Document:

Exhibit 10.19

 

	
 
    	
TIAA Appl. #AAA-3831
    
	
 
    	
Authorization ID# 000576200
    

 

PROMISSORY NOTE

 

	
$21,000,000.00
    	
 
    
	
 
    	
Algonquin, Illinois
    
	
 
    	
Dated: December    , 2004
    

 

FOR VALUE RECEIVED, 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 JBEECHMONT 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, “Borrower”),  each having its principal place of business c/o Rookwood Tower, 3805 Edwards Road, Suite 700, Cincinnati, Ohio 45209, Attn: Jeffrey R. Anderson, promises to pay to TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA (“Lender”),  a New York corporation, or order, at Lender’s offices at 730 Third Avenue, New York, New York 10017 or at such other place as Lender designates in writing, the principal sum of TWENTY-ONE MILLION AND 00/100THS DOLLARS ($21,000,000.00) (the principal sum or so much of the principal sum as may be advanced and outstanding from time to time, the “Principal”),  in lawful money of the United States of America, with interest on the Principal from the date of this Promissory Note (this “Note”) through and including November 1, 2014 (the “Maturity Date”) at the fixed rate of Five and Twenty-Four Hundredths percent (5.24%) per annum (the “Fixed Interest  Rate”).

 

This Note is secured by, among other things, the Mortgage, Assignment of Leases and Rents, Security Agreement, and Fixture Filing Statement (the “Mortgage”)  dated the date of this Note made by Borrower for the benefit of Lender as security for the Loan. All capitalized terms not expressly defined in this Note will have the definitions set forth in the Mortgage.

 

Section 1. Payments of Principal and Fixed Interest.

 

(a) Borrower will make monthly installment payments (“Debt Service  Payments”)  as follows:

 

(i) On January 1, 2005, a payment of accrued interest on the Principal at the Fixed Interest Rate;

 

(ii) On February 1, 2005 and on the first day of each succeeding calendar month through and including December 1, 2005, payments in the amount of                                                                                                    AND    /l00THS DOLLARS ($                 ), each of which will be applied to accrued interest on the Principal at the Fixed Interest Rate; and

 

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(iii) On January 1, 2006 and on the first day of each succeeding calendar month through and including the Maturity Date, payments in the amount of                                                                                                     AND     /100THS DOLLARS

 

(b) In the event a prepayment of the principal of this Note is made as specified in Section 6.8 of the Loan Agreement, then at that time, and effective as to all payments made after that date through and including the Maturity Date, the regular payment of principal and interest shall be recalculated as the payment needed to fully amortize the remaining principal in equal monthly installments over a period of 26 years at the Fixed Interest Rate, each of which will be applied first to accrued interest on the Principal at the Fixed Interest Rate and then to the Principal. Such recalculation shall not be construed as revising the Maturity Date.

 

(c) On the Maturity Date, Borrower will pay the Principal in full together with accrued interest at the Fixed Interest Rate and all other amounts due under the Loan Documents.

 

Section 2. Prepayment Provisions.

 

(a) The following definitions apply:

 

“Discount Rate” means the yield on a U.S. Treasury issue selected by Lender, as published in the Wall Street Journal, two weeks prior to prepayment, having a maturity date corresponding (or most closely corresponding, if not identical) to the Maturity Date, and, if applicable, a coupon rate corresponding (or most closely corresponding, if not identical) to the Fixed Interest Rate.

 

“Default Discount Rate” means the Discount Rate less 300 basis points.

 

“Discounted Value” means the Discounted Value of a Note Payment based on the following formula:

 

	
NP
    	
 
    	
 
    
	
(1 + R/12)n
    	
=
    	
Discounted Value
    
	
 
    	
 
    	
 
    
	
NP
    	
=
    	
 
    	
Amount of Note Payment
    
	
 
    	
 
    	
 
    	
 
    
	
R
    	
=
    	
 
    	
Discount Rate or Default   Discount Rate as the case may be.
    
	
 
    	
 
    	
 
    	
 
    
	
n
    	
=
    	
 
    	
The number of months   between the date of prepayment and the scheduled date of the Note Payment   being discounted rounded to the nearest integer.
    

 

“Note Payments” means (i) the scheduled Debt Service Payments for the period from the date of prepayment through the Maturity Date and (ii) the scheduled repayment of Principal, if any, on the Maturity Date.

 

“Prepayment Date Principal” means the Principal on the date of prepayment.

