DEVELOPMENT FINANCING AND LEASING COMMITMENT
(the "Commitment")
October 17, 1997
AEI Fund Management, Inc., or its assigns, ("AEI"), agrees
to purchase, and you, Timber Lodge Steakhouse Inc. ("Lessee"),
agree to lease from AEI, a parcel of land to be located at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ legally described on
Exhibit "A" attached hereto (together with the "Improvements" as
defined below, (the "Parcel"), with the understanding that the
building, site improvements, fixtures, HVAC, non-trade fixture
items financed by AEI, constituting a Timber Lodge Steakhouse
restaurant (the "Improvements") is to be developed by you on the
Parcel after AEI's purchase of the Parcel from Shoney's, Inc.
("Seller"). The Parcel's purchase, development and lease will be
subject to the provisions and conditions herein contained:
▇. ▇▇▇▇▇▇
Lessee: Timber Lodge Steakhouse Inc.
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
B. ACQUISITION OF PARCEL
This Commitment is contingent upon AEI's purchase of the
Parcel from Seller, pursuant to an assignment to AEI of the
purchaser's interest in a purchase agreement between Lessee
and Seller. Said purchase agreement and assignment shall be
in a form and substance reasonably satisfactory to AEI. The
assignment of the purchase agreement to AEI would not be
executed until the Closing Date, defined in Article D.2.
AEI will not assume any liability to Seller except for
payment of the Purchase Price.
C. FEES AND COSTS
1. A commitment fee equal to one and one-half percent
(1.5%) of the Estimated Total Project Cost of the
Parcel (defined below) (the "Commitment Fee"), not
including the amount estimated for ▇▇▇▇▇▇'s overhead
allocation, will be payable by Lessee to AEI upon the
signing and delivery of this Commitment by Lessee to
AEI. ▇▇▇▇▇▇'s estimate of the total project cost which
will be incurred to acquire the land and complete the
Improvements is $1620000.00("Estimated Total Project
Cost" as set forth on Exhibit "B" attached hereto).
Subject to Article L hereof, the Commitment Fee
shall be considered earned upon AEI's execution and
delivery of this Commitment to Lessee. At Lessee's
election, the Commitment Fee may be included as a
funded project cost and reimbursed to Lessee at closing
on AEI's acquisition of the Parcel (the "Closing").
Said Commitment fee will be adjusted on the date of the
final disbursement of the Development Financing,
defined in Article C.4 hereof, (the "Final Disbursement
Date") to reflect one and one-half percent (1.5%) of
the Actual Total Project Cost, defined in Article D.1
hereof.
2. All outstanding real estate taxes, and levied and
pending special assessments, presently due and payable
prior to the Closing Date, (or required to be paid to
record the documents transferring title to AEI) as
defined in Article C.2 hereof, or assessed for the year
in which closing shall occur, if presently due and
payable (or required to be paid to record the documents
transferring title to AEI) in the year in which closing
shall occur, shall be paid by Lessee in full at or
prior to the Closing Date (except as pro-rated in the
Purchase Agreement for the Parcel as of the Closing
Date).
3. Lessee shall pay all expenses incident to the
Closing and necessary to comply with the requirements
herein, as consistent with this Commitment, including
AEI's outside legal costs, which, absent a default
under the Development Financing Agreement by ▇▇▇▇▇▇ and
barring extraordinary circumstances, shall be capped at
$12,500, plus such additional legal fees incurred by
AEI and reimbursable in such amounts as agreed to by
▇▇▇▇▇▇ as set forth on the Estimated Total Project Cost
Budget. Such costs may be included, at ▇▇▇▇▇▇'s
option, as project costs funded by AEI.
4. AEI shall permit Lessee to construct the
Improvements on the Parcel owned by AEI, according to
the plans and specifications submitted to AEI, and
pursuant to a construction contract between Lessee and
its contractor ("General Contractor"), a copy of which
would be provided in advance of the Closing Date to
AEI. Subject to the terms of the Development Financing
Agreement, (the form of such document to be mutually
agreed upon by the parties hereto) funds will be
advanced for the construction of the Improvements and
related soft costs, up to the Actual Total Project Cost
set forth in Article D.1 hereof, (the "Development
Financing") by AEI as set forth in Article E. hereof.
At the Final Disbursement Date, AEI shall pay
Lessee a fee for developing the Improvements in the
amount of $23225.00(the "Parcel Development Fee"). The
Parcel Development Fee will be included as a funded
project cost and paid to Lessee on the Final
Disbursement Date. However, the Actual Total Project
Cost (defined in Article D.1 hereof), including the
Parcel Development Fee, shall not exceed the MAI
appraised value such appraisal to be approved by AEI.
D. CLOSING TERMS
1. Actual Total Project Cost: The Actual Total
Project Cost will include only all verifiable project
costs actually incurred, which costs are approved by
AEI, either as part of the Estimated Total Project Cost
Budget, or subsequently incurred and approved in AEI's
reasonable discretion (the "Actual Total Project
Cost"), and in any event shall not exceed the MAI
appraisal value , such appraisal to be approve by AEI.
2. Closing Date: The closing date for AEI's purchase
of the Parcel from Seller and the commencement of the
Lease described in Article F. hereof shall be on or
before October 1 24, 1997 (the "Closing Date"), after
delivery and approval of all of the items contemplated
hereunder including, but not limited to, the execution
of the documents described in Article G. hereof. If
Lessee has not performed under this Commitment by the
Closing Date, this Commitment shall be null and void at
the option of AEI. In the event Lessee requests an
extension of this Commitment, and said extension is
approved by AEI in its sole discretion, a written
addendum to this Commitment shall be required.
