pursuant to
the Sub-Contracts.
24. "Sub-Contracts" shall mean the
contracts between the Contractor and its materialmen and
mechanics in the furnishing of labor or materials for the
Project.
25. "Title" shall mean Lawyers Title
Insurance Corporation issuing the Lessor's fee owner's title
insurance policy.
ARTICLE II
THE DEVELOPMENT FINANCING
Subject to compliance with the provisions of this Agreement,
Lessor agrees to advance to Lessee, and Lessee agrees to request
from Lessor, the Development Financing. The Development
Financing shall be advanced in stages by Lessor to 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
Lessee agrees to commence construction of the Improvements within
thirty (30) days from the date of this Agreement. After
commencement of construction of any Improvements, Lessee agrees
to diligently pursue said construction to completion, and to
supply such moneys and to perform such duties as may be necessary
to complete the construction of said Improvements pursuant to the
Plans and Specifications and in full compliance with all terms
and conditions of this Agreement and the Development Financing
Documents, all of which shall be accomplished on or before the
Completion Date, subject to Force Majeure and without liens,
claims or assessments (actual or contingent) asserted against the
Leased Premises for any material, labor or other items furnished
in connection therewith, subject to Lessee's right to contest
such liens, claims, or assessments provided the same are removed
as a lien upon the Leased Premises prior to foreclosure of such
lien, and all in full compliance with all construction, use,
building, zoning and other similar requirements of any pertinent
governmental jurisdiction. Lessee will provide to Lessor, upon
request, evidence of satisfactory compliance with all the above
requirements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE LESSEE
Lessee hereby represents and warrants to the Lessor, which
representations and warranties shall be deemed to be restated by
Lessee each time Lessor makes an advance of the Development
Financing, that:
1. VALIDITY OF DEVELOPMENT FINANCING DOCUMENTS - The Development
Financing Documents are in all respects legal, valid and binding
according to their terms.
2. NO PRIOR LIEN ON FIXTURES - No mortgage, bill of sale, security
agreement, financing statement, or other title retention
agreement (except those executed in favor of Lessor) has been, or
will be, executed with respect to any fixture (except Lessee's
trade fixtures not financed with this Development Financing) used
in conjunction with the construction, operation or maintenance of
the improvements.
3. CONFLICTING TRANSACTION OF LESSEE - The consummation of the
transactions hereby contemplated and the performance of the
obligations of Lessee under and by virtue of the Development
Financing Documents will not result in any breach of, or
constitute a default under, any mortgage, lease, bank loan or
credit agreement, corporate charter, by-laws, partnership
agreement, or other instrument to which Lessee is a party or by
which it may be bound or affected, the breach of which would
materially affect Lessee's ability to perform its obligations
hereunder.
4. PENDING LITIGATION - There are no actions, suits or proceedings
pending, or to the knowledge of Lessee threatened, against or
affecting it or the Leased Premises, or involving the validity or
enforceability of any of the Development Financing Documents, at
law or in equity, or before or by any governmental authority,
except actions, suits and proceedings that are fully covered by
insurance or which, if adversely determined would not
substantially impair the ability of Lessee to perform each and
every one of its obligations under and by virtue of the
Development Financing Documents; and to the Lessee's knowledge it
is not in default with respect to any order, writ, injunction,
decree or demand of any court or any governmental authority.
5. VIOLATIONS OF GOVERNMENTAL LAW, ORDINANCES OR REGULATIONS - To
the best knowledge of Lessee, there are no violations or notices
of violations of any federal or state law or municipal ordinance
or order or requirement of the State in which the Leased Premises
are located or any municipal department or other governmental
authority having jurisdiction affecting the Leased Premises,
which violations in any way have a material adverse affect on the
Leased Premises and which remain uncured after notice by such
governmental authority or department (if notice is required) and
the expiration of the time within which Lessee may cure such
violation, or if no time limitation is specified, within a
reasonable time after notice to cure such violation .
6. COMPLIANCE WITH ZONING ORDINANCES AND SIMILAR LAWS - To the best
knowledge of Lessee, the Plans and Specifications and
construction pursuant thereto and the use of the Leased Premises
contemplated thereby comply and will comply with all present
governmental laws and regulations and requirements, zoning
ordinances, standards, and regulations of all governmental bodies
exercising jurisdiction over the Leased Premises. Lessee agrees
to provide the Project Architect's certification to such effect
prior to the funding of the first disbursement under the
Development Financing.
7. LESSEE'S STATUS AND AUTHORITY - If the Lessee be a corporation,
limited liability company, trust or a partnership, Lessee
warrants and represents that (i) it is duly organized, existing
and in good standing under the laws of the state in which it is
incorporated or created; (ii) it is duly qualified to do business
and is in good standing in the state in which the Leased Premises
are located; (iii) it has the corporate or other power, authority
and legal right to carry on the business now being conducted by
it and to engage in the transactions contemplated by this
Agreement and the Development Financing Documents; and (iv) the
execution and delivery of this Agreement and the Development
Financing Documents and the performance and observance of the
provisions hereof and thereof have been (or future acts will be)
duly authorized by all necessary trust, partnership, or corporate
actions of Lessee. Lessee will furnish such resolutions,
affidavits and opinions of counsel to such effect as Lessor may
reasonably require.
8. AVAILABILITY OF UTILITIES - All utility services necessary for
the construction of the Improvements will be available prior to
the commencement of construction, and all utility services
necessary for the proper operation of the Improvements for their
intended purposes are available at the Leased Premises or will be
available at the Leased Premises prior to the Final Disbursement
Date, at commercially comparable utility rates and hook-up
charges for the vicinity, including water supply, storm and
sanitary sewer facilities, gas, electricity and telephone
facilities. Lessee shall furnish evidence of such availability
of utilities from time to time at Lessor's request.
9. BUILDING PERMITS - All building permits required for the
construction of the Improvements have been obtained prior to the
commencement of the construction of the Improvements and copies
of same will be delivered to Lessor.
10.CONDITION OF LEASED PREMISES - The Leased Premises are not now
damaged or injured as a result of any fire, explosion, accident,
flood or other casualty, nor to the best of Lessee's knowledge,
subject to any action in eminent domain.
11.APPROVAL OF PLANS AND SPECIFICATIONS - To the best knowledge of
Lessee in reliance upon the Project Architect's certification to
such effect, the Plans and Specifications conform to the
requirements and conditions set out by applicable law or any
effective restrictive covenant, to all governmental authorities
which exercise jurisdiction over the Leased Premises or the
construction thereon, and no construction will be commenced upon
the Leased Premises until said Plans and Specifications shall
have been approved by Lessor, which consent shall not be
unreasonably withheld or delayed and shall be given or withheld
within ten business days after written request therefor. Subject
to Article VI, paragraph 14, no material changes are to be made
in the Plans and Specifications as approved without Lessor's
prior consent, which consent shall not be unreasonably withheld
or delayed and shall be given or withheld within ten business
days after written request therefor; except, after prior written
notice to Lessor, provided the Development Financing shall remain
in balance as set forth in Article VII, paragraph 3 herein,
Lessor shall consent to reallocation among line items or use of
the Construction Contingency in the aggregate of not more than
the amount budgeted as set forth on Exhibit B for Construction
Contingency, unless Lessee shall deposit Owner Equity with LTIC-
CDD 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.
Lessee will cause the Contractors to promptly furnish Lessor with
the complete list of all Sub-contractors or entities as and when
under contract, which Contractors propose to engage to furnish
labor and/or materials in constructing the Improvements (such
list containing the names, addresses, and amounts of such sub-
contracts as written in excess individually of $5,000, and prior
to disbursement of funds to or for the benefit of such
Subcontractors, affidavits of authorized signatory and other
documents commercially reasonably required by Title to insure
that the Leased Premises remain lien free) and will from time to
time furnish Lessor or Title with true copies of all Contracts
entered into by Lessee and with the terms of all verbal
agreements therefor, if any, and as to subcontractors, letters
signed by sub-contractors whose contracts are in excess of $5,000
setting forth the present amount of their contract and the
amounts remaining to be paid under that contract, if the same
information is not stated on a lien waiver reflecting the most
currently requested payment to such subcontractor.
13.BROKERAGE COMMISSIONS - No brokerage commissions are due in
connection with the transaction contemplated hereby or if there
are commissions due or payable the same will be paid by Lessee.
Lessee agrees to and shall indemnify Lessor from any liability,
claims or losses arising by reason of any such brokerage
commissions. This provision shall survive the repayment of the
Development Financing and shall continue in full force and effect
so long as the possibility of such liability, claims or losses
exists.
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.
18. NOTICE OF COMMENCMENT\FURNISHING - To provided Lessor prior to
the initial request for a Disbursement, with a copy of the Notice
of Commencement and any amendments thereto prepared in accordance
with Ohio Revised Code Section 1311.04 and to be recorded with
the Franklin County Recorder's Office. Lessee represents and
warrants that a Notice of Commencement has not been and will not
be recorded prior to the recording of the Deed transferring title
to the Leased Premises to Lessor. Lessee shall post and keep
posted the Notice of Commencement and all amendments thereto in a
conspicuous place on the Premises during the course of
construction of the Project. Lessee further represents and
warrants to timely comply with all provisions of Ohio Revised
Code Section 1311.04 and failure to do so shall be deemed an
Event of Default as defined under the Lease. Lessee shall
provide Lessor with a copy of each Notice of Furnishing (as
defined in Ohio Revised Code Section 1311.05) received by Lessee
during the course of construction of any Improvements on the
Leased Premises.
ARTICLE VI
COVENANTS OF LESSEE
Lessee hereby covenants and agrees with Lessor as follows:
1. SURVEYS - Prior to execution of any Development Financing
Documents and prior to the initial request for a Disbursement (as
defined in Article VIII hereof), Lessee has furnished to Lessor
three copies of a current perimeter land survey, in form and
substance satisfactory to Lessor, certified to Lessor, giving a
description of the Leased Premises and showing all encroachments
onto or from the Leased Premises, currently certified by a
registered surveyor and bearing his registry number and showing
access rights, easements, or utilities, rights of way, all
setback requirements upon the Leased Premises, improvements,
matters affecting title and such other items as Lessor may
reasonably request.
2. TITLE INSURANCE - Prior to the initial request for Disbursement
the Lessee has furnished Lessor with an ALTA policy of title
insurance, and prior to any subsequent request for Disbursement
such ALTA policy of title insurance shall be brought down to the
date of Disbursement by endorsement, all in form and substance
satisfactory to Lessor issued at the Lessee's expense and written
by Title insuring the Leased Premises to be marketable, free from
exceptions for mechanic's and materialmen's liens and free from
other exceptions not previously approved by the Lessor, naming
Lessor as fee owner insured to the extent of advances made
hereunder subject only to such exceptions as may be reasonably
approved by Lessor.
3. RESTRICTIONS ON CONVEYANCE OR SECONDARY FINANCING - Lessee will
not transfer, sell, convey or encumber the Leased Premises or
subject the Leased Premises to any secondary financing in any way
without the written consent of the Lessor, except as permitted in
Article V, paragraph 2 relating to trade fixture financing
sources or suppliers.
4. INSURANCE - To obtain or cause Contractor to obtain and maintain
such insurance or evidence of insurance as Lessor may reasonably
require, including but not limited to the following:
(a) BUILDER'S RISK INSURANCE - Builder's
Risk Insurance written on the so-called "Builder's Risk-Completed
Value Basis" in an amount equal to the full replacement cost of
the Improvements at the date of completion with coverage
available on the so-called multiple peril form of policy,
including coverage against collapse and water damage, naming
Lessor as additional named insured, such insurance to be in such
amounts and form and written by such companies as shall be
reasonably approved by Lessor, and the originals of such policies
(together with appropriate endorsement thereto, evidence of
payment of premiums thereon and written agreements by the insurer
or insurers therein to give Lessor ten (10) days' prior written
notice of any intention to cancel) shall be promptly delivered to
Lessor, said insurance coverage to be kept in full force and
effect at all times until the completion of construction of the
Improvements.
(b) HAZARD INSURANCE - Fire and Extended
Coverage Insurance, and such other hazard insurance as Lessor may
require and as called for in the Lease in an amount equal to the
full replacement cost of the Improvements naming Lessor as an
additional named insured, such insurance to be in such amounts
and form and written by such companies as shall be reasonably
approved by Lessor, and the originals of such policies (together
with appropriate endorsements thereto, evidence of payment of
premiums thereon and written agreement by the insurer or insurers
therein to give Lessor ten (10) days' prior written notice of any
intention to cancel) shall be promptly obtained and delivered to
Lessor immediately upon completion of the construction of the
Improvements and before any portion is occupied by Lessee or any
tenant of Lessee with such insurance to be kept in full force and
effect at all times thereafter.
(c) PUBLIC LIABILITY - Comprehensive public
liability insurance (including operations, contingent liability
operations, operations of sub- contractors, completed operations
and contractual liability insurance) in limits of coverage as set
forth in the Lease.
(d) WORKMEN'S COMPENSATION INSURANCE -
Evidence of compliance with the required coverage under statutory
workmen's compensation requirements.
5. COLLECTION OF INSURANCE PROCEEDS - To cooperate with Lessor in
obtaining for Lessor the benefits of any insurance or other
proceeds lawfully or equitably payable to it in connection with
the transaction contemplated hereby and the collection of any
indebtedness or obligation of the Lessee to Lessor incurred
hereunder (including the payment by Lessee of the expense of an
independent appraisal on behalf of Lessor in case of a fire or
other casualty affecting the Leased Premises).
6. APPLICATION OF DEVELOPMENT FINANCING PROCEEDS - To use the
proceeds of the Development Financing solely for the purpose of
paying for Construction Costs and such incidental costs relative
to the construction as may be reasonably approved from time to
time in writing by Lessor, and in no event to use any of the
Development Financing proceeds for personal, corporate or other
purposes.
7. EXPENSES - To pay all costs of closing the Development Financing
and all expenses of Lessor with respect thereto, including, but
not limited to, legal fees by Lessor's counsel and all other
reasonable attorney's fees (limited as set forth in the
Commitment), costs of title insurance, transfer taxes, license
and permit fees, recording expenses, surveys, intangible taxes,
appraisal fees, Inspecting Architect fees, expenses of retaking
possession upon default by Lessee hereunder or other costs of
enforcement (including reasonable attorney's fees) and similar
items.
8. LAWS, ORDINANCES AND ETC. - To comply promptly with any law,
ordinance, order, rule or regulation of all authorities
exercising jurisdiction over the Leased Premises or the
construction thereon, including appropriate supervising boards of
fire underwriters and similar agencies and the requirements of
any insurer issuing coverage on the Project.
9. RIGHT OF LESSOR TO INSPECT LEASED PREMISES - Upon 48 hours
notice, except in cases which Lessor reasonably deems to be an
emergency, in which event upon reasonable notice under the
circumstances, to permit Lessor and Title and their
representatives and agents to enter upon the Leased Premises and
to inspect the Improvements and all materials to be used in
construction thereof and to cooperate and cause Contractor to
cooperate with Lessor or Title and their representatives and
agents during such inspections, provided that such is
accomplished without interrupting the construction process.
Provided, further, however, that this provision shall not be
deemed to impose upon Lessor or Title any duty or obligation
whatsoever to undertake such inspections, to correct any defects
in the Improvements or to notify any person with respect thereto.
10. BOOKS AND RECORDS - To set up and maintain accurate and complete
books, accounts and records pertaining to the Project including
the working drawings in a manner reasonably acceptable to Lessor.
The Lessor, Title and Inspecting Architect shall have the right
at all reasonable times and upon reasonable prior notice to
inspect, examine and copy all books and records of Lessee
relating to the Project, and to enter and have free access to the
Leased Premises and Improvements and to inspect all work done,
labor performed and material furnished in or about the Project,
provided that such is accomplished without interrupting the
construction process. Notwithstanding the foregoing, Lessee
shall be responsible for making inspections as to the
Improvements during the course of construction and shall
determine to its own satisfaction that the work done or materials
supplied by the Contractors and all Subcontractors has been
properly supplied or done in accordance with the applicable
contracts. Lessee will hold Lessor and Title harmless from and
Lessor and Title shall have and have no liability or obligation
of any kind to Lessee or creditors of Lessee in connection with
any defective, improper or inadequate workmanship or materials
brought in or related to the Improvements or the Leased Premises,
or any mechanic's liens arising as a result of such workmanship
or materials. Upon Lessor's request, Lessee shall replace or
cause to be replaced any such work or material found to be
materially deficient by the Project Architect or Independent
Architect. Lessor shall cooperate with Lessee in obtaining any
rights under any applicable warranties to accomplish such work.
Any inspections made by Inspecting Architect, Title or Lessor are
for the sole benefit of Lessor and neither Lessee nor any
creditor, tenant or vendee of Lessee shall be entitled to rely on
such inspection. Lessee shall obtain for Lessor coincident
rights to rely upon any warranties obtain by Lessee from its
Contractors or subcontractors.
