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: September 30, 1998
Commission file number: 0-29274
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1789725
(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)
(651) 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 INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of September 30, 1998 and December 31, 1997
Statements for the Periods ended September 30, 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 INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
BALANCE SHEET
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(Unaudited)
ASSETS
1998 1997
CURRENT ASSETS:
Cash and Cash Equivalents $ 852,942 $ 2,506,790
Receivables 3,334 162,677
----------- -----------
Total Current Assets 856,276 2,669,467
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 6,910,968 6,612,866
Buildings and Equipment 11,321,283 8,779,112
Construction in Progress 92,791 1,078,108
Property Acquisition Costs 50,334 88,696
Accumulated Depreciation (692,517) (399,150)
----------- -----------
Net Investments in Real Estate 17,682,859 16,159,632
----------- -----------
Total Assets $18,539,135 $18,829,099
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 23,132 $ 56,307
Distributions Payable 481,250 324,841
Unearned Rent 24,200 0
----------- -----------
Total Current Liabilities 528,582 381,148
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (29,081) (24,706)
Limited Partners, $1,000 Unit Value;
24,000 Units authorized and issued;
23,829 outstanding 18,039,634 18,472,657
----------- -----------
Total Partners' Capital 18,010,553 18,447,951
----------- -----------
Total Liabilities and Partners' Capital $18,539,135 $18,829,099
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Three Months Ended Nine Months Ended
9/30/98 9/30/97 9/30/98 9/30/97
INCOME:
Rent $ 452,922 $ 282,333 $1,247,467 $ 698,606
Investment Income 14,374 100,539 140,616 399,667
--------- --------- ---------- ----------
Total Income 467,296 382,872 1,388,083 1,098,273
--------- --------- ---------- ----------
EXPENSES:
Partnership Administration -
Affiliates 58,163 58,760 187,294 173,033
Partnership Administration
and Property Management -
Unrelated Parties 30,853 30,073 94,495 82,729
Depreciation 123,898 65,756 324,522 181,593
--------- --------- ---------- ----------
Total Expenses 212,914 154,589 606,311 437,355
--------- --------- ---------- ----------
OPERATING INCOME 254,382 228,283 781,772 660,918
GAIN ON SALE OF REAL ESTATE 65,440 42,582 235,377 42,582
--------- --------- ---------- ----------
NET INCOME $ 319,822 $ 270,865 $1,017,149 $ 703,500
========= ========= ========== ==========
NET INCOME ALLOCATED:
General Partners $ 3,198 $ 2,709 $ 10,171 $ 7,035
Limited Partners 316,624 268,156 1,006,978 696,465
--------- --------- ---------- ----------
$ 319,822 $ 270,865 $1,017,149 $ 703,500
========= ========= ========== ==========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(23,829, 24,000, 23,829
and 23,952 weighted average
Units outstanding for the
periods, respectively) $ 13.29 $ 11.17 $ 42.26 $ 29.08
========= ========= ========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,017,149 $ 703,500
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 324,522 181,593
Gain on Sale of Real Estate (235,377) (42,582)
(Increase) Decrease in Receivables 159,343 (83,917)
Decrease in Payable to
AEI Fund Management, Inc. (33,175) (61,816)
Increase in Unearned Rent 24,200 55,971
----------- -----------
Total Adjustments 239,513 49,249
----------- -----------
Net Cash Provided By
Operating Activities 1,256,662 752,749
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (2,475,090) (5,959,321)
Proceeds from Sale of Real Estate 862,718 225,622
----------- -----------
Net Cash Used For
Investing Activities (1,612,372) (5,733,699)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contributions from Limited Partners 0 436,651
Organization and Syndication Costs 0 (57,869)
Increase in Distributions Payable 156,409 51,607
Distributions to Partners (1,454,547) (1,451,605)
----------- -----------
Net Cash Used For
Financing Activities (1,298,138) (1,021,216)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,653,848) (6,002,166)
CASH AND CASH EQUIVALENTS, beginning of period 2,506,790 10,729,033
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 852,942 $ 4,726,867
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1996 $ (9,754) $19,544,277 $19,534,523 23,563.35
Capital Contributions 0 436,651 436,651 436.65
Organization and
Syndication Costs 0 (57,869) (57,869)
Distributions (14,516) (1,437,089) (1,451,605)
Net Income 7,035 696,465 703,500
--------- ----------- ----------- -----------
BALANCE, September 30,1997 $ (17,235) $19,182,435 $19,165,200 24,000.00
========= =========== =========== ===========
BALANCE, December 31, 1997 $ (24,706) $18,472,657 $18,447,951 23,828.87
Distributions (14,546) (1,440,001) (1,454,547)
Net Income 10,171 1,006,978 1,017,149
--------- ----------- ----------- -----------
BALANCE, September 30,1998 $ (29,081) $18,039,634 $18,010,553 23,828.87
========= =========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 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 Income & Growth Fund XXI Limited Partnership
(Partnership) was formed to acquire and lease commercial
properties to operating tenants. The Partnership's
operations are managed by AEI Fund Management XXI, 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.
(AEI), 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 April 14, 1995 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. On January 31, 1997, the
Partnership offering terminated when the maximum
subscription limit of 24,000 Limited Partnership Units
($24,000,000) was reached.
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$24,000,000 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 INCOME & GROWTH FUND XXI 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 10% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) any
remaining balance will be distributed 90% to the Limited
Partners and 10% 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 in the same ratio as the last dollar of Net Cash
Flow is distributed. Net losses from operations will be
allocated 99% to the Limited Partners and 1% 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 10% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, the
balance of any remaining gain will then be allocated 90% to
the Limited Partners and 10% 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 INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate -
The Partnership leases its properties to various tenants
through triple net leases, which are classified as operating
leases. Under a triple net lease, the lessee is responsible
for all real estate taxes, insurance, maintenance, repairs
and operating expenses of the property. The initial Lease
terms are 20 years except for the Caribou Coffee , which is
18 years, and the Media Play retail store discussed below.
The Leases contain renewal options which may extend the
Lease term an additional 10 years for the Arby's and Caribou
Coffee store, an additional 15 years for the Denny's and
Champps Americana restaurants and 25 years for the Garden
Ridge retail store. The Leases contain rent clauses which
entitle the Partnership to receive additional rent in future
years based on stated rent increases. Certain lessees have
been granted options to purchase the property. Depending on
the lease, the purchase price is either determined by a
formula, or is the greater of the fair market value of the
property or the amount determined by a formula. In all
cases, if the option were to be exercised by the lessee, the
purchase price would be greater than the original cost of
the property.
The Partnership's properties are all commercial, single-
tenant buildings. The cost of the property and related
accumulated depreciation at September 30, 1998 are as
follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
Arby's, Montgomery, AL $ 328,310 $ 425,794 $ 754,104 $ 56,773
Media Play, Apple Valley, MN 239,690 594,170 833,860 102,428
Garden Ridge, Pineville, NC 1,181,253 2,463,138 3,644,391 246,314
Champps Americana,
Columbus, OH 242,937 478,441 721,378 44,857
Denny's, Covington, LA 532,844 772,104 1,304,948 54,174
Caribou Coffee, Charlotte, NC 705,394 605,204 1,310,598 30,331
Champps Americana,
San Antonio, TX 1,127,016 1,706,341 2,833,357 63,524
Champps Americana,
Schaumburg, IL 959,278 1,297,184 2,256,462 43,277
Champps Americana,
Livonia, MI 1,131,499 2,978,907 4,110,406 50,839
Champps Americana,
Centerville, OH 462,747 0 462,747 0
----------- ----------- ---------- ---------
$ 6,910,968 $11,321,283 $18,232,251 $ 692,517
=========== =========== ========== =========
On December 21, 1995, the Partnership purchased a 34.0%
interest in a Media Play retail store in Apple Valley,
Minnesota for $1,414,060. The property was leased to The
Musicland Group, Inc. (MGI) under a Lease Agreement with a
primary term of 18 years and annual rental payments of
$139,587.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In December, 1996, the Partnership and MGI reached an
agreement in which MGI would buy out and terminate the Lease
Agreement by making a payment of $800,000, which was equal
to approximately two years' rent. The Partnership's share
of such payment was $272,000. Under the Agreement, MGI
remained in possession of the property and performed all of
its obligations under the net lease agreement through
January 31, 1997 at which time it vacated the property and
made it available for re-let to another tenant. MGI was
responsible for all maintenance and management costs of the
property through JanuaryE31, 1997 after which date the
Partnership became responsible for its share of expenses
associated with the property until it is re-let or sold. A
specialist in commercial property leasing has been retained
to locate a new tenant for 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 Partnership's interest in the Media Play was
approximately $748,000. In the fourth quarter of 1997, a
charge to operations for real estate impairment of $580,200
was recognized, which is the difference between the book
value at DecemberE31, 1997 of $1,328,200 and the estimated
market value of $748,000. The charge was recorded against
the cost of the land, building and equipment.