3. Closing Agent: The closing contemplated hereunder
shall be handled by the national office of Chicago
Title Insurance Company located in Rockford, Illinois
or other such title company acceptable to Buyer, acting
under instructions from AEI's counsel.
4. This Commitment shall not be assignable by Lessee
by law, or otherwise, without AEI's prior written
approval, but may be assigned by AEI at its option, in
whole or in part, in such manner as AEI may determine,
to an affiliate or affiliates of AEI.
5. Parcel Inspection: The Parcel has been inspected
and approved by AEI.
6. As a condition precedent to closing on AEI's
acquisition of the Parcel and AEI's initial
disbursement for the Development Financing, the
supporting documentation listed below must be submitted
to AEI not less than five (5) business days prior to
the Closing Date, or to avoid being in default under
the Development Financing Agreement and as condition
precedent to further disbursement under the Development
Financing Agreement, by the date otherwise indicated,
in form and content satisfactory to AEI and its
counsel:
a. Lessee is to furnish AEI with an acce
ptable cost breakdown itemizing estimated
construction costs, including, but not limited to,
land acquisition, building construction, site
development, landscaping and soft costs, equal to
the Estimated Total Project Cost (also, the
"Project Cost Budget");
b.The Lessee shall submit to AEI current
financial statements as described on Exhibit "C".
c.The Lessee shall furnish a commitment for
an ALTA Owner's Policy of Title Insurance (ALTA
owner - most recent edition) insuring marketable
title in the Parcel, subject only to such matters
as AEI may approve and excluding exceptions for
mechanic's liens, survey and parties in possession
(the "Title Commitment"). The policy shall be
issued by the national office of Lawyer's Title
Insurance Company located in Phoenix, Arizona (the
"Title Company") and shall contain such
endorsements as AEI may require including, a
future disbursements endorsement up to the
Estimated Total Project Cost, an extended coverage
endorsement, creditor's rights endorsement, and an
owners comprehensive coverage endorsement. The
Title Commitment shall list Seller as the present
fee owner and should show AEI as the fee owner to
be insured. The Title Commitment shall also
include an itemization of all outstanding and
pending special assessments or should state that
there are none, if such is the case, and state the
manner in which any outstanding assessments are
payable, that is, whether they are payable in
monthly or yearly installments, setting forth the
amount of each such installment and its duration.
The Title Commitment shall also include an
itemization of taxes affecting the Parcel and the
tax year to which they relate; should state
whether taxes are current and, if not, shall show
the amounts unpaid, the tax parcel numbers, and
whether the tax parcel includes property other
than the Parcel to be purchased. All easements,
restrictions, documents, and other items affecting
title should be listed in Schedule "B" of the
Title Commitment. COPIES OF ALL INSTRUMENTS
CREATING SUCH EXCEPTIONS MUST BE ATTACHED TO THE
TITLE COMMITMENT.
During construction of the Improvements, AEI
is to be furnished with down-date endorsements to
the owner's title insurance policy with continuing
affirmative mechanic's lien coverage pursuant to
acceptable endorsements increasing coverage to the
aggregate of all disbursements made by AEI to the
date thereof.
d. AEI is to be furnished with a policy of
builder's risk insurance, as well as public
liability coverage, hazard insurance, and
▇▇▇▇▇▇▇'▇' compensation coverage, all in such
amounts and placed with such companies as may be
reasonably acceptable to AEI, in accordance with
the Instructions to Insurance Agent set forth on
Exhibit "D-1" attached hereto. In addition, AEI
shall be furnished with satisfactory flood and
earthquake insurance, unless satisfactory evidence
is given that the Parcel is not located within a
federally designated flood plain area or is above
the applicable 100 year flood plain level, and not
in a federally designated earthquake prone area or
is not in an ISO High Risk Earthquake Zone
respectively.
All policies of insurance must name as a
dditional named insureds: AEI or its specific
assigns and the Corporate General Partner of said
assignee, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as the Individual
General Partner of said assignee, and ▇▇▇▇▇▇ as
insured or additional insured, as their respective
interests may appear, and shall provide that the
policies cannot be canceled without thirty (30)
days written notice to the parties. In addition,
all policies shall contain endorsements by the
respective insurance companies waiving all rights
of subrogation, if any, against the parties named
as insured or additional insured. All insurance
companies must be approved in writing by AEI. No
closing will occur without all insurance policies
completed and in place.
e.Preliminary survey acceptable to AEI p
repared by a licensed surveyor, complying with the
guidelines set forth on Exhibit "E-1" attached
hereto.
▇.▇▇▇▇▇ plans and specifications for the
Improvements upon which construction shall
commence, prepared by an architect or engineer
reasonably acceptable to AEI, not later than
November 15, 1997.
g.A soils report prepared by an engineer
reasonably acceptable to AEI, not later than
November 15, 1997.
h.Appraisal of the Parcel by an independent
MAI appraiser acceptable to AEI (AEI shall make
the initial attempts to obtain such appraisal in a
form satisfactory to AEI). An "As Is" Appraisal
shall be required by October 23, 1997 and an
Appraisal of the Parcel based upon the proposed
and in progress improvements, if any shall be
required not later than November 30, 1997.
i.A letter from the appropriate officer of
the municipality or county exercising land use
control over the Parcel stating: (a) the zoning
code affecting the Parcel; (b) that the Parcel and
its intended use complies with such zoning code,
city ordinances and building and use restrictions;
(c) that there are no variances, conditional use
permits or special use permits required for use of
the Improvements on the Parcel, or if such permits
are required, specifying the existence of same and
their terms, and (d) that the Parcel complies with
the platting ordinances affecting them and can be
conveyed without the requirement of a plat or
replat of the Parcel. If the Parcel falls within
any subdivision rules or regulations, evidence of
compliance with such subdivision regulations, or
waiver of the same by the appropriate officials,
is required. (AEI shall make the initial attempts
to obtain such zoning compliance letter in a form
satisfactory to AEI).
j.Written advice from all proper public
utilities and municipal authorities, that utility
services are available and connected to the Parcel
for gas, electricity, telephone, water and sewer
(AEI shall make the initial attempts to obtain
such utility letters in a form satisfactory to
AEI), not later than November 24, 1997.
k.Copy of the building permit for constr
uction of the Improvements on the Parcel, not
later than November 24, 1997.
l.Copies of all construction contracts, not
later than November 24, 1997.
