Exhibit 10.20

 

CONSTRUCTION LOAN DISBURSEMENT AGREEMENT
(Commercial Real Estate)

 

This Construction Loan Disbursement Agreement (“Agreement”) is entered into
effective as of December    , 2004, by and between each of ALGONQUIN COMMONS,
LLC, an Illinois limited liability company, ALGONQUIN PHASE II ASSOCIATES LLC,
an Illinois limited liability company, JRA ANDERSON OFFICE PARK, LLC, an Ohio
limited liability company, JRA BEECHMONT TWINS, LLC, an Ohio limited liability
company, JRA FAMILY LIMITED LIABILITY COMPANY, an Ohio limited liability
company, MFF ASSOCIATES, LLC, an Ohio limited liability company, and TGH
ASSOCIATES, LLC, an Ohio limited liability company (collectively and jointly and
severally called “Borrower”), each of whose address is 3805 Edwards Road,
Suite 700, Cincinnati, Ohio 45209 and TEACHERS INSURANCE AND ANNUITY ASSOCIATION
OF AMERICA, a New York corporation (“Lender”) whose address for purposes hereof
is 730 Third Avenue, New York, New York 10017.

 

RECITALS

 

A.            Lender has agreed to make and Borrower has agreed to accept a loan
(the “Loan”) in the amount of $21,000,000 for construction of the Improvements
(defined below) on the Real Estate (defined below). Such construction is
referred to herein as the “Project”.

 

B.            As of the date hereof, Lender has advanced 100% of the proceeds of
the Loan to Borrower, which in accordance with the terms of the Loan Application
and Commitment letter dated October 28, 2004 , have been deposited by Capstone
Realty Advisors (“Pledge Agent”) in an account (the “Pledge Account”) maintained
with U.S. Bank National Association pursuant to the Pledge Agreement (defined
below).

 

C.            Lender and Borrower desire to establish the procedures and
conditions pursuant to which the Loan proceeds will be advanced to or for the
account of Borrower to pay for construction of the Project.

 

D.            Lender has entered into a Construction Loan Servicing Agreement of
even date herewith with U.S. Bank National Association (in such capacity,
“Servicer”) pursuant to which Servicer has undertaken to advise Lender with
respect to certain matters related to the advance of the proceed of the Loan:

 

ARTICLE I

DEFINITIONS

 

1.1          Definitions.  The following terms as used herein will have the
following meanings:

 

1.2          Big Box.  Those Project Elements to be demised to Wickes Furniture,
Petsmart and Circuit City.

 

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1.3          Completion.  As to any Improvements, “completion” shall mean that
stage of construction where such Improvements are sufficiently complete that the
tenant(s) are in lawful occupancy, actually paying rent, with only minor
“punchlist” items that do not, individually or in the aggregate, prevent such
tenant(s) from use of such portion of the Improvements as intended by the lease
demising such Improvements (provided that the requirement that a tenant be open
for business shall not apply to a Big Box unless such is a requirement under the
document governing reimbursement of such tenant by the Borrower.

 

1.4          Completion Date.  For purposes of this Agreement, as to all Project
Elements the construction of which is funded by the proceeds of the Loan, the
“Completion Date” shall be thirty six (36) months from the date first above
written, after which time the provisions of Section 6.8 shall apply. For the
sake of clarity, the parties acknowledge that the Completion Date applies only
to portions of the Project, the construction of which is commenced prior to the
Completion Date.

 

1.5          Development Budget.  The detailed hard and soft cost budget for the
costs of land acquisition, construction of the improvements, professional fees
and financing fees, including estimated interest expense and all other related
closing costs and soft costs to be incurred in connection with the Improvements,
all of which shall be certified by Borrower and, as to the costs of construction
of the Improvements, by the general contractor, a copy of which is attached
hereto as Exhibit B.

 

1.6          Disbursement Agreement.  An agreement among the Borrower, the
Lender and the Title Company pursuant to which the Title Company agrees to date
down and endorse the Title Insurance Policy from time to time in connection with
the disbursements of the Loan Proceeds in response to Requests for Advance, as
such document may from time to time be modified, supplemented, restated or
replaced.

 

1.7          Guarantor(s).  Each maker of a Guaranty (defined below).

 

1.8          Improvements.  The site development and improvements to be made on
and to the Premises pursuant to this Agreement and according to the Plans and
Specifications of a 138,919± square feet “big box” retail center (including one
outlet) located on Randall Road in Dundee Township, Kane County, Illinois and to
be known as “The Exchange at Algonquin Commons,” together with on-site
improvements sufficient to meet zoning requirements.

 

1.9          Loan Documents.  The term “Loan Documents” means and includes, the
following documents, each of even date herewith:

 

(a)           This Agreement;

 

(b)                                 A Promissory Note in the principal amount of
$21,000,000 from Borrower to Lender (the “Note”);

 

(c)                                  A Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Filing Statement from Borrower to Lender (the
“Mortgage”);

 

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(d)                                 An Assignment of Leases and Rents from
Borrower to Lender (the “ALR”);

 

(e)                                  Pledge and Security Agreement (Real Estate
Taxes) among Borrower, Lender and Pledge Agent (the “Tax Agreement”);

 

(f)                                   Pledge and Security Agreement (Loan
Proceeds) among Borrower, Lender and Pledge Agent (the “Pledge Agreement”);

 

(g)                                  UCC Financing Statements to be filed in the
respective locations of each entity constituting the Borrower (the “Financing
Statements”);

 

(h)                                 Environmental Indemnity from Borrower and
Jeffrey R. Anderson in favor of Lender (the “Environmental Indemnity”);

 

(i)                                     Guaranty of Non-Recourse Carve-Out
Obligations from Borrower and Jeffrey R. Anderson (the “Carve-Out Guaranty”);

 

(j)                                    Completion Guaranty from Jeffrey R.
Anderson to Lender (the “Completion Guaranty”);

 

(k)                                 Payment Guaranty from Jeffrey R. Anderson to
Lender (the “Payment Guaranty”), together with the Carve-Out Guaranty and the
Completion Guaranty, the “Guaranties”);

 

(l)                                     (i) Security Agreement (Architect’s
Agreement); (ii) Security Agreement (General Contract), (iii) Security Agreement
(Engineering Contract) and (iv) Security Agreement (Permits and Licenses) (each
a “Security Agreement”, collectively, the “Security Agreements”), together with
appurtenant consents from the counterparties, if any, to such agreements; and

 

(m)                             each of the Phase I Guaranty Documents together
with any other document now or hereafter evidencing, securing, guarantying or
otherwise relating to the Loan, as any of the same may from time to time be
amended, modified or restated.

 

1.10        Loan Proceeds.  Funds disbursed under the Note pursuant to the Loan
and this Agreement. As of the date hereof, such proceeds have been disbursed at
the direction and for the benefit of the Borrower and have been deposited by the
Pledge Agent pursuant to the Pledge Agreement, in the Pledge Account. As
construction of the Improvements progresses, Loan Proceeds shall be disbursed
from the Pledge Account as provided herein, and when deemed appropriate by
Lender, in its sole discretion, pursuant to a separate Disbursement Agreement
between Borrower, Lender and the Title Insurance Agent or Title Insurance
Company (as hereinafter defined).

 

1.11        Phase I Guaranty Documents.  A certain Guaranty of Phase I Loan
Obligations of even date herewith from Borrower to Lender (the “Phase I
Guaranty”) together with a certain

 

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Second Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture
Filing Statement from Borrower in favor of Lender (the “Second Mortgage”) and a
certain Second Assignment of Leases and Rents (the “Second ALR”) as each may
from time to time be amended, modified or restated.

 

1.12        Pledge Account.  An account maintained by Pledge Agent with U.S.
Bank National Association pursuant to the terms of the Pledge Agreement in which
Borrower has directed that the proceeds of the Loan be deposited and from which
Lender shall direct that Advances be made for payment of costs of construction
of the Project, subject to strict compliance with the terms of this Agreement.
The Pledge Account is numbered                    and is titled:
                   .

 

1.13        Plans and Specifications.  The final plans and specifications for
the construction of the Improvements on the Premises to be submitted to Lender
and approved as required herein, and all amendments and modifications thereof
made in accordance with this Agreement.

 

1.14        Premises.  The real estate described in Exhibit A attached hereto
and made a part hereof (the “Real Estate”), and all of the estate, right, title
and interest of Borrower at law or in equity in and to the Real Estate, all of
the buildings, structures and improvements of every nature whatsoever now or
hereafter situated on the Real Estate and all fixtures, machinery, appliances,
equipment, furniture and personal property of every kind whatsoever now or
hereafter owned by Borrower and located in or on, or attached to, and used or
intended to be used in connection with or with the operation of, the Real
Estate, building, structures or other improvements thereon or in connection with
any construction being conducted or which may be conducted thereon, including
but not limited to all those items described as “Property” in the Mortgage, and
all extensions, additions, improvements, betterments, renewals, substitutions
and replacements to any of the foregoing, and all of the right, title and
interest of Borrower in and to any such fixtures or personal property which, to
the fullest extent permitted by law, shall be conclusively deemed fixtures and a
part of the real property encumbered hereby.