On March 14, 1997, the Partnership purchased a parcel of
land in San Antonio, Texas for $1,032,299. The land is
leased to Champps Americana, Inc. (Champps) under a Lease
Agreement with a primary term of 20 years and annual rental
payments of $83,451. Effective September 9, 1997, the
annual rent was increased to $128,156. Simultaneously with
the purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
advanced funds to Champps for the construction of a Champps
Americana restaurant on the site. Initially, the
Partnership charged interest on the advances at a rate of
7.0%. Effective September 9, 1997, the interest rate was
increased to 10.75%. On December 23, 1997, after the
development was completed, the Lease Agreement was amended
to require annual rental payments of $296,023. Total
acquisition costs, including the cost of the land, were
$2,833,357.
On March 19, 1997, the Partnership purchased a Denny's
restaurant in Covington, Louisiana for $1,304,949. The
property is leased to Huntington Restaurants Group, Inc.
under a Lease Agreement with a primary term of 20 years and
annual rental payments of $141,243.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
On April 21, 1997, the Partnership purchased a 49.6%
interest in a parcel of land in Schaumburg, Illinois for
$876,387. The land is leased to Champps under a Lease
Agreement with a primary term of 20 years and annual rental
payments of $66,906. Effective October 17, 1997, the annual
rent was increased to $102,749. Simultaneously with the
purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
advanced funds to Champps for the construction of a Champps
Americana restaurant on the site. Initially, the
Partnership charged interest on the advances at a rate of
7.0%. Effective October 17, 1997, the interest rate was
increased to 10.75%. On December 31, 1997, after the
development was completed, the Lease Agreement was amended
to require annual rental payments of $236,479. The
Partnership's share of the total acquisition costs,
including the cost of the land, was $2,256,462. The
remaining interests in the property are owned by AEI Net
Lease Income & Growth Fund XX Limited Partnership and Net
Lease Income & Growth Fund 84-A Limited Partnership,
affiliates of the Partnership.
On July 8, 1997, the Partnership purchased a parcel of land
in Livonia, Michigan for $1,074,384. The land is leased to
Champps under a Lease Agreement with a primary term of 20
years and annual rental payments of $75,207. Effective
January 3, 1998, the annual rent was increased to $115,496.
Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement
under which the Partnership advanced funds to Champps for
the construction of a Champps Americana restaurant on the
site. Initially, the Partnership charged interest on the
advances at a rate of 7.0%. Effective January 3, 1998, the
interest rate was increased to 10.75%. On May 19, 1998,
after the development was completed, the Lease Agreement was
amended to require annual rental payments of $429,135.
Total acquisition costs, including the cost of the land,
were $4,110,406.
On July 31, 1997, the Partnership purchased a 93.1% interest
in a Caribou Coffee store in Charlotte, North Carolina for
$1,310,598. The property is leased to Caribou Coffee
Company, Inc. under a Lease Agreement with a primary term of
18 years and annual rental payments of $146,438. The
remaining interest in the property is owned by AEI
Institutional Net Lease Fund '93 Limited Partnership, an
affiliate of the Partnership.
On August 28, 1998, the Partnership purchased a 25% interest
in a parcel of land in Centerville, Ohio for $462,747. The
land is leased to Americana Dining Corporation (ADC) under a
Lease Agreement with a primary term of 20 years and annual
rental payments of $32,392. Simultaneously with the
purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
will advance funds to ADC for the construction of a Champps
Americana restaurant on the site. Through September 30,
1998, the Partnership had advanced $92,791 for the
construction of the property and was charging interest on
the advances at a rate of 7.0%. The Partnership's share of
the total purchase price, including the cost of the land,
will be approximately $1,058,750. After the construction is
complete, the Lease Agreement will be amended to require
annual rental payments of approximately $109,000. The
remaining interests in the property are owned by AEI Real
Estate Fund XVII Limited Partnership, AEI Real Estate Fund
XVIII Limited Partnership, and AEI Income & Growth Fund XXII
Limited Partnership, affiliates of the Partnership.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
Through September 30, 1998, the Partnership sold 40.7615% of
its interest in the Champps Americana restaurant in
Columbus, Ohio, in six separate transactions to unrelated
third parties. The Partnership received total net sale
proceeds of $1,383,508 which resulted in a total net gain of
$341,928. The total cost and related accumulated
depreciation of the interests sold was $1,087,502 and
$45,922, respectively. For the nine months ended September
30, 1998 and 1997, the net gain was $235,377 and $42,582,
respectively.
During the first nine months of 1998 and 1997, the
Partnership distributed $348,252 and $109,810 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 $14.47 and $7.87 per Limited
Partnership Unit, respectively. The remaining net sale
proceeds will either be reinvested in additional properties
or distributed to the Partners in the future.
The Partnership has incurred net costs of $433,345 relating
to the review of potential property acquisitions. Of these
costs, $383,011 have been capitalized and allocated to land,
building and equipment. The remaining costs of $50,334 have
been capitalized and will be allocated to property
acquisitions in future periods.
(4) Payable to AEI Fund Management, Inc. -
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 nine months ended September 30, 1998 and 1997, the
Partnership recognized rental income of $1,247,467 and $698,606,
respectively. During the same periods, the Partnership earned
$140,616 and $399,667, respectively, in investment income from
subscriptions proceeds and sale proceeds which were invested in
short-term money market accounts, commercial paper and federal
agency notes. This investment income constituted 10% and 36%
respectively, of total income for the periods. The percentage of
total income represented by investment income declines as
subscription proceeds are invested in properties.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Musicland Group, Inc. (MGI), the lessee of the Media Play
retail store in Apple Valley, Minnesota experienced financial
difficulties and was aggressively restructuring its organization.
As part of the restructuring, the Partnership and MGI reached an
agreement in December, 1996 in which MGI would buy out and
terminate the Lease Agreement by making a payment of $800,000,
which is equal to approximately two years' rent. The
Partnership's share of such payment was $272,000. Under the
Agreement, MGI remained in possession of the property and
performed all of its obligations under the net lease agreement
through January 31, 1997 at which time it vacated the property
and made it available for re-let to another tenant. MGI was
responsible for all maintenance and management costs of the
property through January 31, 1997 after which date the
Partnership became responsible for its share of expenses
associated with the property until it is re-let or sold. A
specialist in commercial property leasing has been retained to
locate a new tenant for 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
Partnership's interest in the Media Play was approximately
$748,000. In the fourth quarter of 1997, a charge to operations
for real estate impairment of $580,200 was recognized, which is
the difference between the book value at December 31, 1997 of
$1,328,200 and the estimated market value of $748,000. The
charge was recorded against the cost of the land, building and
equipment.
During the nine months ended September 30, 1998 and 1997,
the Partnership paid Partnership administration expenses to
affiliated parties of $187,294 and $173,033, respectively. These
administration expenses include initial start-up costs and
expenses associated with 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 $94,495 and $82,729, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, insurance and other property costs. The increase in
these expenses in 1998, when compared to 1997, is the result of
expenses incurred in 1998 related to the Media Play situation
discussed above.
The Partnership distributes all of its net income during
the offering and acquisition phases, and if net income after
deductions for depreciation is not sufficient to fund the
distributions, the Partnership may distribute other available
cash that constitutes capital for accounting purposes.
As of September 30, 1998, the Partnership's cash
distribution rate was 8.0% on an annualized basis. Distributions
of Net Cash Flow to the General Partners are subordinated to the
Limited Partners as required in the Partnership Agreement. As a
result, 99% of distributions were allocated to Limited Partners
and 1% to the General Partners.
Inflation has had a minimal effect on income from
operations. The Leases contain cost of living increases which
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.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
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
The Partnership's primary sources of cash will be proceeds
from the sale of Units, investment income, rental income and
proceeds from the sale of property. Its primary uses of cash
will be investment in real properties, payment of expenses
involved in the sale of units, the organization of the
Partnership, the management of properties, the administration of
the Partnership, and the payment of distributions.
Until the offering of Units was completed, the
Partnership's primary source of cash flow was from the sale of
Limited Partnership Units. The Partnership offered for sale up
to $24,000,000 of limited partnership interests (the "Units")
(24,000 Units at $1,000 per Unit) pursuant to a registration
statement effective February 1, 1995. From FebruaryE1, 1995 to
AprilE14, 1995, the minimum number of Limited Partnership Units
(1,500) needed to form the Partnership were sold and on April 14,
1995, a total of 2,937.444 Units ($2,937,444) were transferred
into the Partnership. On January 31, 1997, the Partnership
offering terminated when the maximum subscription limit of 24,000
Limited Partnership Units ($24,000,000) was reached. From
subscription proceeds, the Partnership paid organization and
syndication costs (which constitute a reduction of capital) of
$3,277,000.
Before the acquisition of properties, cash flow from
operating activities is not significant. Net income, after
adjustment for depreciation, is lower during the first few years
of operations as administrative expenses remain high and a large
amount of the Partnership's assets remain invested on a short-
term basis in lower-yielding cash equivalents. Net income will
become the largest component of cash flow from operating
activities and the largest component of cash flow after the
completion of the acquisition phase.