▇.▇▇▇▇ of architect's contract.
n.Copy of purchase agreement for the land
between ▇▇▇▇▇▇ and Seller and all amendments and
assignments of said purchase agreement, including
the assignment of the purchase agreement to AEI.
o.Photographs of all sides of the Parcel.
p.Certified copies of the Articles of In
corporation, By-Laws (or Partnership Agreement)
and Good Standing Certificate for the Lessee,
together with all other documents AEI deems
necessary to support the authority of the persons
executing any documents on behalf of the
corporation, including encumbrancy certificates
and corporate resolutions of the directors and
shareholders (or of the Partnership, including
resolution of the partners).
q.UCC searches on Seller and Lessee from the
offices of the Secretary of State and the county
recorder for the state and county in which the
Parcel is located.
r.Phase I Environmental Assessment Report
prepared by an engineer reasonably satisfactory to
AEI containing evidence satisfactory to AEI that
the Parcel complies with all federal, state and
local environmental regulations. Additional
reports may be required by AEI based upon its
review of the Phase I report. If ▇▇▇▇▇▇ fails to
deliver any additional reports AEI may deem
necessary to complete and approve its
environmental investigation of this Parcel, AEI
may terminate this Commitment and retain that
portion of the Commitment Fee to cover any and all
of its costs incurred hereunder.
s.Executed documents described in Article G.
hereof.
t.All documentation listed on Exhibit "F"
attached hereto.
7. At the completion of construction of the Improvements
on the Parcel and prior to the Final Disbursement of the
Development Financing, Lessee shall deliver the following
documents to AEI:
a.Certificate of Completion executed by the
Project Architect, General Contractor. Said
Certificate shall be in a form reasonably
satisfactory to AEI, and substantially similar to
the form attached hereto as Exhibit "G".
b.Certificate of Occupancy.
c.Copies of all necessary permits and li
censes of any governmental body or authority which
are necessary to permit the use and occupancy of
the Improvements on the Parcel, specifically
including, but not limited to, liquor licenses.
d.Certified cost statement itemizing the
Actual Total Project Costs signed by the Lessee
and related documentation supporting said project
costs.
▇.▇▇▇▇▇▇▇▇▇ policies issued by companies
acceptable to AEI for coverage as required by the
lease, with AEI named as additional named insured,
complying with the guidelines set forth on Exhibit
"D-2" attached hereto.
f.As-built survey, complying with the re
quirements of Exhibit "E-2" attached hereto.
▇.▇▇▇▇▇ date-down endorsement to title p
olicy.
▇.▇▇▇▇▇ draw documentation as required by the
development financing documentation described in
Article D. hereof.
i.Estoppel from Lessee.
▇.▇▇▇▇▇ amendment setting forth the second
full lease year's commencement date, the rent for
the remainder of the term and terminating the
Development Financing Agreement (as described in
Article D. hereof).
8. A Letter of Credit will be required from
Lessee, in the amount of the initial disbursement for
the land and related soft costs, in form and content
acceptable to AEI, attached as Exhibit "I". The Letter
of Credit will be released upon the submission of all
items listed in Article D. 6, a.-t. and D.7. a.-j.,
acceptable to AEI in its sole discretion. If AEI shall
call the Letter of Credit according to the terms to be
set forth in the Development Financing Agreement, under
certain conditions, AEI shall tender a Quit Claim Deed
to Lessee, and AEI shall have not further obligation to
Lessee under the Development Financing Agreement, the
Lease orally other ancillary document, but reserving
unto AEI its remedies for default by Lessee.
E. DEVELOPMENT FINANCING TERMS
Disbursements for construction of the Improvements and related
soft costs, the Development Financing, will be made in accordance
with the provisions of the Development Financing Agreement and
Development Financing Disbursement Agreement, in forms to be
agreed upon between the parties hereto.
F. LEASE TERMS
The Lease, (in the form to be agreed upon between the
parties hereto prior to the Closing Date), will be executed and
delivered by AEI and Lessee at Closing, to include the following
terms:
1. Base Rent:
a. Annual rent on the Initial Disbursed Funds,
for the purchase of the land and land related soft
costs, from date of disbursement through the
Rental Modification Date, not including Lessee's
overhead allocation: the greater of seven and one-
quarter percent (7.25%) or one percent (1.0%)
under the prime rate of interest.
b. Initial Annual Rent as a Percentage of Actual
Total Project Cost from the earlier of the Rental
Modification Date or the Final Disbursement Date:
ten and three quarters percent (10.75%).
Rent shall be payable in advance of the first day
of each month in equal monthly installments calculated
on the Purchase Price less Lessee's overhead allocation.
c.Beginning in the third (3rd) full Lease Year after
the Final Disbursement Date and every Lease Year
thereafter, including any renewal terms, an amount
equal to one and nine hundred twenty-five
thousandths percent (1.925%) of the prior period's
scheduled annual rent.