 

1.15        Project Element.  A discrete portion of the construction to be
undertaken with respect to the entire Project, for example, site work or the
construction of a detached building.

 

1.16        Request for Advance.  A statement of Borrower on the form attached
hereto as Exhibit C, together with (if applicable) a master affidavit and/or
waiver of lien and certificates from the Contractor (as hereinafter defined), in
compliance with the requirements of Section 5.7 hereof, and AIA Form G702/G703
(or such similar forms acceptable to Lender) and such other form(s) required by
Lender (which documents shall include a list of each and every contractor,
subcontractor and materialman to whom payment must be made and dollar amount
owed), all of which shall be signed by the Contractor (as hereinafter defined)
and by Borrower, setting forth the amount of the Loan requested to be disbursed
at any one time and such other statements as Lender may require.

 

1.17        Title Insurance Commitment.  An American Land Title Association
(“ALTA”) mortgagee’s title insurance commitment to be issued by the Title
Insurance Company in such form as is acceptable to Lender.

 

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1.18        Title Insurance Company.  First American Title Insurance Company.

 

1.19        Title Insurance Policy.  An ALTA mortgagee’s title insurance policy
to be issued by the Title Insurance Company, in the amount of the Note showing
fee simple title to the Premises as vested in Borrower and insuring the Mortgage
to be a first and best lien on the Premises, subject only to exceptions
permitted by Lender (the exceptions for mechanics/construction liens and survey
and all other standard exceptions shall be deleted from the Title Insurance
Policy). Such policy shall affirmatively insure ingress and egress to a publicly
dedicated street and shall further provide such affirmative coverages and
endorsements as may be required by Lender. Lender reserves the right to require
reinsurance in such amounts and from such companies as may be acceptable to
Lender, such reinsurance to be evidenced by ALTA Facultative Reinsurance
Agreement with provisions for direct access.

 

ARTICLE II

WARRANTIES AND REPRESENTATIONS

 

To induce Lender to make the Loan, Borrower hereby represents and warrants to
Lender that:

 

2.1          Purpose of Loan.  The Loan shall be for business purposes involved
in the financing of the construction of the Improvements on the Premises and not
for consumer purposes.

 

2.2          Pending Suits.  There are no suits, judgments, bankruptcies or
executions pending or, to the Borrower’s best knowledge, threatened against
Borrower or the Premises.

 

2.3          Financial Statements.  The Financial Statements heretofore
delivered by Borrower and any Guarantor to Lender are true and correct in all
respects, and fairly present the respective financial condition of the subject
thereof as of the respective dates thereof, and no material adverse change has
occurred in the financial condition reflected therein since the respective dates
thereof, and no additional borrowings have been made by Borrower since the date
thereof other than the borrowing contemplated hereby or other borrowing approved
by Lender.

 

2.4          No Mechanic’s/Construction Liens.  Borrower has, as of the date
hereof, permitted no work on the Premises or the Improvements which could give
rise to a lien on the Premises or the Improvements or, if such work has
commenced, has provided adequate waivers, indemnifications and other assurances
to the Title Insurance Company so that the Title Insurance Policy and all
endorsements thereto can be issued without exception for filed or unfiled
mechanics/construction liens.

 

2.5          No Violation of Other Agreements.  The consummation of the
transactions contemplated by this Agreement and the performance of this
Agreement and the Loan Documents will not result in any breach of, or constitute
a default under, any mortgage, deed of trust, deed to secure debt, lease, bank
loan, loan agreement, credit agreement, partnership or joint venture agreement
or other instrument or agreement to which Borrower is a party or by which it may
be bound or affected.

 

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2.6          Effect of Request for Advance.  Each Request for Advance, and the
receipt of the funds requested thereby, will constitute an affirmation that the
representations and warranties of this Article remain true and correct as of the
date thereof and, unless Lender is notified to the contrary prior to the
disbursement of the requested advance, will be so on the date thereof. Each
Request for Advance shall also constitute a representation and warranty that the
information set forth in such Request for Advance is true and correct.

 

ARTICLE III

THE CONSTRUCTION LOAN

 

3.1          Use and Purpose.  Borrower agrees to borrow from Lender and Lender
agrees to lend to Borrower the Loan Proceeds, such Loan Proceeds to be used for
the purposes and subject to all of the terms, provisions and conditions of this
Agreement and to be used as generally provided on the Development Budget.

 

3.2          Expenses and Advance Secured by Mortgage.  All disbursements,
advances or payments made by Lender hereunder, from time to time, and any
amounts expended by Lender pursuant to Section 8.8 of this Agreement, together
with the Lender’s service fee and attorneys’ fees, if any, and all other loan
expenses (including fees and costs paid by the Lender to the Servicer), as and
when advanced or incurred, will be secured by the Mortgage to the same extent
and effect as if the terms and provisions of this Agreement were set forth
therein, and any Event of Default which may occur hereunder will constitute a
default under the Mortgage and each other Loan Document.

 

ARTICLE IV

REQUIREMENTS FOR INITIAL DISBURSEMENT

OF LOAN PROCEEDS

 

Lender will not be obligated to open the Loan and thereafter direct further
disbursements of the Loan Proceeds unless and until the following conditions
have been satisfied (unless Lender in its sole discretion permits Borrower to
deliver same at some future time).

 

4.1          Loan Documents.  Borrower shall have furnished or delivered to
Lender, in form, substance and execution acceptable to Lender, the following
documents, if so requested by Lender:

 

(a)           The Loan Documents (including the Phase I Guaranty Documents);

 

(b)           Disbursement Agreement; and

 

(c)           Such other papers and documents as may be required by this
Agreement or as Lender or Lender’s counsel may otherwise reasonably require.

 

4.2          Closing Costs.  Borrower shall have paid all closing costs,
generally as described in Section 8.1 hereof.

 

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4.3          Financial Statements.  Borrower and any Guarantor shall have
delivered to Lender current financial statements for Borrower and any Guarantor
certified to be true, correct and complete. Said financial statements must be
current within the last 12 months.

 

4.4          Title Policy.  Borrower shall have procured a commitment or
proforma policy for the issuance of the Title Insurance Policy, and the Title
Insurance Company shall be unequivocally be prepared to issue the Title
Insurance Policy, conditioned solely upon disbursement of the Loan Proceeds.

 

4.5          Survey.  Borrower shall have provided Lender and Servicer with a
current ALTA survey (or such other type of survey as required by Lender at its
sole discretion) of the Real Estate, prepared by a registered surveyor
satisfactory to the Lender and the Lender’s counsel, which survey shall be
certified to Lender, Lender’s and Borrower’s counsel, Title Insurance Company,
and show, without limitation, the boundaries of the Real Estate dimensions and
locations of any improvements, easements, rights of way, setback lines,
adjoining sites, encroachments and extent thereof, established building lines
and street lines, the distances to and the names of the nearest intersecting
streets, all easements and encumbrances set forth in the Title Insurance
Commitment, and shall contain a metes and bounds description of the Real Estate.
The Survey shall also certify that the Project is not in a HUD-designated flood
hazard area, has access to a dedicated street and shall meet the requirements of
the Title Insurance Commitment.

 

4.6          Insurance.  Borrower shall have furnished to Servicer and Lender
evidence, either in the form of duplicate policies, binders or certificates,
(identifying each insurance policy, name of insurer, amount of coverage,
deductible provisions and expiration date) that Borrower has purchased, and has
in full force and effect, policies of insurance in form and issued by companies
satisfactory to Lender for (a) fire and extended coverage, in amounts equal to
100% of the replacement cost of the Premises, with acceptable mortgagee clauses
in favor of Lender and, where required by Lender, waiver of subrogation clauses
attached; (b) public liability insurance in amounts satisfactory to Lender
naming Lender as additional insured; and (c) flood and windstorm insurance and
such other insurance all with such coverage and amounts as Lender may from time
to time require, including, without limitation, coverages as specified in the
Mortgage. Borrower shall maintain, or cause to be maintained by others as to
Project Elements as to which work has commenced and remains incomplete, policies
of Builder’s Risk Insurance in the amounts specified in Schedule 4.6 hereto with
respect to construction for leases in effect as of the date hereof and in the
full amount of any other construction undertaken by the Borrower from time to
time as part of the Project, all such policies to have acceptable mortgage
clauses in favor of Lender (such policies shall include soft cost coverage
acceptable to Lender). Borrower shall, from time to time, furnish or cause its
contractors to furnish evidence of worker’s compensation insurance.