The Partnership Agreement requires that all proceeds from
the sale of Units be invested or committed to investment in
properties by the later of two years after the date of the
Prospectus or six months after termination of the offer and sale
of Units. While the Partnership is purchasing properties, cash
flow from investing activities (investment in real property) will
remain negative and will constitute the principal use of the
Partnership's available cash flow.
On March 14, 1997, the Partnership purchased a parcel of
land in San Antonio, Texas for $1,032,299. The land is leased to
Champps Americana, Inc. (Champps) under a Lease Agreement with a
primary term of 20 years and annual rental payments of $83,451.
Effective September 9, 1997, the annual rent was increased to
$128,156. Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement under
which the Partnership advanced funds to Champps for the
construction of a Champps Americana restaurant on the site.
Initially, the Partnership charged interest on the advances at a
rate of 7.0%. Effective September 9, 1997, the interest rate was
increased to 10.75%. On December 23, 1997, after the development
was completed, the Lease Agreement was amended to require annual
rental payments of $296,023. Total acquisition costs, including
the cost of the land, were $2,833,357.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On March 19, 1997, the Partnership purchased a Denny's
restaurant in Covington, Louisiana for $1,304,949. The property
is leased to Huntington Restaurants Group, Inc. under a Lease
Agreement with a primary term of 20 years and annual rental
payments of $141,243.
On April 21, 1997, the Partnership purchased a 49.6%
interest in a parcel of land in Schaumburg, Illinois for
$876,387. The land is leased to Champps under a Lease Agreement
with a primary term of 20 years and annual rental payments of
$66,906. Effective October 17, 1997, the annual rent was
increased to $102,749. Simultaneously with the purchase of the
land, the Partnership entered into a Development Financing
Agreement under which the Partnership advanced funds to Champps
for the construction of a Champps Americana restaurant on the
site. Initially, the Partnership charged interest on the
advances at a rate of 7.0%. Effective October 17, 1997, the
interest rate was increased to 10.75%. On December 31, 1997,
after the development was completed, the Lease Agreement was
amended to require annual rental payments of $236,479. The
Partnership's share of the total acquisition costs, including the
cost of the land, was $2,256,462. The remaining interests in the
property are owned by AEI Net Lease Income & Growth Fund XX
Limited Partnership and Net Lease Income & Growth Fund 84-A
Limited Partnership, affiliates of the Partnership.
On July 8, 1997, the Partnership purchased a parcel of
land in Livonia, Michigan for $1,074,384. The land is leased to
Champps under a Lease Agreement with a primary term of 20 years
and annual rental payments of $75,207. Effective January 3,
1998, the annual rent was increased to $115,496. Simultaneously
with the purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
advanced funds to Champps for the construction of a Champps
Americana restaurant on the site. Initially, the Partnership
charged interest on the advances at a rate of 7.0%. Effective
January 3, 1998, the interest rate was increased to 10.75%. On
May 19, 1998, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$429,135. Total acquisition costs, including the cost of the
land, were $4,110,406.
On July 31, 1997, the Partnership purchased a 93.1%
interest in a Caribou Coffee store in Charlotte, North Carolina
for $1,310,598. The property is leased to Caribou Coffee
Company, Inc. under a Lease Agreement with a primary term of 18
years and annual rental payments of $146,438. The remaining
interest in the property is owned by AEI Institutional Net Lease
Fund '93 Limited Partnership, an affiliate of the Partnership.
On August 28, 1998, the Partnership purchased a 14%
interest in a parcel of land in Centerville, Ohio for $259,138.
The land is leased to Americana Dining Corporation (ADC) under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $18,140. Simultaneously with the purchase of the
land, the Partnership entered into a Development Financing
Agreement under which the Partnership will advance funds to ADC
for the construction of a Champps Americana restaurant on the
site. Through September 30, 1998, the Partnership had advanced
$51,963 for the construction of the property and was charging
interest on the advances at a rate of 7.0%. The Partnership's
share of the total purchase price, including the cost of the
land, will be approximately $592,900. After the construction is
complete, the Lease Agreement will be amended to require annual
rental payments of approximately $61,000. The Partnership has
incurred net costs of $6,375 related to the acquisition of the
property. The costs have been capitalized and will be allocated
to land, building and equipment. The remaining interests in the
property are owned by AEI Real Estate Fund XVIII Limited
Partnership, AEI Income & Growth Fund XXI Limited Partnership and
AEI Income & Growth Fund XXII Limited Partnership, affiliates of
the Partnership.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Through September 30, 1998, the Partnership sold 40.7615%
of its interest in the Champps Americana restaurant in Columbus,
Ohio, in six separate transactions to unrelated third parties.
The Partnership received total net sale proceeds of $1,383,508
which resulted in a total net gain of $341,928. The total cost
and related accumulated depreciation of the interests sold was
$1,087,502 and $45,922, respectively. For the nine months ended
SeptemberE30, 1998 and 1997, the net gain was $235,377 and
$42,582, respectively.
During the first nine months of 1998 and 1997, the
Partnership distributed $348,252 and $109,810 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 $14.47 and $7.87 per Limited Partnership Unit,
respectively. The remaining net sale proceeds will either be
reinvested in additional properties or distributed to the
Partners in the future.
After completion of the acquisition phase, 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. 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. In prior
years, three Limited Partners redeemed a total of 171.1
Partnership Units for $154,021. The redemptions increased the
remaining Limited Partners' ownership interest in the
Partnership.
Until capital is invested in properties, the Partnership
will remain liquid. At SeptemberE30, 1998, $853,229 or 5% of the
Partnership's assets were in cash or cash equivalents (including
accrued interest receivable). After completion of property
acquisitions, the Partnership will attempt to maintain a cash
reserve of only approximately 1% of subscription proceeds.
Because properties are purchased for cash and leased under triple-
net leases, this is considered adequate to satisfy most
contingencies.
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 Purchase Agreement dated July 28,
1998 between the Partnership and Tall
Pines Farm Limited Partnership relating
to the property at 161 E. Campus View
Boulevard, Columbus, Ohio.
10.2 Assignment of the Development
Financing Agreement and Net Lease
Agreement dated August 27, 1998 between
the Partnership, AEI Real Estate Fund
XVII Limited Partnership, AEI Real Estate
Fund XVIII Limited Partnership, AEI
Income & Growth Fund XXII Limited
Partnership, and Americana Dining
Corporation relating to the property at
7880 Washington Village Drive,
Centerville, Ohio.
10.3 Development Financing Agreement
dated June 29, 1998 between AEI Income &
Growth Fund XXII Limited Partnership and
Americana Dining Corporation relating to
the property at 7880 Washington Village
Drive, Centerville, Ohio.
10.4 Net Lease Agreement dated June 29,
1998 between AEI Income & Growth Fund
XXII Limited Partnership and Americana
Dining Corporation relating to the
property at 7880 Washington Village
Drive, Centerville, Ohio.
27 Financial Data Schedule for period
ended September 30, 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: November 9, 1998 AEI Income & Growth Fund XXI
Limited Partnership
By: AEI Fund Management XXI, 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)
PURCHASE AGREEMENT
Champps Restaurant - Columbus, OH
This AGREEMENT, entered into effective as of the 28th of July,
1998.
l. Parties. Seller is AEI Income & Growth Fund XXI Limited
Partnership which owns an undivided 33.4637% interest in the fee
title to that certain real property legally described in the
attached Exhibit "A" (the "Entire Property") Buyer is Tall Pines
Farm Limited Partnership ("Buyer"). Seller wishes to sell and
Buyer wishes to buy a portion as Tenant in Common of Seller's
interest in the Entire Property.
2. Property. The Property to be sold to Buyer in this transaction
consists of an undivided 6.4252 percentage interest (hereinafter,
simply the "Property") as Tenant in Common in the Entire
Property.
3. Purchase Price. The purchase price for this percentage
interest in the Entire Property is $250,000 all cash.
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $5,000
to Seller (which shall be deposited into escrow according to
the terms hereof) (the "First Payment"). The First Payment
will be credited against the purchase price when and if
escrow closes and the sale is completed.
(b) Buyer will deposit the balance of the purchase price,
$245,000 (the "Second Payment") into escrow in sufficient
time to allow escrow to close on the closing date.
5. Closing Date. Escrow shall close on or before July 10, 1998.
6. Due Diligence. Buyer will have until the expiration of the
tenth business day (The "Review Period") after delivery of each
of following items, to be supplied by Seller, to conduct all of
its inspections and due diligence and satisfy itself regarding
each item, the Property, and this transaction. Buyer agrees to
indemnify and hold Seller harmless for any loss or damage to the
Entire Property or persons caused by Buyer or its agents arising
out of such physical inspections of the Entire Property.
(a) The original and one copy of a title insurance
commitment for an Owner's Title insurance policy (see
paragraph 8 below).