2. Initial Lease Term: twenty (20) years plus the
Development Financing Period set forth in the
Development Financing Agreement
3. Renewal Terms: two (2) terms of five (5) years
each with rent increases as set forth above in Article
F.1.c.
4. Type of Use: Timber Lodge Steakhouse Restaurant
5. Lease effective date: The Lease shall be effective as
of the Closing Date.
6. ▇▇▇▇▇▇'s Right of Assignment: The Lease shall not
be assignable by ▇▇▇▇▇▇ until after the Final
Disbursement Date, and then only in accordance with the
terms of the Lease.
G. DOCUMENTS
The documents listed below shall be prepared by AEI's
counsel in accordance with the terms hereof and executed at,
or prior to, the Closing Date in form and substance
satisfactory to AEI, subject to Section K hereof:
1. Development Financing Agreement;
2. Development Financing Disbursement Agreement;
3. Assignment of purchase agreement for the land;
4. Assignments of construction contracts and architect's
contract;
5. Net Lease Agreement;
6. Attorney's Opinion Letter to be given by ▇▇▇▇▇▇'s
internal and outside counsel necessarily familiar with
the conduct of ▇▇▇▇▇▇'s business and the jurisdiction
in which the Parcel is situated to render such opinion
(i.e. an local Illinois counsel), as to the
enforceability of the Lease and compliance of the Lease
with local law and due authority of the signatures, in
a form and substance reasonably satisfactory to AEI.
Such form of opinion shall be satisfactory if
reasonably similar in form and content (except as to
matters and documents particular to this transaction)
to opinions previously delivered to AEI or its
affiliates.
7. Affidavit of ▇▇▇▇▇▇;
8. Hazardous Substances Indemnification Agreement of
Lessee; and
9. FIRPTA Affidavit of Seller.
Lessee, or its counsel, shall furnish a copy of the proposed
warranty deed to AEI's counsel for its review and approval
prior to closing and such other documents as the Title
Company deems necessary for the terms contemplated hereunder
in accordance with the provisions of this Commitment.
H. FAIR CREDIT REPORTING ACT
Lessee warrants that all credit information submitted is
true and correct, and authorizes AEI to make credit
investigations and obtain credit reports and other financial
information, written or oral, respecting ▇▇▇▇▇▇'s credit and
financial positions, as it may deem necessary or expedient
at ▇▇▇▇▇▇'s cost and expense.
I. INTERPRETATION
This Commitment and the terms of the transaction
contemplated to be made in conformity herewith, shall be
construed in accordance with all applicable governmental
regulations and in accordance with the laws of the state
where the Parcel is located.
J. CERTIFICATION
Lessee hereby certifies that:
1. It has no actions or proceedings pending, which
would materially affect the Parcel, Lessee, except
matters fully covered by insurance;
2. The consummation of the transactions contemplated
hereby, and the performance of this Commitment and the
delivery of the Lease and other security and credit
instruments contemplated hereunder, will not result in
any material breach of, or constitute a material
default under, any indenture, bank loan or credit
agreement, or other instruments to which Lessee is a
party or by which Lessee may be bound or affected,
which breach or default would have a material adverse
effect on ▇▇▇▇▇▇'s performance under this Commitment;
3. All of Lessee's covenants, agreements, and
representations made herein, and in any and all
documents which may be delivered pursuant hereto, shall
survive the delivery to AEI of the Lease and other
documents furnished in accordance herewith, for one
year from the Final Disbursement Date, except for the
Lease which survives, and the provisions hereof shall
continue to inure for such period to AEI's benefit, and
its successors and assigns;
4. The Parcel is in good condition, substantially
undamaged by fire and other hazards, and has not been
made the subject of any condemnation proceeding.
K. TERMINATION
This Commitment may be terminated in writing prior to
closing at AEI's option (but reserving to AEI its right to
pursue its remedies at law or equity for ▇▇▇▇▇▇'s breach
hereof) in such manner as AEI may reasonably determine, if:
1) Lessee fails to comply with any of the material terms
hereof, including but not limited to, obtaining AEI's
approval of the documents listed in Article D.6. hereof, and
does not satisfactorily cure the same on or before the
Closing Date; 2) a material default exists in any financial
obligation of Seller or Lessee which would have a material
adverse effect on Seller or Lessee's performance under this
Commitment; 3) any representation made in any submission
proves to be untrue, substantially false or misleading at
any time prior to the Closing Date which would have a
material adverse effect on Seller or Lessee's performance
under this Commitment; 4) there has been a material adverse
change in the financial condition of Seller or Lessee or
there shall be a material action, suit or proceeding pending
or threatened against Seller or Lessee which would have a
material adverse effect on Seller or Lessee's performance
under this Commitment; 5) any bankruptcy, reorganization,
insolvency, withdrawal, or similar proceeding is instituted
by or against Seller or Lessee and such proceeding is not
removed prior to Closing. Provided, however, if AEI shall
terminate this Agreement under paragraphs 2-5 only because
of the Seller or a material adverse change in connection
with the Seller, AEI's remedy shall be limited to
reimbursement of its out of pocket costs (including
reasonable attorneys fees), and AEI shall return the
remaining balance, if any, after such out of pocket
expenses, of the Commitment Fee of Lessee hereunder.
In the event ▇▇▇▇▇▇ and AEI do not reach mutual agreement
prior to the Initial Disbursement of Funds on the documents
contemplated to be executed by either party hereunder by
delivery of written notice to the other party, this
Commitment may be terminated at the option of either party.
AEI shall, in such event, refund the Commitment Fee to
▇▇▇▇▇▇, less AEI's reasonable out-of-pocket expenses
incurred hereunder, including, but not limited to,
attorney's fees.