11.CORRECTION OF DEFECTS - To promptly correct any structural
defects in the Improvements or any material departure from the
Plans and Specifications not previously approved by Lessor. The
advance of any Development Financing proceeds shall not
constitute a waiver of Lessor's right to require compliance with
this covenant.
12.SIGN REGARDING DEVELOPMENT FINANCING - To allow Lessor to erect
and maintain at a suitable site on the Leased Premises, at a
location to be chosen by Lessee in its reasonable discretion, a
sign indicating that Development Financing is being provided by
Lessor, to the extent permitted by law or private covenant,
condition, or agreement affecting the Project.
13.ADDITIONAL DOCUMENTS - To furnish to Lessor all instruments,
documents, initial surveys, footing or foundation surveys, if
conducted, certificates, plans and specifications, appraisals,
financial statements, title and other insurance reports and
agreements and each and every other document and instrument
required to be furnished by the terms hereof, all at Lessee's
expense; to assign and deliver to Lessor such documents,
instruments, assignments and other writings, and to do such other
acts necessary or desirable to preserve and protect the Leased
Premises, as Lessor may require; and to do and execute all and
such further lawful and reasonable acts, conveyances and
assurances for the carrying out of the intents and purposes of
this Agreement, the Lease, or the Commitment, as Lessor shall
reasonably require from time to time.
14.ARCHITECTS AND CONSTRUCTION CONTRACTS - To commit no default nor
knowingly permit a default under the terms of the Architects or
Construction Contracts; To waive none nor knowingly permit a
waiver of the obligations of the parties thereunder; To do no act
which would relieve such parties from their obligations
thereunder; To make no amendments to such contracts, without the
prior written consent of Lessor; To enter into no change orders
or extras that cause a reallocation among budgeted line items, or
that in the aggregate or singularly result in a net increase in
excess of 10% of the original contract amount without Lessor's
prior written consent, which consent shall not be unreasonably
withheld or delayed; provided, however, Lessor shall be given
written notice and copies of all change orders; provided,
further, however, with written notice to Lessor prior to any
request for funds subsequent to any such change order or
reallocation, the Lessee shall be allowed to enter into any
change order or extra which is accounted for by use of any
reallocation among line items or any remaining budgeted
Contingency line item, or if the same has been exhausted, Lessee
shall be allowed increases in the original contract amount
without Lessor's consent if Lessee has, upon the execution of
said change order, deposited with Lessor the amount by which such
change order increases the total Construction Cost; To allow all
such contracts to be subject to the approval of Lessor for its
loan purposes; To allow Lessor to take advantage of all the
rights and benefits of the contracts upon any default by Lessee;
and to submit evidence to Lessor that both the Architect and the
Contractors will permit Lessor to acquire Lessee's interest under
their respective contracts and the Contract Documents without
additional charge or fee should an event of default occur
hereunder, which default is not cured within applicable notice
and cure periods.
15.ENFORCE PERFORMANCE OF SUB-CONTRACTS - To enforce, or cause to be
enforced, the prompt performance of the Sub-Contracts in
accordance with their terms and not to approve any changes in the
same that in the aggregate or singularly result in a net increase
in excess of 10% of the original General Contractor's contract
amount without Lessor's prior written consent, which consent
shall not be unreasonably withheld or delayed, provided Lessee's
right to enter into any such change order shall be on the same
terms set forth in Section 14 above.
16.COMPLIANCE WITH RULES - To comply with, and to require the
Contractors to comply with, all rules, regulations, ordinances
and laws bearing on the conduct of the work on the Improvements,
including the requirements of any insurer issuing coverage on the
Project and the requirements of any applicable supervising boards
of fire underwriters.
17.OPINIONS OF COUNSEL - To furnish such opinions of counsel as may
be reasonably requested of the Lessee in connection with the
matters contemplated by this Agreement.
18.SOIL TESTS - To provide the Lessor with a soil report prepared by
an acceptable engineer certifying as to the status of the soil
conditions on the Leased Premises, the need or lack of need for
special pilings and foundations and that either any pilings and
foundation necessary to support the Improvements have been placed
in a manner and quantity sufficient to provide the required
support or that no such pilings and foundations are necessary for
the support and construction of the Improvements.
19.MARKETABLE TITLE - To execute and deliver or cause to be executed
and delivered such instruments as may be required by the Lessor
and Title to provide Lessor with a marketable, valid title to the
Leased Premises subject only to such exceptions to title as may
be reasonably approved by Lessor.
20.VIOLATIONS OF GOVERNMENTAL LAW, ORDINANCES OR REGULATIONS -
Lessee will permit no violations nor commit the same, of any
federal or state law or municipal ordinance or order or
requirement of the State in which the Leased Premises are located
or any municipal department or other governmental authority
having jurisdiction affecting the Leased Premises, which
violations in any way have a material adverse affect on the
Leased Premises and which remain uncured after notice by such
governmental authority or department (if notice is required) and
the expiration of the time within which Lessee may cure such
violation, or if no time limitation is specified, within a
reasonable time after notice to cure such violation .
21.COMPLIANCE WITH ZONING ORDINANCES AND SIMILAR LAWS - The Plans
and Specifications and construction pursuant thereto and the use
of the Leased Premises contemplated thereby will comply with all
governmental laws and regulations and requirements, zoning
ordinances, standards, and regulations of all governmental bodies
exercising jurisdiction over the Leased Premises, including
environmental protection and equal employment regulations, and
appropriate supervising boards of fire underwriters and similar
agencies.
22.APPROVAL OF PLANS AND SPECIFICATIONS - The Plans and
Specifications will conform to the requirements and conditions
set out by applicable law or any effective restrictive covenant,
and to all governmental authorities which exercise jurisdiction
over the Leased Premises or the construction thereon.
23. NOTICE OF COMMENCMENT\FURNISHING - To provide Lessor prior to
the initial request for a Disbursement, with a copy of the Notice
of Commencement and any amendments thereto prepared in accordance
with Ohio Statute and to be recorded with the County Recorder's
Office where the Leased Premises are situate immediately
following the recording of the Memorandum of Lease between the
parties hereto. Lessee shall post and keep posted the Notice of
Commencement and all amendments thereto in a conspicuous place on
the Leased Premises during the course of construction of the
Project. Lessee further represents and warrants to timely comply
with all provisions of Ohio Statute respecting keeping the Leased
Premises free of mechanic's liens and failure to do so shall be
deemed an Event of Default as defined under the Net Lease
Agreement and this Agreement. Lessee shall provide Lessor with a
copy of each Notice of Furnishing (as defined in Ohio Statute)
received by Lessee during the course of construction of any
Improvements on the Leased Premises.
ARTICLE VII
CONDITIONS PRECEDENT TO A DISBURSEMENT
It shall be a condition precedent to each Disbursement under this
Development Financing Agreement that:
1. DEVELOPMENT FINANCING DOCUMENTS - The Development Financing
Documents shall have been duly executed and delivered to Lessor
and shall be in full force and effect.
2. LESSEE EQUITY - Lessee shall have paid all of the Lessee Equity
funds into the Project before the first Disbursement (or any
subsequent Disbursement if additional Lessee Equity should be
required) and Lessee shall deliver evidence of such payment
reasonably satisfactory to Lessor.
3. DEVELOPMENT FINANCING BALANCE - As of the date immediately prior
to any Disbursement, the total amount of unadvanced proceeds of
the Development Financing shall be sufficient, in the
commercially reasonable opinion of Lessor (the opinion of Lessor
being based upon affidavit of the General Contractor, the Project
Architect, the Inspecting Architect, or other reliable licensed
third party contractor) to complete the Improvements free of
liens. To the extent the total of the unadvanced proceeds of the
Development Financing shall be insufficient, at any time, in
Lessor's reasonable opinion, (based upon the affidavit as set
forth above) to complete the Improvements, or be less than the
total Construction Costs not yet paid for or not yet incurred
(including interest accruing for the remainder of the term or
extensions thereof, if any), the Lessee shall immediately deposit
with the Lessor or with Title, as additional Lessee Equity funds,
an amount equal to such deficiency and such additional Lessee
Equity funds shall be disbursed by LTIC-CDD prior to the
Disbursement of any further advance or advances under this
Agreement.
4. NO DEFAULT - No event of default, which remains uncured after the
expiration of applicable cure periods, shall exist under this
Agreement or the Development Financing Documents.
5. REPRESENTATIONS AND WARRANTIES - The representations and
warranties in Article V hereof shall be true and correct on and
as of the date of each Disbursement.
6. COVENANTS - Lessee shall have complied with all of the covenants
made by it in Article VI hereof.
7. SWORN CONSTRUCTION STATEMENT - Prior to the initial disbursement
hereunder, the Lessee shall have submitted to Lessor and Title a
Construction Cost Statement or the Construction Contract (if such
information is contained therein) sworn to by Lessee and
Contractors reflecting all major Sub-Contractors or materialmen
who shall then be engaged in furnishing labor, materials or
supplies for the Improvements. The list should show the name of
each and every Contractor, Sub-Contractor and materialman (or at
least such entities or individuals whose contract is in excess of
$5,000), its address and an estimate of the dollar value of the
work, labor and materials to be done or supplied and a general
statement of the nature of the work to be done or materials to be
supplied by each Contractor. Thereafter, if such list should
change or new subcontractors shall execute contracts not
reflected on the above list, the Lessee shall furnish to the
Lessor any amendments or additions to the original statement as
so submitted.
8. APPLICATION FOR PAYMENT - Lessor shall have received an
Application for Payment pursuant to Article VIII hereof.
9. TITLE - Title shall issue its endorsement to the title policy
insuring the Lessor as fee owner under the policy in the
aggregate amounts of all prior Disbursements and the requested
Disbursement.
10.WORK IN PLACE - All work or materials for which a Disbursement is
requested shall be in place and incorporated into the
Improvements.
11. AMENDED NOTICE OF COMMENCEMENT - Lessee shall provide Lessor
with any amended Notice of Commencement filed in accordance with
Ohio Statue, and any Notice of Furnishing (as defined in Ohio
Statute) received by Lessee during the course of construction of
any Improvements on the Leased Premises.
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 Project
Architect, Lessee, Contractor, and if required by Lessor, by the
Inspecting Architect. 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 abate
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. A Draw Request Certificate in the form
attached hereto as Exhibit "D" certifying that each contractor or
materialman for which payment is requested in the relevant
Application for Payment has satisfactorily completed the work or
furnished the materials for which payment is requested in
accordance with the applicable contract; that all work for which
an Application for Payment is made substantially conforms to the
Contract Documents and any approved changes, and is in place; and
that sufficient funds remain of the undisbursed Development
Financing proceeds to complete the Project and that all funds
previously disbursed have been applied as per the previous
Application for Payment.
b. Waivers of Mechanics' Liens and
Materialmen's Liens executed by all Contractors for all work done
and all materials furnished to the Leased Premises and included
in such current Application for Payment, or evidence reasonably
required by Title to insure over the same by special specific
endorsement, or such other releases of lien pursuant to bonding
or otherwise to prevent such liens from attaching to the Leased
Premises.
c. Waivers of Mechanics' Liens and
Materialmen's Liens executed by all Sub-Contractors and workmen
and materialmen for all work done and all materials furnished to
the Leased Premises and included in the immediately preceding
Application for Payment, or evidence reasonably required by Title
to insure over the same by special specific endorsement, or such
other releases or lien pursuant to bonding or otherwise to
prevent such liens from attaching to the Leased Premises.
d. Such other supporting evidence,
including invoices and receipts as may be requested by Lessor or
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.
2. INTEREST ADVANCE - If interest has accrued on the Development
Financing and is unpaid or fees are payable to the Lessor
hereunder, Lessor shall be, and hereby is, authorized at any time
to advance to itself from the proceeds of the Development
Financing the total amount of such accrued interest and fees,
whether or not an Application for Payment has been submitted by
the Lessee and the same shall be deemed to be an advance of the
proceeds of the Development Financing under this Agreement in the
same manner and with the same effect as if advanced under the
provisions above. It is understood Lessor may establish an
automatic interest reserve whereby Lessor may withdraw from the
Development Financing account on a regular basis the accrued
interest on the Development Financing and credit the Development
Financing balance with the same.
3. ASSESSMENT AND TAX ADVANCE - As taxes and assessments become due
on the Leased Premises, Lessor shall be, and hereby is,
authorized to advance to itself automatically from the proceeds
of the Development Financing, the total amount of such taxes and
assessments and the same shall be deemed to be an advance of the
proceeds of the Development Financing under this Agreement in the
same manner and with the same effect as if advances under the
provisions above, if not previously paid before due pursuant to
Lessee's obligations under the Lease.
4. DISBURSE UNDER DEVELOPMENT FINANCING DOCUMENT - All sums advanced
and disbursed hereunder shall be disbursed under and shall be
secured by the Development Financing Documents.
5. PAYMENTS TO SUBCONTRACTORS - In its reasonable discretion LTIC-
CDD may make payments directly to any subcontractor or
materialman.
6. RETAINAGE - Each Disbursement shall be limited to an amount equal
to ninety percent (90%) of the value, exclusive of Contractor's
profit and overhead, of the materials and labor furnished to the
Leased Premises and the balance (herein called the Retainage)
shall be retained by Lessor, provided that thirty (30) days after
completion by each subcontractor or materialman of his
subcontract Lessor will disburse to such party, or to the
Contractor on behalf of such party the Retainage withheld from
said party, provided that as a condition to such disbursement the
Lessee and Project Architect and the Inspecting Architect shall
certify to Lessor the date that such Party's subcontract has been
fully and satisfactorily completed and the subcontractor or
materialmen shall have supplied Title with satisfactory final
lien waivers, including final lien waivers for any of its
submaterialmen or sub- contractors and the requirements of any
bonding company issuing the Bonds shall have been fulfilled. Any
Retainage due the Contractor for work performed or materials
furnished by the Contractor and the final balance of Contractor's
profit and overhead shall be disbursed on the Final Disbursement
Date pursuant to Article IX hereof. Contractor's profit and
overhead shall be disbursed based upon and in proportion to the
percentage of completion of the Project, or amounts payable under
the Construction Contract for work actually performed, whichever
is less, as certified by the Project Architect.
ARTICLE IX
FINAL DEVELOPMENT FINANCING BALANCE
Unless and until Lessor and Lessee have entered into a mutually
satisfactory escrow holdback and undertaking agreement to, inter
alia, complete the Improvements and otherwise satisfy the
requirements of this Article IX, at no time and in no event shall
Lessor be obligated to disburse the balance of the proceeds of
the Development Financing, including any Retainage until the date
the following have been satisfied (the "Final Disbursement
Date"):
1. Lessor shall have received reasonably satisfactory evidence of
the final completion of the Improvements in substantial
accordance with the Contract Documents and the Certificate of
Final Completion from the Project Architect accepted by the
Contractor and Lessee.
2. Lessor shall have received satisfactory as-built surveys
reflecting the final location of the Improvements as fully
completed on the Leased Premises in accordance with the Contract
Documents, said survey to be prepared by a registered or licensed
surveyor bearing his registry number, certifying to Lessor as to
the legal description of the Leased Premises and showing all
Improvements located on the Leased Premises and indicating the
street address of the Improvements, absence of any encroachments
on the Leased Premises or from the Leased Premises onto adjacent
land, showing all access points, and showing conformance to all
set back requirements and delineating all utility easements that
are specifically legally described, rights of way and other
matters affecting the Leased Premises, and certifying as to the
total acreage of the land, the exterior dimensions of the
Improvements, and the number of parking spaces, if any, and such
other matters as Lessor may reasonably request.
3. Lessor shall have received a requisite affidavit of the Lessee,
Contractor and Project Architect, and approved by the Inspecting
Architect certifying as to the final cost of the Improvements.
4. Title shall have been furnished with such final lien waivers
sufficient in the opinion of Title to dissolve any possible
Mechanic's and Materialman's Liens affecting title to the Leased
Premises or Lessee shall have provided a bond or other security
sufficient to remove the lien as an encumbrance upon title to the
Leased Premises and Title shall have issued its endorsements to
the title policy increasing the insured coverage to the full
amount of all sums disbursed under this Development Financing
Agreement.
5. Lessor shall have received evidence that all of the terms,
provisions and conditions on the part of the Lessee to be
performed or caused to be performed hereunder and under the
Lease, including but not limited to obtaining casualty insurance
for the full insurable value of the Improvements, have been
fulfilled to the satisfaction of Lessor.
6. Lessor shall have received a Final Certificate of Occupancy
issued by the appropriate governmental authority covering the
Improvements and a Certificate of Substantial Completion from the
Project Architect indicating that the Improvements as built
comply with all building codes and zoning ordinances, including
any plat requirements or requirements of recorded operating
covenants or agreements affecting the Leased Premises.