(b) A copy of a Certificate of Occupancy or other such
document certifying completion and granting permission to
permanently occupy the improvements on the Entire Property
as are in Seller's possession.
(c) A copy of an "as built" survey of the Entire Property
done concurrent with Seller's acquisition of the Property.
(d) Lease (as further set forth in paragraph 11(a) below) of
the Entire Property showing occupancy date, lease expiration
date, rent, and Guarantys, if any, accompanied by such
tenant financial statements as may have been provided most
recently to Seller by the Tenant and/or Guarantors.
Buyer Initial: /s/ FW /s/ FW
Purchase Agreement for Champps - Columbus, OH
It is a contingency upon Seller's obligations hereunder that
two (2) copies of Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and AEI Real Estate Fund XVIII
Limited Partnership and dated on escrow closing date be delivered
to the Seller on the closing date.
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice, via first class
mail, return receipt requested, to Seller and escrow holder
before the expiration of the Review Period. Such notice shall be
deemed effective only upon receipt by Seller. If this Agreement
is not cancelled as set forth above, the First Payment shall be
non-refundable unless Seller shall default hereunder.
If Buyer cancels this Agreement as permitted under this
Section, except for any escrow cancellation fees and any
liabilities under the first paragraph of section 6 of this
agreement (which will survive), Buyer (after execution of such
documents reasonably requested by Seller to evidence the
termination hereof) shall be returned its First Payment, and
Buyer will have absolutely no rights, claims or interest of any
type in connection with the Property or this transaction,
regardless of any alleged conduct by Seller or anyone else.
Unless this Agreement is canceled by Buyer pursuant to the
terms hereof, if Buyer fails to make the Second Payment, Seller
shall be entitled to retain the First Payment and Buyer
irrevocably will be deemed to be in default under this Agreement.
Seller may, at its option, retain the First Payment and declare
this Agreement null and void, in which event Buyer will be deemed
to have canceled this Agreement and relinquish all rights in and
to the Property or Seller may exercise its rights under Section
14 hereof. If this Agreement is not canceled and the Second
Payment is made when required, all of Buyer's conditions and
contingencies will be deemed satisfied.
7. Escrow. Escrow shall be opened by Seller and funds deposited
in escrow upon acceptance of this agreement by both parties. The
escrow holder will be a nationally-recognized escrow company
selected by Seller. A copy of this Agreement will be delivered to
the escrow holder and will serve as escrow instructions together
with the escrow holder's standard instructions and any additional
instructions required by the escrow holder to clarify its rights
and duties (and the parties agree to sign these additional
instructions). If there is any conflict between these other
instructions and this Agreement, this Agreement will control.
8. Title. Closing will be conditioned on the commitment of a
title company selected by Seller to issue an Owner's policy of
title insurance, dated as of the close of escrow, in an amount
equal to the purchase price, insuring that Buyer will own
insurable title to the Property subject only to: the title
company's standard exceptions; current real property taxes and
assessments; survey exceptions; the rights of parties in
possession pursuant to the lease defined in paragraph 11 below;
and other items of record disclosed to Buyer during the Review
Period.
Buyer shall be allowed ten (10) days after receipt of said
commitment for examination and the making of any objections to
marketability thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller shall
be allowed eighty (80) days to make such title marketable 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 make title marketable, or is unable to make title
marketable or obtain insurable title, (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof) Buyer's First Payment shall be returned and
this Agreement shall be null and void and of no further force and
effect. Seller has no obligation to spend any funds or make any
effort to satisfy Buyer's objections, if any.
Pending satisfaction of Buyer's objections, the payments
hereunder required shall be postponed, but upon satisfaction of
Buyer's objections and
Buyer Initial: /s/ FW /s/ FW
Purchase Agreement for Champps - Columbus, OH
within ten (10) days after written notice of satisfaction of
Buyer's objections to the Buyer, the parties shall perform this
Agreement according to its terms.
9. Closing Costs. Seller will pay one-half of escrow fees, the
cost of the title commitment and any brokerage commissions
payable. The Buyer will pay the cost of issuing a Standard
Owners Title Insurance Policy in the full amount of the purchase
price, if Buyer shall decide to purchase the same. Buyer will
pay all recording fees, one-half of the escrow fees, and the cost
of an update to the Survey in Sellers possession (if an update is
required by Buyer.) Each party will pay its own attorney's fees
and costs to document and close this transaction.
10. Real Estate Taxes, Special Assessments and Prorations.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
have been paid in full. Unpaid real estate taxes and unpaid
levied and pending special assessments existing on the date
of Closing shall be the responsibility of Buyer and Seller
in proportion to their respective Tenant in Common
interests, pro-rated, however, to the date of closing for
the period prior to closing, which shall be the
responsibility of Seller if Tenant shall not pay the same.
Seller and Buyer shall likewise pay all taxes due and
payable in the year after Closing and any unpaid
installments of special assessments payable therewith and
thereafter, if such unpaid levied and pending special
assessments and real estate taxes are not paid by any tenant
of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the date of Closing. Seller shall be entitled
to all income earned and shall be responsible for all
expenses incurred prior to the date of Closing, and Buyer
shall be entitled to its proportionate share of all income
earned and shall be responsible for its proportionate share
of all operating expenses of the Entire Property incurred on
and after the date of closing.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) Except for the lease in existence between AEI Income &
Growth Fund XXI Limited Partnership and AEI Real Estate Fund
XVIII Limited Partnership (as "landlord") and Americana
Dining Corporation ("Tenant"), dated August 29, 1996, Seller
is not aware of any leases of the Property. The above
referenced lease agreement also has a first right of refusal
in favor of the Tenant as set forth in Article 34 of said
lease agreement, which right shall apply to any attempted
disposition of the Property by Buyer after this transaction.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property.
(iii) Except as previously disclosed to Buyer and as
permitted in paragraph (b) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the closing date.
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts that would materially affect the Property and be
binding on Buyer after the Closing Date without Buyer's
prior consent, which will not be unreasonably withheld.
However, Buyer acknowledges that Seller retains the right
Buyer Initial: /s/ FW /s/ FW
Purchase Agreement for Champps - Columbus, OH
both prior to and after the Closing Date to freely transfer
all or a portion of Seller's remaining undivided interest in
the Entire Property, provided such sale shall not encumber
the Property being purchased by Buyer in violation of the
terms hereof or the contemplated Co-Tenancy Agreement.
12. Disclosures.
(a) Seller has received no notice that there are now, and
at the Closing there will be, no material, physical or
mechanical defects of the Property, including, without
limitation, the plumbing, heating, air conditioning,
ventilating, electrical systems, and all such items are in
good operating condition and repair and in compliance with
all applicable governmental , zoning and land use laws,
ordinances, regulations and requirements.
(b) Seller has received no notice that the use and
operation of the Property now is, and at the time of Closing
will be, in full compliance with applicable building codes,
safety, fire, zoning, and land use laws, and other
applicable local, state and federal laws, ordinances,
regulations and requirements.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the Tenant from using and operating the Property
after the Closing in the manner in which the Property has
been used and operated prior to the date of this Agreement.
(d) Seller has received no notice that the Property is not,
and as of the Closing will not be, 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 Property including, but
not limited to, soil and groundwater conditions. To the
best of Seller's knowledge: there is no proceeding or
inquiry by any governmental authority with respect to the
presence of Hazardous Materials on the Property or the
migration of Hazardous Materials from or to other property.
Buyer agrees that Seller will have no liability of any type
to Buyer or Buyer's successors, assigns, or affiliates in
connection with any Hazardous Materials on or in connection
with the Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Property arising out of Seller's gross negligence or
intentional misconduct.
(e) Buyer agrees that it shall be purchasing the Property
in its then present condition, as is, where is, and Seller
has no obligations to construct or repair any improvements
thereon or to perform any other act regarding the Property,
except as expressly provided herein.
(f) Buyer acknowledges that, having been given the
opportunity to inspect the Property and such financial
information on the Lessee and Guarantors of the Lease as
Buyer or its advisors shall request if in Seller's
possession, Buyer is relying solely on its own investigation
of the Property and not on any information provided by
Seller or to be provided except as set forth herein. Buyer
further acknowledges that the information provided and to be
provided by Seller with respect to the Property and to the
Lessee and Guarantors of Lease was obtained from a variety
of sources and Seller neither (a) has made independent
investigation or verification of such information, or (b)
makes any representations as to the accuracy or completeness
of such information. The sale of the Property as provided
for herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
Seller herein, except as otherwise specified herein in
Paragraphs 11 (a) or (b) above, Seller makes no Warranty or
representation, Express or Implied, or arising by operation
of law, including, but not limited to, any warranty or
condition, habitability, tenantability, suitability for
commercial purposes, merchantability, or fitness for a
particular purpose, in respect of the Property.
Buyer Initial: /s/ FW /s/ FW
Purchase Agreement for Champps - Columbus, OH
The provisions (d) - (f) above shall survive Closing.