AEI and ▇▇▇▇▇▇ acknowledge the unique nature of the Parcel
and agree that the mutual remedies of any party hereunder
shall be limited to the liquidated damages in the amount of
either the return of the Commitment Fee to Lessee or
retention of the Commitment Fee by AEI plus the outside
counsel fees incurred by the non-breaching party in
connection with this Commitment prior to the date of
termination hereof; provided, however, if ▇▇▇▇▇▇ shall
refuse to close (and being without right to terminate this
Commitment as otherwise set forth herein) even though AEI
shall be ready, willing, and able to do so, and ▇▇▇▇▇▇ shall
thereafter occupy the Leased Premises, AEI shall retain all
remedies available to it at law or in equity.
L. INCORPORATION OF SUBMITTED WRITTEN MATERIALS AND AMENDMENTS
This Commitment is issued by AEI pursuant to all written
materials previously submitted by Seller and ▇▇▇▇▇▇ to AEI
as set forth on Exhibit "H" (the "Submitted Written
Materials") and it is a proviso hereof that the content,
terms and provisions of said Submitted Written Materials are
by express and specific reference incorporated herein and
made a part hereof. Provided, however, in the case of any
contradiction, variance, or ambiguity between any of the
content, terms and provisions hereof and those of the
Submitted Written Materials, the terms specifically
delineated in this Commitment shall govern and shall
supersede the conditions of the Submitted Written Materials.
Neither this Commitment nor any provision hereof may be
changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination
is sought, and in the case of AEI, signed by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, President of AEI, or his designee in writing signed
by ▇▇. ▇▇▇▇▇▇▇ authorizing such other party to execute a
specific change, waiver, discharge or termination instrument
on behalf of AEI.
M. FEES AND COSTS
As a condition hereof, ▇▇▇▇▇▇ agrees to pay the fees of
AEI's outside counsel (absent default by ▇▇▇▇▇▇ under the
Development Financing Agreement or such extraordinary
circumstances, such fees not to exceed $12,500 plus AEI's
Illinois legal counsel fees) plus all costs and expenses
incurred by AEI, as well as all title and escrow charges,
the cost of issuance of interim title certifications,
recording and release fees and all other costs incurred in
connection with the transaction contemplated hereunder.
N. ADVERTISING
During construction, AEI may place a sign on the Parcel at a
location to be determined by Lessee in its reasonable
discretion, specifying that it is participating in the
financing on the Parcel, to the extent permitted by law or
private covenant, condition, or agreement affecting the
Project. Further, AEI may publicize the financing and may
include in publicity releases, if applicable, the names of
▇▇▇▇▇▇'s corporate officers, principals, and a general
description of the Parcel, occupancy and rentals.
O. EXPIRATION
This Commitment must be executed and returned to AEI no
later than October 14, 1997 for the terms to be effective.
AEI FUND MANAGEMENT, INC. (AEI)
By: /s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
STATE OF MINNESOTA )
) ss
COUNTY OF ▇▇▇▇▇▇ )
On this 17th day of October, 1997, before me, the
undersigned, a Notary Public in and for said State, personally
appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, personally known to me to be the
person who executed the within instrument as the President of AEI
Fund Management, Inc., a Minnesota corporation, on behalf of said
corporation.
/s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
Notary Public
This Commitment is accepted and agreed to
this 17th day of October, 1997.
(Lessee) Timber Lodge Steakhouse Inc.
By:/s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Its: President
STATE OF Minnesota ) [notary seal]
) ss
COUNTY OF Hennepin )
On this 17th day of October, 1997, before me, the
undersigned, a Notary Public in and for said State, personally
appeared ▇▇▇▇▇ ▇ ▇▇▇▇▇▇, personally known to me to be the person
who executed the within instrument as the President of Timber
Lodge Steakhouse, a Minnesota corporation, on behalf of said
corporation.
/s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
Notary Public
I authorize the release of any information deemed necessary by
AEI to verify any and all information supplied to AEI. Lessee
shall hold AEI harmless for any damages arising from verification
of said information.
(Lessee) Timber Lodge Steakhouse Inc.
Dated: 10/17/97
By: /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Its: President
EXHIBIT "A"
LEGAL DESCRIPTION
EXHIBIT "B"
ESTIMATED TOTAL PROJECT COST BUDGET
EXHIBIT "C"
FINANCIAL DOCUMENTATION REQUIREMENTS
Prior to Closing, the following must be received and
approved by AEI, along with those items specified more fully
in the Sale and Leaseback Financing Commitment.
▇. ▇▇▇▇▇▇'s prior three (3) fiscal years' Form 10-K
reports as filed with the Securities and Exchange
Commission.
▇▇.▇▇▇▇▇▇'s prior three fiscal years' Annual
Shareholder Reports.
III. Lessee's Form 10-Q reports filed with
the Securities and Exchange Commission during its
current and prior two fiscal year periods.
IV.Lessee's internally generated per store annual
financial statements for the current and year-to-date
periods. Said financial statements shall include at a
minimum, a balance sheet and statement of income. Cash
flow statements and statements of stockholder's equity
should also be provided if available.
▇. ▇▇▇▇▇▇'s internally generated per store
financial statements for each of its prior two
fiscal year periods. Said financial statements
shall include at a minimum, a balance sheet and
statement of income. Cash flow statements and
statements of stockholder's equity should also be
provided if available.
▇▇.▇▇▇ forma of first year's operations for the
property to be purchased.
VII.Itemized budget of total project cost
for the property to be purchased.