7. All remaining uncompleted "punch list" items shall have been
satisfactorily completed.
8. The requirements of all bonding companies, if any, with respect
to release of retainage shall have been met.
9. An amendment to the Lease shall be executed by Lessee and Lessor
setting forth the date the first Lease Year shall end and the
Rent for the balance of the first Lease Year, and evidencing the
satisfaction and termination of this Agreement.
ARTICLE X
EVENTS OF DEFAULT
An "event of default" shall be deemed to have occurred hereunder and
under the Lease, if:
1. DEFAULT UNDER DEVELOPMENT FINANCING DOCUMENTS - Any default or
event of default occurs (which remains uncured after the
expiration of any applicable cure period as may be set forth in
any Development Financing Document) under any of the Development
Financing Documents as defined therein; or
2. FAILURE TO COMPLETE CONSTRUCTION - Lessee shall fail for any
reason, except Lessor's wrongful refusal to fund the Development
Financing pursuant to the terms hereof, to substantially complete
the construction of the Improvements by the Completion Date; or
3. BREACH OF AGREEMENT - Lessee breaches or fails to perform,
observe or meet any covenant or condition of this Agreement,
provided, however, with respect to non-monetary defaults
hereunder, Lessee shall have twenty days after notice from Lessor
to cure such non-monetary default, or if such default (but for
the payment of monies) cannot be cured within twenty days, such
longer time as may be reasonably necessary to effect a cure if
Lessee is diligently pursuing a course of conduct reasonably
designed to cure the default.; or
4. BREACH OF WARRANTY - Any warranties made or agreed to be made in
any of the Development Financing Documents or this Agreement
shall be breached by Lessee or shall prove to be false or
misleading, and the same shall not be cured or made to be true
and correct within the applicable cure periods; or
5. FILING OF LIENS AGAINST THE LEASED PREMISES - Any lien for labor,
material, taxes or otherwise shall be filed against the Leased
Premises and such lien shall not be promptly paid, released,
contested in an appropriate forum, or bonded over to Lessor's
reasonable satisfaction before the lien shall materially
adversely affect Lessor's interest in the Premises; or
6. LITIGATION AGAINST LESSEE - Any suit shall be filed against
Lessee, and is not resolved within 120 days and, which if
adversely determined, could substantially impair the ability of
Lessee to perform each and every one of its obligations under and
by virtue of the Development Financing Documents; or
7. LEVY UPON THE LEASED PREMISES - A levy be made under any process
on the Leased Premises and such levy shall not be promptly Bonded
over prior to the execution of such levy; or
8. TRANSFER OF LEASED PREMISES - Lessee shall without the prior
written consent of Lessor, voluntarily or by operation of law,
sell, transfer, convey or encumber all or any part of its
interest in the Leased Premises or in any of the personalty
located thereon, or used or intended to be used in connection
therewith; or
9. ABANDONMENT - Lessee abandons the project or delays or ceases
work thereon for a period of fifteen consecutive (l5) days, or
delays construction or suffers construction to be delayed for any
period of time for any reason whatsoever so that completion of
Improvements cannot be accomplished in the judgment of Lessor on
or before the Completion Date, subject to force majeure; or
10.BANKRUPTCY - Lessee shall make an assignment for the benefit of
its creditors or shall admit in writing its inability to pay its
debts as they become due or shall file a petition in bankruptcy
or shall be adjudicated a bankrupt or insolvent or shall file a
petition seeking any reorganization, dissolution, liquidation,
arrangement, composition, readjustment, or similar relief under
any present or future bankruptcy or insolvency statute, law or
regulation, or shall file an answer admitting to or not
contesting the material allegations of a petition filed against
it in any such proceedings, or shall not have the same dismissed
or vacated, or shall seek or consent or acquiesce in the
appointment of any trustee, receiver or liquidator of a material
part of its properties, or shall not after the appointment
without the consent or acquiescence of it of a trustee, receiver,
or liquidator of any material part of its properties have such
receiver, liquidator or appointment vacated; or
11.EXECUTION LEVY - Execution shall have been levied against the
Leased Premises or any lien creditors commence suit to enforce a
judgment lien against the Leased Premises or such action or suit
shall have been brought and shall not be immediately bonded over
and shall continue unstayed and in effect for a period of more
than 120 consecutive days; or
12.ATTACHMENT - Any part of the Lessor's commitment to make the
advances hereunder shall at any time be subject or liable to
attachment or levy at the suit of any creditor of the Lessee or
at the suit of any subcontractor or creditor of the Contractor
and shall remain unstayed prior to the time Lessor shall be
obligated to comply with the same.
ARTICLE XI
REMEDIES OF LESSOR
Lessee hereby agrees that the occurrence of any one or more of the
events of default set out in Article X hereof, shall also
constitute an event of default under each of the Development
Financing documents, thereby entitling Lessor, after the
expiration of any applicable cure period, at its option, to
proceed to exercise any or all of the following remedies:
1. EXERCISE OF REMEDIES - To exercise any of the various remedies
provided in any of the Development Financing Documents, including
the acceleration of the Put described in Articles XIV hereof;
2. CUMULATIVE RIGHTS - Cumulatively to exercise all other rights,
options and privileges provided by law;
3. CEASE MAKING ADVANCES - To refrain from making any advances under
this Agreement but Lessor may make advances after the happening
of any such event without thereby waiving the right to refrain
from making other further advances or to exercise any of the
other rights Lessor may have.
4. RIGHTS TO ENTER - To require Lessee to vacate the Leased Premises
and permit Lessor (whether prior to the exercise of the Put or
during any period prior to the closing of the sale pursuant to
the Put;
(a) To enter into possession;
(b) To perform or cause to be performed any
and all work and labor necessary to complete the Improvements in
accordance with the Plans and Specifications;
(c) To employ security watchmen to protect the Leased Premises;
and
(d) To disburse that portion of the
Development Financing Proceeds not previously disbursed
(including any Retainage) to the extent necessary to complete the
construction of the Improvements in accordance with the Contract
Documents and if the completion requires a larger sum than the
remaining undisbursed portion of the Development Financing, to
disburse such additional funds, all of which funds so disbursed
by Lessor shall be deemed to have been disbursed to Lessee. For
this purpose, Lessee hereby consents upon an uncured default by
Lessee after the expiration of any applicable notice and cure
period, to the Lessor taking the following actions, or not, in
Lessor's reasonable discretion: to complete the construction of
the Improvements in the name of the Lessee, and hereby empowers
Lessor to take all actions necessary in connection therewith
including but not limited to using any funds of Lessee including
any balance which may be held in escrow and any funds which may
remain unadvanced hereunder for the purpose of completing the
said portion of the Improvements in the manner called for by the
Contract Documents; to make such additions and changes and
corrections in the Contract Documents which shall be necessary or
desirable to complete the said portion of the Improvements in
substantially the manner contemplated by the Contract Documents;
to employ such contractors, subcontractors, agents, architects,
and inspectors as shall be required for said purposes; to pay,
settle or compromise all existing or future bills and claims
which are or may be liens against said Leased Premises, or may be
necessary or desirable for the completion of the said portion of
the Improvements or the clearance of title to the Leased
Premises; to execute all applications and certificates in the
name of Lessee which may be required by any construction contract
and to do any and every act with respect to the construction of
the said portion of the Improvements which Lessee may do in its
own behalf. Lessor shall also have power to prosecute and defend
all actions and proceedings in connection with the construction
of the said portion of the Improvements and to take such action
and require such performance as it deems necessary. In
accordance therewith, Lessee hereby assigns and quitclaims unto
Lessor all sums to be advanced hereunder including Retainage.
Any funds so disbursed or fees or charges so incurred shall be
included in any amount necessary for the Lessee to pay pursuant
to the Put.
(e) To discontinue making advances
hereunder to the Lessee and to terminate Lessor's obligations
under this Agreement.
5. RIGHTS NON CUMULATIVE - No right or remedy by this Agreement or
by any Development Financing Document or instrument delivered by
the Lessee pursuant hereto, conferred upon or reserved to the
Lessor shall be or is intended to be exclusive of any other right
or remedy and each and every right and remedy shall be cumulative
and in addition to any other right or remedy or now or hereafter
arising at a law or in equity or by statute. Except as Lessor
may hereafter otherwise agree in writing, no waiver by Lessor or
any breach by or default of Lessee of any of its obligations,
agreements, or covenants under this Agreement shall be deemed to
be a waiver of any subsequent breach of the same or any other
obligation, agreement or covenant, nor shall any forbearance by
Lessor to seek a remedy for such breach be deemed a waiver of its
rights and remedies with respect to such a breach, nor shall
Lessor be deemed to have waived any of its rights and remedies
unless it be in writing and executed with the same formality as
this Agreement.
6. EXPENSES - The Development Financing and this Agreement and the
performance by the Lessor or Lessee of their obligations
hereunder shall be without cost and expense to the Lessor, all of
which costs and expenses the Lessee agrees to pay and hold Lessor
harmless of and payment of which shall be secured by the
Development Financing Documents. Specifically, Lessee agrees to
pay all title charges, surveyor's fees, appraisals, loan fees and
attorney's fees and costs and the like incurred in connection
with this Agreement.
ARTICLE XII
GENERAL CONDITIONS AND MISCELLANEOUS
The following conditions shall be applicable throughout the term of
this Agreement:
1. RIGHTS OF THIRD PARTIES - All conditions of the obligations of
Lessor hereunder, including the obligation to make disbursements
are imposed solely and exclusively for the benefit of Lessee, and
no other person shall have standing to require satisfaction of
such conditions in accordance with their terms or be entitled to
assume that Lessor will refuse to make advances in the absence of
strict compliance with any or all thereof, and no other person
shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any and all of which may be freely waived in
whole or in part by Lessor at any time if in its sole discretion
it deems it desirable to do so. In particular, Lessor makes no
representations and assumes no duties or obligations as to third
parties concerning the quality of the construction of the
Improvements or the absence therefrom of defects. In this
connection, Lessee agrees to and shall indemnify Lessor from any
liability, claims or losses resulting from the disbursement of
the Development Financing proceeds or from the condition of the
Leased Premises whether related to the quality of construction or
otherwise and whether arising during or after the term of the
Development Financing made by Lessor to Lessee in connection
therewith, except for Lessor's gross negligence or willful
misconduct. This provision shall survive the termination of this
Agreement and shall continue in full force and effect so long as
the possibility of any such liability, claims or losses exists.
2. EVIDENCE OF SATISFACTION OF CONDITIONS - Any condition of this
Agreement which requires the submission of evidence of the
existence or non- existence of a specified fact or facts implies
as a condition the existence or non- existence, as the case may
be, of such fact or facts, and Lessor shall, at all times, be
free independently to establish to its reasonable satisfaction
such existence or non-existence.
3. ASSIGNMENT - Lessee may not assign this Development Financing
Agreement or any of its rights or obligations hereunder without
the prior written consent of Lessor.
4. SUCCESSORS AND ASSIGNS - Whenever in this Agreement one of the
parties hereto is named or referred to, the heirs, legal
representatives, successors and assigns of such parties shall be
included and all covenants and agreements contained in this
Agreement by or on behalf of the Lessee or by or on behalf of the
Lessor shall bind and inure to the benefit of their respective
heirs, legal representatives, successors and assigns, whether so
expressed or not.
5. HEADINGS - The headings of the sections, paragraphs and
subdivisions of this Agreement are for the convenience of
reference only, and are not to be considered a part hereof and
shall not limit or otherwise affect any of the terms hereof.
6. INVALID PROVISIONS TO AFFECT NO OTHERS - If fulfillment of any
provision hereof, or any transaction related thereto at the time
performance of any such provision shall be due, shall involve
transcending the limit of validity prescribed by law, then, ipso
facto, the obligation to be fulfilled shall be reduced to the
limit of such validity; and such clause or provision shall be
deemed invalid as though not herein contained, and the remainder
of this Agreement shall remain operative in full force and
effect.
7. NUMBER AND GENDER - Whenever the singular or plural number,
masculine or feminine or neuter gender is used herein, it shall
equally include the other.
8. AMENDMENTS - Neither this Agreement nor any provision hereof may
be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought.
9. NOTICES - Any notice which any party hereto may desire or may be
required to give to any of the parties shall be in writing and
the mailing thereof by certified mail, or equivalent, to the
respective parties' addresses set forth herein above or to such
other place such party may by notice in writing designate as its
address shall constitute service of notice hereunder.
10.GOVERNING LAW - This Development Financing Agreement is made and
executed pursuant to and is intended to be governed by the laws
of the State where the Leased Premises are located.
11. FORCE MAJEURE - Anything in this Agreement to the contrary
notwithstanding, Lessee shall not be deemed in default with
respect to the performance of any of the terms, provisions,
covenants, and conditions of this Agreement (except for the
payment of all other monetary sums payable hereunder, to which
the provisions of this Section shall not apply), if the same
shall be due to any strike, lockout, civil commotion, warlike
operations, invasion, rebellion, hostilities, sabotage,
governmental regulations or controls, impracticability of
obtaining any materials or labor (except due to the payment of
monies), shortage or unavailability of a source of energy or
utility service, Act of God, casualty, adverse weather
conditions, or any cause beyond the reasonable control of Lessee
(except due to the payment of monies). Provided, however, in
order to invoke the extension of the Completion Date afforded by
this section, Lessee shall notify Lessor in writing within five
days of the occurrence of such force majeure, and in any event
the Completion Date shall be extended as a result of such
occurrence no more than reasonably necessary and in no event no
more than 90 days.
ARTICLE XIII
DAMAGE, DESTRUCTION, CONDEMNATION, USE OF INSURANCE PROCEEDS
1. DAMAGE OR DESTRUCTION OF THE LEASED PREMISES. Lessee will
give the Lessor prompt notice of any damage to or destruction of
the Leased Premises and in case of loss covered by policies of
insurance the Lessor (whether before or after the exercise of the
Put if Lessee be in default hereof) is hereby authorized at its
option to settle and adjust any claim arising out of such
policies and collect and receipt for the proceeds payable
therefrom, provided, that the Lessee may itself adjust and
collect for any losses arising out of a single occurrence
aggregating not in excess of $50,000.00. Any expense incurred by
the Lessor in the adjustment and collection of insurance proceeds
(including the cost of any independent appraisal of the loss or
damage on behalf of Lessor) shall be reimbursed to the Lessor
first out of any proceeds. The proceeds or any part thereof
shall be applied to reduction of the Put Price, which Put may
then be exercised by Lessor, without the application of any
prepayment premium, or to the restoration or repair of the Leased
Premises, the choice of application to be solely at the
discretion of Lessor.
2. CONDEMNATION. Lessee will give the Lessor prompt notice of
any action, actual or threatened, in condemnation or eminent
domain affecting the Leased Premises and hereby assigns,
transfers, and sets over to the Lessor the entire proceeds of any
award or claim for damages for all or any part of the Leased
Premises taken or damaged under the power of eminent domain or
condemnation, the Lessor being hereby authorized to intervene in
any such action and to collect and receive from the condemning
authorities and give proper receipts and acquittances for such
proceeds. Lessee will not enter into any agreements with the
condemning authority permitting or consenting to the taking of
the Leased Premises unless prior written consent of Lessor is
obtained. Any expenses incurred by the Lessor in intervening in
such action or collecting such proceeds shall be reimbursed to
the Lessor first out of the proceeds. The proceeds or any part
thereof shall be applied to reduction of the Put Price, which Put
may then be exercised by Lessor, without the application of any
prepayment premium, or to the restoration or repair of the Leased
Premises, the choice of application to be solely at the
discretion of Lessor.
3. DISBURSEMENT OF INSURANCE AND CONDEMNATION PROCEEDS. Any
restoration or repair shall be done under the supervision of an
architect acceptable to Lessor and pursuant to plans and
specifications approved by the Lessor. Subject to paragraph 4
below, in any case where Lessor may elect to apply the proceeds
to repair or restoration or permit the Lessee to so apply the
proceeds they shall be held by Lessor for such purposes and will
from time to time be disbursed by Lessor to defray the costs of
such restoration or repair under such safeguards and controls as
Lessor may reasonably require to assure completion in accordance
with the approved plans and specifications and free of liens or
claims. Lessee shall on demand deposit with Lessor any sums
necessary to make up any deficits between the actual cost of the
work and the proceeds and provide such lien waivers and
completion bonds as Lessor may reasonably require. Any surplus
which may remain after payment of all costs of restoration or
repair shall be applied against the rent then most remotely to be
paid, whether due or not, without application of any prepayment
premium or credit.