13. Closing.
(a) Before the closing date, Seller will deposit into
escrow an executed special warranty deed warranting title
against lawful claims by, through or under a conveyance from
Seller, but not further or otherwise, conveying insurable
title of the Property to Buyer, subject to the exceptions
contained in paragraph 8 above.
(b) On or before the closing date, Buyer will deposit into
escrow: the balance of the purchase price when required
under Section 4; any additional funds required of Buyer,
(pursuant to this agreement or any other agreement executed
by Buyer) to close escrow. Both parties will sign and
deliver to the escrow holder any other documents reasonably
required by the escrow holder to close escrow.
(c) On the closing date, if escrow is in a position to
close, the escrow holder will: record the deed in the
official records of the county where the Property is
located; cause the title company to commit to issue the
title policy; immediately deliver to Seller the portion of
the purchase price deposited into escrow by cashier's check
or wire transfer (less debits and prorations, if any);
deliver to Seller and Buyer a signed counterpart of the
escrow holder's certified closing statement and take all
other actions necessary to close escrow.
14. Defaults. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies heretofore paid by the
Buyer. In addition, Seller shall retain all remedies available
to Seller at law or in equity.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has paid the First Payment, deposited
the balance of the Second Payment for the purchase price into
escrow, performed all of its other obligations and satisfied all
conditions under this Agreement, and unconditionally notified
Seller that it stands ready to tender full performance, purchase
the Property and close escrow as per this Agreement, regardless
of any alleged default or misconduct by Seller. Provided,
however, that in no event shall Seller be liable for any actual,
punitive, consequential or speculative damages arising out of any
default by Seller hereunder.
15. Buyer's Representations and Warranties.
a. Buyer represents and warrants to Seller as follows:
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
assurances as Seller or the Title Company may require and be
reasonable in order to consummate the transactions
contemplated herein.
(ii) 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 hereby.
Buyer Initial: /s/ FW /s/ FW
Purchase Agreement for Champps - Columbus, OH
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. Damages, Destruction and Eminent Domain.
(a) If, prior to closing, the 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 to the extent that the cost of
repair exceeds $10,000.00, this Agreement shall become null
and void, at Buyer's option exercised, if at all, by written
notice to Seller within ten (10) 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 (i) all contingencies set
forth in Paragraph 6 hereof have been satisfied, or waived;
and (ii) any ten-day period provided for above in this
Subparagraph 16a 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 assign to Buyer the Seller's right, title, and
interest in and to all insurance proceeds (pro-rata in
relation to the Entire Property) resulting from said damage
or destruction to the extent that the same are payable with
respect to damage to the Property, subject to rights of any
Tenant of the Entire Property.
If the cost of repair is less than $10,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds pro-rata in relation to the
Entire Property, subject to rights of any Tenant of the
Entire Property.
(b) If, prior to closing, the Property, or any part
thereof, is taken by eminent domain, 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 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 Entire Property, subject to rights of any
Tenant of the Entire Property.
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
17. Buyer's 1031 Tax Free Exchange.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax free
exchange, Buyer acknowledges that Seller has made no
representations, warranties, or agreements to Buyer or Buyer's
agents that the transaction contemplated by the Agreement will
qualify for such tax treatment, nor has there been any reliance
thereon by Buyer respecting the legal or tax implications of the
transactions contemplated hereby. Buyer further represents that
it has sought and obtained such third party advice and counsel as
it deems necessary in regards to the tax implications of this
transaction.
Buyer wishes to novate/assign the ownership rights and
interest of this Purchase Agreement to Eastwind Holding Company
who will act as Accommodator to perfect the 1031 exchange by
preparing an agreement of exchange of Real Property whereby
Eastwind Holding Company will be an independent third party
purchasing the ownership interest in subject property from Seller
and selling
Buyer Initial: /s/ FW /s/ FW
Purchase Agreement for Champps - Columbus, OH
the ownership interest in subject property to Buyer under the
same terms and conditions as documented in this Purchase
Agreement. Buyer asks the Seller, and Seller agrees to cooperate
in the perfection of such an exchange if at no additional cost or
expense to Seller or delay in time. Buyer hereby indemnifies and
holds Seller harmless from any claims and/or actions resulting
from said exchange. Pursuant to the direction of Eastwind
Holding Company, Seller will deed the property to Buyer.
18. Cancellation
If any party elects to cancel this Contract because of any
breach by another party or because escrow fails to close by
the agreed date, the party electing to cancel shall deliver
to escrow agent a notice containing the address of the party
in breach and stating that this Contract shall be cancelled
unless the breach is cured within 13 days following the
delivery of the notice to the escrow agent. Within three
days after receipt of such notice, the escrow agent shall
send it by United States Mail to the party in breach at the
address contained in the Notice and no further notice shall
be required. If the breach is not cured within the 13 days
following the delivery of the notice to the escrow agent,
this Contract shall be cancelled.
19. 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 Property and the other matters described,
and it supersedes any other agreements or understandings.
Exhibits attached to this Agreement are incorporated into
this Agreement.
(b) If this escrow has not closed by July 10, 1998, through
no fault of Seller, Seller may either, at its election,
extend the closing date or exercise any remedy available to
it by law, including terminating this Agreement.
(c) Funds to be deposited or paid by Buyer must be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) 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:
Attention: Robert P. Johnson
AEI Income & Growth Fund XXI Limited Partnership
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
Buyer Initial: /s/ FW /s/ FW
Purchase Agreement for Champps - Columbus, OH
If to Buyer:
Tall Pines Farm Limited Partnership
Tall Pines Farm, LLC, its general partner
Fred V. White, member
E. Louise White, member
Fred V. White, Jr., member
Pamela W. Proctor, member
9316 Brandy Wine Lane
Cincinnati, OH 45241
When accepted, this offer will be a binding agreement for
valid and sufficient consideration which will bind and benefit
Buyer, Seller and their respective successors and assigns. Buyer
is submitting this offer by signing a copy of this offer and
delivering it to Seller. Seller has five (5) business days from
receipt within which to accept this offer.
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER: TALL PINES FARM LIMITED PARTNERSHIP
By: Tall Pines Farm, LLC, its general partner
By:/s/ Fred V White Pres
Fred V. White, President
By:/s/ Fred V White Jr Secretary
Fred V. White, Jr., Secretary
WITNESS: WITNESS:
(as to Fred V White, Presdient) (as to Fred V White Jr.,
Secretary)
/s/ Diane M McAdams /s/ Denise Burdett
Diane M McAdams Denise Burdett
(Print Name) (Print Name)
WITNESS: WITNESS:
/s/ Mark D Keller /s/ Paula Kremer
Mark D Keller Paula Kremer
(Print Name) (Print Name)
Buyer Initial: /s/ FW /s/ FW
Purchase Agreement for Champps - Columbus, OH
SELLER: AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP a
Minnesota limited partnership
By: AEI Fund Management XXI Inc., its corporate
general partner
By:/s/ Robert P Johnson
Robert P. Johnson, President
WITNESS:
/s/ Laura M Steidl
Laura M Steidl
(Print Name)
WITNESS:
/s/ Keith Dennler
Keith Dennler
(Print Name)
Buyer Initial: /s/ FW /s/ FW
Purchase Agreement for Champps - Columbus, OH
LEGAL DESCRIPTION
Situated in the State of Ohio, County of Franklin, City of
Columbus, being located in Section 2, Township 2, Range 18,
United States Military Lands, and being part of a 43. 161
acre tract of land (Parcel No. 610-146452) conveyed to Forty-
One Corporation (the Grantor), by deed of record in Official
Record 15500 A-G, all references being to records in the
Recorder's Office, Franklin County Ohio, and being more
particularly described as follows:
Beginning for reference at the intersection of North High
Street (US 23) and East Campus View Boulevard (80.00 feet in
width) as shown in Plat Book 60, Page 26:
thence S 86 49' 53" E, along the centerline of said East
Campus View Boulevard, a distance of 900.00 feet to a point
of curvature,
thence along the centerline of said East Campus View
Boulevard, with a curve tot he left having a radius of
1350.00 feet, a chord bearing of N 89 27' 50" E, and a chord
distance of 174.45 feet to the intersection with centerline
of High Cross Boulevard (80.00 feet in width);
thence S 1 53'32" E, along the centerline of said High cross
Boulevard a distance of 74.72 feet to a point;
thence N 88 06'28" E, a distance of 40.00 feet to an iron
pin set in the easterly right of way line of said High Cross
Boulevard, said point being the True Point of Beginning of
herein described tract;
thence along the easterly right of way line of said High
Cross Boulevard, with a curve to the right, having a radius
of 40.00 feet, a chord bearing of N 40 23'34" E, and a chord
distance of 53.83 feet to an iron pin set in the southerly
right of way line of said East Campus View Boulevard;
thence along the southerly right of way line of said East
Campus View Boulevard and the northerly line of herein
described tract, with a curve to the left, having a radius
of 1390.00 feet, a chord bearing of N 82 25'24" E, and a
chord distance of 12.36 feet to an iron pin set;
thence N 82 10' 07" E, along the southerly right of way line
of said East Campus View boulevard and the northerly line of
herein described tract, a distance of 209.28 feet to an iron
pin set at the northeasterly corner of herein described
tract;
thence s 7 49' 49" E, along the easterly line of herein
described tract, a distance of 312.60 feet to an iron pin
set at the southeasterly corner of herein described tract;
thence S 82 10'11" W, along the southerly line of herein
described tract, a distance of 318.01 feet to an iron pin
set in the easterly right of way line of said High Cross
Boulevard at the southwesterly corner of herein described
tract;
thence along the easterly right of way line of said High
Cross Boulevard and the westerly line of herein described
tract, with a curve to the right, having a radius of 2960.00
feet, a chord bearing of N 9 21' 59" E, and a chord distance
of 10/.64 feet to an iron pin set;
thence N 9 28'10" E, along the easterly right of way line of
said High Cross Boulevard and the westerly line of herein
described tract a distance of 89.24 feet to an iron pin set;
thence along the easterly right of way line of said High
Cross Boulevard and the westerly line of herein described
tract, with a curve to the left, having a radius of 390.00
feet, a chord bearing at N 3 47' 19" E, and a chord distance
of 77.21 feet to an iron pin set;
thence N 53' 32" W, along the easterly right of way line of
said High Cross Boulevard and the westerly line of herein
described tract a distance of 106/36 feet to the True Point
of Beginning containing 2,005 acres, more or less, and
subject to any rights of way, easements, and restrictions of
record.