 

4.7          Plans and Specifications.  Borrower shall have furnished to
Servicer and Lender a complete, final and detailed set of the Plans and
Specifications for the Premises, all of which shall be approved in writing by
Lender. The ownership and right to use said Plans and Specifications shall be
assigned to Lender.

 

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4.8          Contracts.  Borrower shall have furnished to Servicer and Lender,
if so requested by Lender:

 

(a)           Executed copies of all construction contracts, and any
construction management contract, between Borrower and all contractors,
engineers and architects (“Contractors”), and any supplements or amendments
thereto, all subcontracts between any general contractor or Contractors and all
of their subcontractors and suppliers for the construction of the Improvements,
together with AIA Document A—305—Contractors Qualification Statement. Lender
shall have the right to request that all such contracts be contingently assigned
to it and that all requested Contractors execute an agreement in favor of Lender
which includes an obligation to complete construction of the Improvements upon
request by Lender or its designee. Lender shall have the right to disapprove any
such contracts and the contracting parties;

 

(b)           If in the sole judgment of Lender such construction contracts and
subcontracts do not cover all of the work necessary for completion of the
Improvements, Borrower will cause to be furnished firm bids from responsible
parties, or estimates and other information satisfactory to Lender, for the work
not so covered, to enable Lenders to ascertain the total estimated cost of all
work done and to be done.

 

4.9          Evidence of Compliance.  Borrower shall have furnished to Servicer
and Lender evidence satisfactory to Lender that:

 

(a)          The Plans and Specifications, the Premises and the Improvements,
when completed, and the contemplated use-thereof, will be in full compliance
with all federal, state and municipal laws, statutes and ordinances and all
rules and regulations promulgated hereunder, and restrictions of record
affecting the Premises, including those dealing with building, zoning,
environmental impact, setbacks, Americans With Disabilities Act, wetlands,
safety and pollution control; and

 

(b)           There are sufficient utilities (water, sewer, electric, telephone
and gas) for the Premises and the construction and operation of the Improvements
thereon.

 

4.10        Building Permits.  At the request of Lender, Borrower shall have
furnished to Servicer and Lender copies of the building permit or permits, or
proof of the immediate availability of same, and all other licenses and permits
required, complete in all respects, to authorize the construction of the
Improvements on the Premises in accordance with the Plans and Specifications.
Additionally, Borrower shall have furnished to Lender, upon request of Lender,
an architect’s or engineer’s certificate evidencing compliance by Borrower with
the requirements of Section 4.8. All permits shall be and hereby are assigned to
Lender.

 

4.11        Approval.  Lender shall have approved the Plans and Specifications
and the construction contracts with the general contractor for the Improvements.
Neither Lender’s approval of the Plans and Specifications, nor any subsequent
inspections or approvals of the Premises or Improvements during construction
shall constitute a warranty or representation by Lender, Servicer or any of
their respective agents, representatives or designees as to the technical

 

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sufficiency or adequacy or safety of the structures or any of their component
parts or any other physical condition or feature pertaining to the Premises or
Improvements.

 

4.12        Appraisal.  Lender shall have obtained a narrative appraisal of the
Premises and Improvements which is satisfactory to Lender in both form and
substance.

 

4.13        Organizational Documents.  Lender shall be provided with a copy of
Borrower’s organizational documents as requested by Lender and evidence of
authority to sign this agreement and the other Loan Documents.

 

4.14        Environmental Report.  Lender shall be provided with an
environmental report prepared by a firm acceptable to Lender, in scope and
nature, and with findings acceptable to Lender. Such report shall be addressed
to Lender.

 

4.15        Commitment.  Borrower shall have complied with all other terms and
conditions of any commitment letter agreement as to the Loan.

 

4.16        Soil Report.  Servicer and Lender shall be provided with a soil
report of the Premises, containing such information and findings as required by
Lender.

 

4.17        Opinion of Counsel.  Borrower shall provide Lender with such
opinion(s) from counsel to Borrower, in such form and content as required by
Lender.

 

ARTICLE V

REQUIREMENT FOR EACH DISBURSEMENT

 

Lender will not be required to direct disbursements of Loan Proceeds from the
Pledge Account unless and until the following conditions have been satisfied:

 

5.1          Warranties and Representations True.  All warranties and
representations made hereunder shall remain true and correct.

 

5.2          Request for Advance.  Duplicates of a Request for Advance shall
have been submitted by Borrower to Servicer and Lender at least 7 business days
prior to the disbursement. Such 7 day period shall commence on the latest day on
which such Request for Advance shall have been received by the Lender or the
Servicer.

 

5.3          No Damage.  Any structure or improvement on the Premises shall not
have been materially damaged by fire or other casualty unless Lender shall have
received insurance proceeds sufficient, in the sole judgment of Lender, to
effect the satisfactory restoration of the Premises and to permit the completion
of the Improvements prior to the Completion Date.

 

5.4          No Event of Default.  No Event of Default shall have occurred under
this Agreement, any Loan Document or any other instrument evidencing, securing
or otherwise relating to the Loan.

 

5.5          Updated Title Endorsement.  The Title Insurance Company shall be
unconditionally prepared to give Lender an updated endorsement to the Title
Insurance Policy

 

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coincident with such disbursement and showing no additional exception to
Lender’s lien relative to its prior disbursement.

 

5.6          Updated Survey.  Upon completion of the foundation for the
Improvements, at Lender’s sole option, an updated survey showing that the
Improvements are being constructed within lot lines, set-back requirements, and
otherwise according to law. Lender may also require an updated survey at a later
date if Lender reasonably believes that any Improvements may have been
constructed in an area that later may cause title or other problems.

 

5.7          Documents to be Furnished for Each Disbursement.

 

(a)           Regular Construction Disbursements.  The requirements of this
Subsection (a) shall apply to all construction at the Project other than
payments for (i) leasing commissions, (ii) the build out of tenant space as to
which the shell building has already been completed and (iii) the reimbursement
to the tenant for construction of the building to be occupied by Circuit City.
For the sake of clarity, the parties intend and understand that the entire
amount of the Loan is divided between and accounted for by funds to be disbursed
pursuant to this Subsection (a) and Subsections (b) and (c) below.

 

Borrower shall have furnished to Servicer and Lender, for each and every
disbursement, a Request for Advance (with all documents required in Section 1.16
hereof, plus for the immediately preceding draw (the “Prior Draw”), affidavits
and/or waivers of lien and certificates of all subcontractors and materialmen
covering all work and materials furnished to the Premises for which disbursement
was previously made and covering all work and materials, included in the
Previous Draw, all in compliance with the construction and mechanics’ lien laws
of the State where the Premises are located and satisfying such other reasonable
requirements of Servicer, Lender and/or the Title Insurance Company, together
with such invoices, contracts, or other supporting data as Lender may reasonably
require.

 

(b)           Tenant Improvements and Leasing Commissions.  The Development
Budget provides for application of the proceeds of the Loan to (i) leasing
commissions, (ii) the build out of tenant space as to which the shell building
has already been completed and (iii) the reimbursement to the tenant for
construction of the building to be occupied by Circuit City. The funds budgeted
for the items referred to in Clauses (i) and (ii) are referred to herein as the
“TI Funds”, currently budgeted as $                     , and the funds budgeted
for the item referred to in clause (iii) are referred to herein as the “Circuit
City Funds”, currently budgeted as $                       . The submission of
Requests for Advances relative to TI Funds shall conform with the provisions of
this subsection. Lender shall direct the Pledge Agent to disburse portions of
the TI Funds to Borrower for the payment of leasing commissions and tenant
improvement costs in the amounts actually incurred by Borrower in letting the
vacant space in completed shell buildings to third parties, but not exceeding
$70.00 per square foot of space being leased. Disbursements of TI Funds shall
not be available more often than once per month and not in increments of less
than $50,000.00) (except for the final disbursement, which may be in a lesser
sum),. Lender’s approval of a request for a disbursement hereunder shall be
subject to: (1) its receipt of such documentation evidencing the costs incurred
by Borrower, as Lender shall reasonably request (i.e. bills, invoices, etc.),
(2) with respect to subsequent disbursements, evidence reasonably required by
Lender that all prior disbursements have been applied in

 

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accordance with the terms hereof (i.e. invoices, receipts marked paid, lien
waivers, etc.) and (3) such additional requirements, including without
limitation, tenant estoppel certificates, evidence of completion of
improvements, appropriate governmental approvals or “sign-offs”, evidence of
ability to pay for improvements to extent greater than allowance
hereunder, etc., as Lender may reasonably request. Borrower shall request
disbursements by submitting to Pledge Agent a disbursement request, together
with all appropriate supporting documentation, and sending a copy of such
request to Lender.