4. LESSOR TO MAKE PROCEEDS AVAILABLE. In the event of insured
damage to the improvements or in the event of a taking by
condemnation of only a portion of the improvements or land area
of the Leased Premises, and provided, the portion remaining can
with restoration or repair continue to be operated for the
purposes utilized immediately prior to such damage or taking, and
if the appraised value of the Leased Premises after such
restoration or repair shall not have been reduced, and provided
further, no event of default exists under this Agreement after
the expiration of any applicable cure periods and Lessee is
diligently pursuing a course of conduct reasonably designed to
cure such default, and the Lessee certified to Lessor their
intention to remain in possession of the Leased Premises without
any abatement or adjustment of rental payments, the Lessor agrees
to make the proceeds available to the restoration or repair of
the improvements on the Leased Premises in accordance with the
provisions of paragraph 3 hereof.
ARTICLE XIV
MANDATORY PUT UPON DEFAULT
Should Lessee commit an event of Default under this Agreement or
any Development Financing Document (after the expiration of any
applicable notice and cure period) ("Uncured Default"), Lessor
shall have the following rights:
Upon an Uncured Default, or damage or destruction or condemnation
of the Leased Premises not addressed by paragraph XIII (4), if
Lessor elects to exercise the following option, Lessee shall
purchase the Leased Premises from Lessor subject to the following
terms and conditions:
A. The purchase price at which Lessor
shall sell the Leased Premises to Lessee, shall be the total
amount of Initial Disbursed Funds disbursed by Lessor to
acquire the Leased Premises at the Closing Date (as defined
in the Commitment), plus the total amount of funds disbursed
pursuant to this Agreement, plus all accrued interest and
incurred expenses of Lessor fundable pursuant to this
Agreement, plus all reasonable costs of collection and
enforcement of the terms hereof.
B. At such time as Lessor shall elect
to sell the Leased Premises, Lessor shall give Lessee
written notice of its intent to exercise its option to sell
the Leased Premises to Lessee, including in such notice
Lessor's calculation of the Purchase Price through the
actual closing of the sale of the Leased Premises to Lessee
pursuant to the terms hereof (the "Sale Date"), which shall
be sixty days from such notice by Lessor. Lessee shall on
or before the Sale Date deliver the purchase price as set
forth in subparagraph (A) of this Article to Lessor. Upon
such delivery, which shall be preceded by ten (10) days
notice to Lessor, Lessor shall deliver to Lessee a warranty
deed and appropriate affidavits evidencing that Lessor
transfers the Leased Premises to Lessee subject to
restrictions, easements or other encumbrances upon title
existing as of the date of delivery, if any, except to the
extent, if any, placed of record or caused by Lessor. The
purchase price to be paid to Lessor shall be a net amount.
All expenses in connection with the transfer of the Leased
Premises, including, but not limited to appraisal fees,
title insurance, recording fees, documentary stamps,
conveyance tax, title evidence, and all other closing costs,
shall be paid by the Lessee. The purchase price shall be
paid by Lessee in cash to Lessor concurrently with the
conveyance of the Leased Premises by the Lessor to the
Lessee. If Lessor elects to sell the Leased Premises to
Lessee pursuant to the terms hereof, the Leased Premises
shall be conveyed by the Lessor to the Lessee "As Is".
If Lessee shall fail to pay the Purchase Price on or before the
Sale Date, Lessor may terminate the Lease, and sell the Leased
Premises to any third party purchaser. Lessor may then send
Lessee notice of the shortfall (the "Deficiency"), if any,
between the amount of the net proceeds received by Lessor in such
sale, and the total amount of Initial Disbursed Funds disbursed
by Lessor to acquire the Parcel at the Closing Date (as defined
in the Commitment), plus the total amount of funds disbursed
pursuant to this Agreement, plus all accrued interest and
incurred expenses of Lessor fundable pursuant to this Agreement,
plus all reasonable costs of collection and enforcement of the
terms hereof. Lessee shall immediately upon receipt of such
notice of Deficiency remit the amount of the Deficiency in good
funds to Lessor.
Lessor's rights under this Mandatory Put shall expire on the
Final Disbursement Date when the amendment to the Lease has been
executed by all parties as set forth in Article IX hereof.
ARTICLE XV
RENT, INTEREST, AND RENTAL MODIFICATION DATE
1. Rent shall be payable by Lessee and calculated as follows, on the
funds advanced by Lessor on the Closing Date for the purchase of
the land and related closing costs (the "Initial Disbursed
Funds"): Rent shall accrue in the amount of $3,568.81 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 the Rental Modification Date, if not otherwise in default
hereunder, Lessee shall begin paying Rent by the first of each
month (prorata for the balance of any partial month in which the
Rental Modification Date occurs, payable with the first such
adjusted Rent payable on the first day of the first full month
following the Rental Modification Date) in the amount of
$4,303.56 per month out of pocket. On the Final Disbursement
Date, absent an Uncured Default, Rent shall be adjusted and
documented by the lease amendment contemplated in Article IX
hereof and paid to Lessor as described in Article F. of the
Commitment.
2. Disbursed proceeds of the Development Financing shall accrue
interest at a rate of eight and one-half percent (8.5%) per
annum, which interest shall accrue unpaid unless advanced by
Lessor to itself, or Lessee shall default hereunder, which
default shall remain uncured after the expiration of any
applicable notice and cure period. However, one hundred and
twenty days (120) from the date hereof, (the "Rental Modification
Date"), Lessee shall begin making monthly payments of
subsequently accruing interest at the rate of 10.25% per annum
out of pocket ("Out of Pocket Invoiced Interest") within 5 days
after invoice from Lessor.
3. Upon the occurrence of an event of default which remains
uncured after the expiration of applicable notice and cure
periods, disbursed proceeds of the Development Financing shall
accrue interest at a rate of Fifteen Percent (15.0%) per annum,
or the highest rate allowed by law, whichever is less, and the
rental rate on the Initial Disbursed funds shall increase to
Fifteen Percent (15.0%) per annum, or the highest rental rate
allowed by law, whichever is less.
ARTICLE XVI
COUNTERPART EXECUTION
Counterpart Execution. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original
and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Lessee and Lessor have hereunto caused these
presents to be executed on the date first above written.
Tumbleweed, LLC, a Kentucky Limited
Liability Company
By: /s/ James Mulrooney
Its: Executive VP & CFO
By: /s/ John Butorac
Its: President
[Lessor's Signature appears on following page.]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
By: /s/ Robert P Johnson
Robert P. Johnson, President
EXHIBIT A
PARCEL I
SITUATED IN THE STATE OF OHIO, COUNTY OF FRANKLIN, CITY OF
COLUMBUS, QUARTER TOWNSHIP 4, TOWNSHIP 1, RANGE 16, UNITED STATES
MILITARY LANDS, AND BEING 1.169 ACRES OF LAND ALL OUT OF THAT
1.915 ACRE TRACT AS CONVEYED TO BROAD STREET RETAIL, LLC BY DEED
OF RECORD IN INSTRUMENT NUMBER 19970300131362, ALL REFERENCES
REFER TO THE RECORDS OF THE RECORDER'S OFFICE, FRANKLIN COUNTY,
OHIO, AND BEING MORE PARTICULARLY BOUNDED AND DESCRIBED AS
FOLLOWS:
BEGINNING, FOR REFERENCE, AT AN IRON PIN SET AT THE INTERSECTION
OF THE SOUTHERLY RIGHT-OF-WAY LINE OF EAST BROAD STREET (STATE
ROUTE 16) WITH THE EASTERLY RIGHT-OF-WAY LINE OF ROSE HILL ROAD;
THENCE NORTH 81 DEG. 48' 10" EAST, WITH SAID SOUTHERLY RIGHT-OF-
WAY LINE, A DISTANCE OF 1259.07 FEET TO AN IRON PIN SET AT THE
NORTHEASTERLY CORNER OF A 21.979 ACRE TRACT AS CONVEYED TO BROAD
STREET RETAIL, LLC OF RECORD IN INSTRUMENT NUMBER 19970300131357
AND THE TRUE POINT OF BEGINNING FOR THIS DESCRIPTION;
THENCE NORTH 81 DE. 48' 10" EAST, CONTINUING WITH SAID RIGHT-OF-
WAY LINE, A DISTANCE OF 217.00 FEET TO AN IRON PIN SET;
THENCE SOUTH 8 DEG. 11' 50" EAST, WITH A NEW DIVISION LINE ACROSS
SAID 1.915 ACRE TRACT, A DISTANCE OF 222.34 FEET TO AN IRON PIN
SET IN THE NORTHERLY LINE OF A 1.835 ACRE TRACT AS CONVEYED TO
BROAD STREET RETAIL, LLC, OF RECORD IN INSTRUMENT NUMBER
19970300131365;
THENCE SOUTH 75 DEG. 25' 05" WEST, PARTLY WITH THE NORTHERLY LINE
OF SAID 1.835 ACRE TRACT AND PARTLY WITH THE NORTHERLY LINE OF
SAID 21.979 ACRE TRACT, A DISTANCE OF 165.47 FEET TO AN IRON PIN
SET;
THENCE SOUTH 73 DEG. 19' 45" WEST, CONTINUING WITH THE NORTHERLY
LINE OF SAID 21.979 ACRE TRACT, A DISTANCE OF 53.13 FEET TO AN
IRON PIN SET AT A CORNER THEREOF;
NORTH 8 DEG. 11' 50" WEST, WITH AN EATERLY LINE OF SAID 21.979
ACRE TRACT, A DISTANCE OF 248.58 FEET TO THE TRUE POINT OF
BEGINNING AND CONTAINING 1.169 ACRES OF LAND, MORE OR LESS.
THE BASIS OF BEARING FOR THIS DESCRIPTION IS NORTH 81 DEG. 48'
10" EAST FOR THE CENTERLINE OF EAST BROAD STREET (STATE ROUTE 16)
AS THE SAME IS SHOWN ON FRANLIN COUNTY RIGHT-OF-WAY PLANS FRA-16-
7.79-10.44.
PARCEL II
TOGETHER WITH NON-EXCLUSIVE RIGHT OF INGRESS AND EGRESS OVER A
CERTAIN 21.979 ACRE PARCEL AS RESERVED IN INSTRUMENT NO.
199710300131357 AND OVER A CERTAIN 0.722 ACRE PARCEL AS CONTAINED
IN INSTRUMENT NO. 199710300131362, RECORDER'S OFFICE, FRANLIN
COUNTY, OHIO.
EXHIBIT B
CONSTRUCTION COSTS
PROJECT COST BUDGET
MARCH 31, 1998
Land and Hard Costs:
Land Acquisition Cost $ 495,000.00
Building/General Construction 750,000.00
Construction Contigency -10.0% 75,000.00
Soft Costs:
Surveys 2,500.00
Appraisal 4,000.00
Phase I Environmental 2,000.00
TAP Fees 5,000.00
Design Fee-Architect 2,500.00
Architect/Engineering 32,000.00
Liquor License 5,000.00
Title Insurance & Closing Costs (Devlopment Financing) 12,000.00
Development Interest 24,500.00
Attorney's Fees-Borrower (Development Financing) 6,000.00
Attorney's Fees- AEI (Development Financing) 12,500.00
AEI Development Commitment Fee 2%* 29,800.00
AEI Credit Report Fees (Promesa) 300.00
AEI State Qualification Fees 1,500.00
AEI Site Inspection Fee 1,500.00
Tumbleweed Parcel Development Fee 15,675.00
Miscellaneous 13,225.00
TOTAL PROJECT COST $1,490,000.00
* Total project costs prior to AEI commitment fee is $1,460,200.
The Commitment Fee (rounded) is calculated on the total project
cost.
Exhibit C
APPLICATION FOR PAYMENT
Tumbleweed, LLC. ("Lessee") hereby requests a disbursement
in the amount of______________________ ($____________________)
pursuant to that certain Development Financing Agreement dated
effective as of May _____, 1998 by and between Lessee, AEI Real
Estate Fund XVIII Limited Partnership ("Lessor"). The amounts
requested have been or will be used to pay the items identified
on Exhibit "A" attached hereto and made a part hereof.
After payment of the amounts requested herein, the balance
of undisbursed Development Financing proceeds of
$_____________________ will be sufficient to complete
construction and pay all related project costs currently known
and approved by Lessor. In the event of cost overruns which
cannot be accounted for by re-allocation among line items, Lessee
agrees to contribute the necessary equity to complete
construction pursuant to Development Financing Agreement and
Development Financing Disbursement Agreement.
All representations and warranties made by the Lessee in the
Development Financing Documents (as defined in the Development
Financing Agreement) are true and correct as of the date hereof
and Lessee is not in default of any of the provisions thereof.
The total cost of the items for which Lessor is funding is
estimated to be $1,490,000. To date, $______________(exclusive
of this request) has been disbursed pursuant to the Development
Financing Disbursing Agreement.
Dated:______________________________
Lessee:
Tumbleweed, LLC., a
Kentucky Limited Liability Company
By:
Its:
Lessee
Exhibit D-1
DRAW REQUEST CERTIFICATE
This Certificate made by Tumbleweed, LLC.("Lessee").
RECITALS
WHEREAS, Lessee and AEI Real Estate Fund XVIII Limited
Partnership("Lessor") have entered into a Development Financing
Agreement dated effective as of May , 1998 (the
"Development Financing Agreement") pursuant to which Lessor
agreed to loan $1,490,000 to Lessee for the purpose of
constructing a Tumbleweed Restaurant on certain real property
described on Exhibit "A" attached to the Development Financing
Agreement ("Project"); and
WHEREAS, Lessee and Contractor have entered into a contract
dated , 1998, ("Construction Contract"); and
WHEREAS, the Development Financing Agreement requires the
submission to Escrowee and Lessor of this Certificate prior to
the advancement of any loan proceeds under the Development
Financing Agreement.
NOW, THEREFORE, Lessee does hereby certify to Escrowee and
Lessor as follows:
1. This Draw Request for the period from
____________________________, 1998 to _____________________,
1998, showing work completed to date of $
and requesting a current payment of $________________________
relates to costs incurred pursuant to the Construction Contract,
and other line items, all as shown on the Development Financing
Budget attached to the Development Financing Agreement, and are
costs only pertaining to the Project and are included in the
Development Financing Agreement.
2. As of the date of this Draw Request, the balance
remaining due for all costs under the Construction Contract,
including retainage and approved change orders, to complete the
Project after receipt of payments requested herein will be
$________________.
3. As of the date of this Draw Request, the remaining
balance due on the Development Financing Agreement as set forth
above is sufficient to complete the Project in accordance with
the Plans and Specifications (as defined in the Development
Financing Agreement) to the degree set forth by the Development
Financing Agreement.
4. That all work covered by this Draw Request has been
completed in accordance with the Construction Contract, Plans and
Specifications, and any amendments thereto approved by Lessor.
5. That all work completed to date conforms to the
Construction Contract, Plans and Specifications, and any
amendments thereto approved by Lessor.
6. That all funds previously disbursed for costs incurred
pursuant to the Construction Contract under the Development
Financing Agreement have been applied as provided in all previous
Draw Request Certificates.
7. That as of the date hereof, to the best of Lessee's
knowledge after due inquiry, the Project complies with the
requirements of all zoning and building laws, ordinances,
regulations and permits; the requirements of all governmental
agencies having jurisdiction over the Project; and there is no
action or proceeding pending before any court or administrative
agency with respect to such laws, ordinances, regulations and/or
any certifications or permits issued thereunder.
Dated this ______ day of ____________________, 1998.
Lessee: Tumbleweed, LLC.
By:
Its
STATE OF )
)ss.
COUNTY OF )
I, _______________________________________________, a Notary
public of the said State and County do hereby certify that
_________________________________________ personally appeared
before me this day and he is the ____________________________ of
Tumbleweed, LLC., and that by authority duly given and as the act
of the corporation, the foregoing instrument was signed in its
name by its _______________________________, on behalf of said
limited liability company.
Witness my hand and official stamp or seal, this ______ day of
_________________, 1998.
_____________________________
____________
My commission expires:________ Notary Public
CONTRACTOR AND ARCHITECT
Exhibit D-2
DRAW REQUEST CERTIFICATE
This Certificate made by
,("Contractor"), AND
("Architect").
RECITALS
WHEREAS, Tumbleweed, LLC. ("Lessee") and AEI Real Estate
Fund XVIII Limited Partnership ("Lessor") have entered into a
Development Financing Agreement dated effective as of May ,
1998 (the "Development Financing Agreement") pursuant to which
Lessor agreed to advance $1,490,000 to Lessee for the purpose of
constructing a Tumbleweed Restaurant on certain real property
described on Exhibit "A" attached to the Development Financing
Agreement ("Project"); and
WHEREAS, Lessee and Contractor have entered into a contract
dated , 1998, ("Construction Contract"); and
WHEREAS, Lessee and Architect have entered into a contract
dated , 1998, ("Architect Contract"); and
WHEREAS, the Development Financing Agreement requires the
submission to Escrowee and Lessor of this Certificate prior to
the advancement of any loan proceeds under the Development
Financing Agreement.