▇▇▇▇▇▇'s financial statements, and any additional financial
information requested by AEI shall be prepared in accordance
with current GAAP guidelines and signed by an authorized
officer who must certify to the accuracy thereof. The
certification language must read as follows:
"The undersigned hereby certifies and warrants that
the information contained in these financial
statements is true and correct, understands that AEI
is relying upon such information as an inducement
for entering into a purchase transaction with the
undersigned, and expressly represents that AEI may
have reliance upon such information."
EXHIBIT "D-1"
INSTRUCTIONS TO INSURANCE AGENT
(Construction Phase)
The following instructions should be followed with respect to
requesting insurance policies on the Parcel:
1. AEI shall receive Builder's Risk hazard insurance, covering
"All Risk" or "Special Form" perils, including the perils of
collapse and mudslide, in the amount of Replacement Cost.. The
coverage shall include building materials, and shall include
property in transit. The deductible shall not exceed
.
2. AEI shall receive Commercial Liability Insurance of
$3,000,000 per occurrence and $4,000,000 aggregate. These limits
can be accomplished either by underlying liability policies or by
the sum of the underlying policy plus an excess or umbrella
policy. The coverage shall include an endorsement in favor of
"AEI" which is ISO Form CG 20 11 11 85 - "Additional Insured -
Managers Or Lessors Of Premises", or an equivalent endorsement
and shall include Broad Form Contractual Liability coverage. The
Claims Made form of coverage is not acceptable.
3. Flood insurance shall be required if the Parcel is located
in a designated flood area or in an area exposed to flood or
storm surge. If the Parcel is not in a designated flood plain
area or is above the applicable one hundred year flood plain
level, provide satisfactory evidence to the effect. Satisfactory
evidence to determine if coverage is necessary shall be a Base
Flood Elevation Certificate and/or a National Geodetic Vertical
Datum (NGDV)-National standard reference datum for elevations,
formerly referred to as Mean Sea Level (MSL) of 1929. If the
coverage is necessary, it shall be in the following amount
. The deductible shall be .
4. Earthquake insurance shall be required, in amounts
acceptable to AEI, unless evidence is provided that the Parcel is
not located in a federally designated earthquake prone area or is
not an ISO High Risk Earthquake Zone. The deductible shall be
.
5. AEI shall receive Certificates of Insurance for
Comprehensive General Liability with limits and provisions
referred to in Item 2 above, and for Workers' Compensation
coverage, from all contractors and suppliers who will be present
on the jobsite.
6. AEI shall receive Certificates of Insurance for Business
Auto Liability, from all contractors and suppliers whose vehicles
will be present on the jobsite. The coverage limits shall be
per occurrence.
7. The "Additional Requirements For All Insurance Policies"
below shall be required by AEI for each policy.
Please call AEI's lease management department to determine
amounts, ▇▇▇-▇▇▇-▇▇▇▇.
ADDITIONAL REQUIREMENTS FOR ALL INSURANCE POLICIES
1 Each policy shall be accompanied by proof of payment of the
first annual premium.
2 All hazard policies shall name AEI as Loss Payee and
Additional Insured.
3. All liability policies shall name AEI as Additional
Insured.
4. Definition of "AEI" regarding Additional Insured and Loss
Payee Endorsements:
"AEI Limited Partnership and/or its
specific assigns and AEI , Inc., the Corporate
General Partner of said assignee, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as the
Individual General Partner of said assignee, and ▇▇▇▇▇▇ as
insured or additional insured, as their respective interests
may appear. "
5. AEI shall receive a thirty (30) day written notice in the
event of cancellation, material amendment, or expiration without
renewal of the policies.
6. All hazard policies shall contain Waiver of Subrogation
Endorsements waiving all rights of subrogation, if any, against
AEI as defined above.
7. All insurance companies shall be approved in writing by AEI.
EXHIBIT AD-2"
INSURANCE REQUIREMENTS
(Post Construction)
The following instructions should be followed with respect to
requesting insurance policies on the Parcel:
1. An original hazard insurance policy for "All Risk" or
"Special Form" coverage perils, including all exclusions and
endorsements, will be required. The policy(s) shall be written
with a coverage amount of the Replacement Cost of the Parcel,
annually updated, including Improvements. The Parcel insured
shall be described by the address of the Parcel. In the event
that it is impossible to furnish the original policy at the
completion of construction, an Insurance Certificate, form ACCORD
27, detailing the policy coverage forms, with a paid receipt
shall be acceptable. The original policy shall be forwarded to
AEI without delay.
2. If the coverage referred to in Item 1. above is written via
a blanket insurance policy, a Certificate of Insurance with a
Statement of Values attached will be acceptable.
3. All hazard insurance policies shall include the Replacement
Cost Endorsement.
4. All hazard insurance policies shall include a Building
Ordinance Compliance Endorsement.
5. All hazard insurance policies shall be written with no
coinsurance or with an Agreed Amount Endorsement with the total
property value under the blanket amount.
6. N/A
7. The maximum deductible for any hazard insurance policy shall
be $10,000.
8. Hazard insurance shall include Loss of Rents (Business
Interruption) insurance in an amount to cover at least a 12 month
period with the loss proceeds payable to AEI.
9. Flood insurance shall be required if the Parcel is located
in a designated flood area or in an area exposed to flood or
storm surge. If the Parcel is not in a designated flood plain
area or is above the applicable one hundred year flood plain
level, provide satisfactory evidence to that effect. Satisfactory
evidence to determine if coverage is necessary shall be a Base
Flood Elevation Certificate and/or a National Geodetic Vertical
Datum (NGDV)-National standard reference datum for elevations,
formerly referred to as Mean Sea Level (MSL) of 1929. If flood
insurance coverage is required, it shall be in amounts of
with deductibles of .