 

(c)           Circuit City.  The submission of Requests for Advances relative to
Circuit City Funds shall conform with the provisions of this subsection.
Disbursement of the Circuit City Funds shall be made at the stages of completion
and in the amounts specified in the Circuit City lease. Lender’s approval of a
request for a disbursement hereunder shall be subject to Lender’s having
received (1) such documentation evidencing the costs incurred by Borrower, as
Lender shall reasonably request (i.e. bills, invoices, etc.) and (2) copies of
all materials required to be furnished to Borrower by the party requesting
reimbursement under the Circuit City lease. In addition, Lender may request, and
Borrower shall make reasonable efforts to obtain the following: (1) with respect
to subsequent disbursements, evidence that all prior disbursements have been
applied in accordance with the terms hereof (i.e. invoices, receipts marked
paid, lien waivers, etc.) and (2) such additional information as is customary
for interim construction draws in large commercial construction projects,
including without limitation, tenant estoppel certificates, evidence of
completion of improvements, appropriate governmental approvals or “sign-offs”,
evidence of ability to pay for improvements to extent greater than allowance
hereunder, etc.

 

(d)           All Classes of Disbursements.  Lender shall not be responsible in
any manner to Borrower or any other party for the quality, design, construction,
structural integrity, or health or safety features of any such improvements,
notwithstanding Lender’s approval of the expenditure pursuant to this Agreement.
Lender shall be entitled to disapprove any disbursement request if there shall
be any outstanding default under the Loan Documents at the time the request is
made or when the disbursement is scheduled to be made. Borrower shall require
that all improvements shall be completed in a good and workman like manner, in
compliance with all applicable legal requirements and in accordance with all
requirements of the Loan Documents and the leases, if applicable.

 

Promptly after (i) Borrower’s request for a disbursement hereunder and
(ii) Lender satisfaction that the conditions thereto have been satisfied, Lender
shall deliver to Pledge Agent written instructions authorizing disbursement from
the Pledge Account, in accordance with such instructions, and in the amount
determined in accordance with the provisions of the third sentence of this
subsection. Pledge Agent shall make disbursement to Borrower upon its receipt of
Lender’s instructions in respect of Borrower’s request for disbursement, in
accordance with such instructions.

 

5.8          Loan in Balance.  The Loan shall be in balance as defined in
Section 8.9 of this Agreement.

 

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5.9          Draw Inspection.  Servicer and Lender or their respective
representatives have, at Lender’s sole option, inspected the Premises to
sufficiently confirm, for Lender’s purposes, the accuracy of the statements
contained in Sections 5.2, 5.3 and 5.7 above.

 

ARTICLE VI

REQUIREMENTS PRIOR TO FINAL DISBURSEMENT

 

The following requirements, in addition to the other requirements of Article V,
shall have been met prior to a final disbursement of Loan Proceeds for the
construction and/or leasing of the Improvements:

 

6.1          Completion of Improvements.  Except for build out of the Vacant
Space, the Improvements shall have been fully completed, free and clear of
construction and mechanics’ liens.

 

6.2          Fixtures and Equipment.  All fixtures and equipment required for
the operation of the Premises which are to be installed or paid for by Borrower
shall have been installed free and clear of all liens and security interests,
other than Lender’s lien.

 

6.3          Certification of Completion.  With respect to Project Elements
other than Big Boxes, Borrower shall have furnished to Lender and Servicer
applicable certificates of occupancy from the local governmental authority, and
such other evidence reasonably satisfactory to Lender certifying that the
Improvements comply with all applicable zoning ordinances, building and use
regulations and codes and all requirements with respect to licenses, permits and
agreements necessary for the lawful use and operation of the Improvements and,
upon request of Servicer or Lender, Borrower’s certificate that no notices of
any claimed violations of ordinances were or have been served on Borrower.
Servicer and/or Lender may also require a written certification from Borrower’s
architect that the Improvements have been completed in accordance with the Plans
and Specifications.

 

With respect to construction of the Big Boxes, (A) the Improvements shall be
complete as defined in Section 1.3 hereof and (B) the Borrower shall furnish to
Lender all evidence of completion required to be furnished to the Borrower
pursuant to the leases demising the Big Boxes. Lender may also request, and
Borrower shall make reasonable efforts to obtain from the tenants of Big Boxes,
additional evidence of completion, including without limitation, tenant estoppel
certificates, evidence of completion of improvements, appropriate governmental
approvals or “sign-offs”, evidence of ability to pay for improvements to extent
greater than allowance hereunder, etc., as Lender may reasonably request. To the
extent that such items may be obtained by the Borrower without the consent of
the tenants, Borrower shall provide such items (for example, as-built surveys,
title insurance date downs and updated insurance certificates).

 

6.4          Final Inspection.  Servicer and Lender or its representative have,
at Lender’s sole option, inspected the Premises to sufficiently confirm, for
Lender’s purposes, the accuracy of the statements contained in Sections 6.1 and
6.2 above. Unless expressed otherwise in this Agreement, and subject to the
right so the Lender to designate replacement inspectors from time

 

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to time, such inspection shall be carried out by the persons or entities who
carry out regular inspections of the Project in conjunction with Requests for
Advances.

 

6.5          Endorsement to Title Insurance Policy.  Upon completion of all
Improvements, the Title Insurance Company shall give Lender a final endorsement
to the Title Insurance Policy and an ALTA 3.1 Endorsement (with parking),
updating all survey-related coverages to reflect the Project as completed, with
no additional exceptions to coverage, and otherwise acceptable to Lender.

 

6.6          Release of Balance of TI Funds.  At such time as at least 93% of
the rentable space in the Project shall be leased to tenants who are (a) in
occupancy, (b) paying rent and (c) not owed any amounts for tenant improvements
or leasing commissions, then Lender shall direct the Pledge Agent to disburse
the balance, if any, of the TI Funds directly to Borrower.

 

6.7          Other Requirements.  All other requirements, conditions and
covenants of this Agreement and the other Loan Documents shall have been
complied with.

 

6.8          Failure to Advance Funds by the Completion Date.  Subject to the
provisions of Section 6.6 hereof, any portion of the proceeds of the Loan that
remain undisbursed as of the date specified in Section 1.4 hereof shall be
applied, at the sole discretion of the Lender, to reduce and prepay the
principal balance of the Loan and to pay the applicable Prepayment Premium (as
defined in the Note) with respect to such prepayment of principal. In connection
with such optional application by the Lender, Borrower shall have the right, but
not the obligation, to prepay an additional amount of the principal of the Loan
so as to cause the conditions to release of the Payment Guaranty to be met.

 

ARTICLE VII

DISBURSEMENTS

 

7.1          General Provisions Relating to Disbursements.  The parties
acknowledge that the Servicer is acting as the adviser to Lender with respect to
disbursement of the Loan proceeds. Servicer is solely the agent of the Lender
and has no contractual relationship with, and owes no duty to, Borrower with
respect to the Loan.

 

In connection with all disbursements of the Loan proceeds, other than those
relating solely to disbursement of the TI Funds for tenant improvements and
leasing costs associate with the, Borrower shall submit duplicates of all
Requests for Advance, directly to the Servicer and the Lender. In connection
with disbursements of the TI Funds, Borrower shall submit Requests for Advance
to the Lender and the Pledge Agent. (For the avoidance of doubt, any Request for
Advance involving disbursements for TI Funds and other construction costs shall
be sent to Servicer, Lender and Pledge Agent.). Borrower acknowledges that
Servicer is acting as Lender’s adviser as to the appropriateness of each Request
for Advance, and accordingly Borrower agrees to respond to any reasonable
requests by Servicer for additional information relating to any Request for
Advance. Lender shall retain and exercise its own discretion in acting upon any
advice it receives from the Servicer regarding any Request for Advance; Lender
shall not be obliged to direct the Pledge Agent to advance funds solely because
Servicer so recommends, nor shall Lender be precluded from making a disbursement
if Servicer recommends against doing so.

 

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Notwithstanding the foregoing, in the event that Lender declines to make the
full disbursement requested in any Request for Advance, Lender shall provide an
explanation of the reasons for such decision. Borrower acknowledges that Lender
is relying, in part, on recommendations to be provided by the Servicer with
respect to such decisions and that the Servicer’s obligation to Lender is to
provide a reasonable explanation some time after the Servicer provides a
recommendation not to fund in full.

 

Lender represents to Borrower that Servicer is bound by the terms of the
Construction Loan Servicing Agreement to make a recommendation as to the
propriety of any request for a disbursement within five (5) business days of
receipt of such request from Borrower. Lender will take reasonable commercial
steps to see that Servicer adheres to such timing, but Borrower acknowledges and
agrees that Lender shall not be liable to the Borrower for delays that occur
because of Servicer’s failure to advise Lender in a timely manner, and Lender
shall not be obliged to act upon any Request for Advance to the extent that
Lender has not received advice from Servicer with respect thereto. Lender shall
act upon Borrower’s request for a disbursement within five (5) days of receipt
of a recommendation with respect thereto from the Servicer.