The Basis of Bearing in this description is the centerline
of East Campus View Boulevard, being S 86 49' 53" E, as
shown in Plat Book 61, Page 79, Recorder's Office, Franklin
County, Ohio.
ASSIGNMENT
OF
DEVELOPMENT FINANCING AND LEASING COMMITMENT
DEVELOPMENT FINANCING AGREEMENT
DEVELOPMENT FINANCING DISBURSEMENT AGREEMENT
NET LEASE AGREEMENT
AFFIDAVIT OF LESSEE AND GUARANTOR
GUARANTEE OF LEASE
GUARANTEE OF DEVELOPMENT FINANCING AGREEMENT
THIS ASSIGNMENT made and entered into this 27th day of
August, 1998, by and between AEI INCOME & GROWTH FUND XXII,
a Minnesota Limited Partnership, ("Assignor") and AEI INCOME
& GROWTH FUND XXI LIMITED PARTNERSHIP, a Minnesota limited
partnership, AEI REAL ESTATE FUND XVIII LIMITED PARNTERSHIP,
a Minnesota limited partnership, AEI REAL ESTATE FUND XVII
LIMITED PARTNERSHIP, a Minnesota limited partnership
("Assignees");
WITNESSETH, that:
WHEREAS, on the 26th day of June, 1998, Assignor
entered into Development Financing And Leasing Commitment,
Development Financing Agreement, Development Financing
Disbursement Agreement, Affidavit Of Lessee And Guarantor,
Guarantee Of Lease, Guarantee Of Development Financing
Agreement ("the Agreements") for that certain property
located at 7880 Washinton Villiage DriveCenterville, OH
45459 (the "Property") with Americana Dining Corp., as
Seller/Lessee; and
WHEREAS, Assignor desires to assign an undivided
interest of its rights, title and interest in, to and under
the Agreements to the Assignees as hereinafter provided;
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP 25.00%
AEI REAL ESTATE FUND XVIII LIMITED PARNTERSHIP 38.00%
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP 14.00%
NOW, THEREFORE, for One Dollar ($1.00) and other good
and valuable consideration, receipt of which is hereby
acknowledged, it is hereby agreed between the parties as
follows:
1. Assignor maintains a twenty-three percent (23%)
right, title and interest in, to and under the
Agreements, to have and to hold the same unto its
successors and assigns;
2. Assignor assigns all of its rights, title and
interest in, to and under the Agreements to the
Assignees as noted above, to have and to hold the same
unto the Assignees, its successors and assigns;
3. Assignees hereby assumes all rights, promises,
covenants, conditions and obligations under the
Agreements to be performed by the Assignor thereunder,
and agrees to be bound for all of the obligations of
Assignor under the Agreements from this day forward.
4. The Purchase Price paid by the Assignees
designated herein is equal to the prorata share of the
amounts funded as of the date of this Agreement.
All other terms and conditions of the Agreements shall
remain unchanged and continue in full force and effect.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
("Assignor")
BY: AEI FUND MANAGEMENT XXII, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
AEI INCOME & GROWTH FUND XXI
LIMITED PARTNERSHIP ("Assignee")
BY: AEI FUND MANAGEMENT XXI, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
AEI REAL ESTATE FUND XVIII LIMITED PARNERSHIP
("Assignee")
BY: AEI FUND MANAGEMENT XVIII, INC.
By:/s/ Robert P Johnson
Robert P. Johnson, its President
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
("Assignee")
BY: AEI FUND MANAGEMENT XVII, INC.
By:/s/ Robert P Johnson
Robert P. Johnson, its President
DEVELOPMENT FINANCING AGREEMENT
THIS AGREEMENT, made and entered into effective as of this
29th day of June, 1998, by and between Americana Dining Corp.
("Lessee"), whose address is 55 Ferncroft Road, Danvers,
Massachusetts 01923-4001, and AEI Income & Growth Fund XXII
Limited Partnership ("Lessor"), whose address is Suite 1300,
World Trade Center, Saint Paul, Minnesota 55102.
W I T N E S S E T H, that:
WHEREAS, Lessee is contemplating building on the premises
described in Exhibit "A" attached hereto the following
Improvements :
Remodeling of an approximately 11,100 square foot
building and improvements to be used as a Champps 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, April 1, 1999, subject to Force Majeure, as defined
herein.
5. "Construction Costs" shall mean land
costs, all costs paid to construct and complete the
Improvements, as specified on Exhibit "B" attached hereto and
made a part hereof.
6. "Construction Contracts" shall mean the
contracts between Lessee and Contractors for the furnishing
of labor, services or materials to the Leased Premises in
connection with the construction of the Improvements.
7. "Contractors" shall mean those firms
directly engaged by Lessee to construct the Improvements,
whether one or more.
8. "Contract Documents" shall mean the
Project Architect's Contract, Plans and Specifications and
the contract with the Contractor.
9. "Development Financing" shall mean the
funds to be made available pursuant to the Commitment and
not to exceed the lesser of the Construction Costs or the
maximum loan amount of Four Million Two Hundred Thirty-Five
Thousand Dollars ($4,235,000) 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 eighty days (180) 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.
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 represents and warrants that a Notice of
Commencement has not been and will not be recorded prior to the
recording of the Memorandum of Lease. 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 Statute, 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 or 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; or
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 $10,797.43 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 $
16,196.15 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 seven percent (7.0%) 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 eighty days (180) from the date
hereof, (the "Rental Modification Date"), Lessee shall begin
making monthly payments of subsequently accruing interest at the
rate of 10.5% 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.
Americana Dining Corp., a Delaware
corporation
By: /s/ Donna Depoian
Its: Vice President
[Lessor's Signature appears on following page.]
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
By: AEI Fund Management XXI, Inc.
By:/s/ Mark E Larson
Mark E. Larson, Chief Financial Officer
LAWYERS TITLE INSURANCE CORPORATION
EXHIBIT A
Situate in the Township of Washington, County of Montgomery and
State of Ohio and being Lot Numbered Twelve (12) Washington
Village Park, Section 12, as recorded in Plat Book 156, Page 50
of the plat records of Montgomery County, Ohio ("Lot 12").
Together with a perpetual, nonexclusive easement for vehicular
ingress and egress on, over and across a certain 1.061 acre area,
more or less known as Lot Numbered Thirteen (13) Washington
Village Park, Section Twelve, as recroded in Plat Book 156, Page
50 of the Plat Records of Montgomery County, Ohio ("Lot 13"), a
private roadway presently known as Drexel Park Lange ("Roadway
Easement Area"), to provide ingress and egress between the
Premises and the public roadways presently known as Washington
Village Drive and Lyons Road.