 

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(b) Except as set forth in Section 6.8 of the Loan Agreement (which partial prepayment shall include a Prepayment Premium based on the amount so prepaid), this Note may not be prepaid in full or in part before November 30, 2009. Commencing on December 1, 2009, provided there is no Event of Default, Borrower may prepay this Note in full, but not in part, on the first day of any calendar month, upon 90 days prior notice to Lender and upon payment in full of the Debt which will include a payment (the “Prepayment Premium”)  equal to the greater of (i) an amount equal to the product of 1% times the Prepayment Date Principal and (ii) the amount by which the sum of the Discounted Values of Note Payments, calculated at the Discount Rate, exceeds the Prepayment Date Principal. Provided there is no Event of Default, this Note may be prepaid in full without payment of the Prepayment Premium during the last 90 days of the Term. This Note may not be prepaid without simultaneous prepayment in full of (i) any other notes secured by the Loan Documents or (ii) the note evidencing a certain loan in the amount of $77,300,000.00 from Lender to Algonquin Commons, LLC and Algonquin Phase I Associates LLC (the “Phase I Loan”).

 

(c) After an Acceleration or upon any other prepayment not permitted by the Loan Documents, any tender of payment of the amount necessary to satisfy the Debt accelerated, any judgment of foreclosure, any statement of the amount due at the time of foreclosure (including foreclosure by power of sale) and any tender of payment made during any redemption period after foreclosure, will include a payment (the “Evasion Premium”)  equal to the greater of (i) an amount equal to the product of 1% plus 300 basis points times the Prepayment Date Principal, and (ii) the amount by which the sum of the Discounted Values of the Note Payments, calculated at the Default Discount Rate, exceeds the Prepayment Date Principal.

 

(d) Borrower acknowledges that:

 

(i)                           a prepayment will cause damage to Lender;

 

(ii)                        the Evasion Premium is intended to compensate Lender for the loss of its investment and the expense incurred and time and effort associated with making the Loan, which will not be fully repaid if the Loan is prepaid;

 

(iii)                     it will be extremely difficult and impractical to ascertain the extent of Lender’s damages caused by a prepayment after an Event of Default or any other prepayment not permitted by the Loan Documents; and

 

(iv)                    the Evasion Premium represents Lender and Borrower’s reasonable estimate of Lender’s damages for the prepayment and is not a penalty.

 

Section 3. Events  of Default:

 

(a)                        It is an “Event of Default” under this Note:

 

(i)                           if Borrower fails to pay any amount due, as and when required, under this Note or any other Loan Document and the failure continues for a period of 5 days; or

 

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(ii)                        if an Event of Default occurs under any other Loan Document; or

 

(iii)                     if, with respect to any documents evidencing or securing the Phase I Loan (collectively, the “Phase I Loan Documents”),  any “Event of Default” (as defined in any such documents) shall occur.

 

(b)                       If an Event of Default occurs, Lender may declare all or any portion of the Debt immediately due and payable (“Acceleration”) and exercise any of the other Remedies.

 

Section 4. Default Rate. Interest on the Principal will accrue at the Default Interest Rate from the date an Event of Default occurs.

 

Section 5. Late Charges.

 

(a) If Borrower fails to pay any Debt Service Payment when due and the failure continues for a period of 5 days or more or fails to pay any amount due under the Loan Documents on the Maturity Date, Borrower agrees to pay to Lender an amount (a “Late Charge”)  equal to five cents ($.05) for each one dollar ($1.00) of the delinquent payment.

 

(b) Borrower acknowledges that:

 

(i)                           a delinquent payment will cause damage to Lender;

 

(ii)                        the Late Charge is intended to compensate Lender for loss of use of the delinquent payment and the expense incurred and time and effort associated with recovering the delinquent payment;

 

(iii)                     it will be extremely difficult and impractical to ascertain the extent of Lender’s damages caused by the delinquency; and

 

(iv)                    the Late Charge represents Lender and Borrower’s reasonable estimate of Lender’s damages from the delinquency and is not a penalty.

 

Section 6. Limitation of Liability. This Note is subject to the limitations on liability set forth in the Article of the Mortgage entitled “Limitation of Liability”.

 

Section 7. WAIVERS. IN ADDITION TO THE WAIVERS SET FORTH IN THE ARTICLE OF THE MORTGAGE ENTITLED “WAIVERS”, BORROWER WAIVES PRESENTMENT FOR PAYMENT, DEMAND, DISHONOR AND, EXCEPT AS EXPRESSLY SET FORTH IN THE LOAN DOCUMENTS, NOTICE OF ANY OF THE FOREGOING. BORROWER FURTHER WAIVES ANY PROTEST, LACK OF DILIGENCE OR DELAY IN COLLECTION OF THE DEBT OR ENFORCEMENT OF THE LOAN DOCUMENTS. BORROWER AND ALL INDORSERS, SURETIES AND GUARANTORS OF THE OBLIGATIONS CONSENT TO ANY EXTENSIONS OF TIME, RENEWALS, WAIVERS AND MODIFICATIONS THAT LENDER MAY

 