 

7.2          Monthly Payouts.  After opening the Loan, disbursements for the
construction of the Improvements will be made from time to time as construction
progresses, but no more frequently than once in any calendar month and no more
frequently than twice in any calendar month as to the three (3) calendar months
after the Improvements open for business to the public, each of which
disbursements shall occur no sooner than 14 days after the previous disbursement

 

7.3          Amount of Disbursement.  Subject to compliance with the terms of
this Agreement, Lender shall direct Pledge Agent to make the disbursement of
Loan Proceeds for the construction of the Improvements so long as the Loan is in
balance. Retainages shall be separately treated with respect to particular
discrete Project Elements, and shall be released or held as progress on the
particular Project Element is made, without regard to state of completion of
other Project Elements, Disbursements shall be subject to a 10% retainage from
all contractors and materialmen, provided that retainages shall not be withheld
with respect to construction of Big Boxes, unless the lease pursuant to which
such construction is undertaken provides for retainages. There shall be no
retainage for soft costs. The retainage as to the site work shall be disbursed
upon the written request of Borrower after: (i) substantial completion of that
portion of the Improvements constituting site work to the satisfaction of Lender
in a good and workmanlike manner, in accordance with the Plans and
Specifications and in accordance with all applicable building codes and
(ii) Lender’s receipt of evidence satisfactory to it of such completion
including, without limitation, a certificate of substantial completion with
respect thereto on AIA Document G704 (or equivalent) by Borrower, borrower’s
general contractor and Borrower’s architect. The retainage as to those portions
of Improvements representing building shells (each a “Building Shell”) shall be
disbursed upon the written request of Borrower after (A) substantial completion
of the work as to the Building Shell to the satisfaction of Lender in a good and
workmanlike manner, in accordance with the Plans and Specifications and in
accordance with all applicable building codes and (B) Lender’s receipt of
evidence satisfactory to it of such completion including, without limitation, a
certificate of substantial completion with respect to thereto on AIA Document
G704 (or equivalent) by Borrower, Borrower’s general contract and Borrower’s
architect and, as applicable, a certificate(s) of occupancy issued by the
governmental authority having jurisdiction to do so as to such work. The
retainage as to the balance of a

 

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Project Element shall be disbursed upon the written request of Borrower after:
(A) substantial completion of all the Improvements constituting such Project
Element to the satisfaction of Lender in a good and workmanlike manner, in
accordance with the Plans and Specifications and in accordance with all
applicable building codes and (B) occupancy of the premises by each applicable
tenant and such tenant being open for business (provided that the requirement
that a tenant be open for business shall not apply to a Big Box unless such is a
requirement under the document governing reimbursement of such tenant by the
Borrower) and (C) Lender’s receipt of evidence satisfactory to it of such
completion, which may include, without limitation, a final, unconditional
certificate(s) of occupancy issued by the governmental authority having
jurisdiction to do so as to all Improvements constituting such Project Element
(or temporary or conditional certificate(s) of occupancy if such is the practice
in the jurisdiction where the Project is situated, with final to be provided
when available); a certificate of substantial completion of all Improvements
constituting such Project Element on AIA Document G704 (or equivalent) by
Borrower, Borrower’s general contractor and Borrower’s architect; an estoppel
certificate (acceptable in form and substance to Lender in its discretion) from
each tenant using and/or occupying all or any part of the Improvement(s) (which
estoppel certificate must indicate such tenant’s acceptance of the applicable
Improvements, that such Improvements are in compliance with the terms of the
applicable lease and that there are no outstanding “punch list” items) and, if
required by Lender, a confirming certificate or report by Lender’s inspecting
architect. The reduction or release of any of the retainage shall be subject to
adjustment by Lender to withhold an amount equal to one and one-half times
Lender’s estimated cost to correct any defects in the Improvements and/or to
complete that portion of the Improvements for which the retainage is to be
released in accordance with the Plans and Specifications and all applicable
building codes and in a good and workmanlike manner. Lender shall have no
obligation to disburse proceeds of the Loan in connection with materials which
have not been delivered to the Property and incorporated into the Improvements.

 

The retainage shall be disbursed with the final disbursement, upon compliance
with the requirements set forth in Article VI and in Article VII above, unless
Lender, at its sole option, agrees to an earlier release of all or part of the
retainage.

 

7.4          Payment of Disbursements.  At Lender’s sole option, disbursements
shall be made in whole or in part (i) into a deposit account in Borrower’s name,
(ii) directly to Lender for all amounts then due Lender, including, without
limitation, interest expense; draw inspection fees; escrow funding and partial
release, loan origination and delinquent payment fees; (iii) to the Title
Insurance Company to be disbursed as provided in the Disbursement Agreement;
(iv) directly to Borrower, (v) directly to any Contractor or materialman; and/or
(vi) as otherwise determined by Lender.

 

7.5          Acquiescence Not a Waiver.  To the extent that Lender may have
acquiesced in noncompliance with any requirements precedent to the disbursement
of Loan Proceeds, such acquiescence will not constitute a waiver by Lender and
Lender at any time after such acquiescence may require Borrower to comply with
all such requirements.

 

7.6          Loan Expenses.  At the time of initial disbursement of Loan
Proceeds, Lender may pay from the Loan Proceeds all agreed upon loan expenses,
and thereafter, may, if it so

 

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elects, pay to itself from Loan Proceeds, interest and principal due on the Note
and any other loan expenses.

 

ARTICLE VIII

COVENANTS AND AGREEMENTS

 

Borrower covenants and agrees with Lender as follows:

 

8.1          Costs and Expenses.  Borrower will pay all costs and expenses
required to satisfy the conditions of this Agreement, including but not limited
to all taxes and recording expenses, Lender’s attorneys fees, surveys,
appraisals, title insurance, title updates, real estate taxes, and insurance
policies. Borrower shall also pay to Lender the per draw inspection fees to
cover construction draw costs incurred by Servicer and/or Lender, payable at the
time of each draw requests. Borrower shall also pay Lender all costs and
expenses charged to Lender by Servicer pursuant to the Construction Loan
Servicing Agreement.

 

8.2          Inspections.  Borrower will permit Servicer, Lender and
representatives thereof to enter upon the Premises at all reasonable times to
inspect the Improvements and the construction thereof and all materials,
fixtures and articles used or to be used in the construction and to examine all
detailed plans, shop drawings, specifications and other records which relate to
the Improvements and will cooperate, and cause all contractors, subcontractors
and materialmen to cooperate with Servicer and Lender to enable it to perform
its functions hereunder. Lender may, at its discretion, withhold a draw payment
until after Servicer’s or Lender’s architect or inspector has inspected the work
performed.

 

8.3         Construction of Improvements.  Borrower has heretofore commenced
construction of the Improvements. Borrower will cause the construction of the
Improvements to be prosecuted with due diligence and continuity and will
complete the same in accordance with the Plans and Specifications on or before
the Completion Date, free and clear of liens or claims for liens.

 

8.4          Brokers.  Borrower will indemnify and hold harmless Lender from and
against all claims of brokers and agents arising by reason of the execution of
this Agreement or the consummation of the transactions contemplated hereby.

 

8.5          Bill of Sale.  Borrower will deliver to Servicer and Lender on
demand (from Servicer or Lender) any contracts, bills of sale, statements,
receipted vouchers or agreements, under which Borrower claims title to any
materials, fixtures or articles incorporated in the Improvements or subject to
the lien of the Mortgage and/or Loan Documents.

 

8.6          Correction of Defects.  Borrower will correct all defects in the
Improvements and any departure from the Plans and Specifications not approved by
Lender. The advance of any Loan Proceeds, whether before or after such defects
or departures from the Plans and Specifications are discovered by or called to
the attention of Lender, will not constitute a waiver of Lender’s right to
require compliance with this covenant.

 

8.7          Changes.  No single change costing more than $10,000.00, nor any
changes costing in the aggregate more than $25,000.00 shall be made in the
approved Plans and

 

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Specifications without Lender’s prior written consent. To the extent that the
lease demising a Big Box gives Borrower discretion to approve changes, then
Borrower shall not approve any changes in excess of the foregoing limits without
Lender’s prior consent.

 

8.8          Advances to Cure Default.  In the event that Borrower fails to
perform any of Borrower’s covenants or agreements under this Agreement, Lender
may, but shall not be required to, perform any or all of such covenants and
agreements, and any amounts expended by Lender in so doing will constitute
additional indebtedness under this Agreement and under the Mortgage.