NOW, THEREFORE, Contractor and Architect do hereby certify
to Escrowee and Lessor as follows:
1. This Draw Request for the period from
____________________________, 1998 to _____________________,
1998, showing work completed to date of $
and requesting a current payment of $________________________
relates to costs incurred pursuant to the Construction Contract,
and are costs only pertaining to the Project.
2. As of the date of this Draw Request, the balance
remaining due for all costs under the Construction Contract,
including retainage and approved change orders, to complete the
Project after receipt of payments requested herein will be
$________________.
3. As of the date of this Draw Request, the remaining
balance due on the Construction Contract as set forth above is
sufficient to complete the Project in accordance with the Plans
and Specifications (as defined in the Construction Contract) to
the degree set forth by the Construction Contract.
4. That all work covered by this Draw Request has been
completed in accordance with the Construction Contract, Plans and
Specifications, and any amendments thereto approved by Lessor.
5. That each subcontractor or materialmen for which payment
is requested in this Draw Request has satisfactorily completed
the work or furnished materials for which payment is requested in
accordance with the Construction Contract.
6. That all work completed to date conforms to the
Construction Contract, Plans and Specifications, and any
amendments thereto approved by Lessor.
7. That all funds previously disbursed for costs incurred
pursuant to the Construction Contract have been applied as
provided in all previous Draw Request Certificates.
8. That as of the date hereof, to the best of Contractor's
and Architect's knowledge after due inquiry, the Project complies
with the requirements of all zoning and building laws,
ordinances, regulations and permits; the requirements of all
governmental agencies having jurisdiction over the Project; and
there is no action or proceeding pending before any court or
administrative agency with respect to such laws, ordinances,
regulations and/or any certifications or permits issued
thereunder.
Dated this ______ day of ____________________, 1998.
CONTRACTOR:
By:
Its:
ARCHITECT:
By:
Its:
STATE OF )
)ss.
COUNTY OF )
I, _______________________________________________, a Notary
public of the said State and County do hereby certify that
_________________________________________ personally appeared
before me this day and he is the ____________________________ of
, a corporation, and that by authority duly
given and as the act of the corporation, the foregoing instrument
was signed in its name by its _______________________________, on
behalf of said corporation.
Witness my hand and official stamp or seal, this ______ day of
_________________, 1998.
_____________________________
____________
My commission expires:________ Notary Public
STATE OF )
)ss.
COUNTY OF )
I, _______________________________________________, a Notary
public of the said State and County do hereby certify that
_________________________________________ personally appeared
before me this day and he is the ____________________________ of
, a corporation, and that by authority duly
given and as the act of the corporation, the foregoing instrument
was signed in its name by its _______________________________, on
behalf of said corporation.
Witness my hand and official stamp or seal, this ______ day of
_________________, 1998.
_____________________________
____________
My commission expires:________ Notary Public
NET LEASE AGREEMENT
THIS LEASE, made and entered into effective as of the 1st
day of May, 1998, by and among AEI Real Estate Fund XVIII Limited
Partnership, a Minnesota limited partnership whose corporate
general partner is AEI Fund Management XVIII, Inc., a Minnesota
corporation ("Fund XVIII"), whose principal business address is
1300 Minnesota World Trade Center, 30 East Seventh Street, St.
Paul, Minnesota 55101 (hereinafter collectively referred to as
"Lessor"), and Tumbleweed, LLC., a Kentucky limited liability
company (hereinafter referred to as "Lessee"), whose principal
business address is 1900 Mellwood Avenue, Louisville, Kentucky;
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at East Broad Street, Columbus,
Ohio, and legally described in Exhibit "A", which is attached
hereto and incorporated herein by reference; and
WHEREAS, Lessee will be constructing the building and
improvements (together the "Building") on the real property
described in Exhibit "A", which Building is described in the
plans and specifications heretofore submitted to Lessor; and
WHEREAS, Lessee desires to lease said real property and
Building (said real property and Building hereinafter referred to
as the "Leased Premises"), from Lessor upon the terms and
conditions hereinafter provided;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described to be
paid, kept, and performed by Lessee, Lessor does hereby grant,
demise, lease, and let unto Lessee, and Lessee does hereby take
and hire from Lessor and does hereby covenant, promise, and agree
as follows:
ARTICLE 1. LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee leases and takes
from Lessor, the Leased Premises subject to the conditions of
this Lease.
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Fifteen (15)
consecutive "Lease Years", as hereinafter defined, commencing on
May 1, 1998 ("Occupancy Date").
(B) The first "Lease Year" of the Term shall be for a
period of twelve (l2) consecutive calendar months from the
Occupancy Date. If the Occupancy Date shall be other than the
first day of a calendar month, the first "Lease Year" shall be
the period from the Occupancy Date to the end of the calendar
month of the Occupancy Date, plus the following twelve (l2)
calendar months. Each Lease Year after the first Lease Year
shall be a successive period of twelve (l2) calendar months.
(C) The parties agree that once the Occupancy Date has been
established, upon the request of either party, a short form or
memorandum of this Lease will be executed for recording purposes.
That short form or memorandum of this Lease will set forth the
actual occupancy and termination dates of the Term and optional
Renewal Terms, as defined in Article 28 hereof, and the existence
of any right of renewal, and that said right shall terminate when
the Lessee shall lose right to possession or this Lease is
terminated, whichever occurs first.
ARTICLE 3. CONSTRUCTION OF IMPROVEMENTS
(A) Lessee warrants and agrees that the Building will be
constructed on the Leased Premises, and all other improvements to
the land, including the parking lot, approaches, and service
areas, will be constructed in all material respects by Lessee
substantially in accordance with the plot, plans, and
specifications heretofore submitted to Lessor.
(B) Lessee warrants that the Building and all other
improvements to the land contemplated do comply with the laws,
ordinances, rules, and regulations of all state and local
governments.
(C) Lessee agrees to pay, if not already paid in full, for
all architectural fees and actual construction costs relating to
the Building and other related improvements on the Leased
Premises, in the past, present or future, which shall include,
but not be limited to, plans and specifications, general
construction, carpentry, electrical, plumbing, heating,
ventilating, air conditioning, decorating, equipment
installation, outside lighting, curbing, landscaping,
blacktopping, electrical sign hookup, conduit and wiring from
building, fencing, and parking curbs, builder's risk insurance
(naming Lessor, Lessee, and contractor as co-insured), and all
construction bonds for improvements made by or at the direction
of Lessee.
(D) Opening for business in the Leased Premises by Lessee
shall constitute an acceptance of the Leased Premises and an
acknowledgment by Lessee that the premises are in the condition
described under this Lease.
ARTICLE 4. RENT PAYMENTS
(A) Annual Rent Payable for the first Lease Year:
Lessee shall pay to Lessor an annual Base Rent of
$42,825.73, which amount shall be payable in advance on
the first day of each month in equal monthly
installments of $3,568.81 to Lessor Fund XVIII. If the
first day of the Lease Term is not the first day of a
calendar month, then the monthly Rent payable for that
partial month shall be a prorated portion of the equal
monthly installment of Base Rent.
(B) Annual Rent Payable beginning in the second and
each Lease Year thereafter:
1. In the second and each Lease Year
thereafter, the annual Base Rent due and payable
shall increase by an amount equal to the lesser
of: a) Two Percent (2%) of the Base Rent payable
for the immediately prior Lease Year, or b) A
percentage equal to two times the "CPI-U
Percentage Increase" of the Base Rent payable for
the prior Lease Year.
"CPI-U" shall mean the Consumer Price
Index for All Urban Consumers, (all items),
published by the United States Department of
Labor, Bureau of Labor Statistics (BLS) (1982-84
equal 100), U.S. Cities Average, or, in the event
said index ceases to be published, by any
successor index recommended as a substitute
therefor by the United States Government or a
comparable, nonpartisan substitute reasonably
designated by Lessor. If the BLS changes the base
reference period for the Price Index from 1982-
84=100, the CPI-U Percentage Increase shall be
determined with the use of such conversion formula
or table as may be published by the BLS.
The term "CPI-U Percentage Increase"
shall mean the percentage increase in the CPI-U
determined by reference to the increase, if any,
in the latest monthly CPI-U issued prior to the
first day of the Lease Year for which Base Rent is
being increased, over the CPI-U issued for the
same month in the year prior (e.g., the January
CPI-U for the year 2000 over the January CPI-U for
the year 1999.) Said month's CPI-U shall be used
even though that CPI-U will not be for the month
in which the renewal term commences. In no event
shall the CPI-U Percentage Increase be less than
zero.
(C) Overdue Payments.
Lessee shall pay interest on all overdue payments of Rent or
other monetary amounts due hereunder at the rate of fifteen
percent (15%) per annum or the highest rate allowed by law,
whichever is less, accruing from the date such Rent or other
monetary amounts were properly due and payable.
ARTICLE 5. INSURANCE AND INDEMNITY
(A) Lessee shall, throughout the Term or Renewal Terms, if
any, of this Lease, at its own cost and expense, procure and
maintain insurance which covers the Leased Premises and
improvements against fire, wind, and storm damage (including
flood insurance if the Leased Premises is in a federally
designated flood prone area) and such other risks (including
earthquake insurance, if the Leased Premises is located in a
federally designated earthquake zone or in an ISO high risk
earthquake zone) as may be included in the broadest form of all
risk, extended coverage insurance as may, from time to time, be
available in amounts sufficient to prevent Lessor or Lessee from
becoming a co-insurer within the terms of the applicable
policies. In any event, the insurance shall not be less than one
hundred percent (100%) of the then insurable value, with such
commercially reasonable deductibles as Lessor may reasonably
require from time to time. Additionally, replacement cost
endorsements, vandalism endorsement, malicious mischief
endorsement, waiver of subrogation endorsement, waiver of co-
insurance or agreed amount endorsement (if available), and
Building Ordinance Compliance endorsement and Rent loss
endorsements (for a period of twelve months) must be obtained.
(B) Lessee agrees to place and maintain throughout the Term
or Renewal Terms, if any, of this Lease, at Lessee's own expense,
public liability insurance with respect to Lessee's use and
occupancy of said premises, including "Dram Shop" or liquor
liability insurance, if the same shall be or become available in
the State of Ohio, with initial limits of at least $2,000,000 per
occurrence/$5,000,000 general aggregate (inclusive of umbrella
coverage), or such additional amounts as Lessor shall reasonably
require from time to time.
(C) Lessee agrees to notify Lessor in writing if Lessee is
unable to procure all or some part of the aforesaid insurance.
In the event Lessee fails to provide all insurance required under
this Lease, Lessor shall have the right, but not the obligation,
to procure such insurance on Lessee's behalf, following five (5)
business days written notice to Lessee of Lessor's intent to do
so (unless insurance then in place would during such period, or
already has, lapsed, in which case no notice need be given) and
Lessee may obtain such insurance during said five day period and
not then be in default hereunder. If Lessor shall obtain such
insurance, Lessee will then, within five (5) business days from
receiving written notice, pay Lessor the amount of the premiums
due or paid, together with interest thereon at the lesser of 15%
per annum or the highest rate allowable by law, which amount
shall be considered Rent payable by Lessee in addition to the
Rent defined at Article 4 hereof.
(D) All policies of insurance provided for or contemplated
by this Article can be under Lessee's blanket insurance coverage
and shall name Lessor, Lessor's corporate general partner, and
Robert P. Johnson, individual general partner, and Lessee as
additional insured and loss payee, as their respective interests
(as landlord and lessee, respectively) may appear, and shall
provide that the policies cannot be canceled, terminated,
changed, or modified without thirty (30) days written notice to
the parties. In addition, all of such policies shall be in place
on or before the Occupancy Date and contain endorsements by the
respective insurance companies waiving all rights of subrogation,
if any, against Lessor. All insurance companies providing
coverages must be rated "A" or better by Best's Key Rating Guide
(the most current edition), or similar quality under a successor
guide if Best's Key Rating shall cease to be published. Lessee
shall maintain legible copies of any and all policies and
endorsements required herein, to be made available for Lessor's
review and photocopy upon Lessor's reasonable request from time
to time. On the Occupancy Date and no less than fifteen (15)
business days prior to expiration of such policies, Lessee shall
provide Lessor with legible copies of any and all renewal
Certificates of Insurance reflecting the above terms of the
Policies (including endorsements). Lessee agrees that it will
not settle any property insurance claims affecting the Leased
Premises in excess of $25,000 without Lessor's prior written
consent, such consent not to be unreasonably withheld or delayed.
Lessor shall consent to any settlement of an insurance claim
wherein Lessee shall confirm in writing with evidence reasonably
satisfactory to Lessor that Lessee has sufficient funds available
to complete the rebuilding of the Premises.
(E) Lessee shall defend, indemnify, and hold Lessor
harmless against any and all claims, damages, and lawsuits
arising after the Occupancy Date of this Lease and any orders,
decrees or judgments which may be entered therein, brought for
damages or alleged damages resulting from any injury to person or
property or from loss of life sustained in or about the Leased
Premises, unless such damage or injury results from the
intentional misconduct or the gross negligence of Lessor and
Lessee agrees to save Lessor harmless from, and indemnify Lessor
against, any and all injury, loss, or damage, of whatever nature,
to any person or property caused by, or resulting from any act,
omission, or negligence of Lessee or any employee or agent of
Lessee. In addition, Lessee hereby releases Lessor from any and
all liability for any loss or damage caused by fire or any of the
extended coverage casualties, unless such fire or other casualty
shall be brought about by the intentional misconduct or
negligence of Lessor. In the event of any loss, damage, or
injury caused by the joint negligence or willful misconduct of
Lessor and Lessee, they shall be liable therefor in accordance
with their respective degrees of fault.
(F) Lessor hereby waives any and all rights that it may
have to recover from Lessee damages for any loss occurring to the
Leased Premises by reason of any act or omission of Lessee;
provided, however, that this waiver is limited to those losses
for which Lessor is compensated by its insurers, if the insurance
required by this Lease is maintained. Lessee hereby waives any
and all right that it may have to recover from Lessor damages for
any loss occurring to the Leased Premises by reason of any act or
omission of Lessor; provided, however, that this waiver is
limited to those losses for which Lessee is, or should be if the
insurance required herein is maintained, compensated by its
insurers.
ARTICLE 6. TAXES, ASSESSMENTS AND UTILITIES
(A) Lessee shall be liable and agrees to pay the charges
for all public utility services rendered or furnished to the
Leased Premises, including heat, water, gas, electricity, sewer,
sewage treatment facilities and the like, all personal property
taxes, real estate taxes, special assessments, and municipal or
government charges, general, ordinary and extraordinary, of every
kind and nature whatsoever, which may be levied, imposed, or
assessed against the Leased Premises, or upon any improvements
thereon, at any time after the Occupancy Date of this Lease for
the period prior to the expiration of the term hereof, or any
Renewal Term, if exercised.
(B) Lessee shall pay all real estate taxes, assessments for
public improvements or benefits, and other governmental
impositions, duties, and charges of every kind and nature
whatsoever which shall or may, during the term of this Lease, be
charged, laid, levied, assessed, or imposed upon, or become a
lien or liens upon the Leased Premises or any part thereof. Such
payments shall be considered as Rent paid by Lessee in addition
to the Rent defined at Article 4 hereof. If due to a change in
the method of taxation, a franchise tax, Rent tax, or income or
profit tax shall be levied against Lessor in substitution for or
in lieu of any tax which would otherwise constitute a real estate
tax, such tax shall be deemed a real estate tax for the purposes
herein and shall be paid by Lessee; otherwise Lessee shall not be
liable for any such tax levied against Lessor.
(C) All real estate taxes, assessments for public
improvements or benefits, water rates and charges, sewer rents,
and other governmental impositions, duties, and charges which
shall become payable for the first and last tax years of the term
hereof shall be apportioned pro rata between Lessor and Lessee in
accordance with the respective number of months during which each
party shall be in possession of the Leased Premises (or through
the expiration of the term hereof, if longer) in said respective
tax years. Lessee shall pay within 60 days of the expiration of
the term hereof Lessor's reasonable estimate of Lessee's pro-rata
share of real estate taxes for the last tax year of the term
hereof, based upon the last available tax bill. Lessor shall
give Lessee notice of such estimated pro-rata real estate taxes
no later than 75 days from the end of the term hereof. Upon
receipt of the actual statement of real estate taxes for such
prorated period, Lessor shall either refund to Lessee any over
payment of the pro-rata Lessee obligation, or shall assess and
Lessee shall pay promptly upon notice any remaining portion of
the Lessee's pro-rata obligation for such real estate taxes.