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GRANT WITH RESPECT TO THE OBLIGATIONS AND TO THE RELEASE OF ANY SECURITY FOR THIS NOTE AND AGREE THAT LENDER WILL NOT BE REQUIRED TO PURSUE ANY OF ITS RIGHTS OR THE REMEDIES OR TO EXERCISE ANY RIGHTS PURSUANT TO ANY SECURITY FOR THIS NOTE BEFORE EXERCISING ANY OF ITS OTHER RIGHTS. BORROWER AND ALL INDORSERS, SURETIES AND GUARANTORS OF THE OBLIGATIONS FURTHER AGREE THAT ADDITIONAL MAKERS MAY BECOME PARTIES TO THIS NOTE AND ADDITIONAL INDORSERS, GUARANTORS OR SURETIES MAY BE ADDED WITHOUT NOTICE AND WITHOUT AFFECTING THE LIABILITY OF THE ORIGINAL MAKER OR ANY ORIGINAL INDORSER, SURETY OR GUARANTOR.

 

Section 8. Commercial Loan. The Loan is made for the purpose of carrying on a business or commercial activity or acquiring real or personal property as an investment or carrying on an investment activity and not for personal or household purposes.

 

Section 9. Usury Limitations. Borrower and Lender intend to comply with all Laws with respect to the charging and receiving of interest. Any amounts charged or received by Lender for the use or forbearance of the Principal to the extent permitted by Law, will be amortized and spread throughout the Term until payment in full so that the rate or amount of interest charged or received by Lender on account the Principal does not exceed the Maximum Interest Rate. If any amount charged or received under the Loan Documents that is deemed to be interest is determined to be in excess of the amount permitted to be charged or received at the Maximum Interest Rate, the excess will be deemed to be a prepayment of Principal when paid, without premium, and any portion of the excess not capable of being so applied will be refunded to Borrower. If during the Term the Maximum Interest Rate, if any, is eliminated, then for purposes of the Loan, there will be no Maximum Interest Rate.

 

Section 10. Applicable Law. This Note is governed by and will be construed in accordance with the Laws of the State or Commonwealth in which the Property is located, without regard to conflict of law provisions.

 

Section 11. Time of the Essence. Time is of the essence with respect to the payment and performance of the Obligations.

 

Section 12. Cross-Default. A default under any other note now or hereafter secured by the Loan Documents, under any of the Phase I Loan Documents or under any loan document related to such other note constitutes a default under this Note and under the other Loan Documents. When the default under the other note or under the Phase I Loan Documents constitutes an Event of Default under that note or the related loan document, an Event of Default also will exist under this Note and the other Loan Documents.

 

Section 13. Construction. Unless expressly provided otherwise in this Note, this Note will be construed in accordance with the Exhibit attached to the Mortgage entitled “Rules of Construction”.

 

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Section 14. Mortgage Provisions Incorporated. To the extent not otherwise set forth in this Note, the provisions of the Articles of the Mortgage entitled “Expenses and Duty to Defend”, “Waivers”, “Notices”,  and “Miscellaneous” are applicable to this Note and deemed incorporated by reference as if set forth at length in this Note.

 

Section 15. Joint and Several Liability; Successors and Assigns. If Maker consists of more than one entity, the obligations and liabilities of each such entity will be joint and several. This Note binds Borrower and successors, assigns, heirs, administrators, executors, agents and representatives and inures to the benefit of Lender and its successors, assigns, heirs, administrators, executors, agents and representatives.

 

Section 16. Absolute Obligation. Except for the Section of this Note entitled “Limitation of Liability”,  no reference in this Note to the other Loan Documents and no other provision of this Note or of the other Loan Documents will impair or alter the obligation of Borrower, which is absolute and unconditional, to pay the Principal, interest at the Fixed Interest Rate and any other amounts due and payable under this Note, as and when required.

 

Section 17. WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS NOTE OR ANY OTHER LOAN DOCUMENTS; OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF BORROWER OR LENDER WITH RESPECT TO THIS NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATED TO THE LOAN DOCUMENTS, IN EACH CASE WHETHER NOW EXISTING OR ARISING IN THE FUTURE, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT BORROWER OR LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWER TO THE WAIVER OF THE RIGHT OF BORROWER TO TRIAL BY JURY.

 

Section 18. Miscellaneous. The Debt may from time to time be evidenced by another note or notes given in substitution, renewal or extension of this Note. Any security interest or mortgage which secures the Debt will remain in full force and effect notwithstanding any such substitution, renewal, or extension.

 

[SIGNATURES ON NEXT PAGE]

 

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IN WITNESS WHEREOF, Borrower has executed and delivered this Note as of the date first set forth above.

 

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
    	
 
    
				

 

7Exhibit 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.

 

 

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.

 

18

 

(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.

 

19

 

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

 

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

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00206-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00206-of-00352.parquet"}]]