 

8.9          Loan in Balance.

 

(a)           Anything in this Agreement to the contrary notwithstanding, it is
expressly understood and agreed that the Loan at all times shall be in balance.
The Loan shall be deemed to be in balance only when the undistributed Loan
Proceeds equal or exceed the amount necessary to complete the Improvements. The
cost to complete the Improvements or the phase of the Improvements, as the case
may be, shall be based upon Lender’s estimate of the cost of construction from
time to time to pay for all work and labor done or to be done and all materials
furnished or to be furnished for the completion of the construction of the
Improvements in accordance with the Plans and Specifications, and also to pay
the amounts necessary for the estimated or actual costs of start-up expenses,
tenant finish improvements, leasing commissions, initial operating deficits,
including all operating expenses and interest expenses through the date Lender
projects breakeven operations, the expense of items set forth in Section 8.1 of
this Agreement, and all other nonconstruction costs associated with the Loan and
with Borrower’s actual or proposed use of the Premises and Improvements.

 

(b)           If for any reason the amount of such undistributed proceeds shall
at any time be or become insufficient for such purpose under (a) above,
regardless of how such conditions may be caused, Borrower will (within 15 days
after written notification from Lender) pay all costs of the Improvements until
the Loan and each phase of the work is in balance and until such payments have
been made Lender will not be obligated to make any further disbursements
hereunder. During construction, any income received by Borrower relative to the
Project shall be applied to construction period interest under the Note.

 

8.10        Development Fees.  In addition to the other conditions contained
herein and in any other Loan Document, development fees will be disbursed as
construction progresses but at no time shall the amount disbursed exceed the
percentage that the Project is complete.

 

ARTICLE IX

DEFAULT

 

9.1          Events of Default by Borrower.  The occurrence of any one or more
of the following shall constitute an “Event of Default” as such term is used
herein:

 

(a)           A default under the Note, or the Mortgage or any other Loan
Document;

 

(b)           Any representation, warranty or statement made by (or on behalf
of) Borrower or any Guarantor in this Agreement, in any other Loan Document or
any other

 

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instrument now or hereafter evidencing, securing, guarantying or in any manner
relating to the Loan proves untrue in any material respect;

 

(c)           Failure of Borrower to comply with any of the terms and conditions
of this Agreement;

 

(d)           An unreasonable delay in the construction of any Project Element,
other than a Big Box, as to which construction is commenced or a discontinuance
for a period of 15 days (subject to matters beyond Borrower’s control, including
bad weather), or in any event a delay in the construction of such a Project
Element (subject to matters beyond Borrower’s control, including bad weather) so
that the same may not, in Lender’s reasonable sole judgment, be completed on or
before the Completion Date;

 

(e)           The reasonable disapproval by Lender at any time of any
construction work and the failure of Borrower to cause the same to be corrected
to the satisfaction of Lender within 15 days provided, however, if within such
15 day period Borrower has made a good faith effort to comply with the foregoing
requirements but has not yet been able to complete same and such effects
continue and it reasonably appears that they will be successful, then the time
to cure such default shall be extended by such reasonable time as determined by
Lender so long as Borrower continuously and diligently prosecutes such
correction;

 

(f)            The use of any materials, fixtures or articles in the
construction of the Improvements that are not in accordance with the Plans and
Specifications as approved by Lender;

 

(g)           The bankruptcy or insolvency of any general contractor or
subcontractor under contract to work on the Improvements and failure of Borrower
to procure a contract or subcontract with a new substitute contractor or
subcontractor satisfactory to Lender within 30 days from the occurrence of such
bankruptcy or insolvency.

 

(h)           If Borrower or any Guarantor files a voluntary petition in
bankruptcy or is adjudicated a bankrupt or insolvent, or files any petition or
answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or any future
federal bankruptcy act or any other present or future applicable federal, state
or other statute or law, makes an assignment for the benefit of creditors, or
seeks or consents to or acquiesces in the appointment of any trustee, receiver
or liquidator of Borrower or any Guarantor of all or any substantial part of
their properties or of the Premises;

 

(i)            If within 60 days after the commencement of any proceeding
against Borrower or any Guarantor seeking any reorganization, arrangement,
readjustment, liquidation, dissolution or similar relief under the present or
any future federal bankruptcy act or any other present or future applicable
federal, state or other statute or law, such proceeding is not dismissed, or if,
within 60 days after the appointment, without the consent or acquiescence of
Borrower of any trustee, receiver or liquidator of Borrower or any Guarantor of
all or any substantial part of their properties or, of the Premises, such
appointment is not vacated or stayed on appeal or otherwise, or if, within 60
days after the expiration of any such stay, such appointment is not vacated.

 

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(j)           The occurrence of any default or event of default under any
document evidencing or securing a certain loan from Lender to affiliates of
Borrower in the principal amount of $77,300,000, as evidenced by a Promissory
Note of like amount from such affiliates to Lender dated October 29, 2004 and
secured by real property owned by such affiliates, adjacent to and contiguous to
the Project.

 

9.2          Lender’s Remedies in the Event of Default.  Upon the occurrence of
any Event of Default, Lender, in addition to all remedies conferred upon Lender
by law and/or equity and by the terms of the Loan Documents, may, in its sole
discretion, pursue any one or more of the following remedies concurrently or
successively, it being the intent hereof that none of such remedies shall be to
the exclusion of any other:

 

(a)           Take possession of the Premises and complete the construction and
equipping of the Improvements and do anything in its sole judgment to fulfill
the obligations of Borrower hereunder, any expense incurred by Lender being
deemed to be part of the indebtedness of Borrower pursuant to the Loan,
including either the right to avail itself of or procure performance of existing
contracts, under the Security Agreements or otherwise, or let any contracts with
the same contractors or others. Without restricting the generality of the
foregoing and for purposes aforesaid, Borrower hereby appoints and constitutes
Lender its lawful attorney-in-fact with full power of substitute in the premises
to complete construction and equipping of the Improvements in the name of
Borrower; to use unadvanced funds remaining in the Pledge Account under this
Agreement or which may be reserved, or escrowed or set aside for any purpose
hereunder at any time to complete the Improvements; to make changes in the Plans
and Specifications necessary or desirable to complete the Improvements in
substantially the manner contemplated by the Plans and Specifications; to retain
or employ new general contracts, subcontractors, architects and inspectors as
shall be required for such purposes; to pay, settle, or compromise all existing
bills and claims, which may be lien or security interests, or to avoid such
bills and claims becoming liens against the Premises or security interests
against fixtures or equipment, or as may be necessary or desirable for the
completion of the construction of the Improvements or for the clearance of
title; to provide for and cause the completion of any tenant work, tenant
furnishings and/or tenant Improvements for all or any portion of the
Improvements on the Premises; and to do any and every act which Borrower might
do in its own behalf; to prosecute and defend all actions or proceedings in
connection with the Improvements or the Premises or fixtures or equipment; it
being understood and agreed that this power of attorney shall be a power coupled
with an interest and cannot be revoked; and/or

 

(b)           Withhold further disbursement of the Loan Proceeds; and/or

 

(c)           Declare the entire indebtedness evidenced by the Note, without
demand or notice of any kind (which are hereby expressly waived) to be due and
payable at once and, in that event, such indebtedness and obligations shall
become immediately due and payable; and/or

 

(d)           Exercise any or all remedies available to Lender under any of the
Loan Documents.

 

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ARTICLE X

GENERAL COVENANTS

 

10.1        No Assignments by Borrower.  This Agreement may not be assigned by
Borrower.

 

10.2        Assignment by Lender.  This Agreement, the Loan Documents and any
other instrument now or hereafter evidencing, securing or in any manner
affecting the Loan may be endorsed, assigned and transferred in whole or in part
by Lender, and any such holder and assignee of the same will succeed to and be
possessed of the rights of Lender under all of the same to the extent
transferred and assigned.

 

10.3        Time of the Essence.  Time is of the essence of this Agreement.

 

10.4        No Agency.  Neither Servicer nor Lender is the agent or
representative of Borrower, and Borrower is not the agent or representative of
Lender or Servicer, and nothing in this Agreement will be construed to make
Lender or Servicer liable to anyone for goods delivered or services performed
upon the Premises or for debts or claims accruing against Borrower.

 

10.5       No Partnership or Joint Venture.  Neither anything contained herein
nor the acts of the parties hereto will be construed to create a partnership or
joint venture between Borrower and Lender or between Borrower and Servicer.

 

10.6        No Third Party Beneficiaries.  All conditions to the obligations of
Lender to make advances hereunder are imposed solely and exclusively for the
benefit of Lender and its assigns and no other person will have standing to
require satisfaction of such conditions or be entitled to assume that Lender
will not make disbursements in the absence of strict compliance with any or all
thereof and no other person, under any circumstances, will be deemed to be
beneficiary of such conditions, any or all of which may be waived in whole or in
part by Lender at any time if Lender in its sole discretion deems it advisable
to do so.