(D) Lessee shall have the right to contest or review by
legal proceedings or in such other manner as may be legal (which,
if instituted, shall be conducted solely at Lessee's own expense)
any tax, assessment for public improvements or benefits, or other
governmental imposition aforementioned, upon condition that,
before instituting such proceeding Lessee shall pay (under
protest) such tax or assessments for public improvements or
benefits, or other governmental imposition, duties and charges
aforementioned, unless such payment would act as a bar to such
contest or interfere materially with the prosecution thereof and
in such event Lessee shall post with Lessor alternative security
reasonably satisfactory to Lessor. All such proceedings shall be
begun as soon as reasonably possible after the imposition or
assessment of any contested items and shall be prosecuted to
final adjudication with reasonable dispatch. In the event of any
reduction, cancellation, or discharge, Lessee shall pay the
amount that shall be finally levied or assessed against the
Leased Premises or adjudicated to be due and payable, and, if
there shall be any refund payable by the governmental authority
with respect thereto, if Lessee has paid the expense of Lessor in
such proceedings, Lessee shall be entitled to receive and retain
the refund, subject, however, to apportionment as provided during
the first and last years of the term of this Lease.
(E) Lessor, within sixty (60) days after notice to Lessee
if Lessee fails to commence such proceedings, may, but shall not
be obligated to, contest or review by legal proceedings, or in
such other manner as may be legal, and at Lessor's own expense,
any tax, assessments for public improvements and benefits, or
other governmental imposition aforementioned, which shall not be
contested or reviewed, as aforesaid, by Lessee, and unless Lessee
shall promptly join with Lessor in such contest or review, Lessor
shall be entitled to receive and retain any refund payable by the
governmental authority with respect thereto.
(F) Lessor shall not be required to join in any proceeding
referred to in this Article, unless in Lessee's reasonable
opinion, the provisions of any law, rule, or regulation at the
time in effect shall require that such a proceeding be brought by
and/or in the name of Lessor, in which event Lessor shall upon
written request, join in such proceedings or permit the same to
be brought in its name, all at no cost or expense to Lessor.
(G) Within thirty (30) days after Lessor notifies Lessee in
writing that Lessor has paid such amount, Lessee shall also pay
to Lessor, as additional Rent, the amount of any sales tax,
franchise tax, excise tax, on Rents imposed by the State where
the Leased Premises are located. At Lessor's option, Lessee
shall deposit with Lessor on the first day of each and every
month during the term hereof, an amount equal to one-twelfth
(1/12) of any estimated sales tax payable to the State in which
the property is situated for Rent received by Lessor hereunder
("Deposit"). From time to time out of such Deposit Lessor will
pay the sales tax to the State in which the property is situated
as required by law. In the event the Deposit on hand shall not
be sufficient to pay said tax when the same shall become due from
time to time, or the prior payments shall be less than the
current estimated monthly amounts, then Lessee shall pay to
Lessor on demand any amount necessary to make up the deficiency.
The excess of any such Deposit shall be credited to subsequent
payments to be made for such items. If a default or an event of
default shall occur under the terms of this Lease, Lessor may, at
its option, without being required so to do, apply any Deposit on
hand to cure such default, in such order and manner as Lessor may
elect.
ARTICLE 7. PROHIBITION ON ASSIGNMENTS AND SUBLETTING; TAKE-
BACK
RIGHTS
(A) Except as otherwise expressly provided in this Article,
Lessee shall not, without obtaining the prior written consent of
Lessor, in each instance:
1. assign or otherwise transfer this Lease,
or any part of Lessee's right, title or interest
therein, except in the event the Lease is assigned
by Tumbleweed to its successor entity in the event
of either an Initial Public Offering or Direct
Public Offering of Lessee; or
2. sublet all or any part of the Leased
Premises or allow all or any part of the Leased
Premises to be used or occupied by any other
Persons (herein defined as a Party other than
Lessee, be it a corporation, a partnership, an
individual or other entity); or
3. mortgage, pledge or otherwise encumber
this Lease, or the Leased Premises.
(B) For the purposes of this Article:
1. the transfer of voting control of any
class of capital stock of any corporate Lessee or
sublessee, or the transfer voting control of the
total interest in any other person which is a
Lessee or sublessee, however accomplished, whether
in a single transaction or in a series of related
or unrelated transactions, shall be deemed an
assignment of this Lease, or of such sublease, as
the case may be;
2. an agreement by any other Person,
directly or indirectly, to assume Lessee's
obligations under this Lease shall be deemed an
assignment;
3. any Person to whom Lessee's interest
under this Lease passes by operation of law, or
otherwise, shall be bound by the provisions of
this Article;
4. each material modification, amendment or
extension or any sublease to which Lessor has
previously consented shall be deemed a new
sublease; and
Lessee agrees to furnish to Lessor within five (5) business
days following demand at any time such information and assurances
as Lessor may reasonably request that neither Lessee, nor any
previously permitted sublessee or assignee, has violated the
provisions of this Article.
(C) If Lessee agrees to assign this Lease or to sublet all
or any portion of the Leased Premises, Lessee shall, prior to the
effective date thereof (the "Effective Date"), deliver to Lessor
executed counterparts of any such agreement and of all ancillary
agreements with the proposed assignee or sublessee, as
applicable. If Lessee shall fail to do so, and shall have
surrendered possession of the Leased Premises in violation of its
duty of prior notice and failed to obtain Lessor's prior consent
(if and where required herein), and, if in such event, Lessor in
its sole discretion (except as otherwise specifically limited
herein) shall not consent to a proposed sublease or assignment,
Lessor shall then have all of the following rights (in addition
to any rights Lessor may possess occasioned by Lessee's default
hereunder), any of which Lessor may exercise by written notice to
Lessee given within thirty (30) days after Lessor receives the
aforementioned documents:
1. with respect to a proposed assignment of
this Lease, the right to terminate this Lease on
the Effective Date as if it were the Expiration
Date of this Lease;
2. with respect to a proposed subletting of
the entire Leased Premises, the right to terminate
this Lease on the Effective Date as if it were the
Expiration Date; or
3. with respect to a proposed subletting of
less than the entire Leased Premises, the right to
terminate this Lease as to the portion of the
Leased Premises affected by such subletting on the
Effective Date, as if it were the Expiration Date,
in which case Lessee shall promptly execute and
deliver to Lessor an appropriate modification of
this Lease in form satisfactory to Lessor in all
respects.
4. with respect to a proposed subletting or
proposed assignment of this Lease, impose such
conditions upon Lessor's consent as Lessor shall
determine in its sole discretion.
(D) If Lessor exercises any of its options under Article
7(C) above, (and if Lessor shall impose conditions upon its
consent and Lessee shall fail to meet any conditions Lessor may
impose upon its consent), Lessor may then lease the Leased
Premises or any portion thereof to Lessee's proposed assignee or
sublessee, as the case may be, without liability whatsoever to
Lessee.
(E) Notwithstanding anything above to the contrary, Lessor
agrees to consent to any assignment or sublease all or any
portion of the Lessee's interests herein to a franchisee or
licensee in good standing of Tumbleweed, LLC, for the Tumbleweed
restaurant concept, provided Lessor is given prior written notice
of such sublease or assignment, accompanied by a copy of such
sublease or assignment, and the consents of Lessee (such consent
to be in form and substance satisfactory to Lessor) to such
assignment or sublet, affirming their continued liability
hereunder.
Lessor agrees that its consent to any other proposed
assignment or sublet shall not be unreasonably withheld or
delayed, provided Lessor is given prior written notice of such
sublease or assignment, accompanied by a copy of such sublease or
assignment, and the consents of Lessee (such consent to be in
form and substance satisfactory to Lessor) to such assignment or
sublet, affirming their continued liability hereunder.
(F) Notwithstanding anything above to the contrary, the
Lessee's interest herein shall not be assignable in any manner in
accordance with the terms hereof unless and until the termination
of the Development Financing Agreement as set forth in Article 35
hereof.
ARTICLE 8. REPAIRS AND MAINTENANCE
(A) Lessee covenants and agrees to keep and maintain in
good order, condition and repair the interior and exterior of the
Leased Premises during the term of the Lease, or any renewal
terms, and further agrees that Lessor shall be under no
obligation to make any repairs or perform any maintenance to the
Leased Premises. Lessee covenants and agrees that it shall be
responsible for all repairs, alterations, replacements, or
maintenance of, including but without limitation to or of: The
interior and exterior portions of all doors; door checks and
operators; windows; plate glass; plumbing; water and sewage
facilities; fixtures; electrical equipment; interior walls;
ceilings; signs; roof; structure; interior building appliances
and similar equipment; heating and air conditioning equipment;
and any equipment owned by Lessor and leased to Lessee hereunder,
as itemized on Exhibit B attached hereto (if any) and
incorporated herein by reference; and further agrees to replace
any of said equipment when necessary. Lessee further agrees to
be responsible for, at its own expense, snow removal, lawn
maintenance, landscaping, maintenance of the parking lot
(including parking lines, seal coating, and blacktop surfacing),
and other similar items.
(B) If Lessee refuses or neglects to commence or complete
repairs promptly and adequately, after prior written notice as
required under Article 16(B) (except in cases of emergency to
prevent waste or preserve the safety and integrity of the Leased
Premises, in which case no notice need be given), Lessor may
cause such repairs to be made, but shall not be required to do
so, and Lessee shall pay the cost thereof to Lessor within five
(5) business days following demand. It is understood that Lessee
shall pay all expenses and maintenance and repair during the term
of this Lease. If Lessee is not then in default hereunder,
Lessee shall have the right to make repairs and improvements to
the Leased Premises without the consent of Lessor if such repairs
and improvements do not exceed Fifty Thousand Dollars
($50,000.00), provided such repairs or improvements do not affect
the structural integrity of the Leased Premises. Any repairs or
improvements in excess of Fifty Thousand Dollars ($50,000.00) or
affecting the structural integrity of the Leased Premises may be
done only with the prior written consent of Lessor, such consent
not to be unreasonably withheld or delayed. All alterations and
additions to the Leased Premises shall be made in accordance with
all applicable laws and shall remain for the benefit of Lessor,
except for Lessee's moveable trade fixtures. In the event of
making such alterations as herein provided, Lessee further agrees
to indemnify and save harmless Lessor from all expense, liens,
claims or damages to either persons or property or the Leased
Premises which may arise out of or result from the undertaking or
making of said repairs, improvements, alterations or additions,
or Lessee's failure to make said repairs, improvements,
alterations or additions.
ARTICLE 9. COMPLIANCE WITH LAWS AND REGULATIONS
Lessee will comply with all statutes, ordinances, rules,
orders, regulations and requirements of all federal, state, city
and local governments, and with all rules, orders and
regulations of the applicable Board of Fire Underwriters which
affect the use of the improvements. Lessee will comply with all
easements, restrictions, and covenants of record against or
affecting the Leased Premises and any franchise or license
agreements required for operation of the Leased Premises in
accordance with Article 14 hereof.
ARTICLE 10. SIGNS
Lessee shall have the right to install and maintain a sign
or signs advertising Lessee's business, provided that the signs
conform to law, and further provided that the sign or signs
conform specifically to the written requirements of the
appropriate governmental authorities.
ARTICLE 11. SUBORDINATION
(A) Lessor reserves the right and privilege to subject and
subordinate this Lease at all times to the lien of any mortgage
or mortgages now or hereafter placed upon Lessor's interest in
the Leased Premises and on the land and buildings of which said
premises are a part, or upon any buildings hereafter placed upon
the land of which the Leased Premises are a part, provided such
mortgagee shall execute its standard form, commercially
reasonable subordination, attornment and non-disturbance
agreement. Lessor also reserves the right and privilege to
subject and subordinate this Lease at all times to any and all
advances to be made under such mortgages, and all renewals,
modifications, extensions, consolidations, and replacements
thereof, provided such mortgagee shall execute its standard form,
commercially reasonable subordination, attornment and non-
disturbance agreement.
(B) Lessee covenants and agrees to execute and deliver,
upon demand, such further instrument or instruments subordinating
this Lease on the foregoing basis to the lien of any such
mortgage or mortgages as shall be desired by Lessor and any
proposed mortgagee or proposed mortgagees, provided such
mortgagee shall execute its standard form, commercially
reasonable subordination, attornment and non-disturbance
agreement.
ARTICLE l2. CONDEMNATION OR EMINENT DOMAIN
(A) If the whole of the Leased Premises are taken by any
public authority under the power of eminent domain, or by private
purchase in lieu thereof, then this Lease shall automatically
terminate upon the date possession is surrendered, and Rent shall
be paid up to that day. If any part of the Leased Premises shall
be so taken as to render the remainder thereof materially
unusable in the opinion of a licensed third party arbitrator
reasonably approved by Lessor and Lessee, for the purposes for
which the Leased Premises were leased, then Lessor and Lessee
shall each have the right to terminate this Lease on thirty (30)
days notice to the other given within ninety (90) days after the
date of such taking. In the event that this Lease shall
terminate or be terminated, the Rent shall, if and as necessary,
be paid up to the day that possession was surrendered.
(B) If any part of the Leased Premises shall be so taken
such that it does not materially interfere with the business of
Lessee, then Lessee shall, with the use of the condemnation
proceeds to be made available by Lessor, but otherwise at
Lessee's own cost and expense, restore the remaining portion of
the Leased Premises to the extent necessary to render it
reasonably suitable for the purposes for which it was leased.
Lessee shall make all repairs to the building in which the Leased
Premises is located to the extent necessary to constitute the
building a complete architectural unit. Provided, however, that
such work shall not exceed the scope of the work required to be
done by Lessee in originally constructing such building unless
Lessee shall demonstrate to Lessor's reasonable satisfaction the
availability of funds to complete such work. Provided, further,
the cost thereof to Lessor shall not exceed the proceeds of its
condemnation award, all to be done without any adjustments in
Rent to be paid by Lessee. This lease shall be deemed amended to
reflect the taking in the legal description of the Leased
Premises.
(C) All compensation awarded or paid upon such total or
partial taking of the Leased Premises shall belong to and be the
property of Lessor without any participation by Lessee, whether
such damages shall be awarded as compensation for diminution in
value to the leasehold or to the fee of the premises herein
leased. Nothing contained herein shall be construed to preclude
Lessee from prosecuting any claim directly against the condemning
authority in such proceedings for: Loss of business; damage to
or loss of value or cost of removal of inventory, trade fixtures,
furniture, and other personal property belonging to Lessee;
provided, however, that no such claim shall diminish or otherwise
adversely affect Lessor's award or the award of any fee
mortgagee.
ARTICLE 13. RIGHT TO INSPECT
Lessor reserves the right to enter upon, inspect and examine
the Leased Premises at any time during business hours, after
reasonable notice to Lessee, and Lessee agrees to allow Lessor
free access to the Leased Premises to show the premises. Upon
default by Lessee or at any time within ninety (90) days of the
expiration or termination of the Lease, Lessee agrees to allow
Lessor to then place "For Sale" or "For Rent" signs on the Leased
Premises. Lessor and Lessor's representatives shall at all times
while upon or about the Leased Premises observe and comply with
Lessee's reasonable health and safety rules, regulations,
policies and procedures. Lessor agrees to indemnify and hold
Lessee, its successors, assigns, agents and employees from and
against any liability, claims, demands, cause of action, suits
and other litigation or judgements of every kind and character,
including injury to or death of any person or persons, or
trespass to, or damage to, or loss or destruction of, any
property, whether real or personal, to the extent resulting from
the negligence or willful misconduct or Lessor or Lessor's
representatives while upon or about the Leased Premises.
ARTICLE 14. EXCLUSIVE USE
(A) After the Occupancy Date, Lessee expressly agrees and
warrants that the Leased Premises will be used exclusively as a
Tumbleweed Restaurant or other casual dining sit-down restaurant.
In any other such case, after obtaining Lessor's prior written
consent, such consent not to be unreasonably withheld or delayed,
Lessee may conduct any lawful business from the Leased Premises.
Lessee acknowledges and agrees that any other use without the
prior written consent of Lessor will constitute a default under
and a violation and breach of this Lease. Lessee agrees: To
open for business within a reasonable period of time after
completion of construction of the contemplated Improvements; to
operate all of the Leased Premises during the Term or Renewal
Terms during regular and customary hours for businesses similar
to the permitted exclusive use stated herein, unless prevented
from doing so by causes beyond Lessee's control or due to
remodeling; and to conduct its business in a professional and
reputable manner.
(B) If the Leased Premises are not operated as a Tumbleweed
Restaurant or other casual dining sit-down restaurant or other
permitted use hereunder, or remain closed for thirty (30)
consecutive days (unless such closure results from reasons beyond
Lessee's reasonable control) and in the event Lessee fails to pay
Rent when due or fulfill any other obligation hereunder, then
Lessee shall be in default hereunder and Lessor may, at its
option, cancel this Lease by giving written notice to Lessee or
exercise any other right or remedy that Lessor may have;
provided, however, that closings shall be reasonably permitted
for replacement of trade fixtures or during periods of repair
after destruction or due to remodeling.