EXHIBIT B
CONSTRUCTION COSTS
PROJECT COST BUDGET
Americana Dining Corp
Dayton, Ohio
Project Budget
June 17, 1998
Hard Costs:
Land and Building Purchase $ 1,800,000.00
General Building Purchase $ 1,605,000.00
Sitework $ 170,000.00
Contingency 10% $ 160,000.00
Subtotal Hard Costs $ 3,735,000.00
Soft Costs:
Architect/Engineer $ 85,000.00
Site Investigation/Survey $ 21,000.00
Permits/Fees $ 12,000.00
Liquor License Purchase $ 20,000.00
Builders Risk Insurance $ 2,000.00
Title Insurance $ 12,000.00
CEI Parcel Develop Fee (1) $ 64,945.00
CEI Legal Fees $ 12,000.00
AEI Legal Fees $ 7,500.00
RE Fee Paid By Sell/Lessee $ 25,000.00
CEI Construction Supervision and Overhead $ 30,000.00
AEI Development Fee $ 10,000.00
AEI Develop Interest (2) $ 67,000.00
Appraisal $ 4,000.00
Promesa Fees $ 280.00
Sale/Leaseback Fee 1% (3) $ 41,425.00
Miscellaneous $ 2,700.00
Subtotal Soft Cost $ 416,950.00
Project Costs $ 4,151,950.00
AEI 2% overhead Reimbursement $ 83,050.00
Total Project Cost $ 4,235,000.00
(1) Est. 1st draw amount $1,855,600 x 7.0%/12 mos x 6 mos =
$64,945
(2) $4,151,950 - 1,855,600 x 1/2 money out x 7.0%/12 mos x 10
mos = $67,000
(3) Adjusted upon final funding and total final project cost.
This fee is calculated prior to AEI's 2% overhead disbursement.
Exhibit C to Development Financing Agreement
APPLICATION FOR PAYMENT
Americana Dining Corp. ("Lessee") hereby requests a
disbursement in the amount of______________________
($____________________) pursuant to that certain Development
Financing Agreement dated effective as of June ____, 1998 by and
between Lessee, AEI Income & Growth Fund XXII 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 $ . To date,
$______________(exclusive of this request) has been disbursed
pursuant to the Development Financing Disbursing Agreement.
Dated:______________________________
Lessee:
Americana Dining Corp., a
Delaware corporation
By /s/ Donna Depoian
Its: Vice President
Lessee
Exhibit D-1 to Development Financing Agreement
DRAW REQUEST CERTIFICATE
This Certificate made by Americana Dining Corp. ("Lessee").
RECITALS
WHEREAS, Lessee and AEI Income & Growth Fund XXII Limited
Partnership ("Lessor") have entered into a Development Financing
Agreement dated effective as of June , 1998 (the
"Development Financing Agreement") pursuant to which Lessor
agreed to loan $4,235,000 to Lessee for the purpose of
constructing a Champps 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 June , 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: Americana Dining
Corp., a Delaware corporation
By: /s/ Donna Depoian
Its Vice President
STATE OF Massachusetts )
)ss.
COUNTY OF Essex)
I, Jane Blanchette, a Notary public of the said State and
County do hereby certify that Donna Depoian personally appeared
before me this day and she is the VP of Americana Dining Corp., a
Delaware corporation, and that by authority duly given and as the
act of the corporation, the foregoing instrument was signed in
its name by its VP, on behalf of said corporation.
Witness my hand and official stamp or seal, this 22nd day of
June, 1998.
/s/ Jane Blanchette
My commission expires:4-8-99 Notary Public
CONTRACTOR AND ARCHITECT
Exhibit D-2 to Development Financing Agreement
DRAW REQUEST CERTIFICATE
This Certificate made by
,("Contractor"), AND
("Architect").
RECITALS
WHEREAS, Americana Dining Corp. ("Lessee") and AEI Income &
Growth Fund XXII Limited Partnership ("Lessor") have entered into
a Development Financing Agreement dated effective as of June
, 1998 (the "Development Financing Agreement") pursuant to which
Lessor agreed to loan $4,235,000 to Lessee for the purpose of
constructing a Champps 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 29th
day of June, 1998, by and between AEI Income & Growth Fund XXII
Limited Partnership ("Fund XXII"), a Minnesota limited
partnership whose corporate general partner is AEI Fund
Management XXI, Inc., a Minnesota corporation, whose principal
business address is 1300 Minnesota World Trade Center, 30 East
Seventh Street, St. Paul, Minnesota 55101 ("Lessor"), and
Americana Dining Corp., a Delaware corporation ("Lessee"), whose
principal business address is One Corporate Place, 55 Ferncroft
Road, Danvers, Ma. 01923;
WITNESSETH:
WHEREAS, Lessor is the fee owner of a certain parcel of real
property and improvements located at Washington Village Drive,
Dayton, Ohio, and legally described in Exhibit "A", which is
attached hereto and incorporated herein by reference; and
WHEREAS, Lessee will be remodeling 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 Twenty (20)
consecutive "Lease Years", as hereinafter defined, commencing on
June 29th, 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 first refusal, 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, second, and third
Lease Years: Lessee shall pay to Lessor an annual Base Rent of
$129,569.17, which amount shall be payable in advance on the
first day of each month in equal monthly installments of
$10,797.43 to Lessor Fund XXII. 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 fourth,
seventh, tenth, thirteenth, sixteenth, nineteenth, and
if renewed according to the terms hereof, the twenty-
second, twenty-fifth, twenty-eighth, thirty-first, and
thirty-fourth Lease Year:
1. In the fourth and every third Lease
Year thereafter, the annual Base Rent due and
payable shall increase by an amount equal to the
lesser of: a) Seven and 35/100 Percent (7.35%) of
the Base Rent payable for the immediately prior
Lease Year, or b) 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 third year prior (e.g., the
June CPI-U for the year 2000 over the June CPI-U
for the year 1998.) 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 90 days) 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 $1,000,000 per
occurrence/$3,000,000 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, as the general partner of Lessor, 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;
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
5. Lessee shall present the signed
consent to such assignment and/or subletting from
any guarantors of this Lease, such consent to be
in form and substance reasonably satisfactory to
Lessor.
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, 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 Unique Casual
Restaurants, Inc., or a franchisee or licensee in good standing
of Champps Entertainment Inc, for the Champps 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 and Guarantors (such consent to be in
form and substance satisfactory to Lessor) to such assignment or
sublet, affirming their continued liability hereunder (or under
their guaranty, respectively).
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 and Guarantors (such
consent to be in form and substance satisfactory to Lessor) to
such assignment or sublet, affirming their continued liability
hereunder (or under their guaranty, respectively).
(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 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
Champps 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 Champps
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 10.5% 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 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 Right of First Refusal 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
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 its
financial statements to Lessor. Lessee's financial statements
shall include, at a minimum, a consolidated balance sheet and
statement of operations, and do not need to be prepared by an
independent certified public accountant, but shall be prepared in
conformity with generally accepted accounting principles
(hereafter "GAAP") and be represented and warranted in writing 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 and operating statements of the Leased
Premises for such quarter. Lessor shall have the right to
require such financial statements and operating statements on a
monthly basis after the occurrence of a default. Said quarterly
(or monthly, if requested by Lessor) statements do not need to be
prepared by an independent certified public accountant, but shall
be represented and warranted in writing as true and correct by
the chief financial officer or other authorized officer of
Lessee. The financial statements shall conform to GAAP, and
include, at a minimum, a balance sheet and statement of
operations.
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 Three (3) consecutive
periods of Five (5) years each (singularly "Renewal Term"). Rent
during the Twenty-Second, Twenty-Fifth, Twenty-Eighth, Thirty-
First, and Thirty-Fourth Lease Year of the Renewal Term shall
increase by the lesser of Seven and Thirty-Five One Hundredths
Percent (7.35%) 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.
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. RIGHT OF FIRST REFUSAL
Lessor, for itself, its successors and assigns, hereby gives
and grants to Lessee a right of first refusal (the "Right of
First Refusal") to purchase the Leased Premises, subject to the
following terms and conditions:
(A) Duration of Right of First Refusal. The Right of First
Refusal and all rights and privileges of Lessee hereunder shall
be in force for the term of this Lease until the expiration of
Lessee's right to possession.
(B) Manner of Exercising Right of First Refusal. If Lessor
("Selling Lessor") shall desire to sell all or any portion of its
interest in the Leased Premises (subject to the terms of this
Lease), Selling Lessor shall give Lessee written notice of
Selling Lessor's intention to sell Selling Lessor's interest
(partial or whole) in the Leased Premises. Such notice
("Lessor's Notice") shall give Selling Lessor's name and address
and state a price at which Selling Lessor intends to sell and
will sell a specified portion or all of its interest in the fee
simple to the Leased Premises. If Lessee shall fail to exercise
its Right of First Refusal as set forth herein, the terms of
Article 34(E) shall apply. For twenty (20) business days
following the giving of such notice, Lessee shall have the option
to purchase such portion of the fee interest of the Selling
Lessor as set forth in Lessor's Notice at the price in cash
stated in the Lessor's Notice. A written notice in substantially
the following form, addressed to Selling Lessor and signed by
Lessee and given, in accordance with the provisions of Article
29(A) hereof, within the period for exercising the Right of First
Refusal, submitted with a bank cashier's check or money order
payable to the order of Selling Lessor in the amount of $5,000.00
(the "Earnest Money") shall be an effective exercise of Lessee's
Right of First Refusal, to wit:
(date)
"We hereby exercise the Right of First Refusal to purchase such
portion of the fee interest of the Selling Lessor (as set forth
in Lessor's Notice) in the property commonly known as Champps,
Dayton, Ohio, pursuant to the Right of First Refusal contained in
that certain Net Lease Agreement between us pertaining to said
premises."