 

10.7        Waiver.  No delay or omission by Lender to exercise any right or
power arising from any default will impair any such right or power or be
considered to be a waiver of any such default or any acquiescence therein nor
shall the action or nonaction of Lender in case of default on the part of
Borrower impair any right or power arising therefrom. No disbursement of the
Loan hereunder shall constitute a waiver of any of the conditions to Lender’s
obligation to make further disbursements nor, in the event Borrower is unable to
satisfy any such condition, shall any such disbursement have the effect of
precluding Lender from thereafter declaring such inability to be an Event of
Default as hereinabove provided.

 

10.8      Notices.  All notices, requests, demands and other communications
required or permitted to be given hereunder, or pursuant to the applicable
version of the Uniform Commercial Code, will be sufficiently given if in writing
and delivered in person or sent by United States certified mail, return receipt
requested, postage prepaid, to the party being given such notice at the
appropriate address set forth in the first paragraph of this Agreement, or to
such other address as either party may give to the other in writing for such
purpose. All such notices, requests, demands and other communications, if so
mailed, will be deemed to be given

 

20

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when so mailed. All notices or requests addressed to Servicer shall be sent to
“Commercial Real Estate Department, CN OH W 10C, 425 Walnut Street, Cincinnati,
Ohio 45202.”

 

10.9        Partial Invalidity.  In the event any one or more of the provisions
contained in this Agreement shall be for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been set forth herein.

 

10.10      Entire Agreement.  This Agreement, the Loan Documents and the other
contracts, agreements and instruments described herein contain all of the terms
covering the disbursement of the Loan by Lender and the use of the Loan by
Borrower.

 

10.11      Publicity.  Borrower hereby gives Lender permission to release
articles concerning financing of the Premises and shall allow Lender to erect a
sign or add Lender’s name to the construction sign on the Project site
identifying Lender’s financing of the Project.

 

10.12      Applicable Law.  This agreement shall be construed and enforced in
accordance with the laws of the State of Illinois, without reference to the
choice of law or conflicts of law principles of the State.

 

10.13      Attorney’s Fees.  Borrower will pay Lender’s reasonable attorneys’
fees and costs in connection with the negotiation, preparation and
administration of this Agreement and will pay Lender’s reasonable attorneys’
fees and costs in connection with this Note and the other Loan Documents;
without limiting the generality of the foregoing or the provision of Section 7.1
hereof, if at any time or times hereafter Lender employs counsel for advice or
other representation with respect to any matter concerning Borrower, this
Agreement, the Premises or the Loan Documents or if Lender employs one or more
counsel to protect, collect, lease, sell, take possession of, or liquidate any
of the Premises or to attempt to enforce or protect any security interest or
lien or other right in any of the Premises or under any of the Loan Documents,
or to enforce any rights of Lender or obligations of Borrower or any other
person, firm or corporation which may be obligated to Lender by virtue of this
Agreement or under any of the Loan Documents or any other agreement, instrument
or document, heretofore or hereafter delivered to any Lender in furtherance
hereof, then in any such event, all of the attorneys’ fees arising from such
services, and any expenses, costs and charges relating thereto, shall constitute
an additional indebtedness owing by Borrower, payable on demand and evidenced
and secured by the Loan Documents.

 

10.14      WAIVER OF JURY TRIAL.  EACH PARTY HEREBY JOINTLY AND SEVERALLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS
INSTRUMENT AND TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS HEREUNDER OR
THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING
THEREFROM OR CONNECTED THERETO. EACH PARTY REPRESENTS TO THE OTHERS THAT THIS
WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

 

21

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10.15      Joint and Several Liability.  The obligations and liabilities of
“Borrower” hereunder shall be the joint and several obligations and liabilities
of each of Algonquin Commons, LLC, an Illinois limited liability company,
Algonquin Phase II Associates LLC, an Illinois limited liability company, JRA
Anderson Office Park, LLC, an Ohio limited liability company, JRA Beechmont
Twins, LLC, an Ohio limited liability company, JRA Family Limited Liability
Company, an Ohio limited liability company, MFF Associates, LLC, an Ohio limited
liability company, and TGH Associates, LLC, an Ohio limited liability company,
each as a primary obligor, but such obligations are subject to the Limitation of
liability set forth in the Mortgage.

 

ARTICLE XI

ADDENDUM

 

11.1        Project Management.  Borrower shall not use or employ any management
company or agent without the prior written approval of Lender of said company or
agent (other than Jeffrey R. Anderson Real Estate, Inc.), and Borrower shall not
enter into, amend, modify or supplement any management agreement without
Lender’s prior written approval thereof, which shall not be unreasonably
withheld, delayed or conditioned. If required by Lender, Borrower agrees, within
sixty (60) days after notice is given from Lender, to retain a professional
independent management company and/or real estate brokerage company to manage
the operation of the Project and the leasing of space in the Project. Such
management company and/or real estate brokerage company shall be experienced in
the management and leasing of the Project and must be satisfactory to the
Lender, in its discretion.

 

THIS SPACE INTENTIONALLY LEFT BLANK

 

22

--------------------------------------------------------------------------------

 

EXECUTED EFFECTIVE AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.

 

BORROWER:

 

ALGONQUIN COMMONS, LLC, an Illinois limited liability company

ALGONQUIN PHASE II ASSOCIATES LLC, an Illinois limited liability company

JRA ANDERSON OFFICE PARK, LLC, an Ohio limited liability company

JRA BEECHMONT TWINS, LLC, an Ohio limited liability company

JRA FAMILY LIMITED LIABILITY COMPANY, an Ohio limited liability company

MFF ASSOCIATES, LLC, an Ohio limited liability company

TGH ASSOCIATES, LLC, an Ohio limited liability company

 

By:

Jeffrey R. Anderson Real Estate, Inc., an Ohio corporation and collectively
their authorized agent

 

 

 

 

 

 

 

 

By:

/s/ Jeffrey R. Anderson

 

 

Printed Name: Jeffrey R. Anderson

 

 

Title: President

 

 

LENDER:

 

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, a New York corporation

 

 

 

By:

 

 

Printed Name:

 

 

Title:

 

 

 

EXHIBITS

EXHIBIT A — REAL ESTATE LEGAL DESCRIPTION

EXHIBIT B — DEVELOPMENT BUDGET

EXHIBIT C — DRAW FORM

 

--------------------------------------------------------------------------------

 

EXHIBIT A

LEGAL DESCRIPTION

 

ALGONQUIN COMMONS, PHASE II

 

PARCEL 1:

 

THAT PART OF FRACTIONAL SECTION 6, TOWNSHIP 42 NORTH, RANGE 8, EAST OF THE THIRD
PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS: COMMENCING AT THE NORTHEAST CORNER OF
THE NORTHEAST QUARTER OF SAID FRACTIONAL SECTION 6; THENCE SOUTH 89 DEGREES 39
MINUTES 00 SECONDS WEST, ALONG THE NORTH LINE OF SAID NORTHEAST QUARTER, 1457.82
FEET; THENCE SOUTH 00 DEGREES 50 MINUTES 38 SECONDS EAST, TO A LINE 20.00 FEET
SOUTHERLY OF AND PARALLEL WITH THE NORTH LINE OF SAID NORTHEAST QUARTER, BEING
THE SOUTH LINE OF COUNTY LINE ROAD ACCORDING TO DOCUMENT NO. 80478, RECORDED
FEBRUARY 11, 1906, FOR THE POINT OF BEGINNING; THENCE NORTH 89 DEGREES 39
MINUTES 00 SECONDS EAST PARALLEL WITH THE NORTH LINE OF SAID NORTHEAST QUARTER,
997.61 FEET TO THE WEST LINE (IF THE EAST 460.00 FEET OF SAID NORTHEAST QUARTER;
THENCE SOUTH 00 DEGREES 33 MINUTES 35 SECONDS EAST, ALONG SAID WEST LINE, 638.78
FEET TO THE SOUTH LINE OF THE NORTH HALF OF THE NORTHEAST QUARTER OF SAID
NORTHEAST QUARTER, AS MONUMENTED AND OCCUPIED; THENCE NORTH 89 DEGREES 57
MINUTES 05 SECONDS EAST, ALONG SAID SOUTH LINE, 423.27 FEET TO THE WEST LINE OF
RANDALL ROAD ACCORDING TO DOCUMENT NO. 97K073506, RECORDED OCTOBER 28, 1997;
THENCE SOUTH 00 DEGREES 17 MINUTES 50 SECONDS WEST, ALONG SAID WEST LINE 227.08
FEET; THENCE SOUTH 89 DEGREES 57 MINUTES 05 SECONDS WEST, PARALLEL WITH THE
SOUTH LINE OF SAID NORTH HALF, 100.59 FEET; THENCE SOUTH 00 DEGREES 17 MINUTES
50 SECONDS WEST, PARALLEL WITH SAID WEST LINE OF RANDALL ROAD, 62.61 FEET;
THENCE SOUTH 89 DEGREES 57 MINUTES 05 SECONDS WEST, PARALLEL WITH THE SOUTH LINE
OF SAID NORTH HALF, 353.00 FEET; THENCE NORTH 00 DEGREES 17 MINUTES 50 SECONDS
EAST, PARALLEL WITH SAID WEST LINE OF RANDALL ROAD, 209.70 FEET; THENCE SOUTH 89
DEGREES 39 MINUTES 00 SECONDS WEST, PARALLEL WITH THE NORTH LINE OF SAID
NORTHEAST QUARTER, 495.00 FEET; THENCE SOUTH 00 DEGREES 27 MINUTES 16 SECONDS
EAST, PARALLEL WITH THE WEST LINE OF THE EAST HALF OF SAID NORTHEAST QUARTER,
30.00 FEET; THENCE SOUTH 89 DEGREES 39 MINUTES 00 SECONDS WEST, PARALLEL WITH
THE NORTH LINE OF SAID NORTHEAST QUARTER, 335.00 FEET TO THE WEST LINE OF THE
EAST HALF OF SAID NORTHEAST QUARTER; THENCE NORTH 00 DEGREES 27 MINUTES 16
SECONDS WEST, ALONG SAID WEST LINE, 114.35 FEET TO THE SOUTH LINE OF THE NORTH
HALF OF THE NORTHEAST QUARTER OF SAID NORTHEAST QUARTER; THENCE SOUTH 89 DEGREES
57 MINUTES 05 SECONDS WEST, ALONG THE SOUTH LINE OF SAID NORTH HALF, 133.21
FEET; THENCE NORTH 00 DEGREES 50 MINUTES 38 SECONDS WEST, 653.57 FEET TO THE
POINT OF BEGINNING, IN THE VILLAGE OF ALGONQUIN, DUNDEE TOWNSHIP, KANE
COUNTY, ILLINOIS.