ARTICLE 15. DESTRUCTION OF PREMISES
If, during the term of this Lease, the Leased Premises are
totally or partially destroyed by fire or other elements, within
a reasonable time (but in no event longer than one hundred eighty
(180) days and subject to the provisions herein below), Lessee
shall repair and restore the improvements so damaged or destroyed
as nearly as may be practical to their condition immediately
prior to such casualty. All rents payable by Lessee shall be
abated during the period of repair and restoration to the extent
that Lessor shall be compensated by the proceeds of the rent loss
insurance required to be maintained by Lessee hereunder.
Provided Lessee is not in default hereunder (and retains
according to the terms hereof the right to rebuild) with the
Lessor's prior written consent, which consent shall not be
unreasonably withheld or delayed, Lessee shall have the right to
promptly and in good faith settle and adjust any claim under such
insurance policies with the insurance company or companies on the
amounts to be paid upon the loss. The insurance proceeds shall
be used to reimburse Lessee for the cost of rebuilding or
restoration of the Leased Premises. Risk that the insurance
company shall be insolvent or shall refuse to make insurance
proceeds available shall be with Lessee. The Leased Premises
shall be so restored or rebuilt so as to be of at least equal
value and substantially the same character as prior to such
damage or destruction. If the insurance proceeds are less than
Fifty Thousand Dollars ($50,000), they shall be paid to Lessee
for such repair and restoration. If the insurance proceeds are
greater than or equal to Fifty Thousand Dollars ($50,000), they
shall be deposited by Lessee and Lessor into a customary
construction escrow at a nationally recognized title insurance
company, or at Lessee's option, with Lessor ("Escrowee") and
shall be made available from time to time to Lessee for such
repair and restoration. Such proceeds shall be disbursed in
conformity with the terms and conditions of a commercially
reasonable construction loan agreement. Lessee shall, in either
instance, deliver to Lessor or Escrowee (as the case may be)
satisfactory evidence of the estimated cost of completion
together with such architect's certificates, waivers of lien,
contractor's sworn statements and other evidence of cost and of
payments as the Lessor or Escrowee may reasonably require and
approve. If the estimated cost of the work exceeds One Hundred
Thousand Dollars ($100,000), all plans and specifications for
such rebuilding or restoration shall be subject to the reasonable
approval of Lessor.
Any insurance proceeds remaining with Escrowee after the
completion of the repair or restoration shall be paid to Lessor
to reduce the sum of monies expended by Lessor to acquire its
interest in the Lease Premises and rent hereunder shall be
reduced by 10.25% of such amount.
If the proceeds from the insurance are insufficient, after
review of the bids for completion of such improvements, or should
become insufficient during the course of construction, to pay for
the total cost of repair or restoration, Lessee shall, prior to
commencement of work, demonstrate to Escrowee and Lessor's
reasonable satisfaction, the availability of such funds necessary
to completion construction and Lessee shall deposit the same with
Escrowee for disbursement under the construction escrow
agreement.
Provided, further, that should the Leased Premises be
damaged or destroyed to the extent of fifty (50%) percent of its
value or such that Lessee cannot carry on business as a casual
dining restaurant without (in the opinion of a licensed third
party architect reasonably approved by Lessor and Lessee) being
closed for more than sixty (60) days (which duration of closure
may be established by Lessee by the affidavit of the approved
independent third party architect as to the estimated time of
repair) during the last two (2) years of the remaining term of
this Lease or any of the option terms of this Lease, if any
further options to renew remain, Lessee may elect within 30 days
of such damage, to then exercise at least one (1) option to renew
this Lease so that the remaining term of the Lease is not less
than five (5) years in order to be entitled to such insurance
proceeds for restoration or rebuilding. Absent such election,
this Lease shall terminate upon Lessor's receipt of funds at
least equal to the estimated cost of such repair or restoration.
ARTICLE 16. ACTS OF DEFAULT
Each of the following shall be deemed a default by Lessee
and a breach of this Lease:
(A) Failure to pay the Rent or any monetary
obligation herein reserved, or any part thereof
when the same shall be due and payable. Interest
and late charges for failure to pay Rent when due
shall accrue from the first date such Rent was due
and payable; provided, however, Lessee shall have
five (5) business days after written notice from
Lessor within which to cure the failure to pay the
Rent or any monetary obligation herein reserved.
(B) Failure to do, observe, keep and perform
any of the other terms, covenants, conditions,
agreements and provisions in this Lease to be
done, observed, kept and performed by Lessee;
provided, however, that Lessee shall have Thirty
(30) days after written notice from Lessor within
which to cure such default, or such longer time as
may be reasonably necessary if such default cannot
reasonably be cured within Thirty (30) days, if
Lessee is diligently pursuing a course of conduct
that in Lessor's reasonable opinion is capable of
curing such default, but in any event such longer
time shall not exceed 120 days after written
notice from Lessor of the default hereunder.
(C) The abandonment of the premises by
Lessee, the adjudication of Lessee as a bankrupt,
the making by Lessee of a general assignment for
the benefit of creditors, the taking by Lessee of
the benefit of any insolvency act or law, the
appointment of a permanent receiver or trustee in
bankruptcy for Lessee property, or the appointment
of a temporary receiver which is not vacated or
set aside within sixty (60) days from the date of
such appointment; provided, however, that the
foregoing shall not constitute events of default
so long as Lessee continues to otherwise satisfy
its obligations (including but not limited to the
payment of Rent) hereunder.
ARTICLE 17. TERMINATION FOR DEFAULT
In the event of any uncured default by Lessee and at any
time thereafter, Lessor may serve a written notice upon Lessee
that Lessor elects to terminate this Lease. This Lease shall
then terminate on the date so specified as if that date had been
originally fixed as the expiration date of the term herein
granted, provided, however, that Lessee shall have continuing
liability for future rents for the remainder of the original term
and any exercised renewal term as set forth in Article 19,
notwithstanding any earlier termination of the Lease hereunder
(except where Lessee has exercised a right to terminate where
granted herein), preserving unto Lessor the benefit of its
bargained-for rental payments.
ARTICLE 18. LESSOR'S RIGHT OF RE-ENTRY
In the event that this Lease shall be terminated as
hereinbefore provided, or by summary proceedings or otherwise, or
in the event of an uncured default hereunder by Lessee, or in the
event that the premises or any part thereof, shall be abandoned
by Lessee and Rent shall not be paid or other obligations
(including but not limited to repair and maintenance obligations)
of Lessee hereunder shall not be met, then Lessor or its agents,
servants or representatives, may immediately or at any time
thereafter, re-enter and resume possession of the premises or any
part thereof, and remove all persons and property therefrom,
either by summary dispossess proceedings or by a suitable action
or proceeding at law, or by force or otherwise without being
liable for any damages therefor, except for damages resulting
from Lessor's negligence or willful misconduct. Notwithstanding
anything above to the contrary, if Lessee is still in possession
of the Leased Premises, Lessor agrees to use such legal
proceedings (summary or otherwise) prescribed by law to regain
possession of the Leased Premises.
ARTICLE 19. LESSEE'S CONTINUING LIABILITY
(A) Should Lessor elect to re-enter as provided in this
Lease or should it take possession pursuant to legal proceedings
or pursuant to any notice provided for by law, Lessor shall
undertake commercially reasonable efforts to mitigate Lessee's
continuing liability hereunder as such efforts may be prescribed
by law or statute (which shall include listing the Leased
Premises with a licensed commercial real estate broker and
securing the property against waste, but shall not otherwise
include the expenditure of Lessor's funds, unless the same be
required by law or statute and cannot be waived as provided for
herein), and in addition, Lessor may either (i) terminate this
Lease or (ii) it may from time to time, without terminating the
contractual obligation of Lessee to pay Rent under this Lease,
make such alterations and repairs as may be necessary to relet
the Leased Premises or any part thereof for the remainder of the
original Term or any exercised Renewal Terms, at such Rent or
Rents, and upon such other terms and conditions as Lessor in its
sole discretion may deem advisable. Termination of Lessee's
right to possession by Court Order shall be sufficient evidence
of the termination of Lessee's possessory rights under this
Lease, and the filing of such an Order shall be notice of the
termination of Lessee's renewal rights as set forth in any
Memorandum of Lease of record.
(B) Upon each such reletting, without termination of the
contractual obligation of Lessee to pay Rent under this Lease,
all Rents received by Lessor shall be applied as follows:
1. First, to the payment of any
indebtedness other than Rent due hereunder from
Lessee to Lessor;
2. Second, to the payment of any costs and
expenses of such reletting, including brokerage
fees and attorney's fees and of costs of such
alterations and repairs;
3. Third, to the payment of Rent and other
monetary obligations due and unpaid hereunder;
4. Finally, the residue, if any, shall be
held by Lessor and applied in payment of future
Rent as the same may become due and payable
hereunder.
If such Rents received from such reletting during any month are
less than that to be paid during that month by Lessee hereunder,
Lessee shall pay any such deficiency to Lessor. Such deficiency
shall be calculated and paid monthly. No such re-entry or taking
possession of such Leased Premises by Lessor shall be construed
as an election on its part to terminate Lessee's contractual
obligations under this Lease respecting the payment of rent and
obligations for the costs of repair and maintenance unless a
written notice of such intention be given to Lessee.
(C) Notwithstanding any such reletting without termination,
Lessor may at any time thereafter elect to terminate this Lease
for any uncured breach.
(D) In addition to any other remedies Lessor may have with
this Article 19, Lessor may recover from Lessee all damages it
may incur by reason of any uncured breach, including: The cost
of recovering and reletting the Leased Premises; reasonable
attorney's fees; and, the present value (discounted at a rate of
8% per annum) of the excess of the amount of Rent and charges
equivalent to Rent reserved in this Lease for the remainder of
the Term over the then reasonable Rent value of the Leased
Premises (or the actual Rents receivable by Lessor, if relet),
(the Lessee bearing the burden of proof to demonstrate the amount
of rental loss for the same period, that through reasonable
efforts to mitigate damages, could have been avoided) for the
remainder of the Term, all of which amounts shall be immediately
due and payable from Lessee to Lessor in full. In the event that
the Rent obtained from such alternative or substitute tenant is
more than the Rent which Lessee is obligated to pay under this
Lease, then such excess shall be paid to Lessor provided that
Lessor shall credit such excess against the outstanding
obligations of Lessee due pursuant hereto, if any.
(E) It is the object and purpose of this Article 19 that
Lessor shall be kept whole and shall suffer no damage by way of
non-payment of Rent or by way of diminution in Rent. Lessee
waives and will waive all rights to trial by jury in any summary
proceedings or in any action brought to recover Rent herein which
may hereafter be instituted by Lessor against Lessee in respect
to the Leased Premises. Lessee hereby waives any rights of re-
entry it may have or any rights of redemption or rights to redeem
this Lease upon a termination of this Lease.
ARTICLE 20. PERSONALTY, FIXTURES AND EQUIPMENT
(A) All building fixtures, building machinery, and building
equipment used in connection with the operation of the Leased
Premises including, but not limited to, heating, electrical
wiring, lighting, ventilating, plumbing, walk-in
refrigerators/coolers, walk-in freezers, air conditioning
systems, and the equipment owned by Lessor and leased to Lessee
hereunder as specifically set forth on Exhibit B attached hereto,
if any, and incorporated herein by reference shall be the
property of Lessor. All other trade fixtures and all other
articles of personal property owned by Lessee shall remain the
property of Lessee.
(B) Lessee shall furnish and pay for any and all equipment,
furniture, trade fixtures, and signs, except for such items, if
any, described in Article 20(A) above, as owned by Lessor.
Lessee agrees that Lessor shall have a lien on all Lessee's
equipment, furniture, trade fixtures, furnishings, and signs as
security for the performance of and compliance with this Lease,
subject to the rights of any bona fide third party's security
interest in such property. Provided Lessee is not in default
hereunder, Lessor will agree that its interest in the personal
property of Lessee will be subordinated to financing which may
exist or which Lessee may cause to exist in the future on that
same personal property.
(C) At the end of the term of this Lease, the property
described at Article 20(B) above, after written notice to Lessor
given at least ten (10) business days prior to any proposed
removal, may be removed from the Leased Premises by Lessee
regardless of whether or not such property is attached to the
Leased Premises so as to constitute a "fixture" within the
meaning of the law; however, all damages and repairs to the
Leased Premises which may be caused by the removal of such
property shall be paid for by Lessee.
ARTICLE 21. LIENS
Lessee shall not do or cause anything to be done whereby the
Leased Premises may be encumbered by any mechanic's or other
liens. Whenever and as often as any mechanic's or other lien is
filed against said Leased Premises purporting to be for labor or
materials furnished or to be furnished to Lessee, Lessee shall
remove the lien of record by payment or by bonding with a surety
company authorized to do business in the state in which the
property is located, within forty-five (45) days from the date of
the filing of said mechanic's or other lien and delivery of
notice thereof to Lessee. Should Lessee fail to take the
foregoing steps within said forty-five (45) day period (or in any
event, prior to the expiration of the time within which Lessee
may bond over such lien to remove it as a lien upon the Leased
Premises), Lessor shall have the right, among other things, to
pay said lien without inquiring into the validity thereof, and
Lessee shall forthwith reimburse Lessor for the total expense
incurred by it in discharging said lien as additional Rent
hereunder.
ARTICLE 22. NO WAIVER BY LESSOR EXCEPT IN WRITING
No agreement to accept a surrender of the Leased Premises or
termination of this Lease shall be valid unless in writing signed
by Lessor. The delivery of keys to any employee of Lessor or
Lessor's agents shall not operate as a termination of the Lease
or a surrender of the premises. The failure of Lessor to seek
redress for violation of any rule or regulation, shall not
prevent a subsequent act, which would have originally constituted
a violation, from having all the force and effect of an original
violation. Neither payment by Lessee or receipt by Lessor of a
lesser amount than the Rent herein stipulated shall be deemed to
be other than on account of the earliest stipulated Rent. Nor
shall any endorsement or statement on any check nor any letter
accompanying any check or payment as Rent be deemed an accord and
satisfaction. Lessor may accept such check or payment without
prejudice to Lessor's right to recover the balance of such Rent
or pursue any other remedy provided in this Lease. This Lease
contains the entire agreement between the parties, and any
executory agreement hereafter made shall be ineffective to change
it, modify it or discharge it, in whole or in part, unless such
executory agreement is in writing and signed by the party against
whom enforcement of the change, modification or discharge is
sought.
ARTICLE 23. QUIET ENJOYMENT
Lessor covenants that Lessee, upon paying the Rent set forth
in Article 4 and all other sums herein reserved as Rent and upon
the due performance of all the terms, covenants, conditions and
agreements herein contained on Lessee's part to be kept and
performed, shall have, hold and enjoy the Leased Premises free
from molestation, eviction, or disturbance by Lessor, or by any
other person or persons lawfully claiming the same, and that
Lessor has good right to make this Lease for the full term
granted, including renewal periods.
ARTICLE 24. BREACH - PAYMENT OF COSTS AND ATTORNEYS' FEES
Each party agrees to pay and discharge all reasonable costs,
and actual attorneys' fees, including but not limited to
attorney's fees incurred at the trial level and in any appellate
or bankruptcy proceeding, and expenses that shall be incurred by
the prevailing party in enforcing the covenants, conditions and
terms of this Lease or defending against an alleged breach,
including the costs of reletting. Such costs, attorneys fees,
and expenses if incurred by Lessor shall be considered as Rent as
due and owing in addition to any Rent defined in Article 4
hereof.
ARTICLE 25. ESTOPPEL CERTIFICATES
Either party to this Lease will, at any time, upon not less
than ten (10) business days prior request by the other party,
execute, acknowledge and deliver to the requesting party a
statement in writing, executed by an executive officer of such
party, certifying that: (a) this Lease is unmodified (or if
modified then disclosure of such modification shall be made); (b)
this Lease is in full force and effect; (c) the date to which the
Rent and other charges have been paid; and (d) to the knowledge
of the signer of such certificate that the other party is not in
default in the performance of any covenant, agreement or
condition contained in this Lease, or if a default does exist,
specifying each such default of which the signer may have
knowledge. It is intended that any such statement delivered
pursuant to this Article may be relied upon by any prospective
purchaser or mortgagee of the Leased Premises or any assignee of
such mortgagee or a purchaser of the leasehold estate.