(C) Terms of Sale if Right of First Refusal Exercised.
Upon Lessee's exercise of the Right of First Refusal in
accordance with the provisions of subparagraph (B) hereof,
Selling Lessor shall be obligated to sell and convey by
recordable general warranty deed, good and indefeasible title to
its interest in the Leased Premises (or such portion thereof as
set forth in Lessor's Notice) subject only to the matters
affecting title which were of record at the time Selling Lessor
came into title to the Leased Premises and those matters which
Lessee created, suffered or permitted to accrue during the term
hereof, and Lessee shall be obligated to purchase such Lessor's
interest upon the following terms and conditions:
(i) Price. The price "Purchase Price" at which
Selling Lessor shall sell and Lessee shall purchase the
Leased Premises shall be the price stated in Lessor's
Notice.
(ii) Closing. Closing shall be sixty (60) days
after the expiration of the twenty days within which
Lessee may exercise its Right of First Refusal, unless
the parties mutually agree otherwise. The Purchase
Price less credit for the Earnest Money and any other
credits to which Lessee is entitled hereunder shall be
tendered in cash or other certified funds by Lessee at
Closing.
(iii) Evidence of Title. Not less than ten
(10) days prior to closing, Selling Lessor shall obtain
a commitment for an ALTA owner's policy of title
insurance dated within thirty (30) days of the closing
date, issued by a nationally recognized title insurance
company selected by Selling Lessor (the "Title
Company") in the amount of the Purchase Price
determined pursuant to subparagraph (C)(i) above,
naming Lessee as the proposed insured, and covering the
fee simple title to the Leased Premises, and showing
Selling Lessor vested with good title to portion of the
Leased Premises being sold, subject only to the matters
affecting title which were of record at the time
Selling Lessor came into title to the Leased Premises
and those matters which Lessee created, suffered or
permitted to accrue during the term hereof. Such title
commitment shall be conclusive evidence of good title.
If Lessee shall make objection to the marketability of
title, Selling Lessor shall have no obligation to make
title marketable, but may withdraw Lessor's notice of
intent to market the Premises.
(iv) Prorations. Selling Lessor shall pay the
cost of the aforesaid title policy and any and all
state and municipal taxes imposed by law on the
transfer of the title to the Leased Premises, or the
transaction pursuant to which such transfer occurs.
Water, sewer and other utility charges, if any, which
are not metered, driveway permit charges, if any,
general real estate taxes, and other similar items,
shall be adjusted ratably as of the Closing, except to
the extent otherwise settled between the parties
pursuant to other provisions of this Lease. A prorated
portion of the Rent prepaid by Lessee for the month of
closing shall be credited toward the Purchase Price and
Lessee shall be given a credit for rent prepaid for any
period after the month in which the Closing occurs.
Otherwise, Lessee shall not receive a credit against
the Purchase Price for Rent paid hereunder.
(v) Escrow Closing. At the election of Selling
Lessor or Lessee upon notice to the other party not
less than five (5) days prior to the Closing, this sale
shall be closed through an escrow with the Title
Company, in accordance with the general provisions of
the usual form of Deed and Money Escrow Agreement then
is use by said company, with such special provisions
inserted in the escrow agreement as may be required to
conform with this agreement. Upon the creation of such
an escrow, anything herein to the contrary
notwithstanding, paying of the purchase price and
delivery of the deed shall be made through the escrow.
The cost of the escrow shall be divided equally between
the Selling Lessor and Lessee. If for any reason other
than Lessee's default, the transaction fails to close,
the Earnest Money shall be returned to Lessee
forthwith.
(vi) Remedies on Default. If Lessee defaults
under the provisions of this subparagraph 34(C),
Selling Lessor shall have the right to annul the
provisions of this paragraph 34 by giving Lessee notice
of such election, provided that Selling Lessor has
first notified Lessee of such default and Lessee has
failed to cure the same within ten (10) days after such
notice. Upon Selling Lessor's notice of annulment in
accordance herewith, the Earnest Money shall be
forfeited and paid to Selling Lessor as liquidated
damages, which shall be Selling Lessor's sole and
exclusive remedy. If Selling Lessor defaults under the
provisions of this subparagraph 34(C) and fails to cure
such default within ten (10) days after being notified
of the same by Lessee, then in such event, (i) the
Earnest Money at Lessee's election and immediately upon
its demand shall be returned to Lessee, which return
shall not, however, in any way release or absolve
Selling Lessor from its obligations hereunder and (ii)
Lessee shall be entitled to all remedies (both legal
and equitable) the law (both statutory and decisional)
of the state in which the Leased Premises are situated
provides without first having to tender the balance of
the purchase price as a condition precedent thereof and
without having to make any election of such remedies.
(D) Effect of Right of First Refusal on Lease. If the
Right of First Refusal is exercised by Lessee and is exercisable
in Lessor's Notice as to the entire fee simple, this Lease shall
continue in full force and effect until the Closing hereinabove
specified. If the Right of First Refusal is exercised only as to
all of an undivided portion of the fee simple to the Leased
Premises, the Lease shall remain in full force and effect without
merger or termination of this Lease because of such purchase. If
for any reason such Closing fails to occur, this Lease shall
continue in full force and effect, except that if the provisions
of this paragraph 34 are annulled by Selling Lessor, in
accordance with subparagraph 34(C)(vi), by reason of a default by
Lessee, this Lease shall continue but without the provisions of
this paragraph 34 being a part hereof.
(E) If Lessee fails to exercise its Right of First Refusal,
Selling Lessor shall be free to sell all or any portion of its
interest in the Leased Premises for six months following the
expiration of the twenty days within which Lessee may exercise
its Right of First Refusal, provided that the Selling Lessor
giving such Lessor's Notice shall sell its interest (or a portion
thereof) for a price equal to or greater than the price (or the
pro-rata portion thereof if a portion of the Selling Lessor's
interest in the Leased Premises is sold) set forth in Lessor's
Notice. This Right of First Refusal shall survive any sale of
the Leased Premises and shall apply to any subsequent sale or
potential sale by Lessor or its successors and assigns.
ARTICLE 35. 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 36. 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: Americana Dining Corp.
Attest:
By:/s/ Donna Depoian
/s/ Jane Blanchette Its: Vice President
Jane Blanchette
[Print Name]
Attest:
/s/ Diane R Townsend
Diane R Townsend
[Print Name]
STATE OF Massachusetts)
)SS.
COUNTY OF Essex)
The foregoing instrument was acknowledged before me this
22nd day of June, 1998, by Donna Depoian, as VP of Americana
Dining Corp. on behalf of said corporation.
/s/ Jane Blanchette
Notary Public
Lessor's signature appears on the following pages
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
By: AEI Fund Management XXI, Inc.
Attest:
/s/ Paula Jean Powell By:/s/ Mark E Larson
Paula Jean Powell Mark E. Larson, Chief Financial Officer
[Print Name]
Attest:
/s/ Ann M Mccrea
Ann M Mccrea
[Print Name]
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 17th
day of June, 1998, by Mark E. Larson, the Chief Financial
Officer of AEI Fund Management XXI, Inc., a Minnesota
corporation, corporate general partner of AEI Income & Growth
Fund XXII Limited Partnership, on behalf of said limited
partnership.
/s/ Barbara J Kochevar
Notary Public
[notary seal]
LAWYERS TITLE INSURANCE CORPORATION
EXHIBIT A
Situate in the Township of Washington, County of Montgomery and
State of Ohio and being Lot Numbered Twelve (12) Washington
Village Park, Section 12, as recorded in Plat Book 155, Page 50
of the plat records of Montgomery County, Ohio ("Lot 12").
Together with a perpetual, nonexclusive easement for vehicular
ingree and egress on, over and across a certain 1.061 acre area,
more or less known as Lot Numbered Thirteen (13) Washington
Village Park, Section Twelve, as recorded in Plat Book 156, Page
50 of the Plat Records of Montgomery County, Ohio ("Lot 13"), a
private roadway presently known as Drexel Park Lane ("Roadway
Easement Area"), to provide ingress and egress between the
Premises and the public roadways presently known as Washington
Village Drive and Lyons Road.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000931755
<NAME> AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 852,942
<SECURITIES> 0
<RECEIVABLES> 3,334
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 856,276
<PP&E> 18,375,376
<DEPRECIATION> (692,517)
<TOTAL-ASSETS> 18,539,135
<CURRENT-LIABILITIES> 528,582
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 18,010,553
<TOTAL-LIABILITY-AND-EQUITY> 18,539,135
<SALES> 0
<TOTAL-REVENUES> 1,388,083
<CGS> 0
<TOTAL-COSTS> 606,311
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,017,149
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,017,149
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,017,149
<EPS-PRIMARY> 42.26
<EPS-DILUTED> 42.26
</TABLE>