 

--------------------------------------------------------------------------------

 

PARCEL 2:

 

EASEMENTS FOR ROADWAYS, WATERMAINS, SANITARY SEWER, STORM SEWER AND DETENTION
FACILITIES FOR THE BENEFIT OF PARCEL 1 AS SET FORTH AND DEFINED IN DECLARATION
OF EASEMENTS, RESTRICTIONS AND MAINTENANCE AGREEMENT DATED OCTOBER 8, 2003 AND
RECORDED NOVEMBER 4, 2003 AS DOCUMENT NO. 2003K194483, KANE COUNTY, ILLINOIS AS
AMENDED AND RESTATED BY AMENDED AND RESTATED DECLARATION OF EASEMENTS,
RESTRICTIONS AND MAINTENANCE AGREEMENT FOR ALGONQUIN COMMONS LIFESTYLE CENTER
AND THE EXCHANGE AT ALGONQUIN COMMONS MADE EFFECTIVE AS OF NOVEMBER 4, 2003 AND
RECORDED OCTOBER 12, 2004 AS DOCUMENT NO. 2004K132533, KANE COUNTY, ILLINOIS.

 

2

--------------------------------------------------------------------------------

 

Jeffrey R. Anderson Real Estate, Inc.

Algonquin Commons Phase II

Construction Cost Budget

 

 

 

 

 

 

 

 

 

 

 

In lakes

 

 

 

 

 

Circuit City

 

Petsmart

 

Staples

 

RETAIL

 

Furniture

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LAND & ON-SITE COSTS

 

 

 

 

 

 

 

 

 

 

 

 

 

Land Costs - 19,197 acres

 

$

1,959 682

 

$

1,321,268

 

$

1,159,516

 

$

1,449,395

 

$

2,154,179

 

$

8,053,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HARD COSTS

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Costs - Cold Dark Shell

 

2,028 000

 

1,852,275

 

1,300,000

 

1,825,000

 

2,799,875

 

9,404,950

 

Building Costs - Excess of COS

 

0

 

0

 

0

 

0

 

0

 

0

 

Tenant improvement allowance

 

0

 

0

 

0

 

0

 

0

 

0

 

Off-site costs

 

0

 

0

 

0

 

0

 

0

 

0

 

Site Costs

 

364,961

 

246,079

 

215,953

 

289,941

 

403,086

 

1,500,000

 

Paving, Parking, Lights

 

517,028

 

348,011

 

305,934

 

382,417

 

571,010

 

2,125,000

 

Winter Conditions

 

0

 

0

 

0

 

0

 

0

 

0

 

GC/Fee/ProConstruction

 

110,249

 

74,338

 

63,236

 

81,545

 

121,758

 

453,125

 

Hard Cost Contingency

 

241,487

 

95,338

 

87,131

 

102,545

 

142,759

 

669,268

 

Total Hard Costs

 

3,261,734

 

2,416,637

 

1,974,254

 

2,461,448

 

4,038,269

 

14,152,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SOFT COSTS

 

 

 

 

 

 

 

 

 

 

 

 

 

Architectural/Engineering/Traffic

 

33,800

 

45,580

 

40,000

 

50,000

 

74,658

 

244,038

 

Survey

 

7,500

 

7,500

 

7,500

 

7,500

 

7,500

 

37,500

 

Admin. / Overhead

 

20,000

 

20,000

 

20,000

 

20,000

 

20,000

 

100,000

 

Legal / Leases

 

25,000

 

25,000

 

25,000

 

25,000

 

25,000

 

125,000

 

Appraisal

 

1,500

 

1,500

 

1,500

 

1,500

 

1,500

 

7,500

 

Environmental

 

1,500

 

1,500

 

1,500

 

1,500

 

1,500

 

7,500

 

Soil Test & Construction

 

10,000

 

10,000

 

10,000

 

10,000

 

10,000

 

50,000

 

Inspection Fees

 

5,000

 

5,000

 

5,000

 

5,000

 

5,000

 

25,000

 

Title Insurance

 

2,000

 

2,000

 

2,000

 

2,000

 

2,000

 

10,000

 

Liability Insurance

 

10,000

 

10,000

 

10,000

 

10,000

 

5,000

 

45,000

 

Loan Fees - Construction

 

25,000

 

25,000

 

25,000

 

25,000

 

5,000

 

105,000

 

Loan Fees - Permanent

 

25,000

 

25,000

 

25,000

 

25,000

 

25,000

 

125,000

 

Construction Interest

 

138,000

 

105,750

 

108,500

 

80,000

 

158,250

 

598,560

 

Leasing Commissions

 

169,000

 

113,950

 

100,000

 

125,000

 

186,645

 

694,595

 

Building permits

 

33,500

 

22,700

 

20,000

 

25,000

 

37,329

 

138,919

 

Other Permits

 

101,400

 

68,370

 

60,000

 

75,000

 

111,987

 

416,757

 

Development Fee

 

33,800

 

22,790

 

20,000

 

25,000

 

37,329

 

138,919

 

Travel and courier service

 

5,000

 

5,000

 

5,000

 

5,000

 

5,000

 

25,000

 

Closing Costs

 

10,000

 

10,000

 

10,000

 

10,000

 

10,000

 

50,000

 

Project Manager

 

12,165

 

8,203

 

7,108

 

8,998

 

13,436

 

50,000

 

Contingency Soft

 

68,963

 

53,493

 

50,120

 

64,650

 

74,213

 

289,429

 

TOTAL SOFT COSTS

 

738,478

 

588,428

 

651,318

 

601,148

 

816,347

 

3,293,717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL PROJECT COSTS

 

$

5,957,794

 

$

4,326,332

 

$

3,635,088

 

$

4,511,991

 

$

1,018,785

 

$

25,500,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss Equity

 

(1,091,983

)

(738,236

)

(647,860

)

(809,824

)

(1,200,197

)

(4,500,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET PROJECT COSTS

 

$

4,082,912

 

$

3,508,096

 

$

3,037,228

 

$

3,702,167

 

$

5,806,597

 

$

21,000,000

 

 

--------------------------------------------------------------------------------

 

Schedule 4.6

 

BUILDER’S RISK REQUIRED FOR TENANTS SIGNED AT LOAN CLOSING

 

 

 

Circuit City

 

$

3,036,865

 

Pet Smart

 

2,294,838

 

Wickes Furniture

 

3,799,154

 

TOTAL BUILDER’S RISK INSURANCE IN PLACE

 

9,130,857

 

Insurance Provided by Tenant - Circuit City

 

(3,036,865

)

Insurance Provided by Tenant - Wickes Furniture

 

(3,170,246

)

TOTAL BUILDER’S RISK INSURANCE OF BORROWER

 

$

2,923,746

 

 

--------------------------------------------------------------------------------