10. Earthquake insurance shall be required, in amounts
acceptable to AEI, unless evidence is provided that the Parcel is
not located in a federally designated earthquake prone area or is
not in an ISO High Risk Earthquake Zone. If earthquake coverage
is required, it shall be in the amounts of
with deductibles of .
11. Comprehensive General Liability coverage shall be written,
with limits of $3,000,000 per occurrence and $4,000,000 general
aggregate including a self retention limit of $250,000, or less
if Lessee's financial condition shall be adversely materially
diminished, in which event AEI may set commercially reasonable
self retention limits. These limits can be accomplished either by
underlying liability policies or by the sum of the underlying
policy plus an excess or umbrella policy. The coverage shall
include an Endorsement in favor of AEI which is ISO Form CG 20 11
11 85 Additional Insured - Managers Or Lessors Of Premises", or
an equivalent endorsement. The coverage shall by written on an
Occurrence Form basis and shall include Broad Form Contractual
Liability coverage. The Claims Made form of coverage is not
acceptable.
12. If liquor is sold on the premises of the Parcel, Liquor
Liability coverage (also known as Dram Shop coverage) shall be
required. The coverage shall be written in the statutory amount
which is required by the State in which the Parcel is located, if
said State has a maximum recovery statute. Otherwise, the
coverage shall be written with the above limits.
13. N/A
14. The "Additional Requirements For All Insurance Policies"
shown below shall be required by AEI for each policy.
* Please call AEI's lease management department to determine
amounts, ▇-▇▇▇-▇▇▇-▇▇▇▇.
ADDITIONAL REQUIREMENTS FOR ALL INSURANCE POLICIES
1. Each policy shall be accompanied by proof of payment of the
first annual premium.
2. All hazard policies shall name AEI as Loss Payee and
Additional Insured.
3. All liability policies shall name AEI as Additional Insured.
4. Definition of "AEI" regarding Additional Insured and Loss
Payee Endorsements:
"AEI Limited Partnership and/or
its specific assigns and AEI , Inc., the
Corporate General Partner of said assignee, and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, as the Individual General Partner of said assignee,
and ▇▇▇▇▇▇ as insured or additional insured, as their
respective interests may appear. "
5. AEI shall receive a thirty (30) day written notice in the
event of cancellation, material amendment, or expiration without
renewal of the policies.
6. All hazard policies shall contain Waiver of Subrogation
Endorsements waiving all rights of subrogation, if any, against
AEI as defined above.
7. All insurance companies shall be approved in writing by AEI.
** Contact ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at AEI (▇▇▇) ▇▇▇-▇▇▇▇ for the name of
the specific AEI entity to be insured.
EXHIBIT "E-1"
Survey Requirements
(Pre-Construction)
1. The plat or map of such survey must bear the name, address
and signature of the licensed land surveyor who made the
survey, that surveyor's official seal and license number (if
any, or both), and the date of the survey, with the
following certification:
I, , a registered land surveyor, in
and for the State of do hereby certify to AEI
Fund Management, Inc., a Minnesota corporation, or its
assigns (PLEASE CONTACT ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ AT ▇-▇▇▇-▇▇▇-▇▇▇▇
FOR INFORMATION), and (insert name of
title company), that this is a true and correct plat of a
survey of
(Insert Legal Description)
which correctly shows the location of all buildings,
structures and improvements on said described Parcel; that
there are no visible encroachments onto adjoining
properties, streets, alleys, easements or setback lines by
any of said buildings, structures or improvements; that
there are no recorded or visible right of ways or easements
on said described Parcel, except as shown on said survey;
that there are no party walls or visible encroachments on
said described Parcel by buildings, structures or other
improvements situated on adjoining property, except as shown
on said plat or survey; and that the described ▇▇▇▇▇▇ has
direct access to a publicly dedicated right-of-way at the
location shown on said plat or survey.
By:
Dated:
2. If the street address of the Parcel is available, it should
be noted on the survey.
3. The survey boundary should be drawn to a convenient scale,
with that scale clearly indicated. If feasible, a graphic
scale should be indicated. When practical, the plat or map
of survey should be oriented so that North is at the top of
the drawing. Supplementary or exaggerated scale diagrams
should be presented accurately on the plat
or map and drawn to scale. No plat or map drawing less than
the minimum size of 8-1/2" by 11" will be acceptable.
4. The plat or map of survey should meet with the minimum
Standard Detail Requirements for Land Title Surveys as
adopted by the American Title Association and American
Congress on Surveying and Mapping.
5. The character and location of all buildings upon the Parcel
must be shown and their location given with reference to
boundaries. Proper street numbers should be shown where
available. Physical evidence of easements and/or servitudes
of all kinds, including but not limited to those created by
roads, rights of way, water courses, drains, telephone,
telegraph or electric lines, water, sewer, oil or gas
pipelines, etc., on or across the surveyed Parcel and on
adjoining properties if they appear to affect the enjoyment
of the surveyed Parcel should be located and noted. If the
surveyor has knowledge of any such easements and/or
servitudes, not physically evidenced at the time the present
survey is made, such physical non-evidence should be noted.
All recorded easements, rights of way and other record
matters affecting the Parcel should be located and
identified by recording date. Surface indications, if any,
of underground easements and/or servitudes should also be
shown. If there are no buildings erected on the Parcel
being surveyed, the plat or map of survey should bear the
statement "No Buildings". Curb cuts and adjoining streets
should be shown.
6. Joint or common driveways and alleys must be indicated.
Independent driveways along the boundary must be shown
together with the width thereof. Encroaching driveways,
strips, ribbons, aprons, etc., should be noted. Rights of
access to public highways should be shown. The right-of-way
line of any public street must be shown in relationship to
the Parcel surveyed and the street must be labeled "Publicly
Dedicated" or "Private Thoroughfare" as the case may be.