ARTICLE 26. FINANCIAL STATEMENTS
During the term of this Lease, Lessee will, within ninety
(90) days after the end of Lessee's fiscal year, furnish Lessor
with Lessee's financial statements (in SEC Form 10-K, if
available). The financial statements shall be audited, at the
Lessee's expense, by a nationally recognized independent
certified public accounting firm reasonably acceptable to Lessor
and shall be prepared in conformity with generally accepted
accounting principles (GAAP). Lessee shall also provide Lessor
with financial statements for the Leased Premises within 90 days
after the end of each Lease Year. The financial statements for
the Leased Premises do not need to be prepared by an independent
certified public accountant, but shall be certified as true and
correct by the chief financial officer or other authorized
officer of Lessee. Additionally, during the term of the Lease,
Lessee will within forty-five (45) days from the end of each
quarter of each fiscal year, furnish Lessor with Lessee's
financial statements (in SEC Form 10-Q if available)and financial
statements of the Leased Premises for such quarter. Lessor shall
have the right to require such financial statements for the
Lessee and the Leased Premises on a monthly basis after the
occurrence of a default in any Lease Year. Provided, however, if
Lessee shall not commit a default for twelve consecutive months,
Lessor's right to require such monthly financial statements shall
terminate until Lessee shall again commit a default in any given
Lease Year. Said quarterly (or monthly, if required by Lessor)
financial statements do not need to be prepared by an independent
certified public accountant, but shall be certified as true and
correct by the chief financial officer or other authorized
officer of Lessee. The financial statements shall conform to
GAAP, and include a balance sheet and related statements of
operations, statement of cash flows, statement of changes in
shareholder's equity, and related notes to financial statements,
if any.
ARTICLE 27. MORTGAGE
Lessee does hereby agree to make reasonable modifications of
this Lease requested by any Mortgagee of record from time to
time, provided such modifications are not substantial and do not
increase any of the Rents or obligations of Lessee under this
Lease or substantially modify any of the business elements of
this Lease.
ARTICLE 28. OPTION TO RENEW
If this Lease is not previously canceled or terminated and
if Lessee has materially complied with and performed all of the
covenants and conditions in this Lease after applicable cure
periods and is not currently in default, then Lessee shall have
the option to renew this Lease upon the same conditions and
covenants contained in this Lease for Two (2) consecutive
periods of Five (5) years each (singularly "Renewal Term"). Rent
during the Renewal Term shall increase each Lease Year by the
lesser of Two Percent (2%) of the Rent payable for the preceding
Lease Year, or the CPI-U Percentage Increase, as defined in
Article 4 hereof.
The first Renewal Term will commence on the day following
the date the original Term expires and successive Renewal Terms
would commence on the day following the last day of the then
expiring Renewal Term. Except as otherwise provided in Article
15 hereof, Lessee must give ninety (90) days written notice to
Lessor of its intent to exercise this option prior to the
expiration of the original Term of this Lease or any Renewal
Term, as the case may be.
ARTICLE 29. MISCELLANEOUS PROVISIONS
(A) All written notices shall be given to Lessor or Lessee
by certified mail or nationally recognized overnight mail.
Notices to either party shall be addressed to the person and
address given on the first page hereof. Lessor and Lessee may,
from time to time, change these addresses by notifying each other
of this change in writing. Notices of overdue Rent may be sent
to Lessee by regular, special delivery, or nationally recognized
overnight mail.
(B) The terms, conditions and covenants contained in this
Lease and any riders and plans attached hereto shall bind and
inure to the benefit of Lessor and Lessee and their respective
successors, heirs, legal representatives, and assigns.
(C) This Lease shall be governed by and construed under the
laws of the State where the Leased Premises are situate.
(D) In the event that any provision of this Lease shall be
held invalid or unenforceable, no other provisions of this Lease
shall be affected by such holding, and all of the remaining
provisions of this Lease shall continue in full force and effect
pursuant to the terms hereof.
(E) The Article captions are inserted only for convenience
and reference, and are not intended, in any way, to define,
limit, describe the scope, intent, and language of this Lease or
its provisions.
(F) In the event Lessee remains in possession of the
premises herein leased after the expiration of this Lease and
without the execution of a new lease and without Lessor's written
permission, Lessee shall be deemed to be occupying said premises
as a tenant from month-to-month, subject to all the conditions,
provisions, and obligations of this Lease insofar as the same can
be applicable to a month-to-month tenancy except that the monthly
installment of Rent shall be One Hundred Fifty percent (150%) the
amount due on the last month prior to such expiration.
(G) If any installment of Rent (whether lump sum, monthly
installments, or any other monetary amounts required by this
Lease to be paid by Lessee and deemed to constitute Rent
hereunder) shall not be paid when due, or non-monetary default
shall remain uncured after the expiration of any applicable cure
period, Lessor shall have the right to charge Lessee a late
charge of $250.00 per month for each month that any amount of
Rent installment remains unpaid or non-monetary default shall go
uncured after the first such occurrence in any 12 month period.
Said late charge shall commence after such installment is due or
non-monetary default goes uncured after the expiration of any
applicable cure period and continue until said installment,
interest and all accrued late charges are paid in full or such
non-monetary default is cured.
(H) Any part of the Leased Premises may be conveyed by
Lessor for private or public non-exclusive easement purposes at
any time, provided such easement does not interfere with the
access to the Leased Premises, visibility, or operations of the
business of Lessee. In such event Lessor shall, at its own cost
and expense, restore the remaining portion of the Leased Premises
to the extent necessary to render it reasonably suitable for the
purposes for which it was leased, all to be done without
adjustments in Rent to be paid by Lessee. All proceeds from any
conveyance of an easement shall belong solely to Lessor.
(I) For the purpose of this Lease, the term "Rent" shall be
defined as Rent under Article 4, and any other monetary amounts
required by this Lease to be paid by Lessee.
(J) Lessee agrees to cooperate with Lessor to allow Lessor
to obtain and use at Lessor's expense promotional photographs of
the Leased Premises, to the extent permitted by Lessee's
franchisor or licensor.
ARTICLE 30. REMEDIES
NON-EXCLUSIVITY. Notwithstanding anything contained herein
it is the intent of the parties that the rights and remedies
contained herein shall not be exclusive but rather shall be
cumulative along with all of the rights and remedies of the
parties which they may have at law or equity. In the event of a
breach by Lessor, Lessee shall be entitled to all remedies at law
or equity, to be cumulatively enforced.
ARTICLE 31. HAZARDOUS MATERIALS INDEMNITY
Lessee covenants, represents and warrants to Lessor, its
successors and assigns, (i) that it has not used or permitted and
will not use or permit the Leased Premises to be used, whether
directly or through contractors, agents or tenants, and to the
best of Lessee's knowledge and except as disclosed to Lessor in
writing, the Leased Premises has not at any time been used for
the generating, transporting, treating, storage, manufacture,
emission of, or disposal of any dangerous, toxic or hazardous
pollutants, chemicals, wastes or substances as defined in the
Federal Comprehensive Environmental Response Compensation and
Liability Act of 1980 ("CERCLA"), the Federal Resource
Conservation and Recovery Act of 1976 ("RCRA"), or any other
federal, state or local environmental laws, statutes,
regulations, requirements and ordinances ("Hazardous Materials");
(ii) that there have been no investigations or reports involving
Lessee, or the Leased Premises by any governmental authority
which in any way pertain to Hazardous Materials (iii) that the
operation of the Leased Premises has not violated and is not
currently violating any federal, state or local law, regulation,
ordinance or requirement governing Hazardous Materials; (iv) that
the Leased Premises is not listed in the United States
Environmental Protection Agency's National Priorities List of
Hazardous Waste Sites nor any other list, schedule, log,
inventory or record of Hazardous Materials or hazardous waste
sites, whether maintained by the United States Government or any
state or local agency; and (v) that the Leased Premises will not
contain any formaldehyde, urea or asbestos, except as may have
been disclosed in writing to Lessor by Lessee at the time of
execution and delivery of this Lease. Lessee agrees to indemnify
and reimburse Lessor, its successors and assigns, for:
(a) any breach of these representations and warranties, and
(b) any loss, damage, expense or cost arising out of
or incurred by Lessor which is the result of a breach
of, misstatement of or misrepresentation of the above
covenants, representations and warranties, and
(c) any and all liability of any kind whatsoever which
Lessor may, for any cause and at any time, sustain or
incur by reason of Hazardous Materials discovered on
the Leased Premises during the term hereof or placed or
released on the Leased Premises by Lessee;
together with all attorneys' fees, costs and disbursements
incurred in connection with the defense of any action against
Lessor arising out of the above. These covenants,
representations and warranties shall be deemed continuing
covenants, representations and warranties for the benefit of
Lessor, and any successors and assigns of Lessor and shall
survive expiration or sooner termination of this Lease. The
amount of all such indemnified loss, damage, expense or cost,
shall bear interest thereon at the lesser of 15% or the highest
rate of interest allowed by law and shall become immediately due
and payable in full on demand of Lessor, its successors and
assigns.
ARTICLE 32. ESCROWS
Upon a default by Lessee which is uncured after the
expiration of any applicable notice and cure period, or upon the
request of Lessor's Mortgagee, if any, Lessee shall deposit with
Lessor on the first day of each and every month, an amount equal
to one-twelfth (1/12th) of the estimated annual real estate
taxes, assessments and insurance (if the insurance is to be
purchased by Lessor) ("Charges") due on the Leased Premises, or
such higher amounts reasonably determined by Lessor as necessary
to accumulate such amounts to enable Lessor to pay all charges
due and owing at least thirty (30) days prior to the date such
amounts are due and payable. From time to time out of such
deposits Lessor will, upon the presentation to Lessor by Lessee
of the bills therefor, pay the Charges or at Lessee's option,
will upon presentation of receipted bills therefor, reimburse
Lessee for such payments made by Lessee. In the event the
deposits on hand shall not be sufficient to pay all of the
estimated Charges when the same shall become due from time to
time or the prior payments shall be less than the currently
estimated monthly amounts, then Lessee shall pay to Lessor on
demand any amount necessary to make up the deficiency. The
excess of any such deposits shall be credited to subsequent
payments to be made for such items. If a default or an event of
default shall occur under the terms of this Lease, Lessor may, at
its option, without being required so to do, apply any Deposit on
hand to cure the default, in such order and manner as Lessor may
elect.
ARTICLE 33. NET LEASE
Notwithstanding anything contained herein to the contrary it
is the intent of the parties hereto that this Lease shall be a
net lease and that the Rent defined pursuant to Article 4 should
be a net Rent paid to Lessor. Any and all other expenses
including but not limited to, maintenance, repair, insurance,
taxes, and assessments, shall be paid by Lessee.
ARTICLE 34. DEVELOPMENT FINANCING AGREEMENT
The parties hereto hereby acknowledge that the terms hereof
are subject to and shall in the event of conflicts be controlled
by that certain Development Financing Agreement of even date
herewith, until such Agreement is terminated in accordance with
its terms.
ARTICLE 35. 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, Lessor and Lessee have respectively
signed and sealed this Lease as of the day and year first above
written.
LESSEE: Tumbleweed, LLC.
Witness
/s/ Gail Bush By: /s/ James Mulrooney
Gail Bush Its: Executive VP & CFO
Print Name
Witness
/s/ Susan M Gosling
Susan M Gosling
Print Name
Witness
/s/ Gail Bush By: /s/ John Butorac
Gail Bush Its: President
Print Name
Witness
/s/ Susan M Gosling
Susan M Gosling
Print Name
STATE OF Kentucky)
)SS.
COUNTY OF Jefferson)
The foregoing instrument was acknowledged before me this
29th day of May, 1998, by James Mulrooney, as Executive VP & CFO
of Tumbleweed, LLC. on behalf of said limited liability company.
/s/ Kara R Strotman
Notary Public
STATE OF Kentucky)
)SS.
COUNTY OF Jefferson)
The foregoing instrument was acknowledged before me this
29th day of May, 1998, by John Butorac, as President of
Tumbleweed, LLC. on behalf of said limited liability company.
/s/ Kara R Strotman
Notary Public
[notary seal]
AEI REAL ESTATE FUND XVIII LIMITED PARTNERSHIP
By: AEI Fund Management XVIII, Inc.
Witness
/s/ Barbara J Kochevar By: /s/ Robert P Johnson
Barbara J Kochevar Robert P. Johnson, President
Print Name
Witness
/s/ Laura Steidl
Laura Steidl
Print Name
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 1st
day of May, 1998, by Robert P Johnson, the President of AEI Fund
Management XVIII, Inc., a Minnesota corporation, corporate
general partner of AEI Real Estate Fund XVIII Limited
Partnership, on behalf of said limited partnership.
/s/ Michael B Daugherty
Notary Public
[notary seal]
Exhibit A
PARCEL 1
SITUATED IN THE STATE OF OHIO, COUNTY OF FRANKLIN, CITY OF
COLUMBUS, QUARTER TOWNSHIP 4, TOWNSHIP 1, RANGE 16, UNITED STATES
MILITARY LANDS, AND BEING 1.169 ACRES OF LAND ALL OUT OF THAT
1.915 ACRE TRACT AS CONVEYED TO BROAD STREET RETAIL, LLC BY DEED
OF RECORD IN INSTRUMENT NUMBER 19970300131362, ALL REFERENCES
REFER TO THE RECORDS OF THE RECORDER'S OFFICE, FRANKLIN COUNTY,
OHIO, AND BEING MORE PARTICULARLY BOUNDED AND DESCRIBED AS
FOLLOWS:
BEGINNING, FOR REFERENCE, AT AN IRON PIN SET AT THE INTERSECTION
OF THE SOUTHERLY RIGHT-OF-WAY LINE OF EAST BROAD STREET (STATE
ROUTE 16) WITH THE EASTERLY RIGHT-OF-WAY LINE OF ROSE HILL ROAD;
THENCE NORTH 81 DEG. 48' 10" EAST, WITH SAID SOUTHERLY RIGHT-OF-
WAY LINE, A DISTANCE OF 1259.07 FEET TO AN IRON PIN SET AT THE
NORTHEASTERLY CORNER OF A 21.979 ACRE TRACT AS CONVEYED TO BROAD
STREET RETAIL, LLC OF RECORD IN INSTRUMENT NUMBER 19970300131357
AND THE TRUE POINT OF BEGINNING FOR THIS DESCRPTION;
THENCE NORTH 81 DEG. 48' 10" EAST, CONTINUING WITH SAID RIGHT-OF-
WAY LINE A DISTANCE OF 217.00 FEET TO AN IRON PIN SET;
THENCE SOUTH 8 DEG. 11' 50" EAST, WITH A NEW DIVISION LINE ACROSS
SAID 1.915 ACRE TRACT, A DISTANCE OF 222.34 FEET TO AN IRON PIN
SET IN THE NORTHERLY LINE OF A 1.835 ACRE TRACT AS CONVEYED TO
BROAD STREET RETAIL, LLC, OF RECORD IN INSTRUMENT NUMBER
19970300131365;
THENCE SOUTH 75 DEG. 25' 05" WEST, PARTLY WITH THE NORTHERLY LINE
OF SAID 1.835 ACRE TRACT AND PARTLY WITH THE NORTHERLY LINE OF
SAID 21.979 ACRE TRACT, A DISTANCE OF 165.47 FEET TO AN IRON PIN
SET;
THENCE SOUTH 73 DEG. 19' 45" WEST, CONTINUING WITH THE NORTHERLY
LINE OF SAID 21.979 ACRE TRACT, A DISTANCE OF 53.13 FEET TO AN
IRON PIN SET AT A CORNER THEREOF;
NORTH 8 DEG. 11' 50" WEST, WITH AN EASTERLY LINE OF SAID 21.979
ACRE TTACT, A DISTANCE OF 248.58 FEET TO THE TRUE POINT OF
BEGINNING AND CONTAINING 1.169 ACRES OF LAND, MORE OR LESS.
THE BASIS OF BEARING FOR THIS DESCRIPTION IS NORTH 81 DEG. 48'
10" EAST FOR THE CENTERLINE OF EAST BROAD STREET (STATE ROUTE 16)
AS THE SAME IS SHOWN ON FRANKLIN COUNTY RIGHT-OF-WAY PLANS FRA-16-
7.79-10.44.
PARCEL II
TOGETHER WITH NON-EXCLUSIVE RIGHT OF INGRESS AND EGRESS OVER A
CERTAIN 21.979 ACRE PARCEL AS RESERVED IN INSTRUMENT NO.
199710300131357 AND OVER A CERTAIN 0.722 ACRE PARCEL AS CONTAINED
IN INSTRUMENT NO. 199710300131362, RECORDER'S OFFICE, FRANKLIN
COUNTY, OHIO.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000840459
<NAME> AEI REAL ESTATE FUND XVIII LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,381,195
<SECURITIES> 0
<RECEIVABLES> 10,856
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<CURRENT-ASSETS> 4,392,051
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<CURRENT-LIABILITIES> 420,393
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0
0
<COMMON> 0
<OTHER-SE> 14,783,500
<TOTAL-LIABILITY-AND-EQUITY> 15,203,893
<SALES> 0
<TOTAL-REVENUES> 405,549
<CGS> 0
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<INCOME-PRETAX> 252,081
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<INCOME-CONTINUING> 252,081
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