DEVELOPMENT FINANCING AGREEMENT
THIS AGREEMENT, made and entered into effective as of this 8
day of June, 1997, by and between Champps Americana, Inc.
("Lessee"), whose address is 55 Ferncroft Road, Danvers,
Massachusetts 01923-4001, and AEI Income & Growth Fund XXI
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 :
Construction of an approximately 8,600 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 June 8,
1997.)
4. "Completion Date" shall mean midnight, May 1, 1998,
subject to Force Majeure, as defined herein.
5. "Construction Costs" shall mean land costs, all costs
paid to construct and complete the Improvements, as specified
on Exhibit "B" attached hereto and made a part hereof.
6. "Construction Contracts" shall mean the contracts between
Lessee and Contractors for the furnishing of labor, services
or materials to the Leased Premises in connection with the
construction of the Improvements.
7. "Contractors" shall mean those firms directly engaged by
Lessee to construct the Improvements, whether one or more.
8. "Contract Documents" shall mean the Project Architect's
Contract, Plans and Specifications and the contract with the
Contractor.
9. "Development Financing" shall mean the funds to be made
available pursuant to the Commitment and not to exceed the
lesser of the Construction Costs or the maximum loan amount
of Three Million Nine Hundred Seventy Thousand Dollars
($3,970,000) 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 Michigan 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
Michigan 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 Michigan 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
Michigan Statue, and any Notice of Furnishing (as defined in
Michigan 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 $6,267.24 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
$9,624.69 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 10.75% per annum out of pocket ("Out of Pocket Invoiced
Interest") within 5 days after invoice from Lessor.
3. Upon the occurrence of an event of default which remains
uncured after the expiration of applicable notice and cure
periods, 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.
Champps Americana, Inc., a
Minnesota corporation
By:/s/ Charles W Redepenning Jr.
Its: Sr. VP
[Lessor's Signature appears on following page.]
AEI INCOME & GROWTH FUND XXI
LIMITED PARTNERSHIP
By: AEI FUND MANAGEMENT XXI, INC.,
a Minnesota corporation,
Its corporate general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
Exhibit A
City of Livonia, County of Wayne, State of Michigan, Unit 3,
Pentagon Centre Condominium, according to the Master Deed of
record, Wayne County Records, as amended.
EXHIBIT B
CONSTRUCTION COSTS
CHAMPPS AMERICANA, INC.
LIVONIA, MICHIGAN
PROJECT COST BUDGET
JUNE 17, 1997
Land Acuisition Cost $1,050,000
Site Improvements 323,715
Building/General Construction 1,788,410
Construction Material (owner) 254,500
Permits & Fees 32,000
Architect/Engineering 83,300
Site Investigation and Surveys 21,500
Appraisal 4,000
Prototype fee 10,000
Development Interest 50,000
Title Insurance & Closing Costs
(Construction and S/L) 10,000
Attorney's Fees-Borrower
(ConstructionSale/Leaseback) 12,000
Attorney's Fees- AEI
(Construction/Sale/Leaseback) 7,500
AEI Development Funding Fee 10,000
AEI Credit Report Fees (Promesa) 1,000
AEI Site Inspection Fee 1,000
Additional Legal 4,600
Champps Americana, Inc.Parcel Development Fee 37,450
Builders Risk Insurance 2,000
Construction Supervision and Overhead 50,000
AEI Sale/Leaseback Commitment/Funding Fee* 39,500
TOTAL PROJECT COST $3,970,000
*Total project costs prior to AEI S/L fee is $3,930,500. The S/L
fee (rounded) is calculated on the total project cost prior to
the S/L Fee and adjusted, if necessary, at the time the final
disbursment of the Development Financing.
Exhibit C
APPLICATION FOR PAYMENT
Champps Americana, Inc. ("Lessee") hereby requests a
disbursement in the amount of______________________
($____________________) pursuant to that certain Development
Financing Agreement dated effective as of _____, 1997 by
and between Lessee, AEI Income & Growth Fund XXI 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:
Champps Americana, Inc. a
Minnesota corporation
By:
Its:
Lessee
Exhibit D-1
DRAW REQUEST CERTIFICATE
This Certificate made by Champps Americana, Inc.("Lessee").
RECITALS
WHEREAS, Lessee and AEI Income & Growth Fund XXI Limited
Partnership ("Lessor") have entered into a Development Financing
Agreement dated effective as of June , 1997 (the
"Development Financing Agreement") pursuant to which Lessor
agreed to loan $3,850,000 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 , 1997, ("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
____________________________, 1997 to _____________________,
1997, 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 ____________________, 1997.
Lessee: Champps Americana, Inc., a
Minnesota corporation
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
Champps Americana, Inc., a Minnesota 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
_________________, 1997.
_____________________________
____________
My commission expires:________ Notary Public
CONTRACTOR AND ARCHITECT
Exhibit D-2
DRAW REQUEST CERTIFICATE
This Certificate made by
,("Contractor"), AND
("Architect").
RECITALS
WHEREAS, Champps Americana, Inc. ("Lessee") and AEI Income &
Growth Fund XXI Limited Partnership ("Lessor") have entered into
a Development Financing Agreement dated effective as of June
, 1997 (the "Development Financing Agreement") pursuant to which
Lessor agreed to loan $3,970,000 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 , 1997, ("Construction Contract"); and
WHEREAS, Lessee and Architect have entered into a contract
dated , 1997, ("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
____________________________, 1997 to _____________________,
1997, 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 ____________________, 1997.
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
_________________, 1997.
_____________________________
____________
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
_________________, 1997.
_____________________________
____________
My commission expires:________ Notary Public