7. As a minimum requirement, at least two (2) sets of prints of
the plat or map of survey should be furnished to AEI and one
(1) set to the title company.
8. The survey should certify as to the total square footage of
the area surveyed and as to the square footage at the
exterior walls of any improvements on the Parcel. The
survey should note the absence of, or indicate the existence
of, any building restriction or setback lines. Paved areas
should be shown and the survey should designate the area for
parking and its dimensions. If completed, the survey should
indicate the actual number of parking spaces and, if
possible, the actual parking spaces should be outlined on
the survey.
EXHIBIT "E-2"
Survey Requirements
(As-Built/Post-Construction)
1. The plat or map of such survey must bear the name, address
and signature of the licensed land surveyor who made the
survey, that surveyor's official seal and license number (if
any, or both), and the date of the survey, with the
following certification:
I, , a registered land surveyor, in
and for the State of do hereby certify to AEI
Fund Management, Inc., a Minnesota corporation, or its
assigns (PLEASE CONTACT ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ AT ▇-▇▇▇-▇▇▇-▇▇▇▇
FOR INFORMATION), and (insert name of
title company), that this is a true and correct plat of a
survey of
(Insert Legal Description)
which correctly shows the location of all buildings,
structures and improvements on said described Parcel; that
there are no visible encroachments onto adjoining
properties, streets, alleys, easements or setback lines by
any of said buildings, structures or improvements; that
there are no recorded or visible right of ways or easements
on said described Parcel, except as shown on said survey;
that there are no party walls or visible encroachments on
said described Parcel by buildings, structures or other
improvements situated on adjoining property, except as shown
on said plat or survey; and that the described ▇▇▇▇▇▇ has
direct access to a publicly dedicated right-of-way at the
location shown on said plat or survey.
By:
Dated:
2. If the street address of the Parcel is available, it should
be noted on the survey.
3. The survey boundary should be drawn to a convenient scale,
with that scale clearly indicated. If feasible, a graphic
scale should be indicated. When practical, the plat or map
of survey should be oriented so that North is at the top of
the drawing. Supplementary or exaggerated scale diagrams
should be presented accurately on the plat or map and drawn
to scale. No plat or map drawing less than the minimum size
of 8-1/2" by 11" will be acceptable.
4. The plat or map of survey should meet with the minimum
Standard Detail Requirements for Land Title Surveys as
adopted by the American Title Association and American
Congress on Surveying and Mapping.
5. The character and location of all buildings upon the Parcel
must be shown and their location given with reference to
boundaries. Proper street numbers should be shown where
available. Physical evidence of easements and/or servitudes
of all kinds, including but not limited to those created by
roads, rights of way, water courses, drains, telephone,
telegraph or electric lines, water, sewer, oil or gas
pipelines, etc., on or across the surveyed Parcel and on
adjoining properties if they appear to affect the enjoyment
of the surveyed Parcel should be located and noted. If the
surveyor has knowledge of any such easements and/or
servitudes, not physically evidenced at the time the present
survey is made, such physical non-evidence should be noted.
All recorded easements, rights of way and other record
matters affecting the Parcel should be located and
identified by recording date. Surface indications, if any,
of underground easements and/or servitudes should also be
shown. If there are no buildings erected on the Parcel
being surveyed, the plat or map of survey should bear the
statement "No Buildings". Curb cuts and adjoining streets
should be shown.
6. Joint or common driveways and alleys must be indicated.
Independent driveways along the boundary must be shown
together with the width thereof. Encroaching driveways,
strips, ribbons, aprons, etc., should be noted. Rights of
access to public highways should be shown. The right-of-way
line of any public street must be shown in relationship to
the Parcel surveyed and the street must be labeled "Publicly
Dedicated" or "Private Thoroughfare" as the case may be.
7. As a minimum requirement, at least two (2) sets of prints of
the plat or map of survey should be furnished to AEI and one
(1) set to the title company.
8. The survey should certify as to the total square footage of
the area surveyed and as to the square footage at the
exterior walls of any improvements on the Parcel. The
survey should note the absence of, or indicate the existence
of, any building restriction or setback lines. Paved areas
should be shown and the survey should designate the area for
parking and its dimensions. If completed, the survey should
indicate the actual number of parking spaces and, if
possible, the actual parking spaces should be outlined on
the survey.
EXHIBIT "F"
PRELIMINARY DOCUMENTATION CHECKLIST
Prior to closing, the following should be received and approved
by AEI, along with those items specified more fully in the
Commitment:
1. Business and marketing plan, with an explanation
of what ▇▇▇▇▇▇ proposes to do, when, and at what costs
to promote the success of this Parcel. (Include a
structure/organizational chart of Lessee or operator,
identifying departments and key personnel.)
2. Resumes of all principals of Lessee, including:
A. educational, management and other experience
histories;
B. history of businesses owned with the
dates established/terminated; ownership structure
and number of employees.
3. Site plan and maps showing site(s) and location(s)
of competition.
4. Complete city map.
5. Market report and/or feasibility study, or report
(include demographic data on trade area and a
description of the neighborhood) supporting this site.
EXHIBIT "G"
CERTIFICATE OF COMPLETION
EXHIBIT "H"
MATERIALS PREVIOUSLY SUBMITTED BY ▇▇▇▇▇▇
1. Unsigned land purchase contract .
2. Chicago Title Insurance Owner's Policy of named insured
Shoney's, Inc.
3. Executed proposal letter dated June 23, 1997 between Timber
Lodge Steakhouse and Shoney's, Inc.
4. Copy of "As-Built" Survey from Shoney's, Inc.
EXHIBIT "I"
LETTER OF CREDIT
To